Victims of sexual abuse perpetrated by Catholic clergy in New South Wales are now able to sue the Church after the abolition of the state's notorious 'Ellis defence'.

Passed in October, the new legislation came into effect yesterday. It allows individuals to sue unincorporated organisations, including churches, overturning a legal precedent that said they had no legal status as they did not technically exist.

The precedent was set when the Church won a case brought against it by a former altar boy, John Ellis, who was sexually abused by a priest at the age of 13. The 'Ellis defence' was used by the Church to shut down claims against it. Now, however, an institution must identify a defendant with 'sufficient assets' to pay a victim's claim in the event of its success. The change in the law is retrospective, potentially opening the way to many survivors bringing cases.

The move was among those recommended by the Royal Commission into Institutional Responses to Child Sex Abuse. NSW Attorney-General Mark Speakman said in a statement: 'We are changing the power balance so survivors can hold institutions accountable for horrific abuse and move forward with their recovery.'

Before the change, the Church had paid compensation to victims under the 'Melbourne Response Program' devised by Cardinal George Pell – himself since found guilty of sexual offences against two boys in the 1990s, though he is expected to appeal the verdict. Payments were capped at $75,000, with an average payout of $46,000; according to The Age, cases settled after victims had obtained legal representation secured an average payout of $270,000.

Pell said in 2013 that he had 'tried to be prudent with money, but my record shows that I have acted compatibly with the general standards of the community and I have tried to be generous'.