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[2025] NSWCA 151
procedural. The application for leave to appeal was dismissed with costs ([32]).
The Court of Appeal did not grant the State and SESLHD permission to appeal the refusal to split off questions about LSR3’s old settlements. The statute allows a person to start proceedings and apply to set aside an affected agreement, but it does not require that application to be decided first. Whether separate questions are useful depends on the case. Here, unresolved pleadings, possible overlap with the abuse claim, repeated evidence about LSR3’s credibility and delay supported the primary judge’s decision not to order them.
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14 cited instruments linked from this judgment.
2,167 words · generated 06/10/2026
LSR3, a former ward of the State of New South Wales, began proceedings on 28 August 2023 seeking compensation for alleged historic child sexual abuse said to have occurred between 1969 and 1976. The defendants included the State and the South Eastern Sydney Local Health District of Caringbah (SESLHD) ([2]).
The proceedings followed two earlier sets of claims involving substantially the same allegations. The first ended in a 2003 settlement, accompanied by a consent judgment. The second ended in a 2017 settlement. Both settlements included payments by the State, although the judgment records that the extent of the State’s contribution to the 2017 agreement was not entirely clear to the primary judge ([3]). LSR3’s pleaded case included that the $150,000 paid in connection with the 2003 settlement went entirely to legal costs and disbursements, and that the State contributed $26,772.90 to the 2017 settlement ([8]).
LSR3 relied on Part 1C of the Civil Liability Act 2002 (NSW) (CLA), enacted in 2021, to seek orders setting aside the two agreements. His Amended Statement of Claim alleged that the agreements were “affected agreements” under s 7C and that it was just and reasonable to set them aside under s 7D ([6]-[8]). These allegations were part of the pleaded case, not findings made by the Court of Appeal.
Before filing defences, the State and SESLHD applied under r 28.2 of the Uniform Civil Procedure Rules 2005 (NSW) (UCPR) for certain questions to be decided separately and before trial. The questions concerned whether the agreements were affected and whether they should be set aside, as well as the meaning of “circumstances” in s 7C(1)(c) ([9]). The applicants accepted that a separate hearing could involve LSR3’s subjective motivations for entering the agreements, his prospects on liability and quantum, and his credit. They also accepted that he would have to give evidence twice if separate questions were ordered ([13]).
The primary judge refused the application. His Honour considered that the scope of the dispute was not yet defined by pleadings, the likely savings in time and resources were uncertain, the setting-aside questions might overlap with the underlying claim, and a separate hearing risked prejudice and delay ([15]). The State and SESLHD sought leave to appeal that interlocutory decision. The Court of Appeal, with Bell CJ delivering the reasons and Payne JA and Price AJA agreeing, dismissed the application with costs ([32]-[34]).
The judgment addresses two connected points: the interpretation of Part 1C and the discretionary decision whether to order separate questions.
On statutory interpretation, the applicants argued that s 7D allowed a person to commence proceedings and apply to set aside an agreement, but did not allow the person to maintain the underlying proceedings until the agreement had been set aside ([22]). Bell CJ considered that this required adding words to s 7D(1)(a), or reading “commence” so narrowly that proceedings could not continue unless the setting-aside application succeeded ([23]). The statutory text did not say that.
The Court also relied on the Explanatory Note to the Civil Liability Amendment (Child Abuse) Bill 2021. It said proposed s 7D permitted a person to commence the action and permitted “the court hearing the action” to set aside the agreement if that was just and reasonable ([24]). That description did not support a mandatory rule that the setting-aside application must always be decided in advance of the underlying claim.
The Court distinguished between what the statute permits and what procedural arrangement may be sensible in a particular case. It accepted that separate and early determination may be appropriate in some cases, referring to EXV v Uniting Church in Australia Property Trust (NSW) [2024] NSWSC 490. But it held that Part 1C does not prescribe that approach for every case ([28]). The applicants themselves had said that Part 1C did not require separate questions, but that they were, in their view, appropriate in this case ([25]-[26]).
The second point was the primary judge’s discretion under UCPR r 28.2. The Court emphasised the established caution involved in appellate review of interlocutory decisions about practice and procedure. An applicant for leave must establish more than a point that is merely arguable, and a heavy burden applies when challenging procedural discretion ([19]-[21]). The primary judge’s assessment was that separate determination would not be an effective or fair way to progress the case on the information then available.
The Court saw no direct appeal challenge to that practical assessment. The pleadings had not yet identified the full scope of the issues; it was not clear how much evidence would be common to the separate hearing and trial; LSR3 might have to present evidence about liability and quantum in the preliminary hearing; and his credit might be assessed twice ([15]-[16], [26]). The possibility of delay also mattered. The primary judge had considered the time taken by the separate-question proceedings in EXV and the possibility of further proceedings in that matter, while noting that LSR3’s case could be more complicated ([15]).
The judgment describes Part 1C as the third of three New South Wales measures following the Royal Commission into Institutional Responses to Child Sexual Abuse. The first was the 2016 insertion of s 6A(1) into the Limitation Act 1969 (NSW), retrospectively abolishing limitation periods for specified child-abuse personal injury and death claims. The second was the 2019 introduction of Division 4 of Part 1B of the CLA, addressing the so-called Ellis defence for unincorporated defendants ([4]). Part 1C took effect on 18 November 2021 ([5]).
The provisions set out in the judgment establish a mechanism to seek to set aside certain earlier settlements. Section 7C defines an affected agreement by reference to specified circumstances, including agreements made before the limitation-period reform or organisational-liability reform, and agreements made before Part 1B that are not just and reasonable in the circumstances. Section 7D permits a person prevented by an affected agreement from exercising an action to commence proceedings and apply to set the agreement aside. The court may grant that relief if it is just and reasonable, taking account of listed factors and any other relevant matter. Section 7E addresses related instruments, including certain court orders and judgments, and s 7F addresses the effect of setting aside and the treatment of prior payments ([5]).
The specific point clarified by this judgment is procedural. It rejects the proposition that Part 1C itself compels a separate, preliminary determination whenever an application to set aside an affected agreement is brought alongside the underlying claim. It does not decide that such applications must always be heard together. Instead, the ordinary procedural discretion remains available, and the facts of each case matter ([25], [28]).
The judgment also records a legislative-history point concerning s 7C(1)(c). That paragraph was added by amendment after the Bill had been introduced, and no corresponding amendment was made to the stated object in s 7B. The Court referred to the Attorney General’s statement that the amendment could expose pre-2019 settlements to an application to set them aside, subject to the statutory tests ([27]). The Court rejected the applicants’ proposed reliance on the object provision to read down s 7C(1)(c) in the way they suggested. It did not determine the ultimate application of s 7C(1)(c) to the 2017 agreement.
At [23], Bell CJ said the applicants’ construction would require adding words to s 7D(1)(a), or restricting the meaning of “commence”. In plain English, the Court would not treat the statute as containing a procedural restriction that Parliament had not expressed.
At [24], the Court relied on the Bill’s Explanatory Note, which described the court hearing the action as able to set aside the agreement. In plain English, the explanatory material was consistent with the application being determined in the proceedings that include the underlying claim, not necessarily in a prior standalone hearing.
At [28], the Court said that separate and early determination “may” be appropriate in some cases, but is not mandated by Part 1C. In plain English, early separation remains an available case-management choice, not an automatic statutory requirement.
At [29], the Court said that no arguable error of principle or convincing basis for leave had been identified. In plain English, the applicants had not shown the kind of error that justified appellate review of this procedural decision.
At [30]-[31], the Court questioned the proposed approach to cross-examination. If the setting-aside hearing required consideration of LSR3’s underlying allegations, liability and quantum, it was doubtful that the State could avoid cross-examining him on those matters at that stage and simply reserve the issue for later. The Court also noted that once an issue has been determined interlocutorily, the primary judge’s later consideration of the facts and law involved may be constrained.
The decision is relevant where a claimant brings an underlying child-abuse claim and, in the same proceedings, asks the court to set aside a prior settlement under Part 1C of the CLA. It is particularly relevant where a defendant argues that the setting-aside application must be decided first, or seeks separate determination under UCPR r 28.2.
The decision does not establish that separate determination is inappropriate in every such case. It says the statute does not mandate that sequence and the procedural choice depends on the case ([28]). A court considering separate questions may need to assess whether the pleadings have defined the controversy, whether the proposed preliminary issues can be determined practically, whether evidence about the underlying claim will overlap, whether a claimant’s credit will be examined at more than one hearing, and whether separate proceedings will save time or instead cause delay ([10], [15]).
The judgment makes the potential evidentiary overlap especially concrete. The applicants accepted that subjective motivations, prospects on liability and quantum, and credit could matter to the setting-aside questions ([13]). A proposed separate hearing that requires the claimant to address those matters may be difficult to isolate from the underlying trial. The Court’s concern is procedural, not a finding about the truth of LSR3’s allegations or the merits of his application.
The judgment itself refers to EXV v Uniting Church in Australia Property Trust (NSW) [2024] NSWSC 490 and Steen v Trustees of the Diocese of Tasmania [2024] TASSC 3. Bell CJ noted that separate questions had been ordered in EXV after the close of pleadings, and cited Steen by comparison ([28]). These references show that courts had used different procedural approaches in cases concerning the legislation. They do not establish a universal rule either for or against separate questions.
The judgment also cites DZY (a pseudonym) v Trustees of the Christian Brothers [2025] HCA 16 in discussing why liability and quantum might bear on whether it is just and reasonable to set aside an agreement ([30]). The Court describes DZY as a closely analogous context; it does not, in this judgment, set out a broad account of DZY beyond that point.
No later appellate treatment of State of New South Wales v LSR3 is included in the supplied judgment. On this source alone, it is not possible to say how subsequent courts have applied, followed, distinguished or limited the decision. What can be said is that this Court treated the procedural question as fact-dependent and rejected a mandatory sequencing rule under Part 1C ([28]).
This judgment did not decide whether either the 2003 or 2017 agreement was an affected agreement, or whether it would be just and reasonable to set either aside. Those were questions in the underlying proceedings, not issues resolved on the leave application. The Court likewise did not determine the meaning or application of every aspect of s 7C(1)(c), despite discussing its legislative history ([27]-[29]).
The decision leaves open when a separate hearing will be appropriate. The answer may depend on how far pleadings have progressed, whether the proposed questions can be decided on defined facts, the extent of overlap with the underlying claim, and the likely effects on evidence, credit, time and cost. The Court expressly recognised that early separate determination may suit some cases, but supplied no exhaustive checklist or categorical rule ([28]).
It also leaves open the precise conduct of any future hearing where liability and quantum may be relevant to the just-and-reasonable assessment. The Court questioned whether a defendant could reserve cross-examination on the underlying allegations for a later trial, but did not decide the issue as a standalone procedural application ([30]-[31]).
The decision is confined to the statutory and procedural setting before the Court. It notes that procedural approaches in other jurisdictions may be affected by the terms of their legislation, referring to s 92 of the Limitation Act 2005 (WA) ([28]). It does not determine how that Western Australian provision operates.
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Source: NSW Caselaw (www.caselaw.nsw.gov.au). Converted to plain text by ZoeLaw. Not the official version.
Medium Neutral Citation: State of New South Wales v LSR3 [2025] NSWCA 151
Hearing dates: 08 July 2025
Date of orders: 11 July 2025
Decision date: 11 July 2025
Before: Bell CJ at [1];
Payne JA at [33];
Price AJA at [34].
Decision: Application for leave to appeal dismissed with costs.
Catchwords: APPEALS – interlocutory decision on a question of practice and procedure – not to order separate questions – no error of principle
CIVIL PROCEDURE – separate determination of questions – application for separate questions under UCPR r 28.2 – where plaintiff applied under Part 1C of the Civil Liability Act 2002 (NSW) to set aside settlement agreements for historical child
abuse as part of a claim for damages for personal injury – whether set aside application must be heard separately before hearing of underlying claim
STATUTORY INTERPRETATION – Part 1C of the Civil Liability Act 2002 (NSW) – whether application for setting aside “affected agreement” required to be determined by separate determination prior to final hearing
TORTS – liability for historical child sexual abuse – two prior proceedings involving substantially the same allegations – both settled by payment of money by the State of NSW – Part 1C of the Civil Liability Act 2002 (NSW) – new proceedings commenced including applications to have prior settlement agreements set aside – application under UCPR r 28.2 to have set aside applications determined as separate questions – separate questions not ordered
Legislation Cited: Civil Liability Act 2002 (NSW) Pts 1B, 1C
Civil Liability Amendment (Child Abuse) Act 2021 (NSW)
Civil Liability Amendment (Organisational Child Abuse Liability) Act 2018 (NSW) sch 1[4]
Limitation Act 1969 (NSW) s 6A(1)
Limitation Act 2005 (WA) s 92
Uniform Civil Procedure Rules 2005 (NSW) r 28.2
Cases Cited: Adam P Brown Male Fashions Pty Ltd v Philip Morris Incorporated (1981) 148 CLR 170; [1981] HCA 39
Australian National Industries Ltd v Spedley Securities Ltd (in liq) (1992) 26 NSWLR 411
Bass v Permanent Trustee Co Ltd (1999) 198 CLR 334; [1999] HCA 9
DZY (a pseudonym) v Trustees of the Christian Brothers [2025] HCA 16; (2025) 99 ALJR 806
EXV v Uniting Church in Australia Property Trust (NSW) [2024] NSWSC 490
House v The King (1936) 55 CLR 499; [1936] HCA 40
In the matter of the Will of F B Gilbert (dec) [1946] NSWStRp 24; (1946) 46 SR (NSW) 318
PPK Willoughby v Baird [2019] NSWCA 48
Steen v Trustees of the Diocese of Tasmania [2024] TASSC 3
Trustees of the Roman Catholic Church for the Archdioceses of Sydney v Ellis [2007] NSWCA 117
Texts Cited: Civil Liability Amendment (Child Abuse) Bill 2021 (NSW)
New South Wales Legislative Assembly, Parliamentary Debates (Hansard), 9 November 2021
Category: Principal judgment
Parties: State of New South Wales (First Applicant)
South Eastern Sydney Local Health District (Second Applicant)
LSR3 (Respondent)
Representation: Counsel:
D Lloyd SC with R Withana (First and Second Applicants)
D S Weinberger with D Emmerig (Respondent)
Solicitors:
Crown Solicitor’s Office (First and Second Applicants)
Karp O’Neil Lawyers (Respondent)
File Number(s): 2024/477656
Publication restriction: Nil
[This headnote is not to be read as part of the judgment]
LSR3, a former ward of the State, commenced proceedings on 28 August 2023 against multiple defendants including the State of New South Wales (the State) and South Eastern Sydney Local Health District of Caringbah (SESLHD), seeking compensation for alleged historic child abuse (the 2023 proceedings).
LSR3 had previously sued both the State (twice) and SESLHD for substantially the same allegations as those raised in the 2023 proceedings. Those past claims were both settled on terms which included the payment of money by the State (the 2003 Settlement Agreement and the 2017 Settlement Agreement). By Statement of Claim filed on 20 March 2024, LSR3 sought to have those Settlement Agreements set aside, relying on Part 1C of the Civil Liability Act 2002 (NSW) (CLA), alleging that they were “affected agreements” under s 7C and that it was “just and reasonable” to set them aside under s 7D of the CLA.
Part 1C of the CLA was the third and final measure enacted by the New South Wales Parliament following the Royal Commission into Institutional Child Sexual Abuse. The other two measures were the abolition of the limitation period for child abuse actions effected by s 6A(1) of the Limitation Act 1969 (NSW) in 2016, and the abolition of the so-called “Ellis” defence to child abuse actions for unincorporated defendants by Division 4 of Part 1B of the CLA in 2019. Part 1C of the CLA provides a discretionary mechanism to set aside historic settlements of child abuse actions where such agreements are “affected”, allowing claimants to pursue full compensation for the alleged child abuse.
Without filing any defence in the proceedings, the State and SESLHD applied for the separate determination of certain questions under r 28.2 of the Uniform Civil Procedure Rules 2005 (NSW) (UCPR), namely whether the 2003 and 2007 Settlement Agreements should be set aside under s 7D of the CLA*.* In that application, the State and SESLHD conceded that the following issues would arise in the determination of the separate questions: (i) consideration of LSR3’s subjective motivations for entering into the 2003 and 2017 Settlement Agreements; (ii) consideration of LSR3’s prospects for success on liability and quantum; and (iii) the credit of LSR3, such that he would have to give evidence twice.
The primary judge refused to make an order under r 28.2 of the UCPR. His Honour’s dispositive reasoning relied on “a number of material difficulties” with the application for separate questions, including that: (i) the scope of the controversy remained largely undefined in the lack of any defences having been filed; (ii) there was a potential for prejudice against LSR3 particularly if his credit was the subject of both the separate questions and the final hearing; and (iii) an order for separate questions would likely cause delay.
The State and SESLHD applied for leave to appeal from that decision, arguing that the primary judge misconstrued ss 7C and 7D of the CLA as permitting a plaintiff to proceed on the basis of a cause of action prior to setting aside any agreement which had the effect of preventing such a course and/or in the face of extant orders of the court “determining causes of action being maintained”.
The Court (Bell CJ, Payne JA and Price AJA agreeing) held, refusing the application for leave to appeal:
PPK Willoughby v Baird [2019] NSWCA 48; Adam P Brown Male Fashions Pty Ltd v Philip Morris Incorporated (1981) 148 CLR 170; [1981] HCA 39; In the matter of the Will of F B Gilbert (dec) [1946] NSWStRp 24; (1946) 46 SR (NSW) 318; House v R (1936) 55 CLR 499; [1936] HCA 40, cited.
EXV v Uniting Church in Australia Property Trust (NSW) [2024] NSWSC 490; Steen v Trustees of the Diocese of Tasmania [2024] TASSC 3, referred to.
BELL CJ: This is an application for leave to appeal from an interlocutory judgment of Faulkner J (the primary judge) in which his Honour declined to order pursuant to r 28.2 of the Uniform Civil Procedure Rules 2005 (NSW) (UCPR) that certain questions be decided separately from and before any trial in the proceedings: LSR3 v New South Wales [2024] NSWSC 1570 (PJ or primary judgment).
In the underlying proceedings, commenced on 28 August 2023 (the 2023 proceedings), LSR3, a former ward of the State of New South Wales (the State), sought compensation for historic child sexual abuse alleged to have occurred between 1969 and 1976, and sued multiple defendants including the State of New South Wales (the State) and the South Eastern Sydney Local Health District of Caringbah (SESLHD).
The nub of the issue that supplies the context for the current application arises from the fact that LSR3 had twice previously sued the State and on one occasion had sued SESLHD in respect of (most of) the same allegations as were raised in the 2023 proceedings. Those past claims were twice settled (first in 2003 and again in 2017) on terms which included the payment of money by the State (the 2003 Settlement Agreement and the 2017 Settlement Agreement). A consent judgment was entered as part of the 2003 Settlement Agreement. The extent of the State’s contribution to the 2017 Settlement Agreement was not entirely clear however, as the primary judge noted at PJ [8], it “does not matter for current purposes”. LSR3 nonetheless claimed to be entitled to bring the 2023 proceedings by virtue of the regime set out in Part 1C of the Civil Liability Act 2002 (NSW) (CLA) which was, in the words of the primary judge, the third measure in a trilogy of related measures enacted by the New South Wales Parliament following the Royal Commission into Institutional Responses to Child Sexual Abuse.
The first measure was the retrospective abolition of the limitation period for actions for damages relating to the death of or personal injury to a person resulting from an act or omission that constitutes child abuse of the person, effected by the 2016 insertion of s 6A(1) into the Limitation Act 1969 (NSW) (the Limitation Act). The second measure was the abolition of the so-called Ellis defence to child abuse actions which might have arisen where the defendant was an unincorporated association: Trustees of the Roman Catholic Church for the Archdioceses of Sydney v Ellis [2007] NSWCA 117. This reform was effected by the commencement of Division 4 of Part 1B of the CLA on 1 January 2019 by way of schedule 1[4] of the Civil Liability Amendment (Organisational Child Abuse Liability) Act 2018 (NSW)
“Part 1C Child abuse—setting aside settlements
7A Definitions
In this Part—
affected agreement—see section 7C.
applicant—see section 7D.
7B Object of Part
The object of this Part is to provide a way for a person to seek to have an agreement set aside if—
(a) the agreement settled a claim for child abuse perpetrated against the person, and
(b) at the time of the agreement, there were certain legal barriers to the person being fully compensated through a legal cause of action.
7C Meaning of “affected agreement”
(1) In this Part, an affected agreement means an agreement that prevents the exercise of an action on a cause of action to which section 6A of the Limitation Act 1969 applies, if the agreement occurred—
(a) before the commencement of that section, and at the time of the agreement, a limitation period applying to the cause of action had expired, or
(b) before the commencement of Part 1B of this Act, and at the time of the agreement, an organisation, that would have been liable under Part 1B for child abuse had the Part been in force, was not incorporated, or
(c) before the commencement of Part 1B of this Act, and the agreement is not just and reasonable in the circumstances.
(2) For the purposes of this section, a limitation period is taken to have expired even if it were possible at the time to seek the leave of a court to extend the period.
7D Court may set aside affected agreement
(1) A person (the applicant) who, because of an affected agreement, is prevented from exercising an action on a cause of action may—
(a) commence proceedings on the cause of action in a court with sufficient jurisdiction to hear the cause of action, and
(b) apply to the court to set aside the affected agreement.
(2) The court may set aside an affected agreement if it is just and reasonable to do so.
(3) The court may consider the following in making its decision to set aside the affected agreement—
(a) the amount paid to the applicant under the agreement,
(b) the bargaining position of the parties to the agreement,
(c) the conduct in relation to the agreement of—
(i) the parties other than the applicant, or
(ii) the legal representatives of the parties other than the applicant,
(d) any other matter the court considers relevant.
(4) Section 131(1) of the Evidence Act 1995 does not prevent evidence being adduced in proceedings under this section, even if the evidence is of a communication made, or a document prepared, in connection with an attempt to negotiate a settlement of the dispute to which the affected agreement relates.
7E Court may also set aside other things
(1) If the court decides to set aside an affected agreement under this Part, it may also set aside any of the following that gives effect to the agreement—
(a) a contract, deed or other agreement,
(b) an order or judgment of the court or of a lower court.
(2) However, the court must not set aside the following—
(a) a deed of release signed by or on behalf of the applicant in acceptance of an offer under the National Redress Scheme and an agreement relating to a relevant prior payment that has been taken into account in the offer,
(b) an agreement to the extent to which—
(i) it settled a cross-claim between 2 or more defendants, or
(ii) 1 defendant indemnified another,
(c) a contract of insurance.
(3) In this section—
National Redress Scheme means the National Redress Scheme for Institutional Child Sexual Abuse established by the National Redress Scheme for Institutional Child Sexual Abuse Act 2018 of the Commonwealth.
7F E****ffect of setting aside affected agreement
(1) A court may set aside an affected agreement or anything else under this Part only to the extent that it relates to the applicant.
(2) An affected agreement and anything else set aside under this Part is void but only to the extent that it relates to the applicant.
(3) An amount paid, including legal costs or disbursements, or other consideration given under the affected agreement—
(a) is not recoverable despite the agreement being void, and
(b) may be taken into account by a court in determining damages in proceedings for a cause of action to which the affected agreement relates.”
“4 That the settlement agreement entered into between the Plaintiff and the First Defendant in 2003, and the consequent consent judgment, be set aside pursuant to sections 7D and 7E of the Civil Liability Act 2002 (NSW).
5 That the settlement agreement entered into on 15 August 2017 between the Plaintiff, the first Defendant, the Third Defendant, the Fourth Defendant, the Fifth Defendant, the Eighth Defendant and the Tenth Defendant be set aside pursuant to section 7D of the Civil Liability Act 2002 (NSW).”
In that Amended Statement of Claim, LSR3 had pleaded that the 2003 Settlement Agreement and the 2017 Settlement Agreement were “affected agreements” within the meaning of ss 7C(1)(a) and 7C(1)(c) of the CLA respectively, and that it was “just and reasonable” to set aside those agreements.
The particulars in support of these pleas were, in respect of the 2003 Settlement Agreement, that:
Particulars
(a) The Plaintiff did not receive any payment of compensation pursuant to the 2003 Settlement as the totality of the $150,000.00 paid by the First Defendant was contributed solely to the Plaintiff's legal costs and disbursements;
(b) The Plaintiff was in a disadvantageous bargaining position in 2003 as his claim for compensation was statute-barred by some decades at the time of the 2003 Settlement;
(c) The Plaintiff was emotionally vulnerable at the time of entering into the 2003 Agreement as:
i. The Plaintiff had attempted suicide and was admitted to hospital shortly before entering into the 2003 Agreement; and
ii. The Plaintiff was suffering severe psychological symptoms at the time of entering into the 2003 Agreement.
and, in respect of the 2017 Settlement Agreement, that:
Particulars
(a) The amount of $26,772.90 contributed by the First Defendant to the 2017 Settlement is not sufficient compensation given the nature and extent of the sexual abuse averred in paragraphs 41 to 64 above, as well as the severity of the Plaintiff's injuries and disabilities;
(b) The offer of the amount of only $26,772.90 was predicated on the basis that the Plaintiff had already entered into a prior settlement agreement, being the 2003 Agreement which … was not just and reasonable."
“a. whether the settlement agreement entered into between the plaintiff and the State of NSW in 2003 be set aside pursuant to s.7D of the Civil Liability Act 2002 (“CLA”);
b. whether on a proper construction of s.7C(1)(c) of the CLA, the “circumstances” include circumstances other than the barriers to the plaintiff being fully compensated removed by s.6A Limitation Act 1969 (NSW) and Part 1B of the CLA;
c. whether the agreement between the plaintiff and the State of NSW and the South East Sydney Local Health District in 2017 is an “affected agreement” within the meaning of s.7C of the CLA;
d. if the answer to question c. above is yes, whether the 2017 agreement should be set aside under s.7D of the CLA.”
“[25] The procedure contemplated by UCPR 28.2 is the final determination of the relevant question. It must be based on a final finding of any necessary facts and/or the parties’ binding agreement on those facts: Bass v Permanent Trustee Co Ltd [1999] HCA 9; (1999) 198 CLR 334 at 355 & 357-358; [45] & [51] (Gleeson CJ, Gaudron, McHugh, Gummow, Hayne and Callinan JJ).
[26] The Court has a discretion whether to make an order for the separate determination of questions.
[27] Ordinarily the Court will hear and determine all issues in the case at the same time: Tallglen v Pay TV Holdings Pty Ltd (1996) 22 ACSR 130 at 141 (Giles CJ in Comm Div). The discretion to order a separate hearing must be exercised with caution: Perre v Apand Pty Ltd [1999] HCA 36; (1999) 198 CLR 180 at 332; [436] (Callinan J). It is for the party who seeks a departure from the ordinary position to demonstrate that departure is desirable in the particular case.
[28] Consideration will have to be given to whether there may be overlap between the evidence adduced at the hearing of the separate questions and the subsequent hearing of the rest of the questions. Overlap may make separate questions undesirable. In particular, the Court is unlikely to order separate questions if the determination of the separate questions may require consideration of the credit of a witness who is likely to be a witness at the subsequent hearing of the other questions in the case: Australian National Industries Ltd v Spedley Securities Ltd (in liq) (1992) 26 NSWLR 411 at 434 (Samuels JA).
[29] Consideration must also be given to the implications for the case if the separate questions are determined one way or another. An order for a separate question may be appropriate where the determination of the question will resolve the entire dispute or substantially narrow the scope of the dispute. As a practical matter, determination of a separate question may facilitate settlement.
[30] These principles demonstrate that careful consideration must be given to the terms of the questions which a party seeks to have separately determined and the legal and factual context in which those questions fall for determination in the particular case. Reasoning which initially favours an order for separate questions may turn out to be superficial as the preparation and hearing of the separate questions progresses: Tepko Pty Ltd v Water Board [2001] HCA 19; (2001) 206 CLR 1 at 55; [168] (Kirby & Callinan JJ).
[31] When exercising the discretion under UCPR 28.2, the Court must seek to give effect to the overriding purpose to facilitate the just, quick and cheap resolution of the real issues in the proceedings: s 56(2) of the Civil Procedure Act 2005 (NSW).
[32] Ultimately, an application for separate questions is not to be decided in a mechanical way but by reference to a commonsense analysis of the best way to progress the proceedings in accordance with the overarching purpose.”
The primary judge considered at PJ [47]-[87] the various reasons advanced by the State and SESLHD in support of their application, including arguments relating to the proper construction of Part 1C of the CLA which, while not finding persuasive, his Honour unsurprisingly observed did not need to be decided on an application for an order for separate questions: see PJ [69].
The essence of the primary judge’s reasoning was expressed under the heading “Efficacy of separate questions in these proceedings”. His Honour correctly noted that if the questions referred to at [9] above could not be separated out in a practical and realistic way, then it was difficult to see how an order for separate questions could be made “even if the benefits of early determination may be significant”: PJ [76]. No criticism was or could be made of this observation.
Before commencing his analysis, the primary judge noted that the State and SESLHD accepted that: PJ [77]
(a) LSR3’s subjective motivations for entering into the 2003 Settlement Agreement and the 2017 Settlement Agreement were relevant to whether it was just and reasonable for the Court now to set them aside; (b) LSR3’s prospects for success on liability and quantum may be relevant to whether it was just and reasonable to set aside the 2003 Settlement Agreement and the 2017 Settlement Agreement; and (c) if separate questions were ordered, LSR3 would have to give evidence twice.
The State and SESLHD had also conceded in support of the motion for separate questions that if LSR3 succeeded on liability and quantum “the amount paid by the State under the 2017 Agreement was not full compensation for his loss”: PJ [22]. His Honour again correctly noted, however, that this concession was not sufficient to remove LSR3’s prospects on liability and quantum as an issue which was relevant to setting aside the 2003 and 2017 Settlement Agreements on the basis that they were not “just and reasonable” and that, at the hearing of the separate questions (if ordered), it would remain open to LSR3 to seek to demonstrate that his prospects on liability and/or quantum were strong: PJ [78].
The primary judge’s reasoning at PJ [80]-[87] was as follows:
[80] There are a number of material difficulties in the approach advocated by the State and SESLHD. First, the order for separate questions is sought before the State, SESLHD and the other defendants have filed their defences. Even if it is assumed that the State and SESLHD will plead the 2003 Agreement and the 2017 Agreement to the fullest extent possible, the other issues in the case have not yet been defined by pleadings. The real issues in the case not yet defined by pleadings, it is premature to consider the plaintiff’s prospects for success on liability and quantum.
[81] Further, whilst the extent of the controversy between the parties remains undefined, the extent of private and public resources which might be saved by ordering separate questions is unknown. The magnitude of the controversy and expense and other resources required to resolve it are currently based on assumptions which may not ultimately prove correct.
[82] Secondly, should separate questions be ordered, the plaintiff will bear the onus of demonstrating that it is just and reasonable to set aside the settlement agreements. With that onus, it is not clear to what extent, if any, the plaintiff will be precluded from adducing evidence at the hearing of the separate questions to demonstrate the strength of his case on liability and quantum. The State and SESLHD submit that “the Court would not conduct a preliminary trial”. It may be accepted that the Court will be loath to do so. Nonetheless, it is not possible to know with confidence the extent to which the Court will have to consider liability and quantum at the hearing of the separate questions. The degree of overlap between the separate questions and the substantive issues is presently unclear. It may be substantial.
[83] Thirdly, the plaintiff may be prejudiced by having to demonstrate the strength of his prospects if he has to do so at a limited hearing of separate questions rather that a final hearing when all the evidence is before the Court.
[84] The State and SESLHD submit that the extent of overlap will be limited because separate questions about whether it is just and reasonable to set aside the 2003 Agreement and the 2017 Agreement will be confined by the particulars currently set out in paragraphs 89 and 91 of the Amended Statement of Claim. The difficulty with that argument is the dynamic reality of litigation, especially where relatively new legislation is being considered by the Court. The decision to order separate questions must be made having regard not just to the current particulars but also to the realistic possibility of evolution in the plaintiff’s case.
[85] In any event, even on the current particulars it seems that one issue which will be common to both the determination of the separate questions and the issues to be decided at the final hearing will be the credit of the plaintiff. This is a consideration which weighs heavily against an order for separate questions. In this case in particular, where the plaintiff alleges historic child abuse, it would be highly undesirable for the plaintiff to be required to give evidence and to be cross-examined twice. In the face of that prospect, it would be necessary for the State and SESLHD to demonstrate the most compelling reasons before an order for separate questions could be made.
[86] In that context, another important consideration is the delay which will likely result from an order for separate questions. The questions will each have to be argued and decided. The proceedings in EXV v Uniting Church in Australia Property Trust (NSW) commenced in 2022, the separate questions were argued over four days in May and July 2023 and judgment was handed down in May 2024. Given the novelty of the legislation, Weinstein J was required to consider and decide a range of issues without the advantage of prior consideration by the Court. There may yet to be an appeal. The case before Weinstein J does not appear to be as complicated as the current case so the separate questions may take longer in this case. There is also a prospect of an appeal in the current case.”
[87] Notwithstanding the submissions of the State and SESLHD, the proceedings are not amenable to a separate hearing of the questions in the Notice of Motion.
It may be noted at this point that, in its Summary of Argument in support of a grant of leave to appeal, the State conceded that “the matters relied upon by the primary judge, especially at [82]-[87], count against the statement of a separate question”. That concession was well made.
As will be seen, the essence of the State’s and SESLHD’s complaint was that the primary judge misconstrued ss 7C and 7D of the CLA as permitting a plaintiff to proceed on the basis of a cause of action prior to setting aside any agreement which had the effect of preventing such a course and/or in the face of extant orders of the court “determining causes of action being maintained”: see draft notice of appeal grounds 1(a), (b) and (e). But for this fact, Mr Lloyd SC conceded that “there’s no doubt that this application would fail the conventional test for the statement of separate questions for a whole suite of reasons.”
It should be immediately apparent that, although the primary judge did consider various construction arguments that had been advanced by the State and SESLHD on the application for separate questions, as noted at [11] above, his Honour held that “these construction issues do not need to be decided on an application for an order for separate questions”: PJ [69]. His Honour continued in the following paragraph of his reasons by observing that “[u]ltimately the Court still needs to consider whether the current proceedings is an appropriate case for separate questions to be ordered having regard to all the circumstances”: PJ [70]. His dispositive reasoning leading to a negative answer to this question has been reproduced at [15] above.
Leave applications in this Court attract a general obligation on the applicant for leave to establish that there is an issue of principle, a question of public importance or a reasonably clear injustice going beyond something that is merely arguable: Jaycar Pty Ltd v Lombardo [2011] NSWCA 284 at [46] ; BE Financial Pty Ltd v Das [2012] NSWCA 164 at [32]–[38] ; Age Co Ltd v Liu (2013) 82 NSWLR 268; [2013] NSWCA 26 at [13] ; Secretary, Department of Family and Community Services v Smith (2017) 95 NSWLR 597; [2017] NSWCA 206 at [28].
“if a tight rein were not kept upon interference with the orders of Judges of first instance, the result would be disastrous to the proper administration of justice. The disposal of cases could be delayed interminably, and costs heaped up indefinitely, if a litigant with a long purse or a litigious disposition could, at will, in effect transfer all exercises of discretion in interlocutory applications from a Judge in Chambers to a Court of Appeal.”
“Section 7D(1) does what it says. It confers an entitlement on a plaintiff to “commence proceedings on the cause of action” (s 7(1)(a)) and to “apply to the court to set aside the affected agreement” (s 7(1)(b)). What s 7D(1) does not do is confer an entitlement on a plaintiff to maintain the proceedings on the cause of action once commenced. The plaintiff may obtain such an entitlement if and when the application to set aside the affected agreement under s7D(1)(b) is decided in the plaintiff’s favour. Until then, the plaintiff’s right to maintain proceedings is affected by the terms of the affected agreement or other instrument/s the subject of the application to set aside.” (emphasis added)
As expressed, this submission entails reading into s 7D(1)(a) of the CLA the words “but not proceed with” between “commence” and “proceedings” or, alternatively, reading the word “commence” down so that a plaintiff, having commenced proceedings, may not continue with them unless and until he or she has set aside an “affected agreement”. If this construction were correct, one would expect that s 7F, entitled “Effect of setting aside affected agreement”, would indicate that an immediate effect of setting aside an affected agreement would be that the plaintiff could proceed with the proceedings he or she had commenced, but it says no such thing.
The construction advanced by the State and SESLHD would also be inconsistent with the Explanatory Note to the Civil Liability Amendment (Child Abuse) Bill 2021 (NSW) (Child Abuse Bill), which introduced Part 1C, and which states in relation to the proposed s 7D:
"Proposed section 7D permits a person who is prevented from exercising an action because of an affected agreement to commence the action and permits the court hearing the action to set aside the affected agreement if it is just and reasonable to do so." (emphasis added)
The submission advanced on behalf of the State and SESLHD as set out in [22] above and, in particular, the words to which emphasis has been added, appears to suggest that, at least where, as in the present case, the application to set aside an “affected agreement” or agreements is made in the same proceedings as the underlying claim, that application must always be determined in advance of hearing the underlying claim. Putting to one side that this is not what s 7D(1) says, this argument sits uncomfortably with the State and SESLHD’s reply submission that “Part 1C does not require a separate question, but in this case that was the proper and reasonable mechanism for balancing the respective interests” (emphasis also added).
This reply submission rather defeats the State and SESLHD’s contention in support of a grant of leave to appeal, namely that the resolution of the question involves an issue of principle and of general importance. Rather, it focuses attention on the facts of the present case. That takes one back to the primary judge’s assessment of competing considerations as set out in the dispositive passages of his judgment extracted at [15] above. That assessment was, with respect, impeccable and not the subject of any direct attack by the State and SESLHD in their submissions in support of a grant of leave to appeal.
As part of his argument as to the proper construction of Part 1C, Mr Lloyd SC, who appeared for the State and SESLHD, contended that s 7C(1)(c) of the CLA should in some way be read down by reference to the objects of the Part as stated in s 7B of the CLA. That submission did not sit comfortably with the legislative history. Section 7C(1)(c) did not originally form part of the Child Abuse Bill introduced to State Parliament on 17 March 2021. In its then form, what became s 7C(1) only contained sub-paragraphs (a) and (b). This is also reflected in what became s 7B of the CLA. The Attorney General’s Second Reading speech to the Legislative Assembly was given on 17 March 2021. This is the speech referred to in EXV v Uniting Church in Australia Property Trust (NSW) [2024] NSWSC 490 at [154] (EXV). A Second Reading Speech was made in the Legislative Council on 21 October 2021. After that speech but on the same day, what became s 7C(1)(c) was introduced as an amendment to the Bill in the Legislative Council, and a vote to amend the Bill to include it was passed by majority. When the Bill returned to the Legislative Assembly on 9 November 2021, then Attorney General Speakman SC MP stated that:
“the proposed amendment, if passed, would effectively mean that any settlement agreement entered into before 1 January 2019 could be subject to an application to be set aside, allowing a person's claim then to be re‑litigated or renegotiated, provided that the court is satisfied that the settlement agreement is not just and reasonable in the circumstances and it is just and reasonable to set the settlement agreement aside”: New South Wales Legislative Assembly, Parliamentary Debates (Hansard), 9 November 2021 at 6951.”
No corresponding amendment was made to s 7B when what became s 7C(1)(c) was inserted into the Bill. The Bill was assented to on 18 November 2021.
No doubt there may be cases where, in the context of Part 1C of the CLA, a separate and early determination of whether to set aside an affected agreement may be appropriate: see, for example, EXV, noting that the separate questions were ordered in that case following the close of pleadings cf. Steen v Trustees of the Diocese of Tasmania [2024] TASSC 3. But this approach is not mandated by the terms of Part 1C of the CLA. The procedural approach to be followed in other jurisdictions may, however, be affected by the terms of applicable legislation: see, for example, Limitation Act 2005 (WA) s 92.
In the present case, no arguable error of principle was identified nor any convincing basis established warranting a grant of leave to appeal in respect of what was classically an interlocutory decision on a matter of practice and procedure.
One further point arising from the State’s submissions should, however, be made. The submission put to the primary judge and repeated on appeal in this Court, namely that the State would not, on the hearing of any separate question, cross examine LSR3 in relation to the underlying allegations of sexual assault but would reserve this for the balance of proceedings if the Court did not set aside the Settlement Agreements, was problematic. On any such preliminary, separate hearing, it may be expected that LSR3 would have a strong forensic interest in advancing his underlying claims of sexual assault and the damage which it was contended followed as a consequence of the alleged sexual assaults. This is because considerations of both liability and quantum may bear upon the statutory question of whether it was “just and reasonable” to set aside the Settlement Agreements: see CLA s 7D(3)(d) and, in a closely analogous context, DZY (a pseudonym) v Trustees of the Christian Brothers [2025] HCA 16 at [24]-[30];(2025) 99 ALJR 806.
The premise underlying the State and SESLHD’s submission as to their intentions in respect of the cross examination of LSR3 was no doubt driven by a desire to minimise the scope for inconsistent findings and especially findings involving LSR3’s credit, of the kind referred to by the primary judge at PJ [85] (reproduced at [15] above, and see Australian National Industries Ltd v Spedley Securities Ltd (in liq) (1992) 26 NSWLR 411). But whether the State and SESLHD could reserve their position in this regard, and further cross examine LSR3 in relation to the underlying claims in the event that the affected agreements were set aside, is seriously to be doubted. “Once an issue is determined at the interlocutory stage, and the trial continues, the primary judge’s hand is tied in respect of all matters of fact and law involved in that determination”: Bass v Permanent Trustee Co Ltd (1999) 198 CLR 334;[1999] HCA 9 at [57].
The application for leave to appeal should be dismissed with costs.
PAYNE JA: I agree with the Chief Justice.
PRICE AJA: I agree with the Chief Justice.
**********
State of New South Wales
LSR3 [2025] NSWCA 151
(1981) 148 CLR 170
(1992) 26 NSWLR 411
(1999) 198 CLR 334
(2025) 99 ALJR 806
(1936) 55 CLR 499
(1999) 198 CLR 180
(2001) 206 CLR 1
(2013) 82 NSWLR 268
(2017) 95 NSWLR 597
The application for leave to appeal was dismissed with costs ([32]).
Part 1C of the CLA came into effect on 18 November 2021: Civil Liability Amendment (Child Abuse) Act 2021 (NSW). It provides as follows: