Court orders insurer to pay Diocese of Bathurst nearly $3.4M to cover abuse payouts

New Brunswick's Court of Appeal has ordered an insurance company to pay the Diocese of Bathurst nearly $3.4 million to cover the church's payouts to victims of sexual abuse, a decision that could be significant for a similar case in Moncton.

In a written decision released on Thursday, the appeal court overturned a 2016 ruling by the Court of Queen's Bench, citing an error by the judge.

It ordered Aviva Insurance Company of Canada to pay the diocese $3,358,264, plus interest.

"I would've been very disappointed if it would have been contrary," Father Wesley Wade, vicar general of the Diocese of Bathurst, said in an interview with Radio-Canada about the 30-page decision, written by Justice Marc Richard on behalf of the three-justice panel who heard the appeal in February.

"I think we did what we could in good conscience and the judges seemed to be — when we were at the appeal — favourable to what we did as a church community to help the victims."

Wade said he would be surprised if Aviva appeals the case to the Supreme Court of Canada. 

Charles LeBlond, a lawyer representing Aviva, declined to comment Friday.

But in an emailed statement, a spokesperson for Aviva says the company is reviewing its legal options to determine if it will appeal the court decision. 

While the company agrees victims of sexual abuse must be taken care of, the spokesperson said the insurance company should not be responsible for paying for what the church covered up.

"The Church should not be insured for amounts paid voluntarily for reasons that have nothing to do with insurance coverage," the statement said. "The Church sought insurance coverage for crimes committed by their priests which evidence shows they attempted to cover up. That is wrong."  

$4.2M Moncton case heard by same judge

The decision could affect a similar case involving the Diocese of Moncton and Co-operators General Insurance, where the church sought $4.2 million. 

While the case is separate, Moncton's insurance company was an intervener in the Bathurst case.

A lawyer who represented Co-operators did not immediately respond to a request for comment.

Both cases included similar arguments and were heard by the same Court of Queen's Bench judge.

Moncton archbishop hopeful

Moncton Archbishop Valéry Vienneau called the appeal court ruling "significant."

"It tells us we can go forward and now discuss with our own insurance here in Moncton concerning the question of compensating all the abused victims caused by clergy," Vienneau told Radio-Canada.

"We're certainly hopeful this will result in something good for the diocese — and the victims," he said.

A lawyer representing seven people who have filed lawsuits against the Diocese of Moncton claiming damages for sexual abuse allegedly committed by clergy said the decisions "transpose perfectly."

"The church should start paying out claimants who, every time this news story arises and with every day, suffer more on top of what they suffered as being abused by priests of the Catholic church," Brian Murphy said in an interview Friday.

Unlike the Bathurst case, Moncton has not yet made payments.

Abuse by various priests 

The Bathurst case relates to allegations of sexual abuse against various priests in the Diocese of Bathurst, dating back to between the late 1950s and early 1980s.

When victims filed claims against the diocese, it turned to its insurance company to cover payouts. ​The company provided liability coverage for the church.

The appeal court's ruling outlines how the diocese opted to go with a conciliation process rather than deal with each case individually.

Michel Bastarache, a retired Supreme Court of Canada judge, oversaw the confidential compensation process that saw $5.5 million paid to 90 victims of abuse by the diocese's priests. 

Coverage denied

Aviva denied coverage for payments. 

The church filed a civil case against the insurance company, alleging it breached its contract. During the trial, Aviva said the claims fell outside the coverage it provided and that the coverage was void because the church had failed to disclose information. 

A Court of Queen's Bench decision in 2016 found the company wrongfully denied coverage but determined it wasn't obligated to pay the diocese. The Diocese and Aviva both appealed. 

Aviva's appeal dropped

Aviva dropped its appeal shortly before the Court of Appeal heard the case, therefore no longer contesting it had wrongly denied coverage. 

"In my view, the potentially devastating financial consequences of proceeding on a claim-by-claim basis coupled with the Diocese's broader obligations, which would have been known to Aviva when it decided to insure the Diocese, make the conciliation process and the attendant payments reasonable in the circumstances," Richard wrote in the ruling. 

The court found Aviva breached its contract with the diocese.

Richard wrote that allowing an insurer to escape liability because the insured settled a claim rather than seeking a court judgment would encourage companies to deny coverage, which is a situation that "must be prevented."