Legal Update: Child abuse claims expected to rise in Scotland

Hundreds of actions for historic child abuse in Scotland were abandoned when an appeal by two former residents of a Scottish children’s home failed in 2008. The claimants had appealed against a court ruling dismissing their case because of a statutory time bar of three years. Both had left the home, run by religious order the Poor Sisters of Nazareth, decades before coming forward in the late 1990s, when a series of newspaper articles reported allegations of abuse. It was this publicity that spurred the two claimants to seek justice, but the courts ruled that so much time had elapsed that there was a real risk of substantial prejudice to the defenders.

This landmark judgment deterred many from pursing claims for historic child abuse in Scotland. But now that is about to change.

This July, the Limitation (Childhood Abuse) (Scotland) Act received Royal Assent. This legislation that has long been sought by campaigners for victims of child abuse will come into force this October. Most importantly for victims and the insurance industry, the Act removes the statutory time bar for cases in which the claimant was under 18 at the time of the abuse.

As long as a case has not previously been judged on its merits, if it was disposed of due to issues of time bar, it can now be raised afresh. This is unprecedented as an Act of Parliament will overturn the courts’ final judgments.

The Act represents a victory for campaigners, many of whom have fought tirelessly over the years. The Scottish Child Abuse Inquiry heard evidence of the protracted struggle, which culminated in the legislation winning the unanimous support of the Scottish Parliament.

Insurers are supportive of the increased access to justice but have voiced concerns over potential problems with the changes. In the meantime, hundreds of claims have been building up. It is no surprise, then, that claimant firms have been active over recent months and are said to have amassed ‘war chests’ of claims. One has stated it has over 1000 potential actions.

The likelihood of a sharp increase in the number of historic child abuse claims in Scotland is reasonably high. Precedents for this type of legal change exist in Australia and Canada. Although the parallels are not exact, Australia, in particular, saw a significant number of claims – and Scotland will surely do the same.

Insurers will certainly need to review their reserves. They will also need to review their claims handling protocols as they prepare for what is to come. Only a small number of insurers are well versed in handling historic child abuse claims. So with a decade of few claims materialising, training of claims handlers is imperative.

In preparation, insurers are pressing for a pre-action protocol, a framework under which claimants will be required to provide certain key pieces of information and both parties are given a timescale so that there is sound disclosure, early settlement where possible and proper control over costs.

The basis on which these cases can be defended is untested. There may be satellite litigation on the interpretation of the Act for years to come. And with the Scottish Government’s moving to qualified one-way costs shifting, insurers have an extra unknown liability to incorporate into this new exposure.

What will happen this October is, to some extent, unpredictable. What’s certain, though, is that many victims of historic child abuse in Scotland – people who thought they would never get their day in court – will take the opportunity to give voice to the traumatic events of the past.

For the insurance industry, the challenge is to support this process while managing what could be significant evidential issues.