UK: Has Hoare Increased The Exposure Of Liability Underwriters?

Last Updated: 6 March 2008
Article by Janet Lambert and Joanne Jolly

The six year limit on the period during which a victim of sexual abuse can commence proceedings for damages has been removed by the House of Lords in A v Hoare (2008). There is now no definitive limit on the time frame in which such proceedings must be commenced as the court has a discretion to extend time.

Prior to the decision in Hoare, an action for deliberate assault, including acts of indecent assault, had to be brought within six years from the date on which the cause of action accrued under section 2 of the Limitation Act 1980. This was in contrast to personal injury claims which are subject to a three year limitation period under section 11(1) of the Act. This three year period is capable of extension at the court's discretion under section 33.

In the case of Hoare, Iorworth Hoare, known by the media as the "lottery rapist", was convicted in 1989 and sentenced to life imprisonment for the attempted rape of Mrs A. Whilst on day release from prison in 2004, Mr Hoare purchased a National Lottery ticket and won £7m. Mrs A commenced proceedings against the lottery rapist following his win. She had not done so earlier because Mr Hoare had no assets to satisfy any judgment.

In an attempt to circumvent the six year rule, Mrs A sought to rely upon the specific limitation provisions for personal injury claims and had invited the trial court to exercise its discretion and extend time. She was successful. The House of Lords unanimously held that claims for physical or sexual abuse fell within the three year rule and remitted the case to the trial judge to decide whether to exercise his section 33 discretion.

So, when will the discretion be exercised? The House of Lords gave some guidance on this issue (in addition to that contained in section 33(3)). If a complaint has been made and recorded at the time of the incident or, more obviously, if the accused has been convicted of the abuse complained of, the discretion to extend limitation is more likely to be granted. On the other hand, if a complaint is raised many years later out of the blue with no apparent evidence in support, an extension to the three year period is less likely to be granted. Thus, whilst the courts are anticipating an influx of new claims, it is by no means the case that the court's discretion will be exercised to assist anyone who has not previously turned their mind to the possibility of litigation within the three year period.

So what does this mean for insurers and reinsurers alike? Not only are the value of claims expected to increase in accordance with recent trends, historical claims for physical and/or sexual abuse against employers and public authorities are also likely to increase. To the extent that employers and public authorities are protected by Losses Occurring Insurance, the tail of exposure on those policies will be lengthened.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

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