The Supreme Court of Canada will announce Thursday whether Guardian Insurance Co. has to continue paying for the sins of the Roman Catholic Episcopal Corp. of
St. John’s.

The decision is part of a 20-year dispute between Guardian and the administrative arm of the Catholic Church in

St. John’s over whether the insurance company has to pay indemnities to victims of sexual abuse by priests.

It goes back to 1989, when a minor filed a claim against the Episcopal Corp. related to allegations of sexual abuse by James Hickey, a priest in the St. John’s diocese, between 1982 and 1988.    

A year before, Hickey, who died in 1992, had pleaded guilty to 20 charges of sexual assault, gross indecency and indecent assault involving teenage boys.

To cover the cost of the 1989 settlement, the Episcopal Corp. filed a third-party insurance notice to Guardian, with which it had a policy.

Guardian, however, said that it wasn’t liable in this case. The company argued that the Episcopal Corp.’s policy was rendered void because of its failure to disclose knowledge of James Hickey’s history of sexual abuse.  

If it knew about a potential liability, but did not disclose it, argued Guardian’s lawyers, then the Episcopal Corp. had entered the contract in bad faith.

To support this point, Guardian cited the Winter Commission that suggested several senior clergymen knew of Hickey’s abuses as early as 1975.  

Eventually, the insurance company decided its evidence against the Episcopal Corp. was insufficient, and in 1992 signed a “consent order” agreeing to pay the Episcopal Corp.’s indemnities.

Guardian continued covering settlements until 2009, when it became aware of new evidence —   testimony from a victim, a seminarian and a priest — further suggesting senior clergy’s knowledge of abuse went back at least to the 1970s.

The insurance company refused to pay a 2009 abuse settlement, claiming that the new evidence meant its 1992 consent no longer applied.

The case went before the Supreme Court of Newfoundland and Labrador, and in 2011 Justice Richard LeBlanc ruled in favour of Episcopal Corp.

The matter had already been settled in 1992, he argued, and the entrance of new evidence did not qualify as “unusual circumstances” capable of overturning the 1992 consent.

Guardian appealed this decision. In 2013, LeBlanc’s ruling was overturned by the Newfoundland and Labrador Court of Appeal, with Justice M.F. Harrington concluding that, “The 1992 Consent Order, on its face, only applied to one abuse claim that called for indemnity.”

“To suggest that a consent … will forever bind Guardian to indemnify (Episcopal Corp.) … for an unlimited number of potential claims is unfair and unjust.”

The legal tussle continued into 2014 with Episcopal Corp. appealing the latest ruling to the Supreme Court of Canada. The highest court in the country will give its assessment of the matter on Thursday.

If Episcopal Corp. loses the appeal, a new case will open to test Guardian’s original claim that church officials knew about the abuses when they signed the insurance contract.