70. Institutional defendants to child sexual abuse claims include local authorities, charities, religious organisations and private companies. Uninsured defendants will be responsible for meeting the costs of the litigation themselves and are therefore likely to manage the cases themselves. Where a defendant is insured, the responsibility for taking decisions during the litigation may depend on several factors, including: the attitudes and policies of the defendant’s management towards child sexual abuse claims; the defendant’s relationship with its insurer; the defendant’s means and financial obligations; the number and value of the claims; the size of the insurance policy deductibles; and the limits of the insurance cover.
71. It is clear that non-recent child sexual abuse claims often raise difficult issues, such as proving abuse, limitation and causation. Much like the decision to initiate a claim, the decision to defend one will depend in part on the strength of the available evidence. However, the resolution of a claim may also depend on a defendant’s or insurer’s approach to it, which may be informed by wider considerations than the legal defences available, such as a defendant’s ongoing safeguarding responsibilities. This may mean that some claimants face fewer hurdles in achieving accountability and reparations than others, depending on which defendant they are claiming against.
72. Different approaches appear to have been taken in the case studies by the defendants and their insurers, as the following examples show.
72.1. The “key decisions” taken in respect of the St Aidan’s and St Vincent’s claims “were made by Nugent’s insurers with the benefit of legal advice”.[1] The claims in the other tranches of the North West child abuse litigation settled much earlier. Lawyers representing the claimants across the whole group told us that they did not see any difference between the strength of the cases that settled and those that did not. They thought that the difference lay in the attitude of the defendants.[2]
72.2. Paul Durkin said that the alternative “would have been to take a compassionate approach – the defendants don’t have to do that, but to take a compassionate approach, see the modest financial value of the claims, settle them, save the harm and suffering to the claimants, and save a lot of legal costs”.[3]
72.3. Stephen Bellingham explained that a decision was taken relatively early on that there were “material and strong grounds on which to defence the allegation of negligence on the part of Nugent Care, and the tactics I think reflected that”.[4] He made the point, however, that it was open to Nugent Care to choose not to invoke their insurance policy and to settle the claims, or to liaise with their insurer to discuss options for the settlement of the claims.[5]
72.4. In contrast to the St Aidan’s and St Vincent’s claims, the response of the London Borough of Tower Hamlets (insured by MMI) to the claims of abuse at St Leonard’s was seen as instrumental in reaching settlement of that litigation. Malcolm Johnson, solicitor for the claimants, considered that the admission of liability in the defence was made because “London Borough of Tower Hamlets realised that something had gone horribly wrong on their watch and that they needed to make amends”.[6] Sarah Erwin-Jones, the solicitor instructed by MMI, agreed that Tower Hamlets’ approach was “a very significant feature”, and referred to an officer in the Council, John Thesiger, playing a significant role in instructing the defendant solicitors and enabling them to reach the strategic decisions that they did.[7]
73. When asked about the approaches that different insurers might take, Alistair Gillespie told the Inquiry that:
“I think these matters are so fact-specific that it is difficult to generalise any further, and particular insurers may have different approaches, depending upon the type of organisation that they insured at the time. What might be an appropriate approach for a local authority, for example, faced with a multitude of claims might be very different to an approach faced by an insurer in respect of an isolated claim against an isolated organisation, and RSA’s portfolio does not include … very many local authority risks at all.”[8]
74. Some insurance companies have developed guidance over the years to assist their claims handlers in dealing with child sexual abuse claims.
74.1. Zurich insure about 40 percent of the UK’s local authorities.[9] David Nichols said their practices were informed by the need to make their products appeal to local authorities.[10] The Inquiry was told that, while Zurich’s guidance and training for claims handlers used to focus on the legal position, it is now more focused on understanding the circumstances of individual claimants.[11] The guidance makes clear that a limitation defence should not automatically be applied to claims, and permits apologies where appropriate (both of which are discussed further below).[12]
74.2. RSA does not have any specific child sexual abuse guidance. Stephen Bellingham had seen Zurich’s external guidelines and said “the statements they make are similar in their construct to what we undertake in practice, but we don’t have external published guidelines ourselves at this point”.[13] Carolyn Mackenzie said that child sexual abuse claims are governed by RSA’s policies and “technical best practice”, which applies to all claims. However, having heard the evidence given at the Inquiry, she accepted that there would be “value in putting some written guidance and best practice together internally”.[14]
75. Both RSA and Zurich told the Inquiry that if a policyholder wanted to settle claims they would listen to their proposal. Carolyn Mackenzie said that the engagement of policyholders varies but that it is open for defendants to ask to be involved and that there can be dialogue between them as to how to proceed with claims.[15] Stephen Bellingham said it was difficult to say what would have happened if Nugent Care had said they wanted to settle the claims but gave a recent example of a school which reached an agreement with RSA that they settle some child sexual abuse claims “as they saw fit and then return at a later date to discuss what contribution the insurer might make”.[16]
76. David Nichols said that child sexual abuse claims represent only a small part of a local authority’s exposure and therefore would not be “likely to trigger huge changes in their premium base”. He said that if a local authority wished to settle a large group of claims, then Zurich would listen to their proposal and work through the cases.[17] He did not consider that there was a conflict between local authorities’ safeguarding obligations towards children and any obligations they may have to defend claims of child sexual abuse.[18]
77. None of the four local authorities we heard from – Flintshire County Council, Tower Hamlets, Devon County Council and Middlesbrough Council – have written policies or guidance in place for handling claims of child sexual abuse.[19]
78. Richard Baldwin, Divisional Director of Children’s Social Care for Tower Hamlets, said “my position would be that safeguarding trumps any other consideration and what is right for the young person has to be our primary focus”.[20] He said that he would be involved with legal colleagues in the discussions about how to respond to claims and that he would expect his views to be taken into account.[21] He had not “come across or worked in a local authority where … financial constraints have trumped the needs of safeguarding”.[22] When asked whether this approach should be adopted as a matter of policy, he said:
“I think, if you are saying to me that there feels as though there’s inconsistency between local authorities, then certainly some kind of policy that sets a minimum standard for that would sound as though it would be a sensible way forward, yes.”[23]
79. One of the most contentious issues we heard about was defendants’ use of the limitation defence (see above for a discussion of the law), which must be actively raised if they wish to rely upon it. Claimant solicitors told us that defendants will routinely do so.
79.1. Billhar Singh Uppal said “I have never come across a claim that has been notified to a defendant where limitation has not featured as a defence.”[24]
79.2. Alistair Smith said it is “always advanced” which “makes life very difficult, because you have to get over, quite often, an initial hurdle before you can get to the next stage”. He also explained that it is “appallingly difficult” for claimants to understand this.[25]
79.3. Peter Garsden said it “is still used as often as possible to defeat cases”.[26]
79.4. Paul Durkin said that limitation is raised in “each and every case I have”.[27]
79.5. Tracey Storey said that, in otherwise strong cases, insurers are more likely to concede limitation. They were more likely to raise it where there are other unresolved issues in the case.[28] However, she also said:
“I think it is really unfair when the corporate parent loses documents or people and relies on that for a limitation defence. That is very difficult to explain to a layperson, that that’s going to scupper the ability to get civil justice.”[29]
80. Several of the defendant representatives who gave evidence told us that limitation does continue to be raised routinely in defences to non-recent cases.
80.1. Alistair Gillespie said that it was for defendant organisations and their insurers to decide, as a matter of policy, if they want to rely on a legally valid defence.[30] However, he acknowledged that limitation “will invariably be raised as a potential defence, yes, because, as a matter of fact, the claim is out of time”.[31] He did, however, state that he regularly agrees what is known as a moratorium on limitation, which is where limitation is suspended.[32]
80.2. Stephen Bellingham said that “it is good practice to simply put on the record that the claim is outside of the primary limitation period and, depending upon the results of our investigations, it may well be that there is material prejudice”.[33]
80.3. Carolyn Mackenzie agreed that it was right to raise limitation at the outset as at “that point, you don’t know whether it is a material issue”.[34]
81. However, this is not the universal approach across insurers.
81.1. During the hearings, David Nichols told us that Zurich recognises that victims and survivors of child sexual abuse may not make claims until years after the events. Zurich may have formerly “hit limitation as a … primary defence”, but its claims handling internal guidance now advises that claims handlers should “at least try and understand the facts and the knowledge before you get there”[35] and claims handlers seek “only to apply limitation in appropriate claims”.[36]
81.2. Since the hearings, Zurich has made further changes to its approach to limitation in recognition of the evidence given by victims and survivors to the Inquiry. It told us:
“the position that Zurich is looking to put forward is that, where Zurich has handling authority in relation to a claim, limitation should only be raised as a defence where, following reasonable enquiries, it is considered that a fair trial would not be possible. In circumstances where Zurich does not have full handling authority, such as where an insured customer has a significant deductible or another insurer bears the larger proportion of the claim, Zurich will seek their agreement to Zurich’s approach, which it believes is both a responsible one and one that recognises the particular limitation issues in child sexual abuse claims.”[37]
81.3. The Inquiry also heard that Ecclesiastical Insurance has ‘Guiding Principles’ which state that limitation should be pleaded as a defence sparingly in relation to physical and sexual abuse claims, and should be considered and approved only at a senior level.[38]
82. We were also told that, although defendants may raise the issue of limitation in the early stages of a claim, this does not necessarily mean that they will continue to use it at the trial. Carolyn Mackenzie said that RSA will seek to remove the issue of limitation, where possible:
“if we can remove it actively, we can. I think much more likely, in reality, it becomes not much of a discussion point. If you move quickly to resolution of your claim, it’s really not talked about a great deal after that. You just are into the stage of negotiating a settlement.”[39]
It is unclear whether, in reality, defendants do actively tell claimants that they are no longer relying on a limitation defence. If their cases proceed, as Alistair Gillespie accepted, limitation may weaken the claimants’ position in any settlement negotiations.[40]
83. We also heard evidence that, in some cases, defendants will seek to have the courts adjudicate on a limitation defence as a preliminary issue before the main trial.[41] Peter Garsden and Paul Durkin told us that it is easier for defendants to try and strike out claims on limitation, because it prevents them from having to bring the abusers to give evidence and directly accuse claimants of being liars.[42] Stephen Bellingham did not accept this as a general premise.[43] Alistair Gillespie told us that there were a number of cases, following the decision in A v Hoare,[44] where applications for limitation to be tried as a preliminary issue were refused by the court. He said:
“the mood music we have from the courts at the moment is that they don’t readily entertain applications for limitation to be heard as a preliminary issue”.[45]
84. The second tranche of Stanhope Castle litigation exemplifies the difficulties that claimants face in bringing child sexual abuse claims decades after the events.
84.1. Around 2014, Alistair Smith sent letters of claim to Middlesbrough Council. In response, the Council wrote back raising limitation as a defence and stating that it would be prejudiced under section 33 of the Limitation Act in relation to a number of evidential issues. It notified the claimants that it would seek to try limitation as a preliminary issue.[46]
84.2. Alistair Smith was advised by specialist counsel that the claims were unlikely to succeed, due to the evidential and limitation difficulties. As a result, he felt unable to proceed with the claims. His firm could not afford to fund the litigation and he could not obtain litigation insurance for the claimants, as their cases were too risky.[47]
84.3. Alistair Smith therefore made an attempt to settle some of the cases by offering to accept modest sums of damages from the Council. However, these offers were not accepted by the Council and he was forced to write to his clients explaining that there was nothing more he could do for them.[48]
It is difficult to know whether any of the Stanhope Castle claims would ultimately have succeeded if Alistair Smith had been able to proceed further with them. The absence of any criminal convictions and the lack of supportive documentary evidence created real difficulties for the claimants.
85. Rod Luck of MMI (which provided insurance for Middlesbrough Council) said that “there was clearly a very strong limitation defence to these cases”. However, he thought that the “claims did not really come through very strongly following our initial repudiation” and the claimants went away before he expected. He said that the defendant did not receive a full response to the issues it had raised and that the claimants’ low offers of settlement indicated that their solicitors did not think the claims were viable and were simply trying to get some sort of payment.[49]
86. Alistair Smith accepted that the claimants’ offers indicated this. However, he explained that the only alternative was to do nothing. He also thought it was “easy” for Rod Luck to say what he said about the offers at this point. He said that there had been nothing stopping MMI from making a goodwill payment and the defence to these claims had been “extremely robust”.[50] Rod Luck acknowledged that, based on the evidence that the Inquiry had heard about child sexual abuse at Stanhope Castle, “there may be seen to be an unfairness in the system here” but, if that was the case, it was “a system issue”.[51]
87. James Bromiley, Strategic Director of Finance, Governance and Support Services at Middlesbrough Council, said that it was appropriate for the Council to rely on limitation as a defence, referring to the “need to have a legitimate justification … to settle any claims”.[52] We accept that, when faced with a group of claims by victims and survivors of Stanhope Castle, the Council was obliged to consider the financial implications of the litigation. However, insufficient consideration was given to the role of the Council as a corporate parent with past and present child safeguarding responsibilities. It was always open to the Council to settle the claims rather than defend them on the grounds of limitation. Not doing so is even more difficult to understand given that, on the evidence available to us, the Council had the means to pay.[53] The attitude of Middlesbrough Council, as presented by James Bromiley, compares poorly with that of Tower Hamlets, as presented by Richard Baldwin.