The ACT Supreme Court has delivered a decision dealing with a solicitor’s alleged breach of retainer arising out of the settlement of a historical childhood sexual abuse claim. 

Background

The Court accepted that the plaintiff had been subjected to childhood sexual abuse by a number of staff employed by the first defendant (the Marist Brothers) during the 1980s. The plaintiff’s claim against the Marist Brothers had been resolved by the time of hearing.

In 2008, the plaintiff consulted the second defendant (the Solicitor) and commenced proceedings against the Marist Brothers seeking compensation for the abuse he had suffered as a child (the 2008 proceedings). The 2008 proceedings were settled in March 2010, on the recommendation of the Solicitor, for the sum of $80,000.00 inclusive of costs. The plaintiff signed a Deed of Release in favour of the Marist Brothers, which specifically named five Brothers who had perpetrated abuse against the plaintiff.

Subsequently, the Limitation Act 1985 (ACT) was amended to facilitate proceedings arising from historical childhood sexual abuse. The plaintiff engaged the Solicitor again in 2017 to explore reopening his case against the Marist Brothers. The Solicitor advised that this was not possible because of the Deed of Release. However, the Solicitor indicated he may be able to obtain a further payment from the Marist Brothers to compensate the plaintiff for additional legal costs he had incurred because of the Marist Brothers’ conduct in the 2008 proceedings.

The plaintiff received a further payment of $33,000.00 inclusive of costs.

The Allegations

The plaintiff alleged that the Solicitor breached his retainer and/or his duty of care by:

• Pressuring him to settle the 2008 proceedings for a sum substantially less than what his claim was worth. This pressure arose substantially because the Marist Brothers had served a medical report which, the Solicitor advised the plaintiff, was highly detrimental to his case due to the disclosure of previous abuse outside the school.
• The plaintiff alleged that the Solicitor had breached his retainer in 2017 by failing to advise the plaintiff that he could bring a claim against several Brothers who were not named in the 2010 Deed.

The plaintiff also brought a claim for personal injury, alleging that the Solicitor’s breach of duty had caused him to spiral into a deep depression.

The 2010 Claim

The most immediate difficulty faced by the plaintiff in respect of the 2010 settlement was the limitation period, which the Solicitor said had expired. To circumvent this issue, the plaintiff argued that the proceedings against his former solicitor was a claim for personal injury arising out of his childhood sexual abuse. Accordingly, the same amendment to the Limitation Act which permitted victims of childhood abuse to bring compensation claims against their abusers permitted him to bring a claim against the Solicitor.

This argument was rejected by the Court. The Court held that:

• Although the plaintiff pleaded that he had suffered psychological injury as a result of the Solicitor’s conduct, there was insufficient medical evidence as to any psychiatric injury to the plaintiff arising from the settlement negotiations in 2010;
• As a matter of principle, the Court considered various authorities and held that the plaintiff’s loss because of the Solicitor’s breach of retainer (if any) was simply not an injury to his person. He had lost the right to sue or a chose in action, and the value of that right/chose – in short, he had lost a valuable chance; and
• The substance of the claim in the 2008 proceedings was irrelevant. The claim arose squarely and simply from the alleged breach of contract or negligence of the Solicitor. No matter how broadly the Limitation Act was interpreted, the Court could not import into it a meaning which its plain words did not allow.

In the alternative, the plaintiff alleged that the limitation period had not expired because his cause of action had not accrued until a later date. However, it was an integral part of his claim for psychological injury that he had spiralled into depression immediately after settlement, causing him significant general damages and economic loss. This, the Court held, was a clear indication that the cause of action accrued in 2010.

The plaintiff’s claim in relation to the 2008 proceedings therefore failed.

The Court went on to consider liability and quantum, if the limitation period had been no bar. In that circumstance, the Court held that it would have made a finding of negligence against the Solicitor. This was primarily because the Court considered that the Marist Brother’s expert medical report was not nearly as damaging to the plaintiff’s case as the Solicitor had made it out to be.

Damages were to be assessed keeping in mind that the plaintiff was being compensated for the loss of a valuable chance, which needed to be valued at the time of the loss. The assessment was not to be completed as if the Solicitor were the defendant in the 2008 proceedings.

The Court therefore determined the likely award of damages to the plaintiff if he had been successful in the 2008 proceedings (which was significantly less than what it would have been today). The Court then allowed a deduction for the plaintiff’s solicitor/client costs, a discount of 20% to allow for the chance that the plaintiff’s claim would have failed, and finally, with some reservation, the deduction of a payment received by the plaintiff from the National Redress Scheme, which the plaintiff agreed should be deducted.

The 2017 Claim

The Limitation Act did not dispose of the whole of the plaintiff’s claim. The limitation period had not expired in respect of any breach of retainer or negligence which might have occurred in 2017.

The plaintiff pleaded that the Solicitor was instructed in 2008 to seek damages arising out of the actions of five Brothers. Three of them were named in the 2010 Deed, such that there was no avenue to reopen the plaintiff’s case as it related to those Brothers. In respect of the final two Brothers, the Court found that (contrary to the plaintiff’s statement of claim), the plaintiff was unable to identify those Brothers until 2019, well after he had consulted the Solicitor. Accordingly, there was no way for the Solicitor to have reopened the plaintiff’s claim in 2017, and the Solicitor’s actions did not constitute a breach of the 2017 retainer.

If that finding was successfully appealed, the Court held that it was unable to assess the quantum of any loss sustained by the plaintiff in 2017, given the absence of information about the nature of the allegations against the remaining two Brothers.

Outcome

Judgment was made in favour of the Solicitor.

In the ordinary course, the Solicitor would have been awarded his costs of defending the proceedings. In this case, given that the plaintiff had successfully established that the Solicitor was negligent in 2010 and had failed only because of the limitation period, the Court considered it appropriate to order that each party bear its own costs of the proceedings.

Ramifications

The Court used the opportunity presented by this judgment to comment upon the ‘inequity’ that the ACT, in contrast to several other states and territories, has not enacted reforms which enable victims of historical abuse to apply to the Court to have Deeds of Release set aside where it would be just and reasonable to do so. This would have provided a mechanism for the plaintiff to have reopened his case against the Marist Brothers in 2017. It will be interesting to see whether the ACT takes up reform in the wake of this decision.

This case confirms that claims for breach of retainer or negligence are not personal injury claims, even where the client suffers a psychological injury arising out of the breach of retainer/duty.

An appeal has been filed against this decision. Moray & Agnew will report further upon determination of the appeal.