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Proposed Piercing of the “Superannuation Veil” Against Child Abuse Offenders

by | Jan 24, 2023 | Not for Profit & Social Enterprise

On 19 January 2023 the Federal Government released a discussion paper seeking submissions for options to promote transparency of child sex offenders’ financial means to honour compensation orders and to prevent the use of legal loopholes to hide assets.

Spurred by advocates, including the former Australian of the Year, Grace Tame, the discussion paper provides indications of the proposed reforms and intended scope.

Though the discussion of reforms will be welcomed by advocacy groups, it appears that its scope is limited and may make little difference to victim survivors. Primarily this is because it is more often the case that offenders have insignificant assets or if they have significant assets, it is common that they have sophisticated financial structures to shield personal, business and familial assets. Such barriers pose legal, financial and emotional difficulties which are rarely overcome by a victim survivor against their offender. For the offender who may have siphoned off their super, the mechanisms proposed to claim it as compensation hardly seem viable.

The proposed reforms to “pierce the superannuation veil” do not appear to extend to the benefit of institutions and will not shift the burden of litigation from institutions to offenders, or similarly assist institutions in seeking to enforce contribution demands or orders against offenders.  To hold offenders to financial account, it is integral that the powers extend to institutions that have the resources to enforce legal mechanisms for recovery.

Where there is an institution to sue, it will likely remain the case that it will be the most viable defendant and that the reforms will be of little use for the following reasons:

Limited scope of application of the reforms.

It is intended that the reforms apply only to:

  1. offenders who have been convicted of a criminal offence. Given the low conviction rate in, particularly, historical sexual offences, the recourse will not be available to the majority of victim survivors;
  2. compensation orders awarded in connection with a criminal charge, where the amount awarded is typically far outstripped by any common law damages that may be available via a civil claim meaning eligible victim survivors will opt for civil claims.
  3. A limited portion of an offender’s superannuation. As currently framed, only the “additional benefits” that an offender has voluntarily deposited into their superannuation accounts within a relatively short period (of six or 12 months before charges) may be available for reclamation.

Legalistic and potentially timely and costly:

A victim survivor seeking to apply to the Court for an order under the proposed reforms will likely be met with resistance from the offender given the ambiguity in a number of key provisions including the definition of “additional benefits” which will have the effect of shifting the cost and legal burden to the individual victim survivor.

Potentially re-traumatising mechanism:

  • For the reasons above and the fact that an institution may not be in a position to institute the proceedings via a third party claim, potentially exposes the victim survivor in direct opposition to their abuser, which would deter many.

As currently posed, we anticipate that any reform will make little difference to institutions and it will remain the case that for institutions that are committed to seek contribution from tortfeasors and or their estates, the existing legal mechanisms for recovery will remain the only avenues of doing so.

Should you wish to speak with Claire Stratton or another member of Nevett Ford’s litigation team, give us a call on (03) 9614 7111 or email melbourne@nevettford.com.au