Plaintiff v Defendant

1 On 2 February 2021, Gary Pearce commenced a claim for damages against a catholic religious order, the Missionaries of the Sacred Heart (the MSC). He alleged sexual abuse and sexual assault. The alleged sexual abuse occurred while he was a student at a school run by the MSC, Monivae College, in Hamilton. Pearce was a student commencing there in 1977 and as particularised in the statement of claim during 1977 and 1978 Brother Mamo and Brother Frith each sexually abused and sexually assaulted him on a number of occasions.

2 Previously, in 2016, Pearce engaged Waller Legal as solicitors to seek compensation from the MSC in respect of the abuse (the prior claim). In circumstances detailed below, a settlement was agreed in March 2017 with payment to Pearce in the sum of $140,000, without formal court proceedings being issued. A deed of release was signed. The defence to Pearce's present proceeding pleads[1] that his claim is barred by reason of cl 4 of the deed executed on 22 March 2017 in the prior claim.

3 At the time of making the prior claim, amendments to the Limitation of Actions Act 1958 (Vic) (the Limitations Act) made in 2015 removed any limitation period in respect of claims for personal injury as a result of physical or sexual abuse that occurred when a person was a minor,[2] such as that claimed by Pearce. Therefore, when he engaged Waller Legal and resolved the prior claim, he faced no potential difficulty caused by an expired limitation period.

4 In July 2018, after settlement of the prior claim, the Legal Identity of Defendants (Organisational Child Abuse) Act 2018 (Vic) (the Legal Identity Act) was enacted. The main purpose of the Act was to 'provide for child abuse plaintiffs to sue an organisational defendant in respect of unincorporated non-government organisations which use trusts to control their activities'.[3] That Act defines an NGO as a non-government organisation that is an unincorporated association or body.[4] It applies to any proceeding for a claim founded on, or arising from, child abuse.[5]

5 There is no dispute that the MSC is an NGO as defined by the Act and that the Act is applicable to Pearce's proceeding. By s 7, the NGO, with the consent of the nominee, may nominate an entity that is capable of being sued:

(a) to act as a proper defendant to a claim on behalf of the NGO; and

(b) to incur any liability arising from the claim on behalf of the NGO.

6 In determining a claim where a nominee is acting as a proper defendant in accordance with s 7, the Legal Identity Act provides that a court may substantively determine a claim in a proceeding founded on or arising from child abuse for which there is a proper defendant under this section as if the NGO itself were incorporated and capable of being sued and found liable for child abuse in respect of the claim. In the event that an NGO does not nominate a proper defendant under s 7, or in other defined circumstances, s 8 provides a procedure by which a plaintiff may apply for an order that the claim proceed against the trustees of an associated trust of an NGO as a proper defendant.

7 In September 2019, further amendments to the Limitations Act permitted setting aside prior judgments or settlement deeds.

An action may be brought on a previously settled cause of action.

9 Section 27QD permits an application to the Supreme Court to set aside a settlement agreement.[6] It provides:

Application to court to set aside previously settled causes of action

1. This section applies to an action referred to in section 27 QA(2).

1. In a proceeding to which this section applies, application may be made to the court for the settlement agreement and any judgment or order giving effect to the settlement of the previously settled cause of action to be set aside.
2. A court other than the Supreme Court may not set aside a judgment or an order of another court.

10 Section 27 QE sets out the Court's powers on applications to set aside deeds, orders or judgments. Those powers include:

1. On an application under s 27QD or otherwise in a proceeding on an action referred to in s 27QA(2), the court, if it is satisfied that it is just and reasonable to do so -

(a) may make an order setting aside the settlement agreement and any judgment or order giving effect to the settlement of the previously settled cause of action, whether wholly or in part; and

(b) may make any other order that it considers appropriate in the circumstances.

...

11 These reasons deal with Pearce's application under s 27QD of the Limitations Act to set aside the prior deed.

12 Prior to the enactment of the Legal Identity Act, a prospective plaintiff was not able to sue an institutional defendant that was an unincorporated association, because an unincorporated association is not recognised by law as a juridical entity. The inability to pursue such a claim in the context of church institutions is often colloquially known as an 'Ellis defence'.

13 An Ellis defence is a reference to Trustees of the Roman Catholic Church v Ellis & Anor,[7] which held that the catholic Archdiocese of Sydney is an unincorporated association and accordingly cannot sue or be sued in its own name. In that case, a parish priest working in the diocese had committed several sexual assaults, and the archbishop who presided over the Archdiocese during the period of the assaults had since died. The NSW Court of Appeal found that neither the current archbishop nor a trustee corporation set up for the purpose of holding Church property under the Roman Catholic Church Trust Property Act 1936 (NSW) could be found liable for the perpetrator's actions or the negligence of the archbishop who appointed him.

14 The Legal Identity Act is relevant in the present proceeding. Pearce has sued the Missionaries of the Sacred Heart, a non-government organisation that is an unincorporated association or body. The defendant has nominated the Corporation of the Society of the Missionaries of the Sacred Heart (ACN 004 222 306) as the proper defendant in accordance with s 7 and an amended pleading was filed replacing the defendant accordingly.

15 It was this impediment to bringing his claim - which was subsequently removed by the Legal Identity Act - that Pearce relies on in his application to set aside the prior deed.

16 The application proceeded on affidavit and other documentary evidence. Pearce was the only witness required for cross-examination.

17 Pearce affirmed two affidavits and relied on affidavits of his present lawyers Rightside Legal, one sworn by Laird McDonald, two sworn by Grace Wilson and one by Nicole Joseph.

18 The defendant relied on two affidavits of Patrick Monahan and two affidavits of Daniel Creasy - both lawyers at Colin Biggers & Paisley (CBP) who acted for the MSC and Catholic Church Insurance (CCI), and an affidavit of Natasha Savic - a lawyer who was acting as CCI's claims officer. All three were involved in the conduct of the prior claim. The defendant also relied on an affidavit of Amanda Tisler, a lawyer acting for the defendant in the current proceeding.

19 Additionally, Pearce tendered an extract of interrogatories of the plaintiff numbered 1 and 10 and the answers given by the defendant in the present proceeding. The defendant tendered the complete interrogatories 1 and 10 and answers thereto. The interrogatories dealt with steps taken to identify a proper defendant in the prior claim and the question of reliance on an Ellis defence as it was defined in the interrogatories.

20 In his first affidavit,[8] Pearce sets out his summary of relevant events. He attended school at Monivae in 1977 and 1978 at the age of 11 and 12. He gave a short description of the abuse suffered at the hands of Brother Mamo and Brother Frith which was outlined in greater detailed in the statement of claim. He described a lack of academic focus and a chaotic life leading to expulsion from the school in 1978 and leaving school altogether in Year 10.

21 Pearce described seeing his general practitioner, Dr O'Brien, in 2015 for depression for which he was prescribed anti-depressants. In the context of Brother Mamo facing a criminal trial in 2016, Pearce sought counselling from a psychologist (Ms Whetton). Reports from both practitioners and a medico-legal report of psychiatrist Dr Wendy Triggs dated 25 May 2016 were relied on in the prior claim and were exhibited to Pearce's first affidavit.

22 In 2015 Pearce engaged Waller Legal to obtain compensation. He deposed:

I knew my legal position was weak. I knew that because of the way the law operated in relation to religious institutions I could not actually sue Sacred Heart because I would not succeed.

23 He deposed to receiving the payment of $140,000 believing at the time he had no choice but to accept whatever was offered. He said:

I was grateful for all the work the firm had done but to actually see the low number on the cheque was shocking.

24 The affidavit of Laird McDonald exhibited some documents from the Waller Legal file.[9] Pearce first consulted a solicitor at Waller Legal on 29 October 2015. The file note of that attendance recorded: 'Discussed ADR[10] process. Discussed Ellis'. A confirming letter of advice included a paragraph that made the following statement: "The main difficulty is commonly referred to as the 'Ellis defence'". It described claims such as Pearce's as being vulnerable to dismissal by a court on a legal technical defence because a religious order such as the MSC, as an unincorporated association, did not have a legal identity and so could not be sued.[11] The letter of advice also described that due to increased public awareness of sexual abuse issues within the church, defendants such as the MSC were 'generally amenable to entering in to out of court settlement discussion'.

25 On 18 December 2015, Waller Legal contacted both Caroll & O'Dea and CBP to request identification of appropriately indemnified entities or persons to be named as defendants on behalf of the MSC. Creasy informed Waller Legal that CBP had instructions from CCI to represent the defendant. Waller Legal proceeded to engage with CBP in an ADR process leading to settlement discussions.

26 In preparation for an informal settlement conference, CBP arranged for a medico-legal report. For that purpose Pearce was examined by Dr Dianne Neill, a psychiatrist who provided a report dated 13 October 2016.

27 Waller Legal sent a follow-up letter to CBP on 18 July 2016. It provided information preparatory to settlement discussions and requested three pieces of outstanding information. This included another request for the outstanding identification of an appropriately indemnified entity to be the named defendant.

28 Creasey could not locate any correspondence addressing the request to identify a proper defendant. He said that he may have provided the information verbally as it was his practice to provide the information when it was requested.

29 The memorandum to counsel to appear at the informal settlement conference dealt with the potential Ellis defence. It enclosed in the brief two media releases, one of which was dated 23 November 2015 from the Truth Justice and Healing Council[12] and was described by the memo as a document that:

discusses guidelines, endorsed by the church leadership, about how the church authorities should respond when claims of child sexual abuse are made against them. The guidelines include a requirement for Church Dioceses or religious orders to assist a claimant to identify the correct respondent to respond to legal proceedings.

30 The memorandum said that in other cases against the MSC, Waller Legal was aware that the Trustees of the MSC and The Corporation of the Society of the MSC have been nominated as the entities to be named as defendants.

31 An updated memorandum to counsel briefed to attend the informal settlement conference was prepared dated 28 November 2016. It contained the following instruction:

Mr Creasey has indicated that he will be in a position to provide information regarding the identification of the appropriately indemnified defendant in this matter at the settlement conference.

32 A letter of advice from CBP to Natasha Savic at CCI said:

Proper Party / 'Ellis v Pell'

We note CCI's previous 'riding' instructions in relation to the operation of this potential defence. We have therefore not considered this issue at this time. If required to do so, please let us know.

33 Creasey then wrote a letter to CCI advising in a preliminary way on quantum on 18 November 2016. The letter repeated the paragraph above regarding the Ellis defence. As to quantum he set out the relevant findings of Dr Neill and Dr Triggs and the information disclosed by clinical records and reports of treating practitioners. He set out matters from Pearce's impact statement prepared for Mamo's sentencing hearing. He discussed what he described as 'a considerable gulf' between the two medico-legal experts and expressed reasons why he held the view that Dr Neill's evidence would likely be accepted. He concluded:

We have previously assessed the claim at $135,000 including $25,000 claimant costs. In view of the report of Dr Neill, we are now minded to revise that assessment downward.

34 His reasoning was informed by reference to the award of general damages in two Victorian cases dealing with historic claims of sexual abuse of a minor: GGG v YYY (GGG)[13] and Erlich v Leifer (Erlich).[14] Both cases were decided by a judge and in neither case was the defendant an unincorporated association. General damages were assessed at $200,000 in GGG and $300,000 in Erlich. Creasey advised that general damages for Pearce's claim could be awarded in the range of $75,000 to $100,000. This amount took into account Dr Neill's opinion that Pearce did not have a diagnosis of post-traumatic stress disorder nor symptoms of depression. Creasey advised that he assessed general damages at $80,000 to $85,000 He leant toward the upper end of that range settling on a sum of $84,000 'because of concerns regarding liability'. A small allowance was made for future medical expenses of $1,000, with Dr Neill having assessed future medical expenses at $3,000. The assessment noted that no claim for economic loss was presently pursued, advising that although Dr Triggs supported an impact on earning capacity, Dr Neill did not. The assessed claim therefore totalled $105,000 allowing $20,000 for legal costs. Pencilled notes revised these figures upward and allowed a small amount in the event that a claim might in future be made for economic loss to arrive at a total between $130,000 - $150,000.

35 Creasey exhibited his handwritten notes of the informal settlement conference, saying he did not have a specific recollection of the conference itself. The handwritten notes of Natasha Savic, who also attended the settlement conference, were also in evidence. From the handwritten notes of Savic it is clear that there was an initial discussion amongst those attending for the defendant. At that time the evidence as to the allegations was discussed and the potential of the claim was discussed at 'between 130,000 - $150,000 depending on how eco loss is framed by the claimant'.[15]

36 There are no contemporaneous notes available from those advising Pearce at the informal settlement conference.

37 An open session commenced the settlement conference. The assessment of damages put by Pearce's counsel at the start of the open session was general damages at $200,000, past medicals at $1,213.95, and future medicals of $80,000 comprising Dr Triggs' estimate of $19,500 for three years' outpatient treatment and the possibility of inpatient treatment estimated at $60,000. With legal costs added the claimed amount was approximately $310,000.

38 Both Creasey's and Savic's handwritten notes record the plaintiff's counsel stating:

This isn't a claim for eco loss

p and s + medical expenses

39 Savic's note then records the comments about liability which Counsel didn't propose to labour given Mamo had pleaded guilty regarding the abuse. It then recorded:

Absent a claim for economic loss says generally put under GD's how its impacted @ school and after school - impacted behaviours

40 In the open session the defendant's comments are recorded dealing with the view that a court is more likely to prefer the evidence of Dr Neill, noting the wide gulf in treatment proposed.

41 Both notes record the offers and counter offers that were made. They were

42 The notes record a Pastoral Meeting occurring between Fr John Mulrooney and Pearce and detail what is obviously Mulrooney's recitation of what occurred at the pastoral meeting. It was described as 'very nice - easy meeting'.

43 Savic made a note at the end of the conference as follows:

Claim did not resolve - they're remaining firm at $235K.

[plaintiff counsel] doesn't think its worth $235K -

hard to bring the claimant down.

General practice regarding the availability of an Ellis defence

44 Apart from the events surrounding Pearce's individual claim, the defendant also relied on evidence of the general practice of CCI and the lawyers it instructed as at 2016/2017. Creasey also deposed that the Ellis defence was not a legal issue that informed his assessment of quantum and was confident that he did not raise an Ellis defence as an issue in the settlement discussions.

45 Savic worked for CCI between 2014 and 2018. Her affidavit described receiving advices from CBP referring to 'CCI's riding' instructions in relation to the operation of a potential Ellis defence. She said those 'riding' instructions were not to rely on an Ellis defence and to co-operate in the provision of proper defendants from the appropriate religious order to plaintiffs' lawyers. She said she was unaware of any document containing such general instruction but that when inducted into the role in August 2014 she was informed that the Ellis defence was not to be relied on to avoid payment of compensation. She said that reductions factored into the assessment of quantum related to liability and causation rather than the availability of an Ellis defence.

46 Similarly Patrick Monahan's affidavit set out illustrations of correspondence with Waller Legal where information as to appropriate entities to be sued was provided. Most of the illustrations related to the Christian Brothers, which had by 2015 published a confirmation that it would not take an Ellis defence. Monahan deposed that the MSC had relatively few claims but that the same principle was applied to identifying an appropriate defendant.

47 In a further affidavit Monahan deposed to having reviewed defences in proceedings filed by the Missionaries of the Sacred Heart, and stated that for school-based claims there was a corporate entity that could be sued. Relevant to Pearce's circumstances at Monivae in 19977 and 1978 it was the Corporation of the Society of the Missionaries of the Sacred Heart.

48 Grace Wilson's second affidavit identified that the Missionaries of the Sacred Heart is registered as both an unincorporated association and a company. Both are registered as charities and have their own ABNs. The affidavit referred to the Provincial announcing the conviction of a priest working at a school in NSW run by the order, which was made on letterhead of the unincorporated association. The affidavit also recorded requests for documents recording CCI's instructions to its lawyers regarding the Ellis defence, which it provided in the course of the prior claim. The affidavit recorded a response that no documents had been identified. Enclosed with the response was a transcript of evidence of Marita Wright given in 2013[16] that while the Ellis defence could be taken in certain circumstances, CCI 'does not rely on it to avoid payment of compensation'.

49 On 15 August 2022, Pearce affirmed a further affidavit responding to matters surrounding the Ellis defence. He described the pastoral session with Father John Mulrooney. The pastoral session was held between the two of them only. None of the legal representatives attended. Pearce said Mulrooney told him that churches had become much more vigilant now and structures were now in place to protect children. In that context Pearce disagreed and said he did not think anything had changed. He raised the Ellis proceeding and said he thought it was wrong and 'not fair that people abused by the Church could not go to Court'.

50 Pearce put the conversation with Mulrooney in the context of having been given legal advice that there was no church entity to sue so that the only option for him was an out-of-court settlement. As a result he did his own research on what had happened to Ellis and as a result felt he was in the same position. He said that at no time was he told by Mulrooney or anyone else that his position was different to that confronting Ellis and that he was told multiple times by his own lawyers that the Ellis decision meant that he could not successfully sue the MSC.[17]

51 Pearce said that immediately prior to the informal settlement conference his barrister told him that any settlement would be undervalued because of the Ellis problem. He deposed that he was unhappy with the offers that were put on his behalf and that his final offer of $235,000 was in his view too low because he couldn't sue the defendant.

52 On 16 December 2016, CBP wrote making a further offer of $130,000 'all inclusive'. The letter set out the key issues and reasons why the offer should be accepted. Those reasons identified the disparate opinions of Dr Triggs and Dr Neill on diagnosis, the relationship between the diagnosed conditions and the abuse, and the reasons why a court would prefer the opinion of Dr Neill. The offer and the letter were made as a 'Calderbank letter' in accordance with the principles in Hazeldene's Chicken Farm Pty Ltd v Victorian Workcover Authority (No 2)[18] in the event that the matter proceeded to litigation and to judgment.

53 Waller Legal responded on 3 February 2017 after the defendant's offer had lapsed with a counter offer with another 'Calderbank letter' on the basis that the MSC pay $150,000 inclusive of costs and Medicare, in full and final settlement of the claim. The letter also set out a response to the issues raised in the defendant's Calderbank letter and set out the reasons why Pearce was likely to succeed in his claims.

54 Pearce said he eventually accepted the final offer of $140,000 because he believed he couldn't sue the Church.

55 Neither Calderbank letter raised issues of an 'Ellis defence' or a difficulty in identifying an entity from which damages could be recovered.

56 At no stage was Waller Legal instructed to pursue an economic loss claim. The fact that the claim was not made in respect of economic loss was set out in:

(a) The letter to CBP of 18 July 2016 where it was said:

Whilst we are not instructed to prepare a formal loss of earnings component for the purpose of ADR, Gary feels that his education was significantly affected by the abuse and consequently impacted upon his career opportunities. Further, in recent years and particularly during the criminal proceedings, Gary instructs that his work capacity has diminished in part due to his psychological difficulties.

(b) The file notes of the settlement conference where it was recorded that Pearce's counsel confirmed that there was no claim made for economic loss.

(c) The Calderbank letter of 3 February 2017, which confirmed that Waller Legal was instructed not to claim loss of earnings.

57 Pearce was cross examined on his two affidavits. Waller Legal was suggested to him as expert in handling cases of institutional abuse and he agreed that he expected they would have kept him up to date with any developments in being able to sue the Church, if there were such developments.[19] He said he was not told of correspondence between lawyers as to the identification of a proper defendant, rather, the initial advice about the 'Ellis problem' 'wasn't ever updated or altered. It was just set in stone and we rolled forward'.[20]

58 Pearce agreed that if he had been told that his lawyers could get from the defendant the name of an insured defendant that could be sued it would have made a big difference to him.[21]

59 Pearce was asked about how the informal settlement conference was conducted. He described being in a room with his counsel and solicitor. He was not present at any discussions with the lawyers for the MSC and described his counsel going along the corridor alone for discussions with the other lawyers. At some point he was taken to a different room for a pastoral meeting with Mulrooney, which he described as a good discussion between the two of them.

60 Pearce agreed that he made no claim for economic loss and said he didn't fully understand why that was. He said a claim for economic loss was not discussed with him by his lawyers. Nor does he recall any discussion about the competing medical opinions of Dr Triggs and Dr Neill that impacted on causation and severity of consequences. As to the defendant's note that counsel doesn't think the claim is worth $235,000, Pearce said he was told by his counsel that the claim was worth a lot more.[22]

61 The additional evidence relied on by Pearce was exhibited to the affidavit of Nicole Joseph. It was an article appearing in The Age on 14 August 2017 where it was reported that 10 men obtained a settlement of $7 million from the State government for sexual abuse perpetrated by a teacher in state primary schools. Two of the claims were thought to be record figures. The report said the settlements 'significantly exceed what the Catholic Church has paid out'.[23] The article quoted the claimants' lawyer, Rightside Legal.

62 In the present proceeding Pearce interrogated the defendant as to reliance on the Ellis defence.

63 The interrogatories and answers were tendered. Pearce tendered an extract and the defendant tendered the full answers. I have set out the full answers and underlined the additional parts of the complete answer to interrogatory 10 tendered by the defendant.

1. Who was the previous nominated defendant?

Ans: The Corporation of the Society of the Missionaries of the Sacred Heart and the relevant Provincial at the time of the alleged abuse, Father Dennis Murphy and the relevant Principals at the time of the alleged abuse, Father Dennis Uhr and Father Malcolm Fyfe would have been the appropriate defendants.

10.At any time in the previous Pearce claim prior to 23 February 2017, did the Missionaries of the Sacred Heart, or the defendant (or CCI on behalf of or in subrogation for, or in indemnifying the Missionaries of the Sacred Heart or the Defendant) or their lawyers, undertake to or inform the plaintiff or his lawyers (and if so whom, how and when) that the Missionaries of the Sacred Heart, the previous nominated defendant or the Defendant (or CCI on behalf of or in subrogation for, or in indemnifying the Missionaries of the Sacred Heart or the Defendant), would not plead or rely on the Ellis Defence A or Ellis Defence B?

Ans: I do not believe so. However, contextual regard must be had to the Defendant's evidence about the process for identifying an appropriate Defendant and in particular to the longstanding discussions between Colin Biggers Paisley and the Plaintiff's former solicitor, Vivian Waller, regarding the process for defendant identification.[24]

64 Thereafter the answer went on to refer to the affidavits of Daniel Creasey affirmed 14 February 2022 and supplementary affidavit affirmed 21 April 2022, the affidavit of Patrick Monahan sworn 18 January 2022, the affidavit of Nicole Kelidis sworn 21 April 2022 and the affidavit of Natasha Savic affirmed 21 April 2022. The answer also referred to the memorandum to counsel prepared by Waller Legal concerning the ongoing process for identification of an appropriately indemnified defendant and attached that document to the Answers.

65 Additional evidence relied on by the defendant included the affidavit of Amada Tisler, which exhibited legal submissions made by Waller Legal to the Royal Commission into Institutional Responses to Child Sexual Abuse. Those submissions were dated 11 July 2016.

66 Pearce submitted that the documentation made clear that both plaintiff and defendant lawyers proceeded on the understanding that the Ellis defence was potentially available and if raised, operated as a complete bar to Pearce's claim. Therefore at the informal settlement conference all parties were operating under the assumption that the defendant was a church entity to which Ellis applied. Pearce submitted that at the conclusion of the informal settlement conference, as recorded by the defendant's file notes, his counsel took the extraordinary step of informing the defendant's solicitors that he did not think his claim to be worth $235,000.

67 Pearce's written submissions traced through the continued reliance on the Ellis response. They noted the Melbourne Response that was established in 1996 as an alternative to legal proceedings which if commenced would be strenuously defended by the Archdiocese. He submitted that it was a system providing capped and modest ex-gratia payments to complainants who were legally powerless to seek proper compensation.

68 Pearce submitted that it was just and reasonable that the prior deed be set aside because:

(a) Pearce himself believed he had no recourse to the Court because of the Ellis defence, and that he settled his claim for less than it was worth;

(b) Pearce's lawyers had advised him that the Ellis defence meant he could not take successful legal action;

(c) the defendant's lawyers believed that the Ellis defence was available, as they were seeking instructions on CCI's position;

(d) Pearce had sought to take legal action for pain and suffering and economic loss, but instead was required to participate in an ADR process and accept a settlement that did not reflect the true value of his legal claim;

(e) a court in determining compensation can take account of compensation previously paid, if it was determined that the plaintiff was entitled to further compensation;

(f) setting aside the deed would be consistent with the purpose of the Act to remove legal barriers facing abuse survivors allowing their claim to be determined on its merit, where the plaintiff's claim has never been decided on its merit;

(g) Pearce has excellent prospects of success and a reasonable prospect that successful damages would exceed the quantum of the settlement sum;

(h) section 27QE of the Limitations Act is remedial and should be construed so as to give the fullest relief that a fair reading of its language will allow; and

(i) Pearce's legal argument that the institution is vicariously liable for the actions of individual members of the order is strengthened by recent decisions of this Court.

69 Further matters submitted to be relevant to a consideration of what is just and reasonable are Pearce's age when he was abused and the lifelong damage to his mental health as set out in the report of Dr Tagkalidis, obtained for the purpose of the present proceeding. Factors identified in the second reading speech introducing the amending legislation including the unequal bargaining power, barriers to identifying a proper defendant, the burden of giving evidence and being cross-examined and the behaviour of the relevant institution may also be relevant.

70 Pearce submitted that the settlement amount was 'strikingly similar' to the capped payment of $150,000 being offered by the Melbourne Response at the time.

71 The defendant submitted that the test of just and reasonable is not met simply because Pearce's claim today, properly prepared, might achieve a higher outcome. The defendant submitted that the ADR process engaged in was not one of unequal bargaining power, but rather it was conducted at arms-length with both parties represented by expert lawyers.

72 The defendant further submitted that the prior claim was resolved for a reasonable sum in the circumstances of the negotiations. The process of offer and counter-offer set a range of assessments of damages by the parties and the settlement within that range was reasonable. Specifically, the defendant submitted that there is no evidence, other than Pearce's assertion, that the assessment of quantum by his counsel or that of his solicitors, or that and their advice about quantum was discounted by the potential of an Ellis defence.

73 The defendant submitted that whether or not it is just and reasonable that a settlement deed be set aside, the standards applicable at the date of settlement are relevant. The defendant submitted that the comment attributed to Pearce's counsel that he 'doesn't think its worth $235,000 - hard to bring claimant down' is significant as to the reasonable settlement amount eventually arrived at.

74 The defendant submitted that despite Pearce's wish to claim economic loss, he instructed Waller Legal not to pursue such a claim. There is no explanation for the failure to make such a claim. It would not be just and reasonable for the defendant to now face a claim that Pearce, for reasons that are not explained, chose not to make in the prior negotiations having the benefit of legal advice.

75 The defendant submitted that although available at law, the Ellis defence was generally not relied on, consistent with CCI's riding instructions. The approach engaged with between Waller Legal and CBP nominating a defendant against which damages could be recovered was in place and could be relied on in the event proceedings were issued. The impact of the potential Ellis defence was not a discounting factor in the defendant's assessment of the prior claim and was not mentioned by the defendant's lawyers at the informal settlement conference or in their subsequent Calderbank letter.

76 Further, the defendant submitted there was in fact no barrier to suing and recovering damages from an appropriate defendant. There was a corporate entity responsible for the school that could have been sued. The lack of an appropriate legal entity or individual fixed with the necessary knowledge did not arise on these facts. Pearce's lawyers knew or ought to have known that the Ellis defence was not and would not be a barrier to his claim.

77 The defendant submitted that if Pearce was not advised of the true position in relation to the Ellis defence - either that it did not apply in his particular circumstances, or that it would not be relied on by the defendant - then he has an avenue of relief by suing his former solicitors. The defendant submitted that in the context of extending time limits, courts have held that it is not just and reasonable to grant relief because of evidence pointing to the negligence on the part of the plaintiff's solicitors at the time.

78 Finally, the defendant submitted that any improvement in Pearce's position against the institution in relation to vicarious liability is not a factor that should be taken into account.

79 In Roman Catholic Trusts Corporation for the Diocese of Sale v WCB (WCB),[25] the Court of Appeal considered the proper statutory construction of ss 27QD and 27QE and the principles for the exercise of the discretion to set aside a prior deed. On the question of statutory construction, the Court said that the text of ss 27 QD and 27QE are expressed in clear and unambiguous terms. It said:

if the Court is satisfied that it is 'just and reasonable to do so', it may, and ordinarily should, take into account that the order that is sought, would disturb the legal rights and obligations of the parties that are contained in the settlement agreement.[26]

80 This provision does not import some higher threshold of demonstrating clear and compelling reasons for doing so, even though the effect of such relief does alter the legal rights and obligations of the parties. Nor does the exercise of discretion by the Court require an applicant, having demonstrated that intervention is just and reasonable, to meet a further burden of persuasion that the relief should be granted.

81 The context in which those clear and unambiguous provisions were enacted is important. They are part of a suite of amendments contained in Part IIA Division 5 of the Limitations Act dealing with personal injury resulting from child abuse. Provisions introduced in 2015 removed time limits, described by the Court in WCB as 'one of the two principle barriers that stood in the path of plaintiffs who sought to claim damages for historical sex abuse that had been perpetrated on them during their childhood.'[27]

82 WCB brought proceedings in the County Court in 1996 against the then current bishop of the diocese. The pleadings raised expiry of the limitation period. The relevant bishops at the time of the abuse alleged were predecessors of the current bishop who was named as defendant. In the deed application the defendant accepted that any liability attaching to the predecessor bishops could not attach to the present bishop or any relevant corporate entity, absent the remedy of the enactment of the Legal Identity Act.

83 The barrier of time limits and the lack of a legal identity of an institution to be sued were identified as the two elements preventing a determination of claims on their merits, a situation that Parliament considered to be unjust and unfair. As was said in WCB:

By those two Acts, the Parliament recognised, and addressed, two principal impediments to claims for historical sexual abuse, which Parliament considered to be unjust and unfair. It was in that context that ss 27QD and 27QE were introduced to the Limitations of Actions Act. Understood in that light, those provisions were introduced to enable claimants, who had suffered historical sexual abuse, to be able to litigate their claims for that abuse, notwithstanding that, by reason of unfair legal obstacles that had previously obstructed their path, they had previously resolved those claims on terms that were not just or reasonable.[28]

84 The provision does not prescribe matters that are relevant for consideration. A single question arises for a determination: whether it is just and reasonable to set aside the settlement deed. Relevant to that question is whether the agreement sought to be set aside constituted a just and fair resolution of Pearce's claim.

85 TRG v Board of Trustees of Brisbane Grammar School[29] concerned an application to set aside a deed under the equivalent Queensland provisions added to the Limitations of Actions Act 1974 (Qld) by 2016 amendments.[30] The identified impediments to the plaintiff's claim at the time the deed was entered into in 2002, were the expiry of the limitation period and whether the school could be held vicariously liable for the offending of the perpetrator. The power to set aside the deed was one exercisable where the Court was satisfied that it was just and reasonable to do so.[31] The trial judge concluded that the limitation issue did not materially affect the quantum of the settlement reached and was not a material factor in the applicant's decision to settle the proceeding in 2002.[32] The settlement reflected the assessment of risk on liability and quantum on their merits. As a result the deed was not set aside. The decision was affirmed on appeal.

86 In WCB, the Court of Appeal considered TRG noting, relevantly:

the Court held if the trial judge had found that the expiration of the limitation period had a material influence on the settlement, that circumstance would have militated in favour of an order setting aside the settlement agreement.

87 Unlike WCB, Pearce faced only one impediment to the just and fair resolution of his prior claim: the availability to the defendant of an Ellis defence as a complete bar to any claim he might commence before a court.

88 Pearce's evidence was that on being told of the availability of an Ellis defence to church defendants, he read widely and informed himself about that issue. He believed strongly in the injustice of the outcome in Ellis and believed that nothing had changed.

89 I do not accept the submission that Pearce had available to him in 2017 a corporate entity that could be sued and held liable for the abuse. To the extent Patrick Monahan, in his second affidavit swore that the Corporation of the Missionaries of the Sacred Heart (the present defendant) existed and could be sued, he swore it was 'an appropriate corporate entity'.[33] The evidence does not disclose whether it was incorporated at the time the abuse occurred. Nor does the evidence disclose whether the appropriate school principals in 1977 and 1978 - both priests belonging to the MSC - and the relevant provincial of the order who would have been appropriate defendants to the claim were alive and capable of giving evidence. The pleaded defence in this case demonstrates that the corporate defendant was not in fact the entity that operated and conducted Monivae College at the relevant time. It was the unincorporated association that admitted it did so. The corporate entity could only be sued and be liable to meet any damages if the MSC agreed to nominate it as a proper or appropriate entity. Prior to the enactment of the Legal Identity Act, there was nothing that could be done to compel the nomination of a proper defendant.

90 However, the evidence does indicate that there had been a shift in the landscape from 1996 when WCB entered into his settlement Deed and since 2007 when Ellis was decided. In particular, by 2016, evidence given by Waller Legal to the Royal Commission into Institutional Responses to Child Sexual Abuse discussed Church bodies being prepared to engage voluntarily in the identification of a named legal entity that could be sued. This mentioned the MSC order amongst others as participating in an ADR process that has proven to be what Waller Legal described as a 'flexible, compassionate and cost effective approach'.[34]

91 By 2015 other religious orders had made public statements disavowing any intention to rely on such a defence and, as the Waller Legal memorandum to counsel identified, a statement in November 2015 said that church leaders directed church organisations to co-operate in the provision of an appropriate legal entity to sue. That option became enshrined in s 7 of the Legal Identity Act and was strengthened by the Court's ability to order that a claim proceed against a proper defendant if an NGO fails to nominate one.

92 From the evidence, it does not appear that the shift in the landscape was communicated effectively to Pearce. This appears true regardless of whether or not the changes were reflected in a changing practice by 2016 and regardless of whether or not those changes would have affected the resolution of Pearce's claim. Simply put the issue remained outstanding at the time the informal settlement conference was conducted. I accept that the Ellis defence was not raised by the defendant's lawyers during the informal settlement conference or subsequently as part of their negotiating tactics. I also find that, despite anticipating information as to a nominated proper defendant from CBP at the informal settlement conference, the question was not raised for confirmation by those advising Pearce.

93 Despite the fact that the Ellis defence was not raised by any of the lawyers as something that would be pleaded or relied on, I am not persuaded that it was therefore irrelevant to the way in which the claim was negotiated. No response had been forthcoming despite requests for the identification of a proper defendant, and so the question remained unresolved. Certainly in those circumstances it would not warrant a position where the risk of an Ellis defence being raised could be ignored. A claimant would have no recourse to apply to compel identification of a proper defendant. Absent a clear and unequivocal statement that the Ellis defence was not applicable or would not be raised, it could be allowed to remain something of an elephant in the room. It certainly retained that character for Pearce himself as his evidence of the discussion in the pastoral session with Mulrooney demonstrated. It influenced the instructions he gave to accept the final offer that was made. I accept that Pearce understood that the Ellis defence was still available and might be taken against him were he to issue proceedings, leaving him with no real choice but to settle the claim. I accept that this belief impacted upon his decision to ultimately settle his case for a sum with which he was unhappy.

94 I do not accept the defendant's submission that Pearce has a proper avenue for relief by suing his former solicitors for any inadequacy of theirs in assessing and presenting his claim at the time the prior deed was negotiated. It is clear that, in the context of applications to extend a limitation period, a potential claim against a solicitor is a relevant consideration.[35] Although relevant, the weight to be attributed to such a consideration remains subject to some caution. This is because a potential claim against a solicitor is not the same as a claim against the original wrongdoer.[36] Rather it is a claim for the loss of a chance to recover damages because the limitation period was missed. The conduct of such a proceeding is often more complex and expensive than would be the claim against the wrongdoer. It is also approached with caution because the strength of a potential claim against the solicitor is generally not known and the solicitor is not a witness or party to the application to extend, such that their position on the allegation made about their conduct is not before the court.

95 On the face of it there are similarities between an application to bring a claim after the expiration of a limitation period and an application to set aside a deed. Both require a consideration of what is just and reasonable and import a wide discretion. Under the Limitations Act specific considerations such as an explanation for delay, or steps taken to obtain legal advice, are required to be considered,[37] making it necessary in an appropriate case to consider the conduct of a solicitor. It is relevant because, as was said by Buchanan J:[38]

In my view the additional element which renders the availability of a cause of action against a solicitor relevant to the exercise of discretion is that the cause of action arises from the barring of the right of action in which the extension is sought.

96 However, there are different purposes underlying each statutory provision. Statutory time limitations reflect the judgement of a parliament about the time within which disputes are to be litigated and are imposed for the welfare and order of society.[39] They address the deteriorating quality of justice with the passage of time. Extension provisions ameliorate the harsh application of their operation considering relevant prejudices - a time bar that precludes a plaintiff, and actual or presumed prejudice to a defendant resulting from delay[40] - and synthesising them with other relevant factors. The amendments that removed time limits entirely and permitted legally binding prior deeds to be set aside have the purpose of addressing the two particular inequities identified by parliament facing individuals wishing to make, or who had previously attempted to make, claims arising from sexual abuse suffered by them as a child. One or both of these barriers might be applicable in any given circumstances.

97 Clearly where a prior claim is negotiated and settled with the benefit of legal advice, that legal advice is relevant to whether the settlement was adversely affected by the expiry of a limitation period[41] or by the lack of a responsible defendant to sue for the negligence of an unincorporated association, or by both.[42] The presence of lawyers and the advice given by them may be relevant to whether the settlement was achieved because of an unequal bargaining power crated by these factors. Essentially the enquiry is focused on the position taken by the parties to the deed, informed where it has been by the provision of legal advice.

98 It is less clear whether advice more broadly might be relevant where that advice might be negligent. In the limitation context the Court of Appeal recently said it is a relevant matter only in determining whether it is appropriate to refuse an application to extend time.[43] In doing so it illustrated the contrasting outcomes in Tsiadis and Gordon v Norwegian Capricorn Line (Australia ) Pty Limited.[44]

99 In this case the defendant submits that Pearce's lawyers were potentially negligent by not properly advising him that either Ellis would not be relied on by the defendant in any way in its conduct of the claim, or alternatively that Ellis was not applicable at all to his claim because a corporate entity did in fact exist that could be sued and that this justifies refusing the relief. The weight that might be accorded to that consideration depends upon two factors: first, accepting that the opinions of the lawyers as to quantum were adversely affected by these matters, and second, if so affected that advice was in fact mistaken so as to have been potentially negligent.

100 As can be seen from TRG, whether a barrier materially affects an assessment of quantum will depend in part on the advice provided to a claimant or plaintiff, and in part the plaintiff's own consideration of that factor in reaching a decision. Often the two will be related to each other.

101 I can readily accept that counsel's view of an appropriate settlement amount and Pearce's view probably differed. That is not unusual. From the file note relied on by the defendant, I infer that counsel's view was that the claim that was made at the informal settlement conference was worth something less than $235,000 but more than the defendant was presently offering. The only evidence I have of the views of Waller Legal as to quantum is the Calderbank letter putting an offer of $150,000.

102 Quantum of damages is necessarily an assessment about which reasonable minds may differ. Even if I were to accept that the starting point of the negotiations of $310,000 by the plaintiff and $90,000 by the defendant are appropriate parameters, not figures lowered to account for the risk of an Ellis defence, it does not follow that the compromise reached within those parameters necessarily reflects a just and reasonable resolution of the claim made. I note that one perpetrator had been convicted of criminal offences by 2017 and the other was charged. I note that the defendant's lawyer identified risks on liability faced by the defendant. Even allowing the significant disparity in assessments of future medical expenses, the settlement amount is a modest compromise of a claim that Pearce's advisors assessed as strong on liability. It represents less than the midpoint of the range of general damages ($200,000 assessed by the plaintiff's counsel and $85,000-$100,000 by the defendant, exclusive of costs or any allowance for medicals). That may reflect issues of causation as disclosed by the medical evidence, or it may reflect other considerations.

103 I cannot determine what approach was taken by those advising Pearce to the impact of any Ellis defence on quantum. There is nothing that would suggest the quantum claimed and negotiated by counsel was specifically impacted by a discount for the non-identification of a proper defendant. Counsel appearing at the informal settlement conference was not available to give evidence, and his unavailability was satisfactorily explained. I draw no adverse inference from Pearce's failure to call him. Waller Legal was certainly alive to the issue and was actively engaged in discussions, the purpose of which was to obtain a concession as to an entity that could be identified from which damages could be recoverable in a formal court process. The nature of advice that Waller Legal actually gave at the informal settlement conference or at subsequent attendances or correspondence on this and other issues remains privileged.

104 There is no evidence upon which I could conclude that the claim that was pressed was inadequately assessed or presented by the solicitors giving rise to a potential claim against them. On the one hand, it could be said on the evidence that Waller Legal and Pearce's counsel well understood the present landscape where the MSC would co-operate and provide a nominated defendant if required. On that basis their assessment and offers, like those of CBP, are likely to have disregarded any discount for an Ellis defence and assessed the heads of damage claimed and the issues raised by the medical evidence. The available documentary evidence would suggest that this is so. On the other hand Pearce's own evidence was that the initial advice to him that Ellis was a problem never changed. Certainly there is no later letter of advice that has communicated the actual size of the risk faced or the steps that were being taken or could be taken to ameliorate it. I simply do not know what advice was given.

105 As to the second factor, whether the advice as to the availability of an Ellis defence was in fact mistaken, I have set out above at [89] the reasons why I have concluded that Pearce did still face the potential problem that an appropriate entity to sue might not be identified, and that the actual defendants to whom liability would attach absent such nomination might not permit him to recover just compensation. His view of the risk may have been greater than it was in fact, but some risk remained.

106 On the material I could not easily conclude that Pearce had a claim against his solicitors for the manner in which his claim was assessed and presented by them that was a claim of such strength that it would be just and reasonable for Pearce and the defendant to continue to be bound by the deed they signed.

107 However, as I have explained earlier, I am satisfied that the risk of an Ellis defence precluding the recovery of any damages meant that Pearce settled his claim for an amount he would not otherwise have accepted. The risk of not having a viable defendant to sue was material to his decision.

108 It was not contested that the prior claim never advanced a claim for economic loss on Pearce's behalf. Although Pearce said he wished to make such a claim, he accepted his solicitors' advice not to do so. No reasons were advanced for that forensic decision. I can observe from the medical material available at the time that there was divergent medical opinion as to whether the abuse alleged had had some impact or no impact on his capacity for employment. The reports from the treating practitioners did not address the issue. The report of Dr Triggs noted that he worked with racehorses after leaving school and then worked for 30 years as a chef, which he did not find to be a fulfilling career. Pearce described to Dr Triggs the loss of opportunity for further study and expressed a childhood interest in studying law.

109 I have no information as to the reasons why Pearce was advised not to make a claim for economic loss. There is certainly nothing to suggest that the claim was confined as it was because of the risk of a legal barrier posed by a potential Ellis defence. The deed, by provision 9 states:

The parties acknowledge that no claim for economic loss has been made and that the Settlement Sum does not include an economic loss component.

110 Bearing in mind as I must that setting aside a settlement deed disturbs the legal rights and obligations of both parties, I am not satisfied that it would be just and reasonable to set aside the deed insofar as it would permit the plaintiff to make a claim for economic loss now when, with the benefit of legal advice that he accepted at the time, he elected not do so in the prior claim. The evidence does not demonstrate that the difficulty in nominating a viable defendant played any part in the decision to confine the claim to exclude economic loss. I am not satisfied that the decision to do so was influenced by any difficulty in the legal identity of the defendant.

111 It is, in my view, just and reasonable to make an order pursuant to s 27QE setting aside the settlement agreement in part, such that Pearce be permitted to bring his claim for damages as framed at the time of the prior claim; that is for general damages and special damages by way of past and future medical expenses. Insofar as the deed extinguishes Pearce's claim for economic loss I am not persuaded that it is just and reasonable to set aside the agreement entered into by both parties.

[2] Limitations of Actions Act 1958 (Vic) s 27P; and generally Pt IIA Div 5 Actions for personal injury resulting from child abuse ('Limitations Act').

[3] Legal Identity of Defendants (Organisational Child Abuse) Act 2018 (Vic) s 1.

[4] Ibid s 5(1).

[5] Ibid s 4(1).

[7] (2007) 70 NSWLR 565; [2007] NSWCA 117 ('Ellis').

[8] Affidavit of Gary Pearce affirmed on 2 December 2021.

[9] There has been an agreement in place whereby both CCI and Pearce have voluntarily provided copies of documents from the solicitors' files but maintained legal professional privilege over the balance of the files.

[12] The body established by the Australian Catholic Bishops Conference as a national co-ordinating body to oversee the Catholic Church's engagement with the Royal Commission into Institutional Responses to Child Sexual Abuse.

[13] [2011] VSC 429.

[14] [2015] VSC 499.

[15] Affidavit of Natasha Savic affirmed on 12 August 2022, exhibit NS-2.

[16] Evidence given to the Inquiry into the Handling of Child Abuse by Religious and Other Organisations.

[17] Affidavit of Gary Pearce affirmed on 15 August 2022, [19].

[18] (2005) 13 VR 435; [2005] VSCA 298.

[19] Transcript of Proceedings, Gary Pearce v The Corporation of the Society of the Missionaries of the Sacred Heart (ACN 004 222 306) (Supreme Court of Victoria, S ECI 2021 00203, Justice Forbes, 16-17 August 2022) 13.30 - 14.3 ('T').

[23] Tammy Mills, 'Fifty years after a mum first raised the alarm, met get $7m for teacher's abuse', The Age (14 August 2017).

[25] [2020] VSCA 328 ('WCB').

[29] [2019] QSC 157 ('TRG').

[30] The relevant provision s 48 was a transitional provision applicable to actions previously settled before the limitation period had been removed.

[31] Limitations of Actions Act 1974 (Qld) s 48(5A).

[33] Supplementary Affidavit of Patrick Monahan sworn on 11 July 2022, [5].

[34] Affidavit of Amanda Tisler affirmed on 10 February 2022 , exhibit ADT-1 Waller Legal's Submissions dated 11 July 2016, [72].

[35] Tsiadis v Patterson (2001) 4 VR 114; [2001] VSCA 138.

[36] Repco Corporation v Scardimaglia [1996] VicRp 2; [1996] 1 VR 7.

[38] Tsiadis v Patterson (2001) 4 VR 114; [2001] VSCA 138 (Buchanan JA with whom Callaway and Ormiston JJA agreed).

[39] Brisbane South Regional Health Authority v Sharon Annette Taylor [1996] HCA 25; (1996) 186 CLR 541 (McHugh J).

[40] In the context of the Limitations Act (n 2) s 23A.

[43] Griffiths v Nillumbik Shire Council [2022] VSCA 212, [82].

[44] [2007] VSC 517.