After a trial in Newfoundland and Labrador Supreme Court in St. John’s that began a year ago, Justice Peter Browne determined Dec. 20 the failure of the Roman Catholic Episcopal Corporation of St. John’s (RCEC) to disclose the sexual abuse when it applied for and renewed its Guardian Insurance policy in the 1980s, rendered the policy invalid.
The RCEC has been in bankruptcy protection for three years as it sells off properties and other assets to raise money to settle the claims of survivors of sexual abuse by Christian Brothers at Mount Cashel Orphanage and other Roman Catholic clergy, for which it has been found vicariously liable. So far, it has gathered roughly $44 million of the $104 million settlement.
In the meantime, it sued Guardian for failing to defend it related to the claims.
Archdiocese knew but didn’t disclose
In an agreed statement of facts, the RCEC acknowledged it had received information about its priests, particularly Father James Hickey, sexually abusing youth, but did not disclose it to child-protection authorities, nor to the insurance company when it obtained a policy in October 1980 and renewed it yearly for at least five years.
A 2011 affidavit from Father Ronald MacIntyre indicated a student had told him in 1974 he had been sexually assaulted by Hickey, who pleaded guilty years later to 20 charges of sexual violence against boys. MacIntyre stated he had brought the incident to the attention of then-vicar-general Monsignor David Morrissey, who told him it would be taken care of.
Despite meeting with the student to get the details, Morrissey didn’t do anything to prevent the abuse from continuing. At least two other priests were also convicted of sexual violence offences against boys during the period of the insurance policy.
Evidence indicated at least six RCEC priests – including then-archbishop Alphonsus Penney – were aware of Hickey’s sexual predation before the insurance policy was issued.
Clergy abuse ‘not on the radar’ for underwriters
The RCEC argued it had not considered the information to be a material fact to be disclosed on an insurance application.
The court heard expert evidence from Frank Szirt, a retired insurance underwriter and former member of the Liability Committee of the Insurance Bureau of Canada, who testified insurers did not not consider sexual abuse material information from religious institutions in the early 1980s, since it was not “on the radar” and the institutions were considered “generally low hazard.” He acknowledged the RCEC would have been bound to disclose all material facts related to the policy, but said the disclosure of sexual abuse could have been considered a “management issue” and some underwriters may have accepted it as a risk.
It was a matter of individual judgement, and he personally would not have issued the insurance policy had the RCEC disclosed the abuse, he said.
Retired insurance adjuster Michael Mallett, who worked as an underwriter at Guardian during the period in question, similarly testified brokers did not ask religious institutions in the early 1980s about allegations of sexual abuse, but this practice later changed in response to an increased understanding of the abuse and discussions in the industry of how to address it.
Policy voided for fraudulent misrepresentation
The judge accepted that society’s understanding of sexual abuse and its impacts was limited in the early 1980s, and there had been no civil claims for sexual abuse in which an employer was held liable. However, when the RCEC’s knowledge of the abuse is combined with evidence from retired social worker Marilyn Temple that child sexual abuse was an issue Canadian social workers were dealing with at the time, and most provinces had established mandatory reporting legislation when children were suspected of needing protection, the archdiocese had a duty to disclose the information, Browne concluded.
He determined Guardian would not likely have issued a policy to the RCEC, had the abuse been disclosed.
“Guardian has met its burden of establishing that (the) RCEC and its legal representatives intentionally and recklessly withheld knowledge of past and ongoing sexual abuse by its clergy,” the judge wrote. The evidence also meets the threshold of fraudulent misrepresentation and entitles Guardian to void the policy without having to return the RCEC’s premiums, he found.
Issue brought to court previously
It’s not the first time the issue has been raised in court. In 1989, when a claim was filed against the archdiocese for damages from Hickey’s abuse, Guardian denied liability for the same reasons. It later agreed to sign an order requiring it to defend the archdiocese in the claims and settled with it out of court.
The issue returned to court in 2009, when Guardian refused coverage related to another claim involving Hickey, arguing it should not be bound by the previous order as it had received new information about the extent of church officials’ knowledge of Hickey’s actions. The RCEC won that case at trial but lost on appeal.