Statutes – construction
Limitation of Actions Act 1958 (Vic) – Setting aside settlement deed for personal injury resulting from child abuse if “just and reasonable” to do so
In DZY (a pseudonym) v Trustees of the Christian Brothers [2025] HCA 16 (9 April 2025), the High Court (Gageler CJ, and Gordon, Edelman, Steward and Gleeson JJ) dismissed appeals from the Court of Appeal of the Supreme Court of Victoria.
DZY entered into two separate settlement deeds with the Trustees of the Christian Brothers (Trustees) in both 2012 and 2015. These were in settlement of liability for a claim arising from sexual assaults in the 1960s, while DZY was at a school operated by the Congregation of Christian Brothers. Both deeds contained an agreement not to bring further claims for damages arising from the sexual assaults and recorded that DZY did not allege any economic loss in relation to the sexual assault.
There were some developments following the signing of the settlement deeds. There was an addition of s27OA and ss27QA to 27QF into the Limitation of Actions Act 1958 (Vic) (LAA Act), which could allow a court to set aside a settlement agreement for physical or sexual abuse of a minor if it were just and reasonable to do so. At the time the settlements were entered into, two obstacles posed barriers to claims:
- a defence under the LAA Act (“limitation defence”)
- difficulties around suing an unincorporated association (the so-called “Ellis defence”).
DZY commenced an action in the Supreme Court of Victoria claiming general damages for non-economic loss and for economic loss. The Trustees did not contest the general damages but did contest the economic loss claim.
The primary judge set aside the settlement agreements in their entirety notwithstanding and the Trustees appealed to the Court of Appeal, arguing the primary judge had erred in setting aside the agreement for economic loss.
At issue in the High Court was whether, on proper construction of s27QE of the LAA Act, the limitation defence or Ellis defence were required to have materially affected the settlement.
The majority cited the principles of construction in Project Blues Sky v Australian Broadcasting Authority [1998] HCA 35 “by reference to the language of the instrument viewed as a whole” (at [69]).
In finding that the Court of Appeal erred, the majority noted that the previous defences were either a prerequisite or quasi-prerequisite, and the majority cited the second reading speech:1
“It is not necessary that the existence of the limitation period be the predominant reason as to why the agreement was entered into. There may be a number of reasons that a plaintiff entered into such an agreement, including but not limited to unequal bargaining power, barriers to identifying a proper defendant, feelings of guilt and shame compounded by the burden of giving evidence and being subject to cross‑examination, or the behaviour of the relevant institution” (at [28]).
The majority did, however, hold that the existence of the defences could be a factor in determining whether setting aside the agreements was “just and reasonable”. But the High Court also held that the Court of Appeal was correct in the assessment that the evidence did not support that it was just and reasonable to set aside the deeds on the economic loss claim.
Representative actions
Settlement proposal – Notice to group members
In Lendlease Corporation Ltd v Pallas [2025] HCA 19 (7 May 2025) (Lendlease), the High Court (Gageler CJ and Gordon, Edelman, Steward, Gleeson, Jagot and Beech‑Jones JJ) unanimously allowed an appeal from the Supreme Court of NSW.
The issue was whether – in a representative action pursuant to Pt 10 of the Civil Procedure Act 2005 (NSW) (the CPA) – the Supreme Court of NSW could make an order pursuant to s175(5), that:
“[N]otice be given to group members of the intention of the defendant (and perhaps the representative plaintiff), if the proceeding is settled, to seek an order that a group member who has neither opted out of the proceeding nor registered to participate in the proceeding shall remain a group member (and whose claims against the defendant will therefore be extinguished by the settlement) but shall not, ‘without leave of the Court, be permitted to seek any benefit pursuant to any settlement (subject to Court approval) of [the] proceeding that occurs before final judgment’” (at [1]).
In Wigmans v AMP Ltd (2020) 102 NSWLR 199 (Wigmans), the NSW Supreme Court had determined that the Court did not have the power.
In Parkin v Boral Ltd (2022) 291 FCR 116, the Full Court of the Federal Court of Australia considered materially identical provisions under the federal act and found that the decision in Wigmans was “plainly wrong”.
The Court of Appeal in Lendlease, having concluded giving a notice would both subvert the statutory scheme and place the plaintiffs in a position of conflict with those unregistered members who had not opted out, then concluded that Wigmans was not plainly wrong and followed it.
The High Court held that the Court of Appeal had construed their powers too narrowly. Although the Court agreed that the concerns raised by the Court of Appeal were important to consider:
“Those legitimate concerns, however, do not confine the power of the Court to order that such a notice be given. Rather, they properly inform the steps the Court might consider necessary or appropriate to manage the inconsistency of interest to which a representative plaintiff might become subject in the settlement of a proceeding and in deciding whether to approve any such settlement” (at [3]).
