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11 November 2013
It has been widely reported that the House of Lords decision in A v Hoare (2006) will open the floodgates for historical sexual abuse claims, but do organisations such as local authorities, churches, charities and their respective insurers really need to prepare themselves for a significant increase?A v Hoare has removed the fixed six-year time limit for assault claims and replaced it with the more flexible limitation provisions previously applicable only to negligence claims. A claim must now be issued within three years of the date of the assault (or the claimant's 18th birthday) or three years from the claimant's date of knowledge (if later). Crucially, there is also a judicial discretion to disapply the limitation periods entirely where it appears just and equitable to do so.
This means the limitation period for claims against alleged abusers (previously a non-extendable six-year period from the date of the abuse) is potentially indefinite. In practice, though, this is not likely to result in many more claims against alleged abusers, largely because, unless they win the Lottery, they rarely have the financial resources to pay any compensation awarded.
Similarly, although the decision means that vicarious liability claims against employers, for abuse committed by their employees, can also be brought many years later, the reality is that many such claims were already being advanced before this decision. Claimants simply relied on employers' negligence in failing to prevent the abuse in order to take advantage of the more flexible limitation provisions.
Consequently, the A v Hoare decision is unlikely to result in a flood of new claims against either alleged abusers or their employers. The most significant effect of the decision is that claimants in these cases will no longer have to prove that abusers' employers were negligent, but will simply have to establish that they were abused by an employee acting in the course of their employment. This will give rise to new issues for consideration, such as whether to join an alleged abuser as a Part 20 defendant to a claim and the applicability of vicarious liability to particular factual circumstances.
Many commentators have overlooked the Lords' decision in Young v Catholic Care (2006), heard at the same time as A v Hoare. Before the Young decision, claimants seeking to bring negligence claims many years after the expiry of the primary limitation period could seek to rely on a subjective, delayed date of knowledge or upon judicial discretion. Following Young, a claimant's date of knowledge is to be determined objectively, so claims involving allegations of serious abuse not issued within the primary limitation period will be statute-barred on the basis that the claimants knew at the time of the abuse they had suffered a significant injury. Most claims will therefore now have to be decided on the exercise of the judicial discretion.
So what is the impact of these decisions for insurers and their policyholders? The main area of exposure in relation to these claims is for employers' liability and public liability insurers, particularly those of local authorities, churches and charities. It has generally been accepted that the insurer that gave cover at the time of the alleged abuse is responsible for any claims arising out of that abuse. This approach has been reinforced by the Lords' decision in refusing to allow those claiming serious abuse to rely on a delayed date of knowledge.
For many organisations, attempting to trace employers' and public liability insurance policies from 30 or more years ago is extremely difficult, especially if the school or home involved has closed down, which is often the case. Even if the policy can be traced, it may not provide cover for claims of this nature because it was not envisaged at that time that organisations would be liable for sexual assaults committed by their employees. In addition, the limits of indemnity may be so low as to mean the organisation has to meet the costs of any claims itself. These difficulties are unaffected by the Lords' decision, but the overall picture is far from negative for these organisations and their insurers.
Contrary to reports, the number of claims being brought is unlikely to be significantly affected by the decision in A v Hoare, but the basis on which many claims are brought will change from negligence to vicarious liability. This will make it easier for particular claimants to succeed, but only for those who can demonstrate some corroborative evidence that they were abused. The real benefit of the decision is that there is now more certainty as to which claims are likely to succeed and which may be statute-barred.
While the decision has provided some clarity, it has also raised new issues for consideration, ;and ;we ;can therefore expect further litigation in this area for some time to come.
Kathy Perrin is an insurance partner at Hill Dickinson