By: Richard Leder, Michelle Rich and Rhyse Collins

Dougan v Trustees of the Marist Brothers [2025] VCC 1663

At a glance

• On 17 November 2025, Her Honour Judge Bourke of the County Court of Victoria delivered her judgment in Dougan v Trustees of the Marist Brothers [2025] VCC 1663, confirming that defendants who make sensible offers of compromise and then do better at trial will be protected on costs, while plaintiffs cannot expect to vary jury verdicts following the conclusion of a trial.
• Judge Bourke’s decision highlights the Court’s readiness to enforce cost consequences for rejected sensible offers, and prevent plaintiffs from double-dipping in the context of prior settlements.

The facts

The plaintiff, Michael Dougan, commenced proceedings against the Trustees of the Marist Brothers (the Brothers) in the County Court of Victoria seeking damages for psychiatric injury resulting from sexual abuse by a Marist Brother in 1975, when he was 15 years old. Before commencing proceedings, the plaintiff participated in the Towards Healing process and signed a deed of release on 7 June 2016 receiving payment of $122,500 inclusive of legal costs.

In their amended defence, the Brothers admitted the fact of the plaintiff’s abuse and agreed to set aside the prior deed, but sought to have the earlier compensation set off against any award in the current proceedings. The matter proceeded to trial before a judge and jury in October 2025. The jury awarded the plaintiff $300,000 for pain and suffering, $20,659 for medical and like expenses and no award for economic loss.

Before trial, the Brothers served two formal offers of compromise:

• $300,000 (plus retention of the prior payment) on 20 August 2025, and
• $400,000 (less credit for the prior payment) on 23 September 2025.

The plaintiff rejected both offers. He made an offer to accept “$500,000 plus keep, plus standard costs and disbursements to be taxed in default of agreement” on 2 September 2025. That offer was not accepted by the Brothers.

Following the jury verdict, the parties sought rulings on:

• whether the earlier Towards Healing payment should be deducted from the jury’s award under s 27QE(2) of the Limitation of Actions Act 1958 (Vic) (the LAA), and
• the appropriate costs orders in light of the competing offers of compromise.

The plaintiff’s case

The plaintiff submitted that the Towards Healing payment was not true compensation, but rather a pastoral payment made in a non-adversarial, church-controlled process that lacked transparency and procedural safeguards. He contended the payment did not reflect full compensation for his loss, covered non-compensable items, and protected multiple parties.

He also submitted that the payment was made without proper assessment of his loss, and that it was not just or reasonable to deduct it from the jury’s award. The plaintiff argued that, at a minimum, only a small portion of the payment should be deducted, or alternatively, that the earlier payment should be added to the damages awarded by the jury to reflect the true extent of his loss.

The Brothers’ case

The Brothers submitted that the Towards Healing payment was objectively significant and was paid specifically in respect of the same injury that formed the basis of the plaintiff’s claim. The Brothers argued that the deed of release was clear, releasing them and others from further liability, and that the payment was made as compensation for the abuse suffered.

The Brothers submitted that allowing the plaintiff to recover the full jury award without deduction would result in double compensation, contrary to the compensatory principle. Furthermore, the Brothers relied on their formal offers of compromise, which exceeded the plaintiff’s net recovery, and argued that the plaintiff’s refusal to accept those offers should result in a favourable costs order for the Brothers.

The Brothers’ case

The Court addressed three principal issues:

• Whether it was “just and reasonable” under s 27QE(2) LAA to deduct the $107,251 previously paid to the plaintiff from the jury’s damages award,
• Whether the Court should add the prior payment to the jury’s award, effectively granting “double recovery”, and
• Whether, applying r 26.08(3) of the County Court Civil Procedure Rules 2018 (mirrored in Supreme Court (General Civil Procedure) Rules 2025), the Brothers were entitled to their costs from the second business day after service of their first, and subsequently improved, offers of compromise.

The decision

Judge Bourke held that the compensatory principle, as articulated in Haines v Bendall,¹ prevents a plaintiff from recovering more than the loss actually suffered. The Court relied on authorities such as Comensoli v WQA (a pseudonym)² and National Insurance Co of NZ v Espagne,³ confirming that payments for the same loss should be deducted unless injustice would result.

In distinguishing Lonergan v Trustees of the Sisters of Saint Joseph⁴ and Steen v Trustees of the Diocese of Tasmania,⁵  where prior settlements were not deducted, the Court noted that the Towards Healing payment to the plaintiff was objectively significant, was paid by the Brothers (albeit via its insurer), and contained a clear release for the same cause of action. Further, there was no evidence of disentitling conduct by the Brothers of the kind found in Lonergan or Steen. Accordingly, the Court found it just and reasonable to deduct the full $107,251 from the jury’s award, resulting in a net judgment of $213,408 plus interest.

Judge Bourke rejected the plaintiff’s submission that the earlier settlement sum should be added to the jury’s verdict, finding this inconsistent with the compensatory principle and unsupported by s 27QE(2) of the LAA. The Court emphasised that the plaintiff’s entitlement is limited to the loss assessed by the jury, and any addition would constitute impermissible double recovery. The Court also stressed the importance of finality in jury verdicts.

Because the plaintiff’s net recovery of $213,408 was less favourable than both of the Brothers’ offers, the rule in r 26.08(3) was engaged. The Court rejected the plaintiff’s argument that “exceptional circumstances” justified a departure from the usual costs consequences, finding no misconduct by the Brothers and noting that the plaintiff simply “rolled the dice” and failed to beat those offers. As a result, the Brothers were ordered to pay the plaintiff’s costs on a standard basis up to 22 August 2025 (the second business day after the first offer), and the plaintiff was ordered to pay the Brothers’ costs thereafter on a standard basis.

Key takeaways

The Dougan decision demonstrates that reasonable offers of compromise remain a powerful tool for defendants. Where a plaintiff fails to beat a defendant’s offer, the Court will not lightly depart from the presumption that the plaintiff bears the defendant’s costs from the relevant date.

Section 27QE(2) of the LAA provides a mechanism to prevent over-compensation. Prior redress or settlement payments are likely to be deducted from any subsequent damages award unless compelling factors point to injustice, especially where offers of compromise make it clear that the prior payment forms part of the offer (whether on an inclusive or exclusive basis).

Courts are reluctant to revisit jury awards to graft on additional sums post verdict, and defendants can rely on the sanctity of the jury’s assessment when resisting ex-post adjustments.

Early, informed admissions may reduce trial length and costs, but defendants are entitled to test the plaintiff’s evidence robustly. Integrating knowledge of prior payments, legislative entitlements, and potential jury outcomes into early offer formulation can secure both financial certainty and advantageous costs protection.

Key Contacts & Updates

For insights or questions about this article, please reach out to Richard Leder, Michelle Rich or Rhyse Collins.

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