Reopening settlements in abuse cases – the approach in Australia – could it happen in other jurisdictions?

In November 2021 the New South Wales (“NSW”) state parliament passed the Civil Liability Amendment (Child Abuse) Act 2021.

This amending legislation allows the courts to revisit unfair settlements and agreements that may have been entered into by victims and survivors of child sexual abuse and serious physical abuse.

The courts can set aside such agreements if it is “just and reasonable to do so”.

Speaking at the passing of the amending legislation the NSW attorney general Mark Speakman said that “We are righting the wrongs of the past to ensure survivors can access the civil justice they deserve and be properly compensated for the appalling mistreatment they suffered as children.”

This amending legislation is one of a collection of legal changes over the last few years aimed at addressing the recommendations made by the 2015 Royal Commission into Institutional Responses to Child Sexual Abuse (which was established in 2013 and issued its final report in December, 2017).

Similar reforms have already been made in Queensland, Victoria, Tasmania, Western Australia and the Northern Territory.

It is expected that the new law will lead to a significant numbers of cases coming before the courts to be reviewed, the details of which were previously unknown as many were the subject of confidentiality and/or non-disclosure agreements.

The new law is quite specific in terms of the settlement agreements that can be set aside and says that it is the settlement agreements “for claims that were either impacted by the expiry of the limitation period or where an organisation was not incorporated and there was therefore no proper defendant to the cause of action, or both, if just and reasonable to do so.”

In determining whether it would be just and reasonable to set aside a settlement agreement, the court, which has been granted a very wide discretion, can consider the following factors:-

  • The amount  of damages/compensation paid to the claimant at the time of the settlement
  • The respective bargaining positions of the parties to the settlement
  • The conduct of the defendant/s and their legal representatives, and
  • Any other matter the Court considers relevant.

An even more interesting development under the amending legislation is the fact that the court can also look at ‘without prejudice’ communications between the parties and/or their legal representatives which would usually be prohibited the law of evidence in NSW.

Interestingly the amending legislation does not empower the courts to set aside agreements under the Australian National Redress Scheme, certain agreements between defendants or contracts of insurance, this means that previous agreements between defendant’s and their insurers cannot be set aside.

Where the court exercises its discretion in favour of the claimant and sets aside a prior settlement agreement, the defendant does not recover the damages previously paid out they are instead taken into account by the court when assessing the new amount of damages to be paid to the claimant.

Prior to the enactment of this amending legislation there were also restrictions on how claims for child abuse that occurred in custody in juvenile justice facilities were determined but following the enactment of the amending legislation these claims will be treated in exactly the same way as a claim for child abuse that occurred in any other institutional setting.

These changes will have widespread consequences for private and public institutions in NSW and their insurers whom it is expected will now face increased numbers of new and reopened claims.

Defendants and their insurers will now have to put in places clear policies about the indefinite retention of files relating to such claims while also weighing such policies against their legal obligations under the Australian Privacy Act of 1988 as amended.

Insurers will no doubt want to look carefully at policy coverage for re-opened claims and depending on that wording defendants may find themselves without insurance for the re-opened claim.

As similar changes have already been introduced in other Australian states and territories at an earlier date than in NSW it will be important for defendants and insurers to keep a keen eye on how judgments from those other states and territories develop, as they are likely to be persuasive in how the NSW courts may approach the issue.

Here in England and Wales where the work of IICSA is ongoing and the final report has yet to be published, defendants and insurers are well advised to also keep a close eye on developments in Australia as it may well be that in an effort to strengthen the rights of survivors of child sexual abuse here into the future similar amending legislation may be introduced.


Written by Sharon Moohan at BLM (sharon.moohan@blmlaw.com)

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