EXV v Uniting Church in Australia Property Trust
03 May 2024
When is it appropriate to set aside a Settlement Deed?
We provide a short update on the decision of EXV v Uniting Church in Australia Property Trust (NSW) [2024] NSWSC 490, which was delivered in the NSW Supreme Court on 2 May 2024 and which resulted in the dismissal of the claim on the basis that a prior settlement would not be set aside.
The judgment is believed to be the first time the Supreme Court has had the opportunity to consider Pt 1C of the Civil Liability Act 2002 (NSW) (CLA) which commenced on 18 November 2021 and allows the setting aside of an “affected agreement” if it is “just and reasonable” to do so.
Background
In 2007 and 2008, EXV pursued an unlitigated claim against Knox Grammar School (Knox) based on an allegation of one instance of child sexual abuse perpetrated by a teacher upon him while he was a student at the School in 2002 (the 2007 Claim). At the relevant time, the Synod of the Uniting Church in Australia Property Trust (NSW) operated Knox.
The 2007 Claim was mediated on 18 December 2008 (the Mediation) and the Plaintiff agreed to accept the sum of $115,000 inclusive of costs in full and final settlement of the 2007 Claim, leaving him with approximately $83,000 after his legal costs and disbursements were paid. The Plaintiff’s decision to settle was made against legal advice and a Deed of Agreement (Settlement Deed) was executed by the parties on 19 December 2008 releasing Knox from liability for further claims relating to the Plaintiff’s allegations against the teacher.
By way of a Statement of Claim filed on 8 June 2022, the Plaintiff brought a new claim against the defendant, based on the same allegations that were the subject of the 2007 Claim, alleging that the defendant was directly liable in negligence or vicariously liable for the intentional torts committed against him by the teacher in 2002 (the 2022 Claim). Knox filed a Defence pleading the Settlement Deed as a complete answer to the 2022 Claim and the Plaintiff filed a Notice of Motion seeking to have the Settlement Deed set aside as an “affected agreement” under Part 1C of the CLA.
The Plaintiff argued that he accepted a lesser sum at the Mediation because he faced three perceived legal barriers including:
- an alleged difficulty in suing an unincorporated association;
- the expired limitation period; and
- a concern that his lawyers in the 2007 Claim could not certify that a claim in negligence had reasonable prospects of success pursuant to s 347 of the Legal Profession Act 2004 (NSW).
Justice Weinstein did not accept points 1 or 2 had any bearing on the settlement at the Mediation. He found that what exercised the Plaintiff’s mind at the time of the Mediation was his lawyers’ view that there was not enough evidence to prove Knox’s negligence. It was this that caused the Plaintiff to come to the decision to settle, against the advice of his lawyers.
Justice Weinstein also found that the conditions of the Mediation did not amount to impropriety on the part of Knox and no witnesses claimed this impacted the outcome.
Justice Weinstein found it would be unjust and unreasonable to set aside the Settlement Deed and dismissed the Plaintiff’s Notice of Motion as well as the entirety of the proceedings for the 2022 Claim.
What do we expect next?
Justice Weinstein’s judgment provides a degree of clarification as to the interpretation of Part 1C of the CLA and when it will be “just and reasonable” to set aside an affected agreement.
The decision of Justice Weinstein highlights the importance of ensuring all evidence as to the negotiations and settlement are available, which identify all factors which may have contributed to an earlier settlement. The mere fact that a Plaintiff accepted a lesser sum than what may now be available in an action is not the sole factor making it unjust and a Court will and must consider all relevant factors.
The decision also protects Defendants from having a fair settlement set aside in instances where a Plaintiff may seek to reagitate a matter years later by the mere fact that it occurred prior to recent legislative amendments as to limitation periods and unincorporated associations.
