Graeme Watson: Both claimants and insurers need some kind of protocol

In 2008, the failure of an appeal by two former residents of a Scottish children's home was instrumental in the abandonment of hundreds of actions for historic child abuse in Scotland.
Tuesday 8th of December 2015: Clyde & Co Headshots Edinburgh Office Day OneTuesday 8th of December 2015: Clyde & Co Headshots Edinburgh Office Day One
Tuesday 8th of December 2015: Clyde & Co Headshots Edinburgh Office Day One

The claimants had appealed against a court ruling dismissing their case because of a three-year statutory time bar. Both had left the home decades before coming forward in the late 1990s, when allegations of abuse surfaced in the media.

This publicity spurred the claimants to seek justice, but the courts ruled there was a real risk of substantial prejudice to the defenders because so much time had elapsed.

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This judgment deterred many from pursing claims for historic child abuse, but now that is changing.

This month, legislation long sought by campaigners for victims of child abuse – the Limitation (Childhood Abuse) (Scotland) Act – came into force. Most importantly, 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.

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 1,000 potential actions.

The likelihood of a sharp increase in the number of historic child abuse claims in Scotland is reasonably high. Many claims will be passed to the insurers of organisations which employed alleged abusers. Insurers will need to review their reserves and their claims handling protocols as they prepare for what is to come. After a decade of few claims materialising, training of claims handlers will be imperative.

In preparation, both claimants and insurers are pressing for a pre-action protocol – a framework under which parties exchange information early and have a clear timescale so that there is sound disclosure of allegations and supporting information, a detailed response from the other side, early settlement where possible and proper control over costs.

The courts’ response to the new legislation is untested. There may be satellite litigation on the interpretation of the Act for years to come.

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The added factor of the 
Scottish Government’s move to qualified one-way costs 
shifting means that insurers have an extra unknown liability to incorporate into this new exposure.

Already claims are being brought forward under the Act. For many victims of historic child abuse in Scotland – people who thought they would never get their day in court – this will be their 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.

Graeme Watson is a partner with Clyde & Co