Magann v The Trustees of the Roman Catholic Church for the Diocese of Parramatta

1. [1]

   BELL P: This is an appeal from the decision of N Adams J (the primary judge) in which her Honour answered in the affirmative a separate question as to whether or not a deed of settlement and release dated 16 October 2007 (the Deed) extinguished the liability of The Trustees of the Roman Catholic Church for the Diocese of Parramatta (the Respondents) to the Appellant, Mr Darren Peter Magann (Mr Magann). In consequence of her answer to the separate question, her Honour dismissed proceedings that had been brought by Mr Magann.

2. [2]

   The separate question was ordered by Harrison AsJ in proceedings which had been commenced against the Respondents by Mr Magann in 2017, some ten years after the Deed had been entered into (the 2017 Proceedings): see Magann v The Trustees of the Roman Catholic Church of the Diocese of Parramatta [2018] NSWSC 1551.

3. [3]

   Mr Magann contended that the primary judge erred in not holding that the Deed constituted an unjust contract within the meaning of the Contracts Review Act 1980 (NSW), and that its entry was unconscionable and involved the Respondents taking advantage of a special disadvantage which Mr Magann contended he was under at the time of entry into the Deed, namely Post Traumatic Stress Disorder (PTSD).

4. [4]

   One particular factual finding which is challenged on appeal relates to the date on which Mr Magann received a report of Ms Robyn Bailey (the Bailey Report) which had been commissioned by the Respondents and whether or not that was before or after entry into the Deed. The significance of the Bailey Report is explained more fully below.

5. [5]

   Subject to the argument noted in [6] below (which was not put at first instance), it was implicit in the nature of the arguments advanced on Mr Magann’s behalf that he accepted that, unless set aside, the Deed provided a complete answer to his claim in the 2017 Proceedings.

6. [6]

   It was contended for the first time on appeal and only in the written submissions that the Deed was “not binding because it [did] not represent the compromise of a genuine dispute, taking into regard the risks associated with litigation”. This submission was characterised by counsel for Mr Magann as appeal ground 1A.

7. [7]

   For the reasons that follow, I do not consider that the primary judge erred in her factual findings, analysis or ultimate conclusion that the Deed was not “unjust” within the meaning of the Contracts Review Act, and that its entry was not procured by the unconscientious taking advantage of a special disadvantage under which Mr Magann was labouring at the time of entry into the Deed: see Magann v Trustees of the Roman Catholic Church of the Diocese of Parramatta [2019] NSWSC 1453. To the contrary, the primary judgment is carefully and closely reasoned and not affected by error of the kind asserted.

8. [8]

   There is also no substance to the contention that the Deed was not binding because it did not represent the “compromise of a genuine dispute, taking into regard the risks associated with litigation”.

9. [9]

   Before turning to the reasons for these conclusions, it is first necessary to set out the background which led to the entry into the Deed on 16 October 2007.

Background

1. [10]

   On 5 July 2002, Mr Magann lodged with the Respondents a Statement of Complaint (the Complaint), in which he complained of emotional, psychological and sexual assault by an Assistant Priest, Dr Henk Eijkman (Dr Eijkman) and a parish Priest, Fr Michael McGloin (Father McGloin), between “1981 and 1989 approx[imately]”. In the Complaint, Mr Magann indicated that he sought a written and verbal apology from both men, charges to be brought against both men, financial compensation for suffering and counselling for both himself and his wife. The Complaint indicated that he had notified the Police about the matters the subject of the Complaint.

2. [11]

   On 13 August 2002, Mr Magann sent a letter to Bishop Manning of the Roman Catholic Diocese of Parramatta which he characterised as a letter of demand for compensation for the sexual abuse that he alleged occurred against him at the hands of Father McGloin and Dr Eijkman over a 10 year period starting in approximately 1982. The letter stated that the Parramatta Diocese was responsible for both past and present employees and accountable for their actions. The letter signified an “intention to have this matter dealt with immediately” and asserted that “it is your responsibility to accommodate my request”.

3. [12]

   On 19 May 2003, Mr Magann filed a Statement of Claim in the District Court of New South Wales against the Respondents (the 2003 Proceedings). Father McGloin and Dr Eijkman were the second and third defendants respectively. The Statement of Claim alleged that the two priests sexually abused Mr Magann over a number of years and that the Respondents were responsible for that conduct. As a result of the alleged abuse, damages including exemplary and punitive damages were sought. The allegations against Father McGloin related to the period 1983 through to 1991, and the allegations against Dr Eijkman related to the period 1987 through to about 1989.

4. [13]

   Mr Magann sought an extension of time under the Limitation Act 1969 (NSW) to bring his claims. Although an extension was initially granted by Judge Sorby in the District Court in November 2004, that extension decision was reversed by a decision of this Court on 8 December 2005: see Eijkman v Magann; McGloin v Magann; Trustees of the Roman Catholic Church of Diocese of Parramatta v Magann [2005] NSWCA 358.

5. [14]

   Just over a month after the Court of Appeal’s decision, on 8 December 2005, Mr Magann’s then solicitor, Herbert Weller (Mr Weller), wrote to the then solicitors for the current Respondents proposing a mediation conference “to effect a fair and compassionate resolution of the matter”.

6. [15]

   The evidentiary record is largely silent as to what, if anything, transpired in the period immediately following this request. It is clear, however, that Mr Magann’s Complaint and demands were considered as part of the Church’s “Towards Healing” process. As part of that process, by way of a letter dated 21 March 2007, Ms Bailey was appointed to assess Mr Magann’s complaints against Dr Eijkman and Fr McGloin. She was asked to investigate and report on whether there were grounds for concluding, on the balance of probabilities, that his complaints were justified either totally or in part.

7. [16]

   Ms Bailey’s review included a series of interviews (including of Mr and Mrs Magann, Dr Eijkman and Fr McGloin), as well as with Mr Magann’s then legal representatives, Mr Russell QC and Mr Weller, and the solicitor for Dr Eijkman, Mr Walsh. Ms Bailey also considered a bundle of documents supplied to her by the Professional Standards Office of the Catholic Church (PSO).

8. [17]

   Ms Bailey produced a report dated 14 August 2007 which ran to some 31 closely typed pages and resulted in Ms Bailey concluding that:

9. [18]

   There was an issue at the hearing of the separate question as to when the Bailey Report was provided to Mr Magann. The primary judge found that it was handed to him on 11 September 2007 at a meeting at the premises of the PSO with Mr Paul Davis (Mr Davis) and Mr Michael Salmon (Mr Salmon): at [122]. Mr Davis was special counsel to the Office of Safeguarding and Professional Standards for the Catholic Diocese of Parramatta, and Mr Salmon was the Director of the New South Wales PSO between 2003 and 2018.

10. [19]

    Mr Magann claimed that he did not receive the Bailey Report until after the Deed had been entered into (which was on 16 October 2007), and was supported in this respect by evidence given at the hearing before the primary judge by his former wife, Mrs Magann. As already noted, the primary judge’s finding as to the date of receipt of the Bailey Report is a central part of the appeal and I consider this aspect of the appeal at [39]-[46] below.

11. [20]

    It is clear that, on 11 September 2007, Mr Magann met with Mr Salmon and Mr Davis at the premises of the PSO. (The primary judge’s reference at [121] to Mr Wall being present at this meeting appears to be erroneous, but nothing turns on that).

12. [21]

    Mr Salmon’s contemporaneous file note of the 11 September 2007 meeting was relevantly as follows:

13. [22]

    It may be inferred that the reference to TH in this file note was a reference to the “Towards Healing” process. Shane Wall (Mr Wall), also referred to in the file note, was an independent facilitator engaged by the NSW Professional Standards Office of the Roman Catholic Church to facilitate the Towards Healing complaint lodged by Mr Magann. He, together with Mr Davis and Mr Salmon, all gave evidence in the proceedings at first instance.

14. [23]

    Also in evidence was Mr Salmon’s copy of the Bailey Report which bore the handwritten note “Final Edited Version Handed to DM at PSO on 11/9”. “DM” may reasonably be inferred to be a reference to Mr Magann.

15. [24]

    On 15 October 2007, Mr Wall sent the following email to Mr Salmon:

16. [25]

    The settlement conference was held on 16 October 2007 with Mr and Mrs Magann, Mr Wall and Mr Davis in attendance. The primary judge recorded some areas of dispute as to what transpired at this meeting at [73]-[78] of her reasons. The manner in which her Honour resolved these areas of dispute is considered below in the context of considering the grounds of appeal relating to the Contracts Review Act and unconscionability: see [47]-[68] below.

17. [26]

    It was uncontroversial that a draft of the Deed without any settlement amount specified was given to Mr Magann at the settlement conference, and that the Respondents increased an original offer of $85,000 to $95,000 and reduced the payment period from the 28 day period referred to in the draft deed to 7 days, at Mr Magann’s request. It is also not controversial that Mr Magann did not sign the draft deed at the meeting, but took it to his solicitor Mr Weller and discussed it with him prior to signing and returning it. This occurred later in the day on 16 October 2007.

18. [27]

    Mr Magann also delivered a handwritten letter to Bishop Manning on the same day in the following terms:

19. [28]

    On 17 October 2007 at 8.27am, Mr Wall sent the following email to Mr Magann:

20. [29]

    The Recitals to the Deed were as follows:

21. [30]

    The operative terms of the release were contained in cl 5 as follows:

22. [31]

    The Deed also contained an acknowledgment by Mr Magann in cl 7.2 that upon receipt of the payment referred to in the Deed, Mr Magann will have received all payments and benefits he may be entitled to receive in connection with the Complaint, the Proceedings or any matter incidental to the Complaint or the Proceedings.

Consideration

1. [32]

   Ground 1A (see [6] above), namely the contention that the Deed was “not binding because it did not represent the compromise of a genuine dispute, taking into regard the risks associated with litigation”, must be rejected.

2. [33]

   As the Recitals to the Deed extracted at [29] above plainly demonstrate, there was a genuine dispute. Indeed, Mr Magann’s grievance was of a profound kind. If the point of this argument was that there was no dispute because Mr Magann had failed in his application for an extension of time before the Court of Appeal, Mr Magann still pressed his claim against the Church. So much is apparent from the letter from his solicitor referred to at [14] above, as well as Mr Magann’s pursuit of his claim which was the subject matter of the Bailey Report.

3. [34]

   Litigation need not be on foot for a dispute or claim, however weak or otherwise unlikely to succeed, to be settled and for a deed recording that settlement to be binding and efficacious.

4. [35]

   Counsel appearing for Mr Magann did not explain what was meant by the expression “taking into regard the risks associated with litigation” in ground 1A. If by this he meant that, because Mr Magann’s claim for an extension of time had been rejected (see [13] above) and the 2003 Proceedings had been dismissed so that Mr Magann had no risks to “lay off” by way of settlement, this only serves to illustrate the providence of the settlement from his perspective.

5. [36]

   To the extent that Mr Magann relied upon Atkins Freight Services Pty Ltd v Fair Work Ombudsman [2017] FCA 1134 (Atkins) in support of this ground of appeal, that decision has no relevance to a case of the present kind. It was a case decided in a particular statutory context, as is made clear in the following passage from the judgment of White J at [49]:

6. [37]

   The particular industrial relations law context of Atkins is reflected in White J’s observation at [52], that “[t]he principle acknowledged in Kowalski should be carefully confined in its application. Were it otherwise, the general principle that parties cannot contract out of award obligations may be easily subverted.”

7. [38]

   This line of authority has no relevance to the present case. No statutory right or obligation was being released or contracted out of in the Deed.

8. [39]

   It is next convenient to deal with the challenge to the primary judge’s finding that Mr Magann received the Bailey Report on 11 September 2007, because the contention that he did not receive it until after the Deed had been entered into formed part of his attack on the Deed under the Contracts Review Act limb of the case.

9. [40]

   The primary judge referred to some of the competing evidence in relation to this issue at [65]-[69] of her judgment as follows:

10. [41]

    The primary judge turned to a resolution of this factual issue at [121]-[128] of her judgment. Her analysis was as follows:

11. [42]

    The ground of appeal in relation to this finding was as follows:

12. [43]

    The primary judge’s reliance on contemporaneous documents to resolve the dispute as to the timing of the receipt of the Bailey Report was entirely orthodox and her reasoning by reference to those documents was impeccable. The events in question had occurred more than 12 years prior to the evidence given by Mrs Magann. The documents pointed overwhelmingly to the fact that Mr Magann had been given a lightly redacted version of the Bailey Report prior to the settlement meeting: see, for example, [21] and [23] above. It was not put to either Mr Salmon or Mr Davis that they had fabricated these documents which supported that conclusion, or were either lying or mistaken in their sworn evidence as to when Mr Magann was provided with the Bailey Report.

13. [44]

    There was no suggestion, either by the primary judge or senior counsel for the Respondents, that Mrs Magann was dishonest in her evidence. It was put to her in cross examination that she was mistaken in her recall of the matter. Counsel for Mr Magann in this Court expressly eschewed any submission that there had been a failure to comply with the rule in Browne v Dunn (1893) 6 R 67.

14. [45]

    The primary judge’s reconciliation of her finding that Mrs Magann had given her evidence honestly with the judge’s rejection of this particular aspect of her evidence was entirely unremarkable and compelling in light of the contemporaneous documents.

15. [46]

    This ground of appeal must be rejected.

16. [47]

    The appeal in relation to these two grounds can be dealt with compendiously in light of the arguments put, and the fact that a failure to make out a case under the Contracts Review Act will generally, although not necessarily, mean that success under the equitable doctrine of unconscionability is unlikely cf. Spina v Permanent Custodians Limited [2009] NSWCA 206; (2009) 14 BPR 26,923.

17. [48]

    In considering an appeal from a decision under the Contracts Review Act, it is also necessary to bear in mind that what is under review is an evaluative decision based on the totality of relevant circumstances (see Provident Capital Ltd v Papa (2013) 84 NSWLR 231; [2013] NSWCA 36 at [7]) or, as it has also been put, a broadly based value judgment: Antonovic v Volker (1986) 7 NSWLR 151 at 154-155.

18. [49]

    In Perpetual Trustee Company Limited v Albert and Rose Khoshaba [2006] NSWCA 41, the Court considered the role of an appellate court in an appeal concerning a finding that a contract was unjust within the meaning of the Contracts Review Act. Although Spigelman CJ expressed the matter more tentatively, Handley and Basten JJA considered that appellate review of a finding that a contract was unjust (or, I would add, not unjust, as held in the present case) should be undertaken by reference to the principles identified in Warren v Coombes (1979) 142 CLR 531; [1979] HCA 9. See also Canty v PaperlinX Australia Pty Ltd [2014] NSWCA 309 at [125] (Canty); Al Maha Pty Ltd v Coplin [2017] NSWCA 318 at [29]. As such, as Gleeson JA said in Canty at [125]:

19. [50]

    A valuable recent summary of the principles governing consideration of an application under the Contracts Review Act is that of Gleeson JA, sitting at first instance, in Lauvan Pty Limited v Bega (2018) 330 FLR 1; [2018] NSWSC 154 at [283]-[285]:

20. [51]

    Before turning to the substance of the appeal in relation to the primary judge’s findings with respect to the Contracts Review Act and unconscionability, it is to be observed that, apart from the challenge to the Bailey Report, no other factual findings were identified either in the Notice of Appeal or in a statement accompanying the written submissions identifying the findings of fact which were challenged and the alternative findings contended for, as required by the Uniform Civil Procedure Rules 2005 (NSW) r 51.36(2) (UCPR).

21. [52]

    Whether or not this was intentional or inadvertent was not entirely apparent; the Notice of Appeal appeared to signal an intention to challenge further findings of fact, but these were not identified or elaborated on either in written submissions or in the (in this case, non-existent) narrative statement as required by UCPR r 51.36(2). That rule provides that:

22. [53]

    The purpose of this rule, as explained by Beazley JA (as her Honour then was and with whom Giles and Whealy JJA agreed) in Hamod v State of New South Wales [2011] NSWCA 375 at [774], was separately to identify “substantial challenges made to primary facts found by the trial judge”. In South Western Sydney Local Health District v Gould (2018) 97 NSWLR 513; [2018] NSWCA 69 at [135], Leeming JA (with whom Basten and Meagher JJA agreed) remarked that it was:

23. [54]

    Most recently, in Best v Rosamond [2020] NSWCA 90 at [21], Payne JA (with whom Leeming JA and I agreed) noted the absence of a statement by the appellant identifying the findings of fact which were challenged and the alternative findings contended for, observing that that was an "important omission in the present case as the appellant's challenge essentially rests on overturning numerous findings of fact, including demeanour based credit findings." See also Namrood v Ebedeh-Ahvazi [2017] NSWCA 310 at [61].

24. [55]

    It is of particular importance, especially in a fact intensive matter such as an appeal involving an attempt to set aside a contract under the Contracts Review Act, that the procedure required by the UCPR is adhered to. That procedure does not represent a procedural option. Adherence to it is important for at least three reasons.

25. [56]

    First, it serves to focus the mind of the lawyer drafting the submissions on precisely what factual errors are relied upon to underpin the appeal, and whether there is a proper basis in the evidence to challenge that finding or those findings. Secondly, adherence to the rule is important as a means of putting the respondent on fair notice as to the level of detail at which the decision at first instance is to be challenged. Thirdly, adherence to the procedure is vitally important in delineating this Court’s task on appeal and assisting the Court with all relevant evidentiary references. The high volume of appellate work conscientiously undertaken by this Court demands that practitioners who should have the closest familiarity with the evidentiary record in a given matter, frequently running to thousands of pages of documentary evidence and transcript, assist the Court with precise and accurate references to that record, as required by the rules, in respect of those findings of primary fact which are sought to be challenged.

26. [57]

    Returning to the substance of the appeal, central to Mr Magann’s case at trial in relation to his attempt to set aside the Deed under the Contracts Review Act or, alternatively, on grounds of unconscionability, was the dispute in the evidence as to what transpired at the settlement conference on 16 October 2007, in addition to the matter already dealt with, namely when Mr Magann received the Bailey Report and whether or not it was before or after the meeting of 16 October 2007.

27. [58]

    As to the other issues in dispute as to the 16 October 2007 meeting, the primary judge held at [129]-[137] as follows:

28. [59]

    As has been observed, no challenge was made to any of the factual findings set out in these paragraphs. Although the Court is engaged in a “Warren v Combes” rather than “House v R” level of appellate review, that review falls to be undertaken by reference to the unchallenged factual findings made at first instance. The underlying fact finding process is not repeated unless specific findings of fact are challenged, but the Court may reach its own evaluative determination of the question of unjustness, drawing inferences from unchallenged findings of fact.

29. [60]

    Counsel for Mr Magann expressly accepted that Mr Weller was correct in his advice to Mr Magann prior to executing the Deed that he had no rights to give up. Rather, the primary point put by counsel for Mr Magann related to Mr Magann’s diagnosis of PTSD, and that, because of this condition, he was unable to protect his own interests. He emphasised this matter together with Mr Magann’s lack of relative bargaining ability and the fact that there was no negotiation as to the terms of the Deed (other than as to quantum and date of payment).

30. [61]

    The primary judge was well aware of the fact that Mr Magann suffered from PTSD and took it into account, although her Honour rejected a separate argument, not pressed on appeal, that Mr Magann lacked capacity to enter into the Deed.

31. [62]

    Mr Gyles SC, who appeared for the Respondents, did not question that Mr Magann was suffering from PTSD. He submitted, correctly, that this fact did not in and of itself mean that the Deed was unjust. Were that not so, any number of deeds of settlement beneficially entered into by persons suffering from such a disorder would be vulnerable to being set aside. Nothing should be done to discourage the settlement of such claims. Where, of course, such a deed has been entered into in circumstances attracting the operation of the Contracts Review Act, it will be apt to be set aside but, at least perhaps only in the most extreme circumstances (and even then, the matter would be open to argument), the mere presence of such a disorder in a settling party could not, by itself and without more, attract the beneficial operation of the Contracts Review Act.

32. [63]

    In this context, the Respondents referred to the decision of Brereton J (as his Honour then was) in Tillett v Varnell Holdings Pty Ltd [2009] NSWSC 1040 (at [70], where his Honour said:

33. [64]

    As already noted, Mr Magann did not press a claim of lack of capacity that had failed at first instance, and did not challenge the rejection by the primary judge at [195]-[202] of the evidence of Dr Robertson to the effect that Mr Magann was incapable of understanding the Deed.

34. [65]

    Mr Gyles also embraced those findings of fact made by the primary judge as set out at [58] above to which challenge was not made. He also made the point that, on the aspects of the Deed where there was negotiation, the Respondents acceded to Mr Magann’s demands. Thus, the initial offer was increased by $10,000 and the date for payment was accelerated from 28 days to 7 days.

35. [66]

    Also of relevance was the fact that, although Mr Magann did not have legal representation at the settlement conference, he had obtained legal advice both before it, including from Mr Russell QC (see [24] above) and after it, but before he executed the Deed, from Mr Weller. It was not submitted that insofar as Mr Weller told him he had no rights to give up that this advice was in substance wrong, and the fact is that Mr Magann was not giving up any legal rights he had at the time in relation to the subject matter of the Deed. The limitation period for his claims had passed, and his application for an extension of time had been denied. As Mr Boyd, who appeared for Mr Magann, put in oral submissions, “he [Mr Magann] had nothing to protect except a desire to bring something to a conclusion”.

36. [67]

    The primary judge held at [226] that she was unable to identify any undue influence or unfair pressure or tactics to have been exerted by the Respondents on Mr Magann. Nor am I. As the Respondents submitted, and I accept, this conclusion was and is amply justified by the following matters:

37. [68]

    In short, there was no substantive or procedural unfairness or unjustness which vitiated the Deed (see West v AGC (Advances) Ltd (1986) 5 NSWLR 610 at 620; Nemeth v Australian Litigation Funders Pty Ltd [2014] NSWCA 198 at [94]-[97]), and the primary judge was correct to so hold. So also, with respect, the primary judge was correct to conclude that no basis lay to impugn the Deed in equity by reference to the doctrine of unconscionable conduct.

A question of timing and a final observation

1. [69]

   As this Court noted in Moubarak by his tutor Coorey v Holt (2019) 100 NSWLR 218; [2019] NSWCA 102 at [32]-[34], on 17 March 2016, s 6A was introduced into the Limitation Act removing any limitation period for child abuse actions: see Limitation Amendment (Child Abuse) Act 2016 (NSW). Similar, albeit not identical, reforms have been enacted in all other Australian states and territories: see Limitation Act 1985 (ACT) s 21C; Limitation Act 1981 (NT) s 5A; Limitation of Actions Act 1974 (Qld) s 11A; Limitation of Actions Act 1936 (SA) s 3A; Limitation Act 1974 (Tas) s 5B; Limitation of Actions Act 1958 (Vic) ss 27O–27R; and Limitation Act 2005 (WA) s 6A. The reforms were enacted in response to recommendations made by the Royal Commission into Institutional Responses to Child Sexual Abuse.

2. [70]

   Had a section such as s 6A of the Limitation Act existed at the time of Mr Magann’s 2003 Proceedings, there would have been no relevant limitation period and thus no occasion for Mr Magann to seek an extension of time. As has been noted above, his failure to achieve such an extension left him with no relevant legal rights against the Respondents at that time or at the time of entry into the Deed, insofar as the subject matter of those proceedings was concerned.

3. [71]

   The amendments effected by the Limitation Amendment (Child Abuse) Act in New South Wales did not address the situation of someone in Mr Magann’s position, who had entered into a deed of release in relation to what may be described as a claim based on alleged historic child sexual abuse in circumstances where that claim was statute barred. Legislation in other states has addressed this circumstance, albeit in a non-uniform way. The relevant legislation is referred to and discussed in a NSW Government Discussion Paper entitled “Setting aside settlement agreements for past child abuse claims” (the Discussion Paper), accessible at <https://www.justice.nsw.gov.au/justicepolicy/Documents/settlement-agreements/discussion-paper-setting-aside-settlement-agreements-for-past child-abuse-claims.pdf>. The Discussion Paper called for submissions which closed on 15 April 2020.

4. [72]

   Paragraph 4.15 of the Discussion Paper referred to the decision at first instance in the present case, noting that:

5. [73]

   The Respondents very properly drew the Court’s attention to the Discussion Paper. Mr Boyd did not seek to make any submission in relation to the Discussion Paper.

Conclusion

1. [74]

   The appeal must be dismissed with costs.

2. [75]

   MACFARLAN JA: I agree with Bell P.

3. [76]

   PAYNE JA: I agree with Bell P.