On 24 February 2021, after hearing competing legal arguments in A v XY Limited, Lord Woolman issued the first judicial decision on the substantial prejudice defence in non-recent Scottish childhood abuse claims (link here).
Although only persuasive, this decision suggests that it will be an uphill struggle for a defender to successfully prevent a case continuing by taking a substantial prejudice argument once the court has also considered the pursuer’s interest in the case proceeding, albeit the outcome will depend on the facts and circumstances of the particular case, with key factors including the seriousness of the alleged crime and the consequences said to have been caused by that.
The pursuer, a former pupil at the defender company’s school, alleges that, at the age of 13, she was raped by a teacher when on a school camping trip in 1987. She sues for £1.5m. The defender company’s position is that they do not know whether or not the alleged rape happened. They acknowledge that if the court accepts the pursuer’s account then they will be vicariously liable for the teacher. In addition to substantial prejudice, they put forward defences on causation and quantum. The pursuer claims that the alleged incident has had corrosive and pervasive life-long consequences including on her academic and career (under)achievement.
Lord Woolman held that:
- The defender company would be substantially prejudiced if the action proceeds. But for the retrospective abolition of limitation, the pursuer would have had to raise her action by 1993 (the third anniversary of her 16th birthday) or, if she raised the action later, she would have had to persuade the court that it was equitable for her action to continue though raised out of time. In reality, case law strongly suggests that if the pursuer did not litigate by 1993 then her action would not have been allowed to proceed. If the pursuer had litigated against the defender company school by 1993 then she is likely to have been met with a defence that the school was not vicariously liable for the alleged criminal act of the teacher because they did not employ the teacher to commit such acts. At that time, that defence is likely to have succeeded because it was not until 2001 that the House of Lords explained that vicarious liability can arise if there is a sufficient connection between an employee’s criminal conduct and the work that he had been employed to do (Lister v Hesley Hall Limited  1 AC 215). So “For many years (the defender company) had no potential liability for the alleged incident” but, because of the retrospective abolition of limitation in Scotland and the intervening development of the common law by the House of Lords, “It is now exposed to a significant interference with the peaceful enjoyment of its possessions”. This “sea change” in the defender’s position suffices for substantial prejudice to be established.
- There are no further factors to the defender company’s prejudice. In particular, while they may face certain difficulties in investigating matters, key witnesses appear to be available and the school was made aware of the allegation in 1991 after the pursuer made disclosure to a psychiatrist. In any event, the defender does not argue that any difficulties faced are so fundamental that a fair trial is impossible. In the context of prejudice, it does not matter that the pursuer has chosen to sue the defender company rather than the teacher directly. The teacher might not be able to meet any financial award made.
- However, importantly the substantial prejudice to the defender does not outweigh the pursuer’s interest in the case proceeding. Reasons for this include that rape is a “detestable crime”, that – if the allegation is true – the incident was aggravated by premeditation and breach of trust with the teacher taking advantage of a child in a vulnerable situation, and that the consequences are said to be life-long. The pursuer also has a vital interest in securing justice. She reported the incident to the police in 2013. A trial was arranged for 2014. For evidential reasons on the requirement for corroboration in a Scottish criminal case, the Crown abandoned the prosecution.
Lord Woolman emphasises that each case in this area is “intensely fact specific” and “must be decided on its individual circumstances”. In this particular case, “the scales tip decisively in favour of the pursuer” so the action will now continue towards an evidential hearing. Nonetheless, the finding of substantial prejudice to the defender company is likely to be of note in other cases involving vicarious liability for alleged pre-2001 criminal acts. In such cases and assuming Lord Woolman’s lead on “substantial prejudice” is followed, the court’s assessment of the pursuer’s interest might not always tip the scales in favour of the pursuer. For that outcome however significant inquiry will be needed on any particular case with the exercise of the balancing of the scales then being required on each occasion.