Cherry v State of Victoria [2025] VSC 603 (Link to JADE).
In this matter the court held that it was not just and reasonable to set aside a prior settlement deed.
The claim arose from alleged abuse by a teacher at a State school. The earlier settlement was in 2003. Proceedings had been issued and the plaintiff had obtained an interlocutory ruling to the effect that the cause of action was not statute barred. Consequently, the limitation period could not have impacted his decision to enter into the prior deed.
It was undisputed that the defendant was an entity capable of being sued at the time of the prior proceeding.
The authority of Lepore was applicable at the time Mr Cherry’s first offer was made. Accordingly, there was a timing problem with Mr Cherry’s submission that the law on vicarious liability before Lepore was a barrier. Further, there was no evidence that he received or relied on such advice. The court noted at [86]:
Consequently, although I accept that the law on vicarious liability has been clarified since Mr Cherry entered into the prior deed, I give this no weight, particularly in circumstances where there is no evidence that it impacted upon his decision to settle. Moreover, he had another cause of action available to him: a direct claim in negligence.
There was no evidence from Mr Cherry that the law on the non-delegable duty impacted his decision to settle, nor his claim based on fiduciary duty.
The settlement sum was inadequate by today’s standards. Mr Cherry’s evidence was that he received $100,000 once costs and disbursements had been deducted from the settlement sum (however this was doubted). Relying on the RBA inflation calculator, $100,000 is equivalent to $175,649.15 in 2024. The court said that by today’s standards, he would likely receive between $400,000 to $500,000 in general damages alone. The inadequacy of the settlement amount weighed in favour of setting aside the prior deed.
As to bargaining positions, the court said at [123] – [124]:
I accept that the defendant was in a more powerful bargaining position than Mr Cherry. The defendant is an experienced litigant with the resources of the State. Nevertheless, he was legally represented and his solicitors actively negotiated the settlement sum…… I am not satisfied that the defendant’s conduct hindered Mr Cherry’s ability to bargain with the defendant.
Ultimately the court held at [136]:
I find that it is not just and reasonable to set aside the prior deed. I am not satisfied that there was any legal barrier that impacted Mr Cherry’s decision to enter into the settlement deed. He was paid a settlement amount per the deed. While it is likely less than he would have received if successful at trial in 2003, he entered into the deed with legal advice. I accept Mr Cherry was suffering from mental health conditions at the time of settlement, but there is no evidence his health impacted his decision to settle. He was concerned about the consequences of adverse costs if he were unsuccessful at trial. This is a risk faced by most litigants.
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