In
Aviva Insurance Company of Canada v. L’Évêque catholique romain de Bathurst, (NB Court of Appeal, Oct. 18, 2018), the New Bunswick Court of Appeal held that the Catholic Diocese of Bathurst is entitled to $3.35 million damages against its insurance company that refused to cover amounts paid to victims of clergy sexual abuse. The court said in part:
While the underlying facts of this litigation are most disturbing, at its core this is a breach of contract case involving a diocese that, over the years, purchased general public liability insurance from an insurer, which, many years later, when claims were made, wrongfully denied coverage. The question on appeal is whether the diocese is entitled to damages for breach of contract in amounts that involve the costs of, and payments made through, a conciliation process the diocese set up as a result of its insurer’s denial of coverage....
The Diocese’s right to damages did not rest on it being legally obligated to make the conciliation payments. The correct legal test is one of reasonableness; the trial judge was bound to follow this test and determine whether the conciliation process and the resulting payments were a reasonable response to breach of contract. I conclude the actions of the Diocese did constitute a reasonable response, within the boundaries of the law, to Aviva’s wrongful denial of coverage.
CNS reports on the decision.
