Additional issues to consider in costs arguments

Case note

Subject: Lonergan v Trustees of The Sisters of Saint Joseph & Anor [2021] VSC 651

Facts and basis of claim

1. The Sisters of Saint Joseph (the Sisters) managed St Joseph’s Primary School (the School) located in Ouyen, north-west Victoria and is located in the Catholic Diocese of Ballarat (the Diocese). The School, the convent where the Sisters resided, the church and the presbytery were all located on the same grounds. The Parish Priest (Father Coffey) was appointed to the position of parish priest in 1972 by the then Bishop of Ballarat (the Bishop). Mr Lonergan (the Plaintiff) was a pupil at the School between 1966 and 1974.
2. The Plaintiff alleged that he was abused by Father Coffey and that the Sisters and the Diocese were vicariously liable for the acts perpetrated by Father Coffey, which resulted in injury, loss and damage suffered by him.
3. Father Coffee was found guilty after a jury trial in the County Court and on 15 February 1999 was convicted of 13 counts of indecent assault (one of those counts concerned this Plaintiff).

Procedural Background

4. The matter was heard before Justice Keogh. On day 7 of the trial, it was admitted that the Plaintiff was abused by Father Coffey and that this was caused by a breach of duty by the Diocese and the Sisters. However, the Court found that there was no direct evidence that the Bishop or any other person representing the Diocese, or the Sisters, was aware of Father Coffey’s history of abusing children.
5. The Court found that a reasonable assessment of damages for pain and suffering and loss of enjoyment of life of the Plaintiff was $250,000, $10,000 for future treatment expenses and $390,000 for economic loss.

Exemplary Damages

6. The Court noted that exemplary damages will only be awarded in exceptional circumstances.
7. The Court did not make an award of exemplary damages in this case on the following bases:
   1. There was no evidence the Diocese was aware that Father Coffey had sexually abused children before he was appointed parish priest or of grounds for suspicion that he had done so.
   2. At the time the Plaintiff was abused, the evidence did not establish that either the Diocese or the Sisters acted with reckless and contumelious disregard of the Plaintiff’s rights, or their conduct was so reprehensible that it involved flagrant conscious wrongdoing.
   3. Schemes to respond to persons who were abused as children, and systems of protection to avoid future abuse have been implemented, and although not perfect, were such that an award of exemplary or aggravated damages was not justified in these circumstances.

Set off for prior settlement

8. Prior to the subject litigation, in 2000 the Plaintiff made a claim for compensation against the Sisters, Diocese and others for injury, loss and damage caused by the abuse, which settled by confidential agreement for $45,000 inclusive of costs. 
9. The Court concluded that it was neither just nor reasonable to take account of the amount paid under the prior settlement agreement by setting it off against damages assessed in this proceeding. This was due to the Diocese obtaining the benefit of the Plaintiff maintaining the confidentiality of the first settlement. The Bishop also breached the agreement by disclosing the terms of the settlement to others following settlement. In addition, the sum was modest, and the Plaintiff was disadvantaged by the lapse of time since past loss was suffered and the effects of inflation, compounded by the unavailability of interest from the date of the cause of action. 

Offers & subsequent costs ruling

10. There was also a subsequent costs ruling.  The Plaintiff failed to “beat” two Calderbank offers, which had been made during the life of the file.  The Defendant sought to rely upon those in an ensuing argument about costs, which required the Court to consider whether it was reasonable for the Plaintiff to have rejected those.  Keogh J ultimately found that it was not established that the rejection of the offer(s) was unreasonable.  In so doing, he examined the timing of the offers; one was made after a mediation on 30 July 2021 and expired 2 August 2021 (the trial was listed on 9 August) and the second more generous offer was made on 12 August and was only left open that day.
11. Briefly, his Honour found that the time for acceptance was very brief and needed to be viewed against the fact that the Plaintiff’s legal team was ensconced in final trial preparation and/or the hearing when the offers were made.
12. Significantly, he also considered the Plaintiff’s state of mind.  This Plaintiff had significant mental health issues, hampering his engagement in the litigation.  That was a factor to add to the overall matrix of considerations. 

Key Takeaways

13. The Court’s acknowledgement of the high threshold necessary for an award of exemplary damages. 
14. The Court determining that an offset of the previous settlement was inappropriate due to the conduct of the Bishop and the benefit to the Diocese of the confidential enforced on the Plaintiff. 
15. The Court’s consideration of the timing and particular circumstances of a claim when considering an award for indemnity costs following Calderbank offers being made.

If you have any questions on this case summary, please contact Kerri Thomas.