VIC stops clock on child abuse claims

Limitation periods are increasingly recognised as an impediment to justice in civil claims arising from child abuse. This was recently highlighted by the Royal Commission into Institutional Responses to Child Sexual Abuse in its January 2015 Consultation Paper on Redress and Civil Litigation.[1]

The Royal Commission noted that a significant amount of time often elapses before abuse survivors are able to disclose their abuse (22 years on average, based on the experiences of participants in the Royal Commission’s private sessions), and counselling, support and police action may take priority over compensation.[2]

In these circumstances, limitation periods can present a significant barrier. Though discretion exists for courts to extend time limits, the expiry of limitation periods can deter compensation claims being pursued, with particularly unjust results for abuse survivors.

Limitation of Actions Amendment (Child Abuse) Bill 2015 (Vic)

Before the Royal Commission, these issues were considered by the Victorian Parliament Family and Community Development Committee Inquiry into the Handling of Child Abuse by Religious and Other Non-Government Organisations. In its 2013 Betrayal of Trust report, the Committee recommended that in recognition of the extended time it can take for survivors of abuse to come forward, civil claims arising out of child abuse should be excluded from the statute of limitations.[3] This important reform is now being implemented in Victoria.

The Limitation of Actions Amendment (Child Abuse) Bill 2015 (Vic) amends the Limitation of Actions Act 1958 (Vic) by abolishing limitation periods for actions relating to personal injury resulting from child abuse. It also removes the 12-year ‘long stop’ period from cases involving actions by dependents for wrongful deaths caused by child abuse (under Part III of the Wrongs Act 1958 (Vic)). For such wrongful death claims, the Bill introduces a three year limitation period from the date on which the cause of action is discoverable by the plaintiff, irrespective of the date of death of the deceased.

The amendments apply retrospectively, extending to child abuse whenever it occurred and regardless of whether a limitation period previously applied. The new provisions cover civil actions founded on the death or personal injury of a person resulting from physical abuse or sexual abuse of that person as a minor, and associated psychological abuse. The Bill does not define physical, sexual or psychological abuse, leaving it to the courts to define those terms.

Importantly, the reforms do not limit the Courts’ inherent, implied, or statutory jurisdiction or any powers of courts arising or derived from the common law or legislation. As the Explanatory Memorandum notes, this approach preserves the power of courts to control or dismiss proceedings where the impact of the delay on the defendant is so significant that a fair trial is not possible.[4]

The Bill passed the Victorian Parliament on 14 April 2015, and at the time of writing, it is awaiting Royal Assent.

Are other states and territories likely to follow the Victorian lead?

The Victorian reforms come at a time of heightened attention to abuse litigation and redress by reason of the work of the Royal Commission. There is, however, considerable variation in legislated limitation periods across the states and territories,[5] and no uniformity amongst other jurisdictions in plans for change.

The New South Wales government published a discussion paper on limitation periods in child sex abuse cases in January 2015, seeking input by mid-March.[6] Abolition of limitation periods is one of several reform options canvassed by the paper, which flags that recommendations made by the Royal Commission will be considered in the assessment of reform proposals.

Submissions provided by other state and territory governments in response to the Royal Commission’s redress and litigation consultation suggest less openness to limitation period reform in line with the Victoria developments. South Australia, the Northern Territory and Tasmania noted that they do not currently support the removal of limitation periods. Western Australia made no relevant comment, and the ACT and Queensland made no written submission to the consultation. It is anticipated that the Royal Commission will make recommendations about limitation periods in its final report on redress and civil litigation, following which the way forward in other jurisdictions will likely become clearer as they respond.

What is the likely impact of for insurers?

The potential impacts are many and varied. In its submission to the Royal Commission on litigation and redress, the Insurance Council of Australia (ICA) noted that limitation periods are factored in to the process of underwriting and pricing public liability risks. The ICA projected that changes to limitation periods with retrospective effect will create two major challenges for insurers:

• exposure to claims from a policy holder for which the insurer has not collected sufficient premium, and
• prudential management risks, in that where substantial numbers of additional claims are facilitated by legislative change, the capital position of an insurer could be negatively affected.

Removing the limitation period takes down one barrier faced by abuse survivors, in that post-reform, it can no longer be relied upon to resist a claim. This may result in greater numbers of claims being made, with the retrospective nature of the reforms potentially creating an initial uptick in new claims that were previously statute-barred.[7] There may be legal cost reductions in the avoidance of expensive interlocutory battles over limitations.[8]

Though in practice insurers may settle claims regardless of the expiry of limitation periods,[9] evidence from the Royal Commission shows that expired limitation periods [10] have been used to resist claims and drive down settlements. By reason of the reform, those approaches will no longer be open. It is possible that the reforms will increase the likelihood that claims will be made in circumstances where evidence and witnesses are no longer available; however, a plaintiff will still have to prove their substantive case. Victorian courts will also retain their inherent powers to stay proceedings in circumstances where the prospect of a fair trial is prejudiced by delay.

Ultimately, however, there is great uncertainty about the impacts of the reforms. It is well understood that child abuse is underreported and far fewer abuse survivors seek compensation than may be entitled to do so. The impacts will also need to be seen in the context of the Royal Commission’s broader impact on claim numbers and the magnitude of awards,[11] its ultimate recommendations on litigation and redress options, and the subsequent responses of Commonwealth, state and territory governments. The Royal Commission is due to publish its final report on redress and civil litigation in July 2015.

CPD: Actuaries Institute Members can claim two CPD points for every hour of reading articles on Actuaries Digital.