The appellant, DZY, entered into two settlement deeds with the Trustees of the Christian Brothers (Trustees) in 2012 and 2015, respectively. These deeds released the Trustees from liability for claims related to alleged sexual assaults that occurred in the 1960s while DZY was a student at a school operated by the Congregation of Christian Brothers (Congregation). The deeds specifically renounced any claims for economic loss.

At the trial, the primary Judge ordered that both deeds be set aside in their entirety deeming it "just and reasonable" to do so. The Trustees appealed the part of the primary Judge's decision that set aside the economic loss components of the deeds. The Court of Appeal allowed the Trustees' Appeal, and set aside only the non-economic loss components of the deeds.

For a more detailed background to the 2012 and 2015 Deeds along with an overview of the Victorian Supreme Court proceedings in July 2021 and Victorian Court of Appeal proceedings in April 2024, see our previous article, here. 

At the time of the previous settlements, DZY's claims faced significant legal obstacles, including the limitation defence under the Limitation of Actions Act 1958 (Vic) and the (so-called) Ellis defence that arose as a result of the case New South Wales Court of Appeal in Trustees of the Roman Catholic Church v Ellis, which posed difficulties in suing unincorporated associations like the Congregation.

Subsequent legislative amendments removed these barriers, allowing for the possibility of setting aside previously settled claims if it is "just and reasonable" to do so.

DZY appealed the Court of Appeal decision to the High Court of Australia, on the basis that the primary Judge's considerations of what was "just and reasonable" to set aside the economic loss components of the deeds, was the correct decision. 

The High Court (Gageler CJ, Gordon, Edelman, Steward and Gleeson JJ) was tasked with determining whether the Victorian Court of Appeal erred in its interpretation of section 27QE of the Limitation of Actions Act. Specifically, the Court examined whether the limitation defence or the Ellis defence needed to have materially influenced DZY's decision to settle for it to be "just and reasonable" to set aside the settlement agreements.

The plurality concluded that the term "just and reasonable" is of wide import and does not require the limitation defence or the Ellis defence to have materially influenced a claimant's decision to settle.

Crucially, the High Court found that there was no direct evidence from DZY that, at the time he signed each of the deeds, he decided to renounce his economic loss claim due to the limitation defence or the Ellis Defence. In addition, the High Court acknowledged that DZY was legally represented, and provided legal advice in relation to both deeds. In addition, DZY's legal representatives certified that DZY appeared to understand the purport and effect of each deed. In addition, the High Court found that DZY's statement that he felt like he had "no choice but to accept the offer because the legal barriers were too great" was not related to any conduct of the Congregation or to DZY's decision to renounce economic loss - rather, the statement appears to relate to DZY's acceptance of the settlement sum for his general damages claim [36 and 37]. 

The plurality emphasised that the exercise of the power under section 27QE depends on all relevant circumstances, not just the influence of these legal barriers.

Steward J provided some commentary against the plurality decision that is also quite helpful. He agreed with the plurality and reasons for the decision, save in one respect. On his reading of the Court of Appeal's reasons, he did not find those to suggest that there were any necessary "prerequisites" to the exercise of power considered by 27 QE. The plurality of the High Court found that the Court of Appeal had decided that there are "prerequisites" to the excise of power conferred in 27QE to set aside settlements. These were said to be for one of the historical barries (being the Limitations Defence and Ellis Defence) to have been a material reason for settling, relevantly, a claim for child sex abuse. In Steward J's reading of the Court of Appeal decision, he reasoned that the Court of Appeal did in fact give proper guidance as to what a trial judge should expect to look. In short: 

• The power conferred by 27QE turns upon a judge's satisfaction as to what is "just and reasonable". This is not a reference to a judge's subjective beliefs about what is just and reasonable. 

• What is just and reasonable must have objective content.

1. Statutory Construction: The Court highlighted that the language of section 27QE does not limit the exercise of the court's power to circumstances where the claimant's decision was materially impacted by a limitation defence or the Ellis defence.

2. Legislative Purpose: The purpose of section 27QE is to address potentially unfair settlement agreements resulting from historic legal barriers. The Court noted that the breadth of the term "just and reasonable" allows for a variety of injustices to be remedied.

3. Relevant Factors: The Court acknowledged that while the limitation defence and the Ellis defence are relevant factors, they are not prerequisites for setting aside a settlement agreement. The Court must consider all relevant circumstances, including the conduct of the parties, the terms of the deed, and any potential prejudice to the respondent.

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