News / Canada

Insurer seeking $10 million back from diocese that knew about predator priest

The diocese of London, Ont., is suing AXA Insurance for breach of contract. The insurer is pushing back, saying priests’ sex abuse of minors was covered up decades ago.

Rev. Charles Sylvestre, seen here in 2005, pleaded guilty in 2006 to sexually assaulting 47 girls over four decades while working as a priest in the London diocese. In 2006, the diocese revealed it found 1962 police reports it had received about Sylvestre.

The Canadian Press

Rev. Charles Sylvestre, seen here in 2005, pleaded guilty in 2006 to sexually assaulting 47 girls over four decades while working as a priest in the London diocese. In 2006, the diocese revealed it found 1962 police reports it had received about Sylvestre.

One of Canada’s largest liability insurance companies wants the Roman Catholic diocese of London, Ont., to return $10 million paid to the diocese for settlements to victims sexually abused by priests.

AXA Insurance, now owned by Intact Financial Corp., accuses the diocese of hiding pedophile priests by moving them to different parishes or duties for decades, thereby misleading the insurance company and exposing it to greater financial risk.

In documents filed with Superior Court in London, the company cites the cases of five notorious offenders, including serial predators Charles Sylvestre and John Harper, for sexual assaults against children and teens from the 1960s to the 1970s.

“The Diocese of London, consistent with the policies and practices of the Roman Catholic church more broadly, engaged in a practice of concealing reports of child sexual abuse by members of the diocese’s clergy, and then assigning the priests in question to different parishes in the Diocese, thereby providing the priests with further opportunity to commit sexual assaults upon children within the new parish,” AXA court documents allege.

In dispute is an insurance policy that the diocese says covered it from 1963 to 1971. AXA questions whether the policy ever existed. At the time, AXA’s predecessor insured nine other dioceses in Ontario.

And if the London policy did exist, the company argues it was made void by the diocese’s failure to disclose abuse committed by its priests before the policy was issued and renewed.

If the diocese had disclosed the information, AXA says it would have refused to provide or renew a policy, would have written in exclusions, or would have increased premiums because “this information dramatically affected the risk.”

The diocese claims its insurance policy is valid and accuses AXA of acting in “bad faith."

The diocese initiated the legal battle in 2008 after AXA refused to pay two sexual abuse settlement claims totalling about $900,000. The diocese is suing AXA for $2 million for breach of contract, according to its statement of claim.

AXA pushed back hard, filing a counterclaim demanding the return of the $10 million AXA and its predecessors paid the diocese for settlements and legal costs in 50 lawsuits brought by victims sexually assaulted during the disputed period.

AXA and the diocese declined requests for interviews. The allegations have not been proven in court.

The diocese insists the insurance policy covered employees who commit “assault and battery.” It also wants AXA to cover “future claims which counsel for the Diocese asserts are inevitable,” according to a 2016 court ruling that decided the dispute would be heard by judge only.

The decade-old legal battle is scheduled for trial in September.

The litigation is part of an emerging movement across North America that pits Roman Catholic dioceses against their insurers in multi-million-dollar civil actions regarding victim settlements. At least 10 dioceses in the U.S. have been embroiled in lawsuits with insurance companies that won’t pay.

In Canada, the dioceses of Moncton, Bathurst, N.B., Ottawa and Sault Ste. Marie have all gone to court against insurance companies who refuse to cover millions of dollars in payments made to victims abused by priests. In October 2016, Bathurst lost its legal attempt to recoup $3.3 million from its former insurer.

Dioceses have slashed staff and sold properties to pay for the settlements.

Massimo Faggioli, a professor of Catholic church history at Pennsylvania’s Villanova University, says lawsuits from victims and insurance companies have created a “perfect storm” for dioceses already downsizing due to fewer worshipers.

“It’s a double challenge that’s consuming a lot of the energy of a lot of bishops,” Faggioli says in a phone interview. “The Catholic church will have to get rid of assets much more rapidly than it thought.”

Attempts to slow the downsizing by sheltering assets or spending large amounts on legal battles further taint a public image battered by the sex abuse scandals, Faggioli adds.

In Ontario, AXA’s predecessor, a company named Great American, began its legal challenge of dioceses in 2000, when it refused to cover the diocese of Sault Ste. Marie for sexual assaults committed by one of its priests. The Court of Appeal for Ontario eventually upheld a lower-court decision ordering Great American to pay up.

Great American, and later AXA, then began paying out for other dioceses it insured in Ontario, “including the Diocese of London, who claimed to be insured under an identical policy,” according to the 2016 Superior Court ruling against a jury trial. A complicating factor is that a copy of the disputed policy has not been found by either AXA or the diocese.

Charles Brindamour, CEO of Intact Financial Corp.

Charles Brindamour, CEO of Intact Financial Corp.

AXA bought Great American’s successor in 2005. Toronto-based Intact Financial Corp., headed by CEO Charles Brindamour, bought AXA in 2011.

In court documents, the company argues the London diocese dealt with abusive priests in secret, consistent with a papal “instruction” to bishops by Pope John XXIII in 1962.

Called by its Latin name, Crimen Sollicitationis, it formed part of the Vatican’s canon law and “ordered all bishops to investigate allegations of priest sexual misconduct against minors in utmost secrecy, under threat of excommunication,” AXA argues.

“The victims were also required to keep the investigation secret, also under threat of excommunication.”

The papal order, the insurance company adds, became publicly known only in 2003, “when its existence was revealed” during litigation involving abusive Catholic priests in the United States.

AXA alleges the diocese followed this secretive practice in the shocking case of Rev. Charles Sylvestre, who pleaded guilty in 2006 to sexually assaulting 47 girls between 1954 and 1986. His victims were between 7 and 15 at the time of the abuse.

Sylvestre, who died in prison in 2007 at age 84, was moved to 12 different parishes in 20 years.

In 1962, Sarnia police told the diocese that three girls accused Sylvestre of sexual abuse. Sylvestre was not available for questioning because the diocese had sent him to a retreat in Quebec.

The diocese’s bishop at the time, John Cody, “removed Father Sylvestre from the Diocese of London, and from the jurisdiction of Sarnia Police,” AXA alleges.

Sylvestre then had a brief stay in Toronto before returning to parishes in the London diocese in 1963. He committed most of his crimes during his 12-year tenure at St. Ursula’s parish in Chatham, which ended in 1980. He spent the following nine years as pastor of Immaculate Conception Parish in Pain Court, Ont., until more allegations caught up with him in 1989.

In October of 1989, he was sent to a Michigan centre for Catholic priests and treated for alcoholism, AXA says in court documents.

After Sylvestre’s trial in 2006, the London diocese revealed it had found — in the back of a diocese filing cabinet — the Sarnia police reports from 1962.

A year after the discovery, AXA refused to indemnify the diocese in two sexual abuse settlements — one for $166,666 and another for $707,351 — involving Rev. John Harper, whose abuse of boys began as early as 1959.

The diocese sued in 2008 for breach of contract and the decade-old legal battle commenced.

Bishop Ronald Peter Fabbro gives communion at St. Ursula Church in Chatham, Ont. The London diocese bishop has called the abuse of victims by priests a

Bishop Ronald Peter Fabbro gives communion at St. Ursula Church in Chatham, Ont. The London diocese bishop has called the abuse of victims by priests a "scourge" that must end.

In Harper’s case, the priest rotated through three different parishes in the first six years since his ordination in 1958 — Stratford, Aylmer and London, AXA documents say.

He became a teacher at Regina Mundi College, then a diocese-run all-boys boarding school, in 1964. He stayed there until his retirement in 1993.

In 1964, the parents of three boys from Harper’s former parish in Stratford told officials at the Diocese that the priest had sexually abused their sons, according to allegations in AXA’s pleadings. The abuse was reported to London’s bishop, AXA adds.

Harper was sent by the diocese to receive psychiatric treatment but was not removed from the all-boys school.

In 1987, Harper was charged with sexually abusing two boys. He was convicted in 1988 of sexually assaulting minors. In 2003, he pleaded guilty to sexually assaulting a victim from 1959 to 1964, beginning when the victim was 9.

In its statement of claim, the diocese says it dealt with the 1962 allegations against Sylvestre according to the “practice and standards applicable to such claims in 1962. Sylvestre was removed from his parish, reassigned for further education and assigned work under supervision until such time as it appeared he was not a risk to re-offend.

“Unknown to the Diocese, Sylvestre re-commenced sexual assaults thereafter. Forthwith, on notice to the Diocese of that activity in 1989, Sylvestre was removed from parish work.”

In 2006, the diocese’s current bishop, Ronald Fabbro, called the abuse of victims by priests a “scourge in the Diocese of London that must end.”

“I want to apologize for the failure of our church to protect children,” Fabbro told the faithful gathered at St. Ursula’s parish at the time. “I’m here today to pledge myself as the bishop of the diocese to do my utmost to protect the children."

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