State of New South Wales v LSR3

BELL CJ: This is an application for leave to appeal from an interlocutory judgment of Faulkner J (the primary judge) in which his Honour declined to order pursuant to r 28.2 of the Uniform Civil Procedure Rules 2005 (NSW) (UCPR) that certain questions be decided separately from and before any trial in the proceedings: LSR3 v New South Wales [2024] NSWSC 1570 (PJ or primary judgment).

In the underlying proceedings, commenced on 28 August 2023 (the 2023 proceedings), LSR3, a former ward of the State of New South Wales (the State), sought compensation for historic child sexual abuse alleged to have occurred between 1969 and 1976, and sued multiple defendants including the State of New South Wales (the State) and the South Eastern Sydney Local Health District of Caringbah (SESLHD).

The nub of the issue that supplies the context for the current application arises from the fact that LSR3 had twice previously sued the State and on one occasion had sued SESLHD in respect of (most of) the same allegations as were raised in the 2023 proceedings. Those past claims were twice settled (first in 2003 and again in 2017) on terms which included the payment of money by the State (the 2003 Settlement Agreement and the 2017 Settlement Agreement). A consent judgment was entered as part of the 2003 Settlement Agreement. The extent of the State’s contribution to the 2017 Settlement Agreement was not entirely clear however, as the primary judge noted at PJ [8], it “does not matter for current purposes”. LSR3 nonetheless claimed to be entitled to bring the 2023 proceedings by virtue of the regime set out in Part 1C of the Civil Liability Act 2002 (NSW) (CLA) which was, in the words of the primary judge, the third measure in a trilogy of related measures enacted by the New South Wales Parliament following the Royal Commission into Institutional Responses to Child Sexual Abuse.

The first measure was the retrospective abolition of the limitation period for actions for damages relating to the death of or personal injury to a person resulting from an act or omission that constitutes child abuse of the person, effected by the 2016 insertion of s 6A(1) into the Limitation Act 1969 (NSW) (the Limitation Act). The second measure was the abolition of the so-called Ellis defence to child abuse actions which might have arisen where the defendant was an unincorporated association: Trustees of the Roman Catholic Church for the Archdioceses of Sydney v Ellis [2007] NSWCA 117. This reform was effected by the commencement of Division 4 of Part 1B of the CLA on 1 January 2019 by way of schedule 1[4] of the Civil Liability Amendment (Organisational Child Abuse Liability) Act 2018 (NSW).

Part 1C of the CLA came into effect on 18 November 2021: Civil Liability Amendment (Child Abuse) Act 2021 (NSW). It provides as follows:

By prayers 4 and 5 of the Amended Statement of Claim filed on 20 March 2024, in addition to seeking relief by way of damages, interests and costs, LSR3 sought the following orders:

In that Amended Statement of Claim, LSR3 had pleaded that the 2003 Settlement Agreement and the 2017 Settlement Agreement were “affected agreements” within the meaning of ss 7C(1)(a) and 7C(1)(c) of the CLA respectively, and that it was “just and reasonable” to set aside those agreements.

The particulars in support of these pleas were, in respect of the 2003 Settlement Agreement, that:

Without filing any defence in the proceedings, the State and SESLHD sought by notice of motion an order pursuant to UCPR r 28.2 that the following questions be stated and determined separately and before the trial in the proceedings:

The primary judge identified the well-known principles relating to the discretion to order separate questions in a manner that attracted no criticism from the State and SESLHD. Indeed, his Honour’s identification of those principles supplies a valuable summary for judges dealing with interlocutory applications pursuant to UCPR r 28.2:

The primary judge considered at PJ [47]-[87] the various reasons advanced by the State and SESLHD in support of their application, including arguments relating to the proper construction of Part 1C of the CLA which, while not finding persuasive, his Honour unsurprisingly observed did not need to be decided on an application for an order for separate questions: see PJ [69].

The essence of the primary judge’s reasoning was expressed under the heading “Efficacy of separate questions in these proceedings”. His Honour correctly noted that if the questions referred to at [9] above could not be separated out in a practical and realistic way, then it was difficult to see how an order for separate questions could be made “even if the benefits of early determination may be significant”: PJ [76]. No criticism was or could be made of this observation.

Before commencing his analysis, the primary judge noted that the State and SESLHD accepted that: PJ [77]

The State and SESLHD had also conceded in support of the motion for separate questions that if LSR3 succeeded on liability and quantum “the amount paid by the State under the 2017 Agreement was not full compensation for his loss”: PJ [22]. His Honour again correctly noted, however, that this concession was not sufficient to remove LSR3’s prospects on liability and quantum as an issue which was relevant to setting aside the 2003 and 2017 Settlement Agreements on the basis that they were not “just and reasonable” and that, at the hearing of the separate questions (if ordered), it would remain open to LSR3 to seek to demonstrate that his prospects on liability and/or quantum were strong: PJ [78].

The primary judge’s reasoning at PJ [80]-[87] was as follows:

It may be noted at this point that, in its Summary of Argument in support of a grant of leave to appeal, the State conceded that “the matters relied upon by the primary judge, especially at [82]-[87], count against the statement of a separate question”. That concession was well made.

As will be seen, the essence of the State’s and SESLHD’s complaint was that the primary judge misconstrued ss 7C and 7D of the CLA as permitting a plaintiff to proceed on the basis of a cause of action prior to setting aside any agreement which had the effect of preventing such a course and/or in the face of extant orders of the court “determining causes of action being maintained”: see draft notice of appeal grounds 1(a), (b) and (e). But for this fact, Mr Lloyd SC conceded that “there’s no doubt that this application would fail the conventional test for the statement of separate questions for a whole suite of reasons.”

It should be immediately apparent that, although the primary judge did consider various construction arguments that had been advanced by the State and SESLHD on the application for separate questions, as noted at [11] above, his Honour held that “these construction issues do not need to be decided on an application for an order for separate questions”: PJ [69]. His Honour continued in the following paragraph of his reasons by observing that “[u]ltimately the Court still needs to consider whether the current proceedings is an appropriate case for separate questions to be ordered having regard to all the circumstances”: PJ [70]. His dispositive reasoning leading to a negative answer to this question has been reproduced at [15] above.

The principles relevant to the grant of leave to appeal generally and in the context of a matter of practice and procedure were reviewed by this Court in PPK Willoughby v Baird [2019] NSWCA 48 (PPK). In that case, the Court observed at [6]:

Appellate courts have been directed to exercise particular caution in reviewing applications for leave to appeal from decisions pertaining to practice and procedure: PPK at [3]; Adam P Brown Male Fashions Pty Ltd v Philip Morris Incorporated (1981) 148 CLR 170 at 177; [1981] HCA 39; In the matter of the Will of F B Gilbert (dec) [1946] NSWStRp 24; (1946) 46 SR (NSW) 318 at 323 (Gilbert). As Sir Frederick Jordan famously observed in Gilbert:

A decision whether to order a separate question is classically a matter of practice and procedure involving the exercise of judicial discretion. Such decisions “also engage the strictures against over-ready appellate interference and the correlative need for ‘added restraint’ associated with House v R (1936) 55 CLR 499 with the consequence that a ‘heavy burden’ lies on an applicant seeking leave to appeal from a discretionary judgment on a question of practice or procedure”: PPK at [5] and the cases there cited.

The State and SESLHD submitted in writing that:

As expressed, this submission entails reading into s 7D(1)(a) of the CLA the words “but not proceed with” between “commence” and “proceedings” or, alternatively, reading the word “commence” down so that a plaintiff, having commenced proceedings, may not continue with them unless and until he or she has set aside an “affected agreement”. If this construction were correct, one would expect that s 7F, entitled “Effect of setting aside affected agreement”, would indicate that an immediate effect of setting aside an affected agreement would be that the plaintiff could proceed with the proceedings he or she had commenced, but it says no such thing.

The construction advanced by the State and SESLHD would also be inconsistent with the Explanatory Note to the Civil Liability Amendment (Child Abuse) Bill 2021 (NSW) (Child Abuse Bill), which introduced Part 1C, and which states in relation to the proposed s 7D:

The submission advanced on behalf of the State and SESLHD as set out in [22] above and, in particular, the words to which emphasis has been added, appears to suggest that, at least where, as in the present case, the application to set aside an “affected agreement” or agreements is made in the same proceedings as the underlying claim, that application must always be determined in advance of hearing the underlying claim. Putting to one side that this is not what s 7D(1) says, this argument sits uncomfortably with the State and SESLHD’s reply submission that “Part 1C does not require a separate question, but in this case that was the proper and reasonable mechanism for balancing the respective interests” (emphasis also added).

This reply submission rather defeats the State and SESLHD’s contention in support of a grant of leave to appeal, namely that the resolution of the question involves an issue of principle and of general importance. Rather, it focuses attention on the facts of the present case. That takes one back to the primary judge’s assessment of competing considerations as set out in the dispositive passages of his judgment extracted at [15] above. That assessment was, with respect, impeccable and not the subject of any direct attack by the State and SESLHD in their submissions in support of a grant of leave to appeal.

As part of his argument as to the proper construction of Part 1C, Mr Lloyd SC, who appeared for the State and SESLHD, contended that s 7C(1)(c) of the CLA should in some way be read down by reference to the objects of the Part as stated in s 7B of the CLA. That submission did not sit comfortably with the legislative history. Section 7C(1)(c) did not originally form part of the Child Abuse Bill introduced to State Parliament on 17 March 2021. In its then form, what became s 7C(1) only contained sub-paragraphs (a) and (b). This is also reflected in what became s 7B of the CLA. The Attorney General’s Second Reading speech to the Legislative Assembly was given on 17 March 2021. This is the speech referred to in EXV v Uniting Church in Australia Property Trust (NSW) [2024] NSWSC 490 at [154] (EXV). A Second Reading Speech was made in the Legislative Council on 21 October 2021. After that speech but on the same day, what became s 7C(1)(c) was introduced as an amendment to the Bill in the Legislative Council, and a vote to amend the Bill to include it was passed by majority. When the Bill returned to the Legislative Assembly on 9 November 2021, then Attorney General Speakman SC MP stated that:

No doubt there may be cases where, in the context of Part 1C of the CLA, a separate and early determination of whether to set aside an affected agreement may be appropriate: see, for example, EXV, noting that the separate questions were ordered in that case following the close of pleadings cf. Steen v Trustees of the Diocese of Tasmania [2024] TASSC 3. But this approach is not mandated by the terms of Part 1C of the CLA. The procedural approach to be followed in other jurisdictions may, however, be affected by the terms of applicable legislation: see, for example, Limitation Act 2005 (WA) s 92.

In the present case, no arguable error of principle was identified nor any convincing basis established warranting a grant of leave to appeal in respect of what was classically an interlocutory decision on a matter of practice and procedure.

One further point arising from the State’s submissions should, however, be made. The submission put to the primary judge and repeated on appeal in this Court, namely that the State would not, on the hearing of any separate question, cross examine LSR3 in relation to the underlying allegations of sexual assault but would reserve this for the balance of proceedings if the Court did not set aside the Settlement Agreements, was problematic. On any such preliminary, separate hearing, it may be expected that LSR3 would have a strong forensic interest in advancing his underlying claims of sexual assault and the damage which it was contended followed as a consequence of the alleged sexual assaults. This is because considerations of both liability and quantum may bear upon the statutory question of whether it was “just and reasonable” to set aside the Settlement Agreements: see CLA s 7D(3)(d) and, in a closely analogous context, DZY (a pseudonym) v Trustees of the Christian Brothers [2025] HCA 16 at [24]-[30];(2025) 99 ALJR 806.

The premise underlying the State and SESLHD’s submission as to their intentions in respect of the cross examination of LSR3 was no doubt driven by a desire to minimise the scope for inconsistent findings and especially findings involving LSR3’s credit, of the kind referred to by the primary judge at PJ [85] (reproduced at [15] above, and see Australian National Industries Ltd v Spedley Securities Ltd (in liq) (1992) 26 NSWLR 411). But whether the State and SESLHD could reserve their position in this regard, and further cross examine LSR3 in relation to the underlying claims in the event that the affected agreements were set aside, is seriously to be doubted. “Once an issue is determined at the interlocutory stage, and the trial continues, the primary judge’s hand is tied in respect of all matters of fact and law involved in that determination”: Bass v Permanent Trustee Co Ltd (1999) 198 CLR 334;[1999] HCA 9 at [57].

The application for leave to appeal should be dismissed with costs.

PAYNE JA: I agree with the Chief Justice.

PRICE AJA: I agree with the Chief Justice.