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Legislative Council - Fifty-Fourth Parliament, Second Session (54-2)
2021-08-24 Daily Xml
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Civil Liability (Institutional Child Abuse Liability) Amendment Bill

Introduction and First Reading

The Hon. R.I. LUCAS (Treasurer) (16:17): Obtained leave and introduced a bill for an act to amend the Civil Liability Act 1936. Read a first time.

Second Reading

The Hon. R.I. LUCAS (Treasurer) (16:17): I move:

That this bill be now read a second time.

The government is pleased to introduce the Civil Liability (Institutional Child Abuse Liability) Amendment Bill 2021. The bill introduces four important reforms for institutional child abuse victims/survivors. The bill will reverse the onus of proof in negligence cases, codify and expand the definition of vicarious liability, assist in identifying a proper defendant, and enable the setting aside of previous settlements. These reforms are based on, and consequential to, recommendations from the Royal Commission into Institutional Responses to Child Sexual Abuse.

In September 2015, the Royal Commission released its Redress and Civil Litigation report, which included 99 recommendations to alleviate the impact of past institutional child sexual abuse on victims, and to prevent future abuse. The bulk of those recommendations related to the establishment, funding and operation of a national redress scheme and have been implemented.

The National Redress Scheme came into operation on 1 July 2018. On 1 February 2019, people who were abused in South Australian government institutions became eligible for redress under the scheme. The remaining recommendations in the redress and civil litigation report are aimed at improving civil litigation systems for those victims/survivors who wish to seek compensation through a civil claim. The amendments contained in this bill implement these remaining recommendations.

These reforms have been developed through broad consultation with stakeholders, including various government agencies, the courts and legal organisations, children's advocates, community service providers, religious organisations and peak bodies for schools, childcare centres and foster care agencies.

It is worth highlighting that while the recommendations made by the royal commission were limited to sexual abuse, following consultation the government has determined to extend provisions in the bill to include serious physical abuse and related psychological abuse committed in an institutional context.

The bill amends the Civil Liability Act 1936 by inserting new part 7A and part 7B. The first reform will reverse the onus of proof. One option for survivors seeking compensation against an institution is to commence an action in negligence. However, uncertainty can arise around the existence of a duty of care outside of well established categories.

The burden of establishing that an institution failed to exercise reasonable care can be particularly difficult for victims of abuse to prove, especially in respect of historical abuse. The royal commission was satisfied that institutions are in a better position to prove the steps it took to prevent abuse. They generally have better access to records and witnesses capable of giving evidence about its behaviour at the time the abuse occurred.

Division 2 of part 7A introduces a legislative duty on institutions to take all reasonable steps to prevent the abuse of a child by a person associated with the institution while the child is under its care, supervision, control or authority. This makes clear that, in an action in negligence, a duty of care is owed by the institution and is one that cannot be circumvented through delegation.

In addition, division 2 of part 7A introduces a reverse onus of proof in relation to breaches of the legislative duty. Generally, a plaintiff must establish all elements of a claim in negligence, including that the defendant failed to take reasonable care to prevent the harm. The bill reverses this onus, providing that the institution is taken to have breached its duty of care unless the institution proves it took all reasonable steps to prevent the abuse. The bill prescribes a non-exhaustive list of matters that are relevant in deciding whether the institution took all reasonable steps to prevent the abuse. In line with the royal commission recommendations, division 2 of part 7A applies only to abuse that occurs after its commencement.

Reform two will codify and expand vicarious ability. Division 3 of part 7A addresses the vicarious liability of institutions. Vicarious liability is a common law doctrine that imposes no-fault liability on employers for the wrongdoing of employees committed in the course of employment.

The royal commission recommended imposing a non-delegable duty—another kind of no-fault liability—on certain institutions for institutional child sexual abuse. The intent of the royal commission recommendation was to override the common law position that non-delegable duties do not extend to liability for intentional criminal conduct. However, the High Court case of Prince Alfred College Incorporated and ADC [2016] HCA 37 has since made clear that the correct approach to consider the no-fault liability of an organisation for the intentional wrongdoing of its employees is through vicarious liability.

The court also articulated a clear test for determining an organisation's vicarious liability for child abuse perpetrated by an employee. Division 3 of part 7A implements the intent of the royal commission's recommendations but does so in a manner that is consistent with what has now been identified as the preferable legal approach to no-fault ability in these cases.

Section 50G of the bill codifies the High Court's approach in relation to vicarious liability. In short, an institution will be vicariously liable for abuse committed by an employee if:

the apparent performance by the employee of a role in which the institution placed the employee supplied the occasion for the abuse to occur, and

the employee took advantage of that occasion to abuse the child.

In determining whether the institution supplied the occasion for the abuse, the court is to take into account whether the institution placed the employee in a position in which the employee had:

authority, power or control over the child,

the trust of the child, or

the ability to achieve intimacy with the child.

The common law in Australia has limited vicarious liability to acts of employees. This has presented a major obstacle for survivors who suffered abuse at the hands of other persons placed in a position of trust or authority but who were not technically employees of an organisation.

The bill addresses this unfairness by extending the vicarious liability of institutions to abuse committed by persons who are akin to an employee of the institution. Again, in line with the recommendations of the royal commission, division 3 of part 7A will only apply to abuse committed after its commencement.

The third reform will assist in identifying a proper defendant. One of the major obstacles faced by survivors in attempting to seek compensation is identifying a proper defendant against whom to commence litigation. This is particularly an issue with unincorporated associations as they lack legal personality, and consequently cannot sue or be sued.

This was the difficulty encountered by the plaintiff in the New South Wales case of Trustees of the Roman Catholic Church for the Archdiocese of Sydney v Ellis (2007) 70 NSWLR 565. Mr Ellis alleged abuse at the hands of a priest in the archdiocese and commenced legal action against several defendants, including the Trustees of the Roman Catholic Church, which was incorporated under New South Wales legislation. However, the trustees who held and controlled the church property were found to be not vicariously liable given their lack of oversight of the alleged offending priest.

As a result, unincorporated associations have been able to avoid liability for abuse committed against children in their care despite in some cases holding significant assets in an associated trust. Divisions 4, 5 and 6 of part 7A address the liability of unincorporated associations and their office holders. These provisions enable an abuse claim to be commenced against the unincorporated institution through the nomination of an appropriate defendant, such as an associated trust, with sufficient assets to satisfy the potential liability. It also enables a claim to be commenced against the current office holder where a cause of action existed against the former office holder. The current office holder will not be held personally liable but may satisfy liability over the assets of the institution or of an associated trust.

Another limitation that was highlighted in the Ellis case but was not addressed in the royal commission's recommendations was the difficulties arising from the lack of perpetual succession in unincorporated institutions and its officers. Division 6 of part 2 provides for the continuity of the institutions and officers, including by enabling action to be taken against successor institutions following a change in structure such as a merger. These changes will apply to abuse committed before or after commencement of the bill, enabling victims to take action against unincorporated institutions for historical abuse.

Section 50T declares sections 50K and 50Q as corporations legislation displacement provisions. South Australia, along with all other states, has referred powers to the commonwealth in respect of corporations law. The Corporations Agreement 2002, which sets out the rights and obligations of parties in relation to the administration of the corporations scheme, requires state legislation to expressly indicate where it is inconsistent with the national law and to declare the inconsistent provisions as being excluded from the national law. It is necessary to make such a declaration in relation to 50K and 50Q as they affect the rights, duties and liabilities of trustees with respect to their dealings with trust property and have the potential to be inconsistent with aspects of the Corporations Act 2001.

Reform 4 allows for the setting aside of previous settlements. The Limitation of Actions (Child Abuse) Amendment Act 2018, which came into operation on 1 February 2019, retrospectively removed any time limitation for commencing child abuse actions. The government has heard concerns that victims who settled their claims prior to 1 February 2019 may have done so on unfair terms on the understanding that the limitation period would preclude them from being able to commence or maintain proceedings. Similarly, victims who, prior to commencement of this bill, have been precluded from taking legal action against an unincorporated institution may have entered into settlements on unfair terms given these institutions have been shielded from liability.

Should the bill pass the parliament, those victims who reached unfair settlements on the understanding that they had no legal right to sue may wish to seek to have those agreements set aside. Part 7B of the bill enables these categories of victims to commence proceedings in respect of their child abuse claim and to apply to the court to set aside the settlement agreement.

The court may set aside the agreement if it is just and reasonable to do so. Section 50W(3) sets out the factors that may be considered by the court. These factors focus on the extent to which the limitation period or barriers to identifying a proper defendant materially contributed to the applicant's decision to enter into the agreement, as well as the circumstances in which the agreement was negotiated and entered into. The court may also consider any other matter it considers relevant.

The intent of part 7B is to address unfairness that has resulted from the application of legal barriers that have or will be removed retrospectively. It is not intended to provide a broader mechanism for victims to relitigate matters that have been settled on terms that they now consider to be disadvantageous. The bill attempts to strike the appropriate balance between the interests of finality and giving recourse to victims who historically have been prevented from seeking justice due to unfairness in the operation of the law.

I commend the bill to members and seek leave to have the explanation of clauses inserted in Hansard without my reading it.

Leave granted.

Explanation of Clauses

Part 1—Preliminary

1—Short title

2—Commencement

3—Amendment provisions

These clauses are formal.

Part 2—Amendment of Civil Liability Act 1936

4—Insertion of Parts 7A and 7B

This clause inserts new Parts 7A and 7B into the principal Act as follows:

Part 7A—Child abuse—liability of institutions

Division 1—Preliminary

50A—Interpretation

This section defines terms and phrases used in Part 7A.

50B—Meaning of associated trust

This section sets out what an associated trust is in Part 7A.

50C—When persons are associated with institution

This section sets out when a person is, and is not, associated with an institution for the purposes of Part 7A.

50D—Application of Part

This section explains that Divisions 1, 4, 5 and 6 of Part 7A apply to a cause of action regardless of whether it arose before or after the commencement of the Part and that the Part binds the Crown in all capacities (as far as permitted).

Division 2—Duty of institutions to prevent child abuse

50E—Duty to prevent child abuse

This section imposes a duty on institutions to take reasonable steps to prevent child abuse by a person associated with the institution in certain circumstances.

50F—Proof of whether duty was breached

This section provides that an institution is taken to have breached its duty to take reasonable steps to prevent child abuse by a person associated with the institution unless the institution proves it took reasonable steps to prevent it. It also sets out the matters that are relevant to whether an institution took reasonable steps to prevent the abuse.

Division 3—Vicarious liability of institutions

50G—Institutions vicariously liable for abuse of child by employee

This section sets out the circumstances in which an institution is vicariously liable for child abuse perpetrated by an employee.

Division 4—Liability of particular institutions and office holders

50H—Liability of incorporated institution that was unincorporated at time of abuse

This section provides that a proceeding for a cause of action in respect of child abuse may be commenced or continued against an institution that was unincorporated at the time of abuse in certain circumstances.

50I—Liability of current office holder of unincorporated institution

This section provides that a proceeding for a cause of action in respect of child abuse may be commenced or continued against a current officer holder in an institution in certain circumstances.

50J—Claim against unincorporated institution and nomination of appropriate defendant

This section allows a proceeding for an abuse claim to be commenced against an institution that is an unincorporated body and allows the institution to nominate a person as an appropriate defendant for the purposes of an abuse claim against it and also allows a court to order that the trustee of a trust is the institution's nominee in certain circumstances.

50K—Proceeding against nominee of unincorporated institution

This section sets out what applies to a proceeding against a nominee of an unincorporated institution (for example, anything done by the institution is taken to have been done by the nominee).

Division 5—Satisfaction of liability

50L—Assets available to satisfy liability of institution

This section allows an institution to satisfy liability under a judgment in, or settlement of, an abuse claim out of assets of the institution and assets of an associated trust.

50M—Assets available to satisfy liability of nominee

This section allows an institution's nominee who is the trustee of an associated trust of the institution to satisfy the liability under a judgment in, or settlement of, an abuse claim out of the assets of the trust and assets of the institution.

It also allows an institution's nominee who is not the trustee of an associated trust of the institution to satisfy the liability under a judgment in, or settlement of, an abuse claim out of its assets and assets of the institution.

50N—Assets available to satisfy liability of current office holder

This section provides that a current office holder is not personally liable under a judgment in, or settlement of, an abuse claim but may satisfy the liability out of the assets of the institution and the assets of an associated trust.

50O—Satisfaction of liability by trustee of associated trust

This section enables the trustee of an associated trust to pay an amount in satisfaction of the liability of an institution, nominee or current office holder and to realise assets of the trust for that purpose.

It also provides that:

the trustee may be indemnified out of the trust property for the satisfaction of the liability despite any limitation on a right of indemnity of the trustee;

the liability of the trustee as the institution's nominee is limited to the value of the trust property;

the trustee is not liable for a breach of trust for doing anything authorised by the section.

50P—References to liability

This section provides that a reference to liability in Part 7A Division 5 includes costs associated with proceedings for the relevant abuse claim.

Division 6—Miscellaneous

50Q—Entities may act despite other laws and duties

This section enables certain entities to act under Part 7A Division 5 and to consent to being an institution's nominee despite another law, term of a trust or duty.

50R—Continuity of institutions

This section provides that an institution may be liable under Part 7A Division 4 if it is substantially the same as it was at the time when the cause of action accrued and sets out when an institution may be considered substantially the same.

It also provides that, if there is no institution that is the same, or substantially the same, as the institution, a relevant successor of the institution may be taken to be the same institution and sets out when an institution is a relevant successor and what happens if more than 1 institution is a relevant successor.

50S—Continuity of offices

This section provides that an office holder may be liable in accordance with section 50I if the office is substantially the same as it was when the relevant cause of action accrued and if there is no current office that is the same, or substantially the same, then the current head of the institution is taken to be the current office holder.

50T—Corporations Act displacement

This section declares that sections 50K to 50Q are Corporations legislation displacement provisions in relation to the Corporations legislation generally.

50U—Proceedings despite previous judgment

This section enables proceedings in accordance with Part 7A to be commenced against a person or institution, if leave of the court is granted on the basis that it is just and reasonable to do so, even if a judgment was given that the person or institution was not an appropriate defendant in relation to the cause of action before the Part commenced.

Part 7B—Child abuse—setting aside settlements

50V—Meaning of affected agreement

This section sets out the meaning of an affected agreement for the purposes of Part 7B.

50W—Court may set aside affected agreement

This section enables a person to apply to a court to set aside an affected agreement and commence proceedings on a cause of action to which section 3A of the Limitation of Actions Act 1936 applies, or in respect of an abuse claim, in a court with sufficient jurisdiction.

The section allows a court to set aside an affected agreement if it is just and reasonable to do so and sets out matters the court may consider. It also allows a court to set aside certain other instruments, orders, judgments etc that give effect to the affected agreement but not certain other instruments, contracts etc.

The section further provides that evidence of matters in connection with an attempt to negotiate settlement of the dispute to which the affected agreement relates may be adduced as evidence in proceedings under this section despite section 67C(1) of the Evidence Act 1929.

50X—Effect of setting aside affected agreement

This section provides that an affected agreement and anything else set aside under Part 7B is void and sets out other effects of the setting aside of an affected agreement.

Debate adjourned on motion of Hon. I.K. Hunter.

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