Setting aside Prior Deeds of Settlement: Steen v Trustees of the Diocese of Tasmania [2024] TASSC 3

The Tasmanian Supreme Court has recently set aside a prior deed in the interests of justice and affectively confirmed that earlier settlements will not, in particular circumstances, bar an applicant from reopening their claim(s). This decision adds to the developing trend seen across Australian jurisdictions to set aside earlier settlement agreements in circumstances where it is just and reasonable to do so.

Background

Steen (the Plaintiff) commenced proceedings against the Trustees of the Diocese of Tasmania (Defendant) in respect of sexual assault perpetrated by Anglican priest, Louis Daniels, between 1981-1987. At the time of the abuse, the Plaintiff was 10-16 years of age. The abuse occurred on four separate occasions in either Church environments and/or during Church related activities including annual summer camps.

Daniels was heavily involved with the Church of England Boys’ Society (CEBS) and held the position of Chief Commissioner from at least 1978. Importantly, Daniels was also camp director of the annual summer camps which is where he perpetrated abuse upon the Plaintiff.  

The Plaintiff alleged, and the Defendant admitted, both vicarious liability and negligence. In addition, the Defendant made full admissions as to the acts of abuse committed by Daniels on the Plaintiff. However, it relied on a previous deed of settlement executed in 1994 that had resolved the same claim for the sum of $34,000. 

In these proceedings, the Court was required to determine: 

• Whether the previous deed should be set aside pursuant to s 5C of the Limitation Act 1974 (TAS) (the Act); and 
• If so, the quantum of damages including aggravated and exemplary damages. 

Setting aside the 1994 Deed

At the time of signing the deed: 

• the Plaintiff’s claim was statute barred; 
• CEBS’ response to the Plaintiff’s reporting of the abuse by Daniels resulted in Daniels’ promotion within CEBS;
• responsible members of the Defendant were aware of the prior behaviour of Daniels, which involved sexual misconduct against a child; 
• Daniels had admitted to the (then) Bishop Administrator of the Diocese that he had sexually propositioned a boy aged 14 years (not the Plaintiff); and 
• despite its knowledge of Daniels’ propensity for sexual abuse of children, the Defendant maintained a denial of liability during negotiations. 

The deed was held to be valid and unless the deed was set aside or rescinded, it would operate as an absolute bar to the Plaintiff’s claim. 

The sole available ground for setting aside a previous agreement is if “it is in the interest of justice to do so”, as provided under s 5C of the Act. In determining this question, the legislation provides that the Court may also have regard to the following factors when determining whether to set aside a previous settlement agreement: 

(a) the amount of the agreement;

(b) the relative strengths of the bargaining positions of the parties;

(c) any conduct, by or on behalf of the organisation to which the agreement relates, that –

          (i) relates to the cause of action; and

          (ii) occurred before the settlement was made; and

          (iii) the court considers to have been oppressive. 

Primarily, the Court considered that the Defendant’s denial of liability in 1994, which had no factual or legal merit, had been oppressive. 

In addition, the Defendant’s decision to require the settlement money to be paid by Daniels only, and make no contribution, was considered an oppressive approach.

The Court also took into consideration the disparity in bargaining position between the Plaintiff and the Defendant and determined that the Plaintiff was made weaker by aspects of his personal circumstance including his young age and poor psychological health at the time of negotiations. 

After taking these factors into account, the Court granted the Plaintiff’s application and agreed to set aside the 1994 deed as a bar to his action. 

The Plaintiff also asserted that the deed should be rescinded because it was unconscionable and/or for fraudulent misrepresentation. This argument failed and the Court was not satisfied that the deed should be set aside for unconscionable conduct or fraudulent misrepresentation.

Quantum

With the deed having been set aside, and the Plaintiff’s original cause of action restored, the Court turned to assess damages in the ordinary course.

General damages were assessed at $275,000. 

The Court awarded aggravated damages in the sum of $125,000 which considered various factors including: 

• the nature and circumstances of the abuse; 
• the Church’s prior knowledge of Daniels' propensity to commit sexual abuse against children, and its negligence in leaving him in a position in which he had direct access to children and the opportunity to commit sexual abuse; and
• the seriousness and ongoing effects of the abuse perpetrated by Daniels having not been properly appreciated by the Defendant. 

Additionally, the Court made a separate award of $100,000 for exemplary damages due to the contumelious behaviour of the Defendant. 

Past impairment of earning capacity was assessed at $350,000 and $1,182,720 was awarded for loss of future earning capacity. 

A total award of $81,711 was awarded for past and future treatment and related expenses. 

No deduction of the amount paid under the prior deed was ordered. In circumstances where the Defendant did not contribute to the 1994 settlement and its conduct since the abuse precluded the Court from effectively giving the Defendant the benefit of the deduction. 

The total assessment of damages was just under $2.4 million. 

Setting aside prior deeds in NSW

In NSW, the test for setting aside a deed in claims arising from historical abuse is “if it is just and reasonable to do so” as provided under Part 1C of the Civil Liability Act 2002 (the CLA). 

However, unlike the legislative framework in Tasmania, the CLA imposes no restraint on the Courts’ discretion in relation to factors it may consider, as follows: 

(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.

Outcome

The setting aside of prior deeds is a developing area in the abuse space and these provisions have yet to be dealt with by NSW Courts. Despite this, parties ought not to simply assume that an earlier settlement of a claim will prima facie preclude a survivor from reopening their cause(s) of action. 

It is therefore a practical exercise for both institutions and insurers to consider the risks of past settlements in relation to coverage, as well as the exposure to substantial quantum assessments.