Roman Catholic Episcopal Corporation of St. John's v. Guardian Insurance Company of Canada

IN THE COURT OF APPEAL OF NEWFOUNDLAND AND LABRADOR Citation: Roman Catholic Episcopal Corporation of St. John’s v. Guardian Insurance Company of Canada, 2025 NLCA 29 Date: August 18, 2025 Docket Number: 202501H0004 BETWEEN: ROMAN CATHOLIC EPISCOPAL CORPORATION OF ST. JOHN’S APPELLANT AND: GUARDIAN INSURANCE COMPANY OF CANADA RESPONDENT AND: JOHN DOE (G.E.B. #26) AND OTHER ANONYMOUS CLAIMANTS/CREDITORS OF THE APPELLANT CORPORATION APPLICANTS/INTENDED INTERVENORS Coram: D.M. Boone J.A. Court Appealed From: Supreme Court of Newfoundland and Labrador, General Division, 2009 St. J. No. 4501, 200901T2235, 201001T2027, 201401G7895 and 201401G6795 (2024 NLSC 182) Page 2 Application Heard: August 5, 2025 Judgment Rendered: August 18, 2025 Reasons for Judgment by: D.M. Boone J.A. Counsel for the Appellant: Mark R. Frederick and Chris T.J. Blom Counsel for the Respondent: Philip J. Buckingham K.C. and Bridget S. Daley Counsel for the Applicants/ Geoffrey E. Budden K.C., Eugene Meehan K.C., Intended Intervenors: Thomas Slade, Cory Giordano and Clifton P. Prophet Authorities Cited: CASES CITED: John Doe (G.E.B. #25) v. The Roman Catholic Episcopal Corporation of St. John’s, 2020 NLCA 27, leave to SCC refused, 39343 (14 January 2021); Roman Catholic Episcopal Corp. of St. John's v. Doe, [2020] S.C.C.A. No. 309; Roman Catholic Episcopal Corporation of St. John's (Re), 2024 NLSC 180; RCEC (Re), 2025 NLSC 77; Weir's Construction Ltd. v. Warford, 2017 NLCA 1; Laurentian University of Sudbury, 2022 ONSC 3013; Montréal (City) v. Deloitte Restructuring Inc., 2021 SCC 53, [2021] S.C.R. 736; Elton Estate v. Elton, 2009 NLCA 34; R. v. Morgentaler, [1993] 1 S.C.R. 462. STATUTES CONSIDERED: Bankruptcy and Insolvency Act, RSC 1985, c. B-3, s. 50.4, 2; Companies’ Creditors Arrangement Act, RSC 1985, c. C-36, s. 19; Insurance Contracts Act, RSNL1990, c. I-12, s. 13. RULES CONSIDERED: Court of Appeal Rules, NLR 38/16, rule 38. D.M. BOONE J.A.: [1] The Intended Intervenors are Representative Plaintiffs for persons (the “claimants”) who claim to have been abused in this Province by clergy or members of lay religious orders for whom the Roman Catholic Episcopal Corporation of St. John’s (“RCECSJ”) is responsible. [2] Guardian Insurance Company of Canada (“Guardian”) issued an insurance policy (the “Policy”) to RCECSJ. Following a trial, a Supreme Court judge decided that Guardian could consider that policy as void ab initio because RCECSJ did not Page 3 disclose its knowledge of abuse allegations when it applied for and renewed the Policy (John Doe v. Roman Catholic Episcopal Corporation of St John’s, 2024 NLSC 182) (the “Decision”). [3] The Policy may otherwise have indemnified RCECSJ against some of the abuse claims. [4] RCECSJ has appealed from the Decision. The Intended Intervenors apply to intervene in that appeal. [5] I have decided to grant the application to intervene. BACKGROUND RCECSJ is vicariously liable to the claimants [6] The litigation against RCECSJ by abuse survivors started with a few claims in the early 1990s. There are now hundreds of claimants. They each allege that they were abused at some time from the 1940s to 2021. [7] The parties agreed to treat the cases of four claimants, who alleged abuse by members of a lay order, as test cases. After trial in those cases, a Supreme Court judge held that RCECSJ was not vicariously liable to those plaintiffs. In John Doe (G.E.B. #25) v. The Roman Catholic Episcopal Corporation of St. John’s, 2020 NLCA 27, this Court reversed that decision. The Supreme Court of Canada dismissed RCECSJ’s application for leave to appeal on January 14, 2021 (Roman Catholic Episcopal Corporation of St. John’s v. Doe, [2020] S.C.C.A. No. 309). [8] As the Supreme Court judge overseeing the later insolvency of RCECSJ put it, the “Supreme Court's refusal to hear the RCECSJ's appeal ended the decades-long litigation and the focus shifted straightaway to quantifying the Claimants' damages and liquidating the RCECSJ's assets to pay them” (Roman Catholic Episcopal Corporation of St. John's (Re), 2024 NLSC 180, at para. 5). RCECSJ says it is insolvent [9] On December 30, 2021, RCECSJ filed a Notice of Intention under section 50.4(1) of the Bankruptcy and Insolvency Act, RSC 1985, c. B-3 (the “BIA”). RCECSJ said in this filing that it was insolvent. An insolvent person is defined in Page 4 the BIA, section 2, as someone who is unable to meet their obligations as they become due, has ceased paying current obligations, or the aggregate of whose property is not sufficient to enable payment of all his obligations, due and accruing due. [10] The BIA proceeding was converted to a restructuring process under the Companies’ Creditors Arrangement Act, RSC, 1985 c. C-36 (the “CCAA”). [11] Through the CCAA process, the Intended Intervenors and RCECSJ, with the assistance of a Monitor and the supervising judge, have attempted to work out a compromise arrangement to settle the abuse claims. A Claims Procedure Order, setting out a process for valuing the claims, was approved by the supervising judge. The liquidation of RCECSJ assets has been proceeding at the same time. As of March 2025, approximately $44,000,000 has been raised from selling most of RCECSJ assets (RCEC (Re), 2025 NLSC 77, at para. 3). [12] The parties advise that they still anticipate a significant shortfall between the amount raised by the liquidation of RCECSJ assets and the aggregate of the claims assessed under the Claims Procedure Order. The insurance policy subject of the appeal [13] Guardian issued the Policy to RCECSJ in 1980 and it was renewed annually until 1985. The Policy covered claims that occurred within that five year period. Some of the claimants say that they were abused during this time. [14] The Policy limits were $5,000,000 from October 1, 1980 to October 1, 1982, and $10,000,000 from October 1, 1982 to October 1, 1985. Therefore, if the Policy covered the abuse claims, then up to $40,000,000 over and above the value of RCECSJ assets could be available to compensate some claimants. This would leave more RCECSJ funds available to compensate the other claimants. The decision under appeal [15] Guardian contested whether it was obliged to indemnify RCECSJ against claims for abuse that occurred during the Policy period. In essence, Guardian says that its obligation to indemnify was vitiated by non-disclosure on the part of RCECSJ. That issue proceeded to trial in November 2023. The parties filed an Agreed Statement of Facts in which RCECSJ admitted that when it applied for or Page 5 renewed the Policy, it did not disclose its knowledge that certain of its clerics were alleged to have committed acts of sexual abuse. The parties also called witnesses, including experts in insurance underwriting. [16] The trial judge decided that: … a reasonably prudent insurer during the period of 1980 to 1985 would have considered RCEC's knowledge of allegations of sexual abuse to be a material fact, or at the very least, an important and relevant consideration before issuing the Policy; and therefore, RCEC had an obligation of full disclosure under the doctrine of uberrima fides. (Decision, at para. 177) … the failure to disclose demonstrated a lack of truthfulness, a misrepresentation of the risk, and an acceptance of potential criminal acts so as to make a reasonable and prudent insurer decide to decline to issue a policy. (Decision, at para. 179) … Guardian has met its burden of establishing that RCEC and its legal representatives intentionally and recklessly withheld knowledge of past and ongoing sexual abuse by its clergy and is not required to return the premiums paid by RCEC during the time of the Policy. (Decision, at para. 180) The Appeal [17] RCECSJ appeals from the Decision on the following grounds: • The trial judge erred in law in finding that RCECSJ was required to report its knowledge to Guardian at the time of the obtaining or renewing the Policy. • The trial judge erred in mixed fact and law in finding that the knowledge of allegations of sexual abuse was a material fact. • The trial judge erred in mixed fact and law in finding that the fact of such abuse having occurred would be material to the consideration of a Page 6 reasonable insurer in the issuance and renewal of a general liability policy from 1980 to 1985. • The trial judge erred in mixed fact and law in concluding that Guardian was not required to return the premiums to RCECSJ. Relevant procedural history [18] The actions between RCECSJ and Guardian started as third party actions within separate actions brought against RCECSJ by three of the claimants. The Supreme Court granted the request of RCECSJ and Guardian to sever the trial of the third party actions from the claimants’ actions. The claimants could have opposed that severance and then participated in that trial, but instead they consented to the severance. The third party actions were later consolidated for trial, again with the consent of the claimants. [19] The claimants continued as parties in the main action and were therefore provided with notice of all steps in the proceeding, including the trial. [20] The appointment of the Intended Intervenors as Representative Plaintiffs for all claimants happened in February 2022, before the trial. [21] The Intended Intervenors, in their capacity as Representative Plaintiffs, did not ask to participate in the trial. An intervenor must have an interest in the appeal [22] The application to intervene is taken pursuant to the Court of Appeal Rules, NLR 38/16, Rule 38: 38. (1) A person who did not participate in the court appealed from may apply to be added as an intervenor for purposes of the appeal. (2) The application shall state the intervenor's interest in the appeal, explain the failure to apply to intervene in the court appealed from, and indicate the position the intervenor intends to take on the appeal. (3) In addition to the factors set out in subsection (2), the Court may consider any relevant factors, including whether intervention would delay or prejudice adjudication Page 7 of the rights of the parties and whether the record of the court appealed from is sufficient for purposes of the intervention. (4) The Court may define or limit the scope of participation by an intervenor in an appeal. [23] In Weir's Construction Ltd. v. Warford, 2017 NLCA 1, this Court noted that: [10] This rule, which came into force on October 17, 2016, replaces the previous rule 7.05 of the Rules of the Supreme Court, 1986. Rule 7.05 did double duty by regulating interventions not only in this Court but also in the Trial Division. Considerations relating to interventions in the Court of Appeal are not necessarily congruent with those relevant to a proposed intervention at the trial level. One obvious difference is that, as rule 38(2) recognizes, the Court has to grapple with the complicating fact that the proposed intervenor was not a participant in the hearing below and therefore had no role in creating the record or shaping the argument that is the basis of the appeal. [24] In Weir’s Construction, at paragraph 20, this Court stated that “the key to a successful intervention application is to show some legitimate connection to or ‘interest’ in the appeal that would justify the involvement of another party who is not central to the original litigation.” [25] An application to intervene invokes the discretionary jurisdiction of the Court. The Court in Weir’s Construction, at paragraph 22, described two categories of cases where intervention may be appropriate: The first involves a situation where the applicant's specific legal interests will or may be affected by the decision on appeal. The second involves a broader public interest consideration. There may be situations where the legal issues in an appeal may involve broader questions which may have to be considered from differing points of view, and which have significant public implications. The Court may be persuaded that the contribution from persons other than the actual parties may being important and differing perspectives to bear on an issue of public importance and that the Court would benefit from hearing those other perspectives. The parties’ positions on the application [26] The Intended Intervenors rely on the second of the categories described in Weir’s Construction. They say they wish to participate in the appeal to present the perspective of sexual assault survivors. They especially want to ensure that the Court hearing the appeal understands the effect that voiding an insurance policy will have on recovery of compensation from judgment-proof defendants and may have on the Page 8 willingness of survivors to report claims. They intend to show that the guiding principles of Canadian insurance law require that those perspectives be considered. They acknowledge that their arguments may overlap somewhat with those of RCECSJ, but they say that the abuser should not be permitted to speak for the interests of the abused. They have presented a draft of the Factum that they will file if permitted to intervene. [27] Guardian opposes the application. It says that the Intended Intervenors do not offer any fresh perspective and only plan to appear on the appeal to echo the submissions of RCECSJ, and therefore advance their pecuniary claims. Guardian says that its dispute with RCECSJ is a matter of private law and does not raise any broad public policy implications. Finally, Guardian says that the Intended Intervenors had the opportunity to participate in the trial but declined to do so by consenting to the severance of the trial from their actions against RCECSJ, and by not seeking to revisit that position once they became aware that RCECSJ was insolvent. [28] RCECSJ supports the Intended Intervenors’ application. It says that if RCECSJ cannot fully compensate all claimants then the claimants who were abused during the Policy period could bring actions to recover their unpaid damages directly from Guardian. Therefore, RCECSJ says that the Intended Intervenors have a direct interest that will be affected by the appeal because they cannot recover against Guardian if the Policy is void. ANALYSIS Direct interest [29] I accept the submissions of RCECSJ that the Intended Intervenors have a direct interest in the appeal. [30] The Insurance Contracts Act, RSNL1990, c. I-12, provides: 13. (1) Where a person incurs liability for injury or damage to the person or property of another and is insured against that liability and fails to satisfy a judgment awarding damages against him or her in respect of his or her liability and an execution against him or her is returned unsatisfied, the person entitled to the damages may recover by action against the insurer the amount of the judgment up to the face value of the policy but subject to the same equities that the insurer would have if the judgment had been satisfied. Page 9 [31] There are questions around the application of that provision in the insolvency context. There is a question whether a claim valued under the Claims Procedure Order that is not fully paid out of the compromise would amount to an unsatisfied judgment for the purpose of applying the provision. There is also a question as to the application of the CCAA, section 19(2) (which excepts claims in certain categories from the operation of the CCAA unless the creditor consents), to an as yet unproven claim for damages for sexual assault (see Laurentian University of Sudbury, 2022 ONSC 3013; Montréal (City) v. Deloitte Restructuring Inc., 2021 SCC 53, [2021] S.C.R. 736). [32] Nonetheless, it is certain that if Guardian is entitled to consider the Policy void ab initio, then the claimants abused during the Policy period could not succeed in a claim for direct recovery under the Insurance Contracts Act, section 13. Any recourse to such a remedy would be closed to them because they would be unable to prove the existence of a valid insurance policy (assuming without deciding that res judicata would apply to preclude them from pursuing the issue of validity of the Policy in a direct action). [33] Therefore, I find that the Intended Intervenors, as Representative Plaintiffs for those claimants who allege that they were abused during the Policy period, have a direct interest in the appeal. “The outcome of the appeal will very probably have an effect on” those claims (Elton Estate v. Elton, 2009 NLCA 34, at para. 14; Weir’s Construction, at para. 23). Intervention to present useful perspective on public policy issues [34] As I have decided that the Intended Intervenors have a direct interest in the outcome of the appeal, there is no need to consider whether they fall within the second category of cases described in Weir’s Construction. If questions of broad public policy arise from the legal issues on appeal, then those questions can be addressed in argument. Considerations other than interest in the appeal [35] In Weir’s Construction, the Court said that an order allowing intervention does not necessarily follow even if an applicant demonstrates an interest in the appeal: Page 10 35 Assuming an applicant establishes an "interest" in the appeal, within one or the other — or perhaps both — of the categories discussed above, that does not mean that intervention will automatically be granted. Rules 38(2) and (3) require the Court to consider a number of other factors in deciding whether to exercise its discretion to grant or deny intervention. They include: (i) The applicant's explanation for failure to apply to intervene in the Court appealed from. A failure to give a reasonable explanation may be an indication that the applicant's "interest" may not be that important. (ii) The position the applicant intends to take on the appeal. A statement of this matter will enable the Court to consider whether the point can be adequately be dealt with by others without the intervention or whether the proposed intervenor can make a different or useful contribution. (iii) Whether intervention would delay or prejudice adjudication of the rights of the parties to the appeal. It is to be noted that delay, without corresponding prejudice, may be enough in itself to prevent intervention. There is a value in timely adjudication for its own sake. Of course, the possibility of prejudice, flowing from delay or for some other reason, enhances the significance of this factor. (iv) Whether the record of the court appealed from is sufficient for the purposes of the intervention. Without a suitable record, the Court would have to address whether there would have to be reception of additional evidence to augment the record, either by way of legislative or adjudicative facts, to accommodate the submission of the proposed intervenor. That is a factor that would have the potential of complicating and delaying the appeal. 36 Presence or absence of each of these factors is not crucial. They and any other factors deemed relevant by the Court must be balanced to arrive at a fair, efficient, orderly and proportional disposition of the ultimate appeal, as contemplated b rules 2 and 3 of the Court of Appeal Rules. The Intended Intervenors did not participate in the trial [36] The only factor that weighs against allowing the application is the Intended Intervenors’ explanation for failing to participate in the trial. [37] The Intended Intervenors say that when they decided not to participate, they were unaware that RCECSJ would have insufficient assets to compensate all the abuse claimants. That may have been the case in the earlier stages of the litigation. However, it was not the case by the time the third party action proceeded to trial. Page 11 RCECSJ declared itself insolvent in 2021. The Intended Intervenors were made Representative Plaintiffs in February 2022. The trial of the third party action between RCECSJ and Guardian was originally set to start in October 2022 and later postponed until November 2023. The Intended Intervenors would have been aware at that time that there was considerable risk that RCECSJ would not have sufficient assets to pay all the abuse claims. [38] The failure to provide a reasonable explanation for not participating in the trial is not necessarily fatal to the application to intervene on appeal. It is, under Rule 38, only one factor to consider. As the Court made clear in Weir’s Construction, at paragraph 36, “[p]resence or absence of each of these factors is not crucial. They and any other factors deemed relevant by the Court must be balanced to arrive at a fair, efficient, orderly and proportional disposition of the ultimate appeal…”. [39] The failure to intervene or participate in the court below can undercut assertions of important public interest (Weir’s Construction, at para. 48) where an applicant relies on the second category of interest. However, it will generally be of less importance where the basis for intervention is founded in direct interest. In such a case, the application should not be denied punitively. However, the conditions imposed on intervention should reflect the choice not to participate in the trial. The position the Intended Intervenors intend to take on the appeal [40] The Intended Intervenors presented a draft factum in support of their application. The essence of the argument in the draft is that the Decision failed to sufficiently address leading appellate authorities on the principles of insurance law and failed to address the public policy implications of voiding coverage for sexual assault claims. [41] The factor that applicants to intervene must show a useful or unique perspective should not be as strictly applied where they have a direct interest in the outcome of the appeal. Yet, the Intended Intervenors must still thread a fine needle. They must not simply echo the arguments made, or which could be made, by RCECSJ on the appeal (Weir’s Construction, at para. 35(ii)). But the Intended Intervenors also cannot expand the scope of the appeal (R. v. Morgentaler, [1993] 1 S.C.R. 462, at para. 2). [42] The Intended Intervenors’ draft factum deals with issues of general insurance law and particularly the public policy implications of voiding an occurrence-based Page 12 policy many years after the occurrences. Their arguments appear to relate to the first three grounds of appeal and therefore do not expand the scope of the appeal. It will be for the Court on appeal to determine if the legal arguments they make are material to resolution of the issues on appeal. [43] RCECSJ has filed its factum for the appeal. The factum deals with the general principles of insurance law. However, it does not make the arguments made by the Intended Intervenors. The record on appeal [44] The record on appeal is sufficient to dispose of the grounds of appeal raised by RCECSJ. The record will also limit the submissions that the Intended Intervenors can make on appeal. Their submissions on the hearing of this application included discussion of the general experiences of sexual assault survivors and the particular experiences of the claimants. These matters were not the subject of evidence at the trial and therefore do not form part of the record. However, their draft factum does not deal with such issues. Allowing the application will not delay the adjudication of the appeal [45] Guardian and RCECSJ agree that the Intended Intervenors made this application in a timely manner. The Intended Intervenors have already prepared a draft factum which their counsel advises can be filed, within a short time, with any necessary modifications required by the Court ruling on this application. The hearing of the appeal is not yet scheduled. Allowing the application will not delay the appeal. The Court can impose limits on participation. [46] In Weirs’ Construction, this Court made a final note: 37 Finally, I would note that even if intervention is granted, rule 38(4) allows the Court to define or limit the scope of participation by an intervenor in the appeal. That could include limiting the subject-matter to be addressed, determined by reference to the position the applicant intends to take on the appeal and by reference to the assessment by the Court as to the usefulness of the contribution that the intervenor can make. As well, limits could be placed on the manner of the participation, including all or only some of the filing of materials and written briefs and making oral submissions. Page 13 CONCLUSION AND DISPOSITION [47] The Intended Intervenors have a direct interest in the outcome of this appeal. Although they did not participate in the trial, I would allow their application to intervene but would restrict the scope of their intervention as follows: (i) They may only refer to facts in the record; (ii) They must revise their draft Factum to include submissions demonstrating how their arguments address RCECSJ’s grounds of appeal; (iii) They must file their revised Factum within two weeks; and (iv) They may participate in the hearing of the appeal to present their arguments as set out in their Factum but not to reply to the submissions of RCECSJ or Guardian. [48] Neither the Intended Intervenors nor RCECSJ asked for costs. I make no order as to costs. _______________________________ D.M. Boone J.A.