Roman Catholic Episcopal Corporation for the Diocese of Sault Ste. Marie v. AXA Insurance (2015 ONSC 838)

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Roman Catholic Corporation v. AXA Insurance, 2015 ONSC 838 (CanLII)

Date: 2015-02-10
Docket: 4492-08
Citation: Roman Catholic Corporation v. AXA Insurance, 2015 ONSC 838 (CanLII), <http://canlii.ca/t/gg844>, retrieved on 2016-04-30
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CITATION: Roman Catholic Corporation v. AXA Insurance, 2015 ONSC 838

COURT FILE NO.: 4492-08

DATE: 2015-02-10

ONTARIO

SUPERIOR COURT OF JUSTICE

BETWEEN: )

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THE ROMAN CATHOLIC EPISCOPAL CORPORATION FOR THE DIOCESE OF SAULT STE. MARIE, IN ONTARIO, CANADA

Plaintiff

– and –

AXA INSURANCE (CANADA)

Defendant

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Daniel Dooley, for the Plaintiff
Kevin L. Ross, for the Defendant
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) HEARD: October 27 and 28, 2014

 

REASONS ON MOTION

 

JUSTICE E. GAREAU:

 

[1]               This is a motion brought by the defendant, AXA Insurance (Canada).  The relief sought is detailed in the amended notice of motion dated September 5, 2014 located at Tab 1 of Volume 1 of the motion record of the defendant.

[2]               This motion arises out of the examination for discovery of Monsignor Angelo Caruso on August 12 and 13, 2013.

[3]               Monsignor Caruso was produced by the plaintiff as its representative for discovery in the action by the Diocese against its insurer.  The main issue in that action is whether the defendant is obligated to insure the plaintiff and reimburse it for monies paid out with respect to 16 sexual abuse claims against priests who worked throughout the Diocese.  The plaintiff takes the position that it is insured by a policy of insurance in place.  The defendant takes the position that it is entitled in law to deny coverage on the basis of material misrepresentation, material non-disclosure and bad faith.  The position taken by the defendant is that the policy is void ab initio.

[4]               It is against this backdrop that Monsignor Caruso was examined for discovery.  During the course of his examination for discovery, Monsignor Caruso gave refusals with respect to certain questions, in particular, questions relating to church Canon Law and the Diocese’s practices, policies and procedures that existed at the time the insurance was in place and renewed.  The answers were refused on the basis that these questions were not relevant or proper questions. Additionally, it was conceded by the plaintiff that Monsignor Caruso was not knowledgeable in the area of the church’s Canon Law and could not answer such questions even if they were relevant.

[5]               In the motion before the court, the defendant seeks an order that the plaintiff produce for discovery the Bishop of the Diocese of Sault Ste. Marie, Bishop Jean-Louis Plouffe and that Bishop Plouffe be instructed to answer questions put by the defendant with respect to church Canon Law and the practices, policies and procedures that were in place at the relevant time.  These are essentially the questions that were put to Monsignor Caruso on his examination for discovery that he refused to answer, either on the basis of relevance or lack of knowledge.

[6]               In the alternative, if the court is not prepared to order Bishop Jean-Louis Plouffe to attend at an examination for discovery, the defendant seeks an order that Monsignor Angelo Caruso re-attend and answer the questions that he refused to answer on his examination for discovery held on August 12 and 13, 2013.

Background

[7]               The insurance coverage provided by the defendant to the plaintiff covers the period between October 15, 1963 to December 31, 1970.

[8]               The Roman Catholic Episcopal Corporation for the Diocese of Sault Ste. Marie is a corporation which was created by a Special Act of the Legislature.

[9]               The primary issue in the litigation concerns the plaintiff’s entitlement to coverage under a liability policy issued by the Great American Insurance Company to the plaintiff Diocese between the periods from October 15, 1963 and December 31, 1970.  The defendant is the successor to the Great American Insurance Company.

[10]           The plaintiff is seeking from the defendant indemnity under the Great American Insurance policy with respect to tort actions against the Diocese concerning sexual assaults of children committed by priests in the Diocese during the 1960’s and 1970’s.

[11]           The action before the court is one of 16 separate insurance coverage actions in which the Diocese seeks insurance coverage by way of indemnification related to actions brought by 21 plaintiffs against the Diocese arising out of sexual assaults of children committed by 7 priests in the Diocese in the 1960’s and 1970’s.  By previous court orders, the other actions have been stayed pending the determination of this action with respect to insurance coverage.

[12]           In the particular action before the court, the Diocese seeks a declaration that the defendant owes the Diocese a duty to defend and indemnify the Diocese for monies paid out by the Diocese in respect of sexual assaults of Robert Berube by Father Jean-Claude Etienne between 1969 and 1972.  The result in the Berube action will bind the parties in the other action for claims for indemnity brought by the Diocese against AXA Insurance Canada.

[13]           It is a fact of some significance that during the course of one of the collateral tort and coverage actions involving the parties presently before the court, the plaintiff disclosed particulars of a proceeding involving the plaintiff Diocese and Father John Sullivan, who was a priest in the Diocese.  In March, 1960, the then Bishop of the plaintiff Diocese, Bishop Alexander Carter, received a report that Father Sullivan had sexually assaulted two boys in the parish.  Father Sullivan admitted to the misconduct, was reprimanded by the Bishop and sent from the parish for a period of one week to do penance.  In January, 1961, Bishop Carter received a further report from a father of three boys that Father Sullivan had sexually assaulted his three sons.

[14]           In light of the repeated sexual assaults against minors committed by Father John Sullivan, the plaintiff Diocese, under the direction of Bishop Carter, conducted a Diocesan Tribunal, “Processus Criminalus” essentially an internal trial within the Roman Catholic Church.  This “Diocesan Tribunal” was conducted according to church Canon Law, and, in particular, under Canon 2359, paragraph 2.  This trial within the church was conducted under an “Oath of Secrecy”.

[15]           Canon 2359, paragraph 2 of the Roman Catholic Church provides that:

“Clerics in sacred orders guilty of offences against the sixth commandment with minors, under the age of sixteen, be it adultery, rape, bestiality, sodomy, incest with relatives in the first degree of consanguinity or affinity, are to be suspended, declared infamous, deprived of all offices, benefices, dignities or functions, if they have any, and, when cases are particularly grave, deposed.”

[16]           The records produced by the plaintiff with respect to the internal trial conducted by the Diocese in accordance with Canon Law, indicate that Father Sullivan was found guilty of the offence under Canon 2359, paragraph 2, referred to above.

[17]           Father John Sullivan was deposed but later returned to the Diocese in 1964 with the permission of the Bishop and resumed the duties of a parish priest.  Father John Sullivan continued assaulting boys in the Diocese over the next 15 years until  he was ordered to leave the Diocese by the Bishop in or about 1979.  Ultimately, Father John Sullivan was charged under the Criminal Code of Canada and convicted of sexual assaults he committed as a priest throughout the Diocese in the period between 1958 and 1979.

[18]           The Diocese did not report the misconduct of Father John Sullivan either to the police or the Children’s Aid Society at the time the Diocese learned of Father Sullivan’s activities in or around 1960.

[19]           It is alleged by the defendant insurer that a Diocese and the Bishop were subject to specific instruction and direction from the Vatican itself on how allegations of sexual abuse by priests were to be handled.  This instruction from the Vatican was issued in 1962 and known as Crimen Sollicitationis.

[20]           The “Crimen Sollicitationis” was published under the authority of Pope John XXIII and was provided to “all the Bishops of the world”.  The full title of the “Crimen Sollicitationis” translates into English as “Instruction on the Manner of Proceeding in Cases of Solicitation.”  The document outlines the manner in which certain grave clerical crimes are to be investigated and tried pursuant to Canon Law.

[21]           Most of the “Crimen Sollicitationis” addresses the canonical crime of solicitation, which occurs when a priest attempts to solicit sex during the course of taking confession.  The document itself is strictly confidential and to be stored in the secret archives of the Curia.  The process set out for the investigation and trial process is cloaked in secrecy, which requires all participants in the inquiry, including the victim, to swear an oath of secrecy.

[22]           Although the “Crimen Sollicitationis” primarily addresses the crime of solicitation, Title V of the document, “Crimen Possimum” outlines a procedure for the “foulest” or “worse” crimes, which include any external obscene act, gravely sinful, perpetrated or attempted by a cleric in any way whatsoever with pre-adolescent children of either sex.  The instruction directs that the same secret investigation and trial process as set out for solicitation be followed.  The document provides that penalties for crimes of this type should take Canon 2359, paragraph 2 into account.

[23]           Although the “Crimen Sollicitationis” was not in place in 1960 and 1961 when Bishop Carter dealt with the sexual assaults perpetrated by Father John Sullivan, it was certainly in place when the plaintiff Diocese contracted its policy of insurance with Great West Life in 1963.

[24]           Father John Sullivan was dealt with by Bishop Carter under the 1917 P10 – Benedictive Code of Canon Law (“1917 Code”).  Pope Benedict XV issued an Apostolic Constitution dated May 27, 1917 which set out the 1917 Code, which are Canon Law Provisions Regarding the Conduct of Priests.  The “1917 Code” includes Canon 2359, which was followed and referenced in the Canonical Trial of Father John Sullivan.

[25]           It is clear that Father John Sullivan was dealt with by the Roman Catholic Church according to the tenants of Canon Law.  As indicated in the concluding paragraphs of the “Written Brief of the Promotor Justitiae” dated January 16, 1961, the written decision of the church tribunal dealing with the Father John Sullivan case:

“The law is clear in the case.  “Clerics in sacred orders guilty of offences against the sixth commandment with minors, under the age of sixteen, be it adultery, rape, bestiality, sodomy, incest with relatives in the first degree of consanguinity or affinity, are to be suspended, declared infamous, deprived of all offices, benefices, dignities or functions, if they have any, and, when cases are particularly grave, DEPOSED.” Can. 2359, par. 2.C.J.C.

There is a clear and definite relation between the crimes committed and the prescriptions of Canon Law.  Rev. John E. Sullivan has been suspended, and informed of the fact, according to the norms of law.

It is not necessary to describe at length the gravity of the offense.  The testimony given by trustworthy witnesses and the credibility of the lay persons involved justified the constitution of the Criminal Tribunal to hear and judge the case.

Conclusion.  I therefore, respectfully submit that this Venerable tribunal, to fulfill the prescriptions of the Sacred Canons, to preserve the dignity of the priesthood, to stop the danger of perversion and loss of faith of young people, to the common good of Church, return a verdict in the affirmative.  Signed:  (Very Rev.) Adolphe Proulx – Promotor Justitiae.”

 

The Issues in the Motion Before the Court:

[26]           In the motion before the court, the moving party, AXA Insurance (Canada) is seeking an order:

(a)               that the plaintiff produce Bishop Jean-Louis Plouffe at an examination for discovery to answer questions related to Canon Law, and the Diocese practices and procedures;

(b)               that Bishop Plouffe answer the questions put to Monsignor Angelo Caruso at his examination for discovery, which were refused on the basis of relevance.  These questions deal primarily with issues of Canon Law, church practices and procedures which Monsignor Caruso either refused to answer or was not qualified to answer;

(c)               in the alternative, if the court does not direct Bishop Jean-Louis Plouffe to attend on discovery, to direct Monsignor Angelo Caruso to re-attend at discovery and answer questions refused at discovery.

[27]           The position taken by the plaintiff Diocese is that that Canon Law is irrelevant to the central issue of whether or not representatives of the Diocese failed to disclose material facts, made material misrepresentations or acted in bad faith in 1963 when the Great American Insurance policy was placed and in 1967 when the policy was renewed.

[28]           In the action proper, the defendant takes the position that the policy of insurance put in place in 1963 and renewed in 1967 is void ab initio on the basis of a material misrepresentation, material non-disclosure and bad faith on the part of the plaintiff Diocese.

[29]           The Roman Catholic Episcopal Corporation for the Diocese of Sault Ste. Marie is a corporation which was created by a Special Act of the Legislature.

[30]           Rule 31.03(2) of the Rules of Civil Procedure sets out who may be examined on behalf of a corporation.  The Rule states as follows:

“(2)  Where a corporation may be examined for discovery:

(a)   The examining party may examine any officer, director or employee on behalf of the corporation, but the court on motion of the corporation before the examination may order the examining party to examine another officer, director or employee; and

(b)   The examining party may examine more than one officer, director or employee only with the consent of the parties, or the leave of the court.”

[31]           Applying Rule 31.03(2) of the Rules of Civil Procedure, the defendant insurer could  have initially insisted that Bishop Plouffe be produced for discovery with the issue of who was to be produced to be adjudicated by the court, on motion, if the Diocese objected to the defendant’s choice of who was to be examined for discovery.

[32]           The fact that the defendant did not insist on first examining Bishop Plouffe is not fatal to its request to examine him for discovery at this stage of the litigation.  Rule 31.03(2)(b) provides that “the examining party may examine more than one officer, director or employee only with the consent of the parties or the leave of the court.”

[33]           Rule 31.03(2)(b) couches the court with the jurisdiction to order the production of Bishop Jean-Louis Plouffe for discovery on behalf of the Diocese Corporation if the court considers it appropriate to do so.

[34]           The corporate structure of a Diocese is unique as observed by the Supreme Court of Canada in John Doe v. Bennett 2004 S.C.C. 17.  At page 441 of the decision, the Chief Justice, on behalf of the court, observes:

“A Roman Catholic Diocese is a territorial enterprise, composed of a number of parishes and administered by a bishop or archbishop.  Dioceses are constituted by the Pope, who also appoints bishops and archbishops.  A number of Dioceses may form an ecclesiastical province.  It is common for legislation to incorporate bishops and archbishops as episcopal corporations.  I conclude that the episcopal corporation is the secular arm of the bishop or archbishop for all purposes.  The office of bishop/archbishop, the enterprise of the diocese and the episcopal corporation are legally synonymous.”

[35]           The court goes on at page 442 of the Doe v. Bennett decision to state:

“The purpose for which ecclesiastical corporations sole like St. George’s are created is to serve as a point of legal interface between the Roman Catholic Church and the community at the diocesan level.  The church is at one and the same time a spiritual presence in the community and a secular actor in the community.  The task of the corporation sole is to provide a bridge between the two spheres for the diocese.  On a secular level, the Church interacts with members of the diocesan community in a host of ways.  It carries on a variety of religious, educational and social activities.  It makes contracts with employees.  It transports parishioners.  It sponsors charitable events.  It purchases and sells goods and property.  To do these things, it requires a legal personality.  That personality is the corporation sole.”

[36]           The Supreme Court of Canada goes on to state on pages 443 and 444 in the Doe v. Bennett decision:

“In sum, the bishop is a corporation capable of suing and being sued “in all Courts” with respect to all matters, and has the power to hold property and borrow money for all diocesan purposes.  The corporation can fairly be described as the temporal or secular arm of the bishop.  The argument that only the bishop’s acts relating to property are acts of the corporation must be rejected.  All temporal or secular actions of the bishop are those of the corporation.  This includes the direction, control and discipline of priests, which are the responsibility of the bishop.  If the bishop is negligent in the discharge of these duties, the corporation is directly liable.  Furthermore, this liability remains with the corporation sole, as a continuing legal entity, even when the bishop initially responsible moves from the diocese or retires from his position.”

[37]           Given the fact that all temporal or secular actions of the bishop are those of the corporation and the fact that the corporation can fairly be described as the temporal or secular arm of the bishop, in the unique corporate structure of a Diocese, it is not inappropriate to request that the Bishop of a Diocese be produced for examination for discovery on behalf of the corporation pursuant to Rule 31.03(2) of the Rules of Civil Procedure.

[38]           The court must not lose sight of the fact that the plaintiff has already produced Monsignor Caruso for discovery in these and other proceedings.  Is it now appropriate to request that Bishop Jean-Louis Plouffe be produced for discovery in view of the fact that the defendant has already had its discovery?  The answer to this question lies in whether Bishop Plouffe has relevant information to provide with respect to the issues in this litigation which cannot be provided for by Monsignor Caruso.  The Monsignor could not answer questions related to church Canon Law put to him on his examination for discovery.  It is clear from the answers given by Monsignor Caruso on the discovery that even if the questions concerning Canon Law, or the practices and policies in place for the church, were properly put and relevant in the issues in the litigation that Monsignor Caruso was not qualified or competent in such matters that he could provide meaningful answers on discovery.

[39]           The pleadings in the litigation provide the parameters to assist in determining whether a particular question or area of questioning is relevant on an examination for discovery and, therefore, should be answered.

[40]           The statement of claim of the plaintiff was issued by the court on October 8, 2008.  In that statement of claim, the plaintiff Diocese makes the following claims against the defendant:

(a)   a declaration that the defendant (“AXA”) is obliged to defend it against the claim made by Robert Berube (“Berube”) in an action commenced in the Superior Court of Justice at London, Ontario, as action number 47565 (the “Berube action”), pursuant to the terms of a policy of insurance described more fully below (the “Great American Policy”);

(b)   an order that AXA pay to the Diocese a proportionate share of the costs incurred in defending the Berube action, representing that portion of the claims made in the said action falling within the period of the Great American Policy;

(c)   a Declaration that AXA is obliged to indemnify the Diocese, pursuant to the terms of the Great American Policy, in respect of any amount(s) paid in the Berube action for damages, prejudgment interest and costs relating to claims falling within the Great American Policy period;

(d)   punitive damages in the amount of FIVE MILLION DOLLARS ($5,000,000.00) for the breach by AXA of its duty to deal in good faith with the Diocese;

(e)   prejudgment interest in accordance with the provisions of Section 128 of the Courts of Justice Act, R.S.O. 1990, c. C43 and amendments thereto;

(f)   its costs of this action on the basis of a solicitor and his own client, together with all Goods and Services Taxes applicable thereto; and

(g)   such further and other relief as to this Honourable Court may seem just.”

[41]           The plaintiff’s claim is based on the policy of insurance in place with Great American, the predecessor corporation of the named defendant.  The plaintiff relies upon coverage under the insurance policy.  The plaintiff specifically pleads reliance upon the case of E.M. v. Reed, 2002 CanLII 6331 (ON CA), [2002] O.J. No. 4791.  In that case, Mr. Justice Wilkins of the Ontario Superior Court of Justice held that the policy in place was broad enough to cover claims for sexual assault by priests and accordingly there was coverage and a duty to defend on the part of Great American.  Specifically in paragraphs 11 and 12 of the statement of claim, the plaintiff pleads as follows:

“11.  Following a trial of the aforementioned Third Party Claim, Justice Wilkins of this Honourable Court held, in Reasons released on the 15th day of December, 2000, amongst other things:

(a)   that the Great American Policy required the Citadel to defend the Diocese against allegations of liability related to assaults and sexual assaults by Diocesan priests alleged to have occurred during the policy period; and

(b)   that the said policy required the Citadel to indemnify the Diocese for any damages found owing by the Diocese to such plaintiffs (subject to the policy limits).

The Diocese pleads, therefore, that by virtue of the decision of Justice Wilkins in E.M. v. Reed and the assumption by AXA of the liabilities of the Citadel, AXA is required to defend the Diocese against the allegations made by the plaintiff in the main action and to indemnify the Diocese for any damages found owing by the Diocese to the plaintiff.”

[42]           The transcript from the examination for discovery of Monsignor Caruso reveals that counsel for the plaintiff relied upon the E.M. v. Reed case on more than one occasion to suggest that questions put to Monsignor Caruso were not relevant and therefore should not be answered.

[43]           The statement of defence and counterclaim of the defendant AXA Insurance was delivered in February, 2009 and amended on January 17, 2013 pursuant to a court order.  Paragraphs 13 and 14 of the statement of defence and counterclaim specifically refer to the 1962 Crimen Sollicitationis.  In particular, paragraphs 13 and 14 read as follows:

“13.  In 1962 a document entitled Crimen Sollicitationis was distributed to all bishops of the world under the seal of Pope John XXIII.  This document formed part of Canon Law and ordered all bishops of the Roman Catholic Church to investigate allegations of sexual abuse by priests against children in secrecy.  Crimen Sollicitationis provided that the penalty for failing to maintain this secrecy was automatic excommunication.   All persons involved in this investigative process, including the priests’ accusers, were required to keep the allegations of sexual abuse a secret, under threat of excommunication.  This secrecy also attached to the existence of the document itself, and it was not until 2003 that this document became known outside of the Roman Catholic Church as a result of litigation in the United States involving sexual assaults committed by Roman Catholic priests.

14. The utmost secrecy required by Crimen Sollicitationis exemplifies the secret manner in which Roman Catholic Dioceses dealt with allegations of sexual assault in the 1960’s, at the time when some Ontario Dioceses made application for coverage with Great American.

[44]           The defendant specifically pleads, in paragraph 38 of the statement of defence and counterclaim, that the plaintiff misrepresented or failed to disclose material facts to Great American at the time of the plaintiff’s application for insurance coverage.  The material facts alleged not to be disclosed by the plaintiff are set out in detail in paragraph 38 of the Statement of Defence and Counterclaim as follows:

(a)   that a priest or priests affiliated with the Diocese of Sault Ste. Marie had been previously accused of sexual assaults involving children;

(b)   that a priest or priests affiliated with the Diocese of Sault Ste. Marie had been investigated by the Diocese in relation to sexual assaults involving children;

(c)   that in particular, Father Sullivan had undergone a canonical trial in the Diocese and had been found guilty of committing sexual assaults against children in the Diocese after admitting his crimes;

(d)   that Bishop Carter had taken active steps to keep Father Sullivan’s sexual assaults secret so that they would not come to the attention of the civil authorities and would not become publicly known;

(e)   that Bishop Carter removed Father Sullivan from the Diocese of Sault Ste. Marie for a period of time, with a plan to return Father Sullivan to priestly duties in the Diocese of Sault Ste. Marie at some point in the future;

(f)   Bishop Carter did in fact return Father Sullivan to the Diocese of Sault Ste. Marie where he was given pastoral duties, placing him in a position of trust and authority in relation to children, without providing any notice to the civil authorities or the public concerning Father Sullivan’s admitted history of sexually assaulting children;

(g)   that despite the prior allegations and canon law judicial findings, that the priest or priests had committed sexual assaults against children, the priest or priests continued to be affiliated with the Diocese.

(h)   that despite the prior allegations and canon law judicial findings that the priest or priests had committed sexual assaults against children, the Diocese continued to place the priest or priests in a position of trust and authority in relation to children.

(i)     that the Diocese maintained a practice and policy of secrecy in relation to accusations and canon law judicial findings of sexual assault by priests against children, and did in fact employ such practices and policies when allegations of child sexual assault were made against priests;

(j)     that the Roman Catholic Church maintained practices and policies of dealing with allegations and canon law judicial findings of child sexual abuse in secrecy, which were followed by the Diocese of Sault Ste. Marie;

(k)   that the Diocese maintained a practice and policy of moving priests from one parish to another when allegations of sexual assault against children were made in order to conceal those assaults, thereby giving the priest or priests additional opportunities to commit sexual assaults in parishes where children, parents and other parishioners were unaware of the prior allegations; and/or

(l)     that the Diocese was required by Papal directive and Canon Law, set out in part in the document entitled Crimen Sollicitationis, to keep all allegations of sexual assault committed by priests against children secret.

[45]           It is alleged and specifically pleaded by the defendant in paragraph 39 of the statement of defence and counterclaim that if full and complete disclosure had been made by the plaintiff at the time of the application for insurance (in 1963), Great American would have:

(a)   refused to provide the Diocese of Sault Ste. Marie with a policy of insurance;

(b)   refused to insure the Diocese of Sault Ste. Marie for liability arising from “assault and battery”;

(c)   included appropriate exclusions within the policy; and/or

(d)   would have determined this information dramatically affected the risk insured, and would therefore have increased the quantum of the premiums charged.

[46]           The defendant takes the position in its pleading that the insurance policy under which the plaintiff seeks coverage is void ab initio based on the plaintiff’s breach of its duty of good faith, its material misrepresentation and for non-disclosure of material facts.

[47]           Reference has been made to the case of E.M. v. Reed, [2000] O.J. No. 4791.  Although the Ontario Court of Appeal upheld the trial judge’s decision that the insurance policy was broad enough to include coverage for claims of sexual assault and therefore there was a duty to defend, in my view, that case cannot be used by the plaintiff to shield itself against the position of the defendant given the specific wording of the pleadings and what is put in issue by the statement of defence and counterclaim.  The case of E.M. v. Reed did not deal with allegations of a lack of good faith or material misrepresentation or non-disclosure.  Those issues were not raised or adjudicated by the court in E.M. v. Reed which makes that case readily distinguishable from the case at bar.  In E.M. v. Reed, the wording of the policy created the obligation to provide coverage and defend.  There was no position advanced by the insurer in that case that non-disclosure or material representation voided the insurance contract ab initio.  In the case at bar, such a position by the defendant raises issues and broadens the litigation in a way which was not considered in the case of E.M. v. Reed.

[48]           I agree with the position of the defendant, AXA Insurance that the case of E.M. v. Reed is not determinative of the issues presently before the court.  The plaintiff cannot simply shield itself behind E.M. v. Reed and take the position that the defendant must defend based on that decision and that other issues, such as non-disclosure and material misrepresentation, are answered by that case.

[49]           There is a central factual issue in this action and the similar coverage actions, namely, did the plaintiff make material misrepresentations or fail to disclose material facts at the time of its application for coverage and subsequent renewal of coverage?  Of legitimate concern in answering this question is whether the Diocese knew that some of its priests had committed sexual assaults and whether the Diocese failed to disclose this information to the insurer when it applied for coverage or at the time of any subsequent renewal of coverage.  The players involved at the material time are deceased and unable to assist the court in answering this question.  That makes information concerning the Diocese’s practices and procedures as directed the Canon Law of the church of even more relevance and importance in dealing with the questions raised concerning non-disclosure and material misrepresentation.

[50]           Did the Diocese fail to disclose?  How is a court able to answer that question and deal with that issue unless there is a full examination of what information the Diocese had concerning sexual improprieties of priests in the Diocese in the 1960’s and prior and the policy dictated by the Roman Catholic Church about how claims against priests were to be processed within the church.  In my view, this makes church Canon Law, as it pertains to the church practice with respect to priests who committed sexual indiscretions, relevant in the litigation presently before the court.

[51]           I fail to see how the court can adjudicate on the defence raised by AXA Insurance of bad faith, non-disclosure and material misrepresentation without information pertaining to how the church hierarchy was directed and instructed to handle such claims by the Canon Law of the Roman Catholic Church.

[52]           If this was a case of whether there was a valid policy of home insurance in place at the time of a house fire, would not previous difficulties with the electrical wiring in the home, known to the insured prior to the placing of insurance and not disclosed to the insurer, not be relevant to the issue of whether there was material misrepresentation or material non-disclosure at the time the contract of insurance was entered into by the insured and the insurer?

[53]           Similarly, church Canon Law and the Diocese`s practices and procedures in dealing with priests who committed sexual assaults and sexual impropriety at the time the insurance policy was contracted with the defendant`s predecessor, Great American, is relevant to the issue of material representation and non-disclosure as pleaded by the defendant in its amended statement of defence and counterclaim.

[54]           Being of this view, it is clear that the Bishop of the Roman Catholic Episcopal Corporation for the Diocese of Sault Ste. Marie, Canada is in the best position to answer questions of Canon Law and the practices and procedures in place by the Roman Catholic Church as dictated by the Vatican. Monsignor Angelo Caruso is not the person in a position to answer these questions. Apart from objecting to the relevancy of such questioning, it was clearly acknowledged in the examination for discovery of Monsignor Caruso that he was not familiar with Canon Law, not an expert in such matters and was not familiar with the church practices and policies in place at the relevant time.  The Bishop of the Diocese by virtue of his office is expected to be knowledgeable in Canon Law and knowledgeable in matters of church practices and policies.  It is undisputed that Bishop Jean-Louis Plouffe has such knowledge and expertise.  The motion record of the defendant (Volume 3) contains at Tab MMM, the biography of His Excellency Bishop Jean-Louis Plouffe.  That biography notes that Bishop Plouffe was ordained into the Priesthood on June 12, 1965.  The third paragraph of the biography states that, `Since then, he has completed various post-graduate studies in Toronto, Belgium, at Saint-Paul University in Ottawa, and at the Gregorian University in Rome.  He holds a Masters Degree and a Licentiate in Theology, a diploma in Liturgy and Mission Studies and a Licentiate in Canon Law.”

[55]           I am aware of the line of jurisprudence setting out the principle that courts should be reluctant to become involved in spiritual matters.  In particular, in the case of P.D. v. Allen, 2004 Can. LII 4033, the learned trial judge stated at paragraph 293 of his judgment:

“There was much testimony by and on behalf of the plaintiff on the subject of Canon Law and the application of religious law.  Courts are and should be reluctant to intervene in and interpret spiritual matters:  see V.B. v. Cairns 2003 CanLII 2429 (ON SC), [2003] O.J. No. 2750 at paras. 131-135 (Sup. Ct.)

[56]           I was very mindful of the aforementioned principle in arriving at my decision that it was appropriate on the facts of this case to have Bishop Plouffe produced for discovery and to require him to answer questions regarding church Canon Law, the practices and procedures within the Catholic Church and the operation and oversight of the Diocese.  In doing so, the court is not entering the arena of interpreting or interfering with spiritual matters.  Rather, the court is requiring this matter to be examined to provide a factual underpinning in respect to claims within the Roman Catholic Church involving impropriety of Diocesan priests during the relevant time period, at the time the insurance policy was put in place (1963) and renewed (1967) and prior.  In my view, without such an inquiry, the defences raised by the defendant in its pleadings, namely lack of good faith, non-disclosure and material misrepresentation, cannot be fully explored and adjudicated on by the court.

[57]           The requirement that Bishop Jean-Louis Plouffe be produced for examination for discovery by the plaintiff will mean that the defendant is examining more than one person on behalf of the plaintiff corporation, as permitted by Rule 31.03(2)(b) of the Rules of Civil Procedure.  I have reviewed the jurisprudence involving the application of Rule 31.03 including the leading case of ING Wellington Insurance Co. v. Alexander Forbes Risk Services U.K. Ltd. [2003] O.J. No. 1012.  I have considered the factors listed in that case to be considered by a court with respect to whether or not it is appropriate to order a second examination of discovery.  On the facts in the case at bar, I am of the view that the defendant AXA Insurance (Canada) will not have a full inquiry into all matters relevant to the issues raised in the pleadings and will not be afforded the examination for discovery it is entitled to unless a second examination for discovery takes place with the plaintiff producing Bishop Jean-Louis Plouffe for discovery.  I reach this conclusion being mindful that a second examination for discovery is the exception rather than the rule and should be granted sparingly and only in exceptional cases.

[58]           Accordingly, there will be an order that the plaintiff produce for examination for discovery, at its expense, Bishop Jean-Louis Plouffe, to answer questions concerning Canon Law, the policies and practices of the Diocese and the operation and oversight of the Diocese.

[59]           With respect to the refusals given by Monsignor Angelo Caruso or counsel on his behalf to questions asked by counsel for the defendant on the examination of Monsignor Caruso held on August 12 and 13, 2013, these refusals are particularized and set out in a chart entitled Schedule A” and attached to the amended notice of motion dated September 5, 2014 brought by the solicitors for the defendant.  A review of Schedule “A” reveals that a large portion of the questions refused to be answered by Monsignor Caruso on his discovery were related to Canon Law, the practices of the Roman Catholic Church and the interpretation of various internal documents of the Roman Catholic Church.  The refusal to answer these questions was made primarily on the grounds of relevance.  For example, at number 6 on the second page of the chart, the question posed was refused to be answered on the grounds of relevance with the added comments, “The Code of Canon Law has a particular application and not relevant to the insurance contract that is in consideration in this litigation.”  In my view, this type of refusal, on the grounds of relevance and on the basis that the Code of Canon Law has no application, is not appropriate given the issues in this case and the specificity of the defendant’s pleadings in its statement of defence and counterclaim.  The refusal by the plaintiff to answer such questions disentitles the defendant to the full and complete discovery which it is entitled to under the Rules of Civil Procedure

[60]           All questions refused by Monsignor Caruso on his examination for discovery held on August 12 and 13, 2013 pertaining to Canon Law, church practices and policies and the operation and oversight of the plaintiff Diocese are proper and relevant questions which can be put to Bishop Jean-Louis Plouffe when he attends on his examination for discovery on behalf of the plaintiff corporation.  This would include, but not be limited to, the questions numbered 1 to 20 inclusive on Schedule “A” attached to the amended notice of motion dated September 5, 2014.

[61]           In light of the fact that this litigation has been outstanding since October 8, 2008, and the examination for discovery of Monsignor Angelo Caruso took place some 1½ years ago, it would be the court’s expectation that the examination for discovery of Bishop Jean-Louis Plouffe would be held, completed and undertakings arising from that discovery would be satisfied without inordinate delay.

[62]           If costs of the motion are in issue, each party shall deliver written submissions on costs, no longer than five typed pages in length, excluding bills of costs and offers to settle.  These submissions shall be delivered by March 16, 2015.

 

Justice E. Gareau

 

Released: February 10, 2015

CITATION: Roman Catholic Corporation v. AXA Insurance, 2015 ONSC 838

       COURT FILE NO.: 4492-08

DATE: 2015-02-10

 

 

 

 

ONTARIO

SUPERIOR COURT OF JUSTICE

BETWEEN:

THE ROMAN CATHOLIC EPISCOPAL CORPORATION FOR THE DIOCESE OF SAULT STE. MARIE, IN ONTARIO, CANADA

Plaintiff

– and –

AXA INSURANCE (CANADA)

Defendant

REASONS on motion

Justice E. Gareau

 

Released: February 10, 2015

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