Canada: Coverage Issues In Sexual Abuse Claims (Part 2)

In the October 3, 2016 edition of the Lloyd's Brief I addressed the challenges of limitations in sexual abuse claims. The article discussed coverage issues including difficulties associated with proving policies of insurance in historical sexual abuse claims, the interpretation of the grant of coverage and exclusions for intentional acts. In this article we consider the further issue which arises when the employer is aware of the historical acts of sexual abuse but does not inform the insurer.

To provide some background to the discussion, we consider an institutional framework where an employee committed acts of sexual abuse in the past, as late as the mid-1980s. There is sufficient historical evidence in the employment records to suggest that the employer was aware of the abuse. The employer was insured under a commercial general liability policy with occurrence-based coverage. The employer did not advise the insurer of the abuse, nor did the insurer ask the employer if it was aware of any acts of abuse.

As discussed in the earlier article, the Supreme Court of Canada liberalized the limitation period for sexual abuse claims to the point where the limitation period does not begin until the plaintiff is reasonably capable of discovering the wrongful nature of the defendant's acts.1 Typically, that is not until he or she has received counselling. More recently, in Ontario, legislation has been passed to eliminate entirely the limitation period in cases of sexual abuse.

Until 1999 employers were not vicariously liable for the unauthorized intentional acts (sexual abuse) committed by an employee. This issue was revisited by the Supreme Court of Canada in 1999, when the court expanded the scope of vicarious liability for sexual assault in circumstances where the nature of the employment relationship is such that it provides the opportunity for the abuse to take place.2

Against this background, the question then arises: was the employer required to inform the insurer of the historical acts of sexual abuse?

The issue was considered by Justice S. McNally in the decision of L'Eveque Catholique Romane de Bathurst v. Aviva Insurance Company of Canada in October 2016.3

The Diocese of Bathurst settled claims for damages arising from sexual abuse committed by clergy from the late 1950s to the early 1980s. The insurer refused coverage, in part, on the grounds that the Diocese had failed to disclose to the predecessor companies its knowledge of the acts of abuse at the time they occurred.

The common law duty of disclosure of material facts by the insured to the insurer was confirmed in the decision of Carter v. Boehm.4 Lord Mansfield explained that the special facts upon which the contingent chances to be computed lie most commonly within the knowledge of the insured only. On this basis the insured is required to disclose to the insurer the material facts which would affect a reasonable insurer's decision to underwrite the risk. The principle that the insured is required to disclose the material facts with the utmost good faith is now enshrined in insurance policies and related statutes.

It is the insurer which has the burden of proving that the insured breached the duty of disclosure. In doing so, the best evidence to lead in order to establish materiality is that of an objective source who can testify as to the standard insurance industry practices.

In the Bathurst decision, the Diocese called the evidence of Frank Szirt, who was qualified as an expert in the field of underwriting as a result of his employment in the insurance industry from 1965.

Mr. Szirt explained that sexual abuse was virtually unheard of until the mid-1980s. The incidents of abuse were not in the public domain. Employers, including non-profit charitable organizations such as a church were not vicariously liable for sexual abuse committed by an employee until the 1999 decision of Bazley v. Curry.

As such an underwriter would not ask questions of an employer about the risk of sexual abuse at the hands of an employee, nor would an insured employer be expected to understand that they were to disclose such information, if known.

It was not until the mid-1980s that questions were being asked about sexual abuse and, ultimately, exclusions were included in the policy of insurance.

Justice McNally therefore concluded that the Diocese was not obligated to disclose its knowledge of the abuse which took place from the 1950s to the 1980s. The issue of sexual abuse by clergy was not material to the risk at that time and therefore the disclosure of any such conduct would not have been expected or required by an insurer.

Since the mid-1980s our understanding of sexual abuse in society is much clearer. An employer may now be vicariously liable for the unauthorized intentional acts (sexual abuse) committed by an employee. A reasonable insurer therefore expects to receive information about conduct such as sexual abuse, and a reasonable insured should understand that the information is to be disclosed. It should be kept in mind that old occurrence policies are not necessarily dead policies. They will be viewed for purposes of forming the contract within the context of their times, but will have application for expanding areas of tort, if they apply, regardless of whether any risk was foreseen.


1 M.(K.) v. M.(H.), [1992] 3 S.C.R. 6 (S.C.C.).

2Bazley v. Curry, [1999] 2 S.C.R. 534 (S.C.C.).

3 2016 NBQB 174.

4 (1766), 97 E.R. 1162 (K.B.).

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

To print this article, all you need is to be registered on

Click to Login as an existing user or Register so you can print this article.

Similar Articles
Relevancy Powered by MondaqAI
In association with
Related Topics
Similar Articles
Relevancy Powered by MondaqAI
Related Articles
Related Video
Up-coming Events Search
Font Size:
Mondaq on Twitter
Register for Access and our Free Biweekly Alert for
This service is completely free. Access 250,000 archived articles from 100+ countries and get a personalised email twice a week covering developments (and yes, our lawyers like to think you’ve read our Disclaimer).
Email Address
Company Name
Confirm Password
Mondaq Topics -- Select your Interests
 Law Performance
 Law Practice
 Media & IT
 Real Estate
 Wealth Mgt
Asia Pacific
European Union
Latin America
Middle East
United States
Worldwide Updates
Registration (you must scroll down to set your data preferences)

Mondaq Ltd requires you to register and provide information that personally identifies you, including your content preferences, for three primary purposes (full details of Mondaq’s use of your personal data can be found in our Privacy and Cookies Notice):

  • To allow you to personalize the Mondaq websites you are visiting to show content ("Content") relevant to your interests.
  • To enable features such as password reminder, news alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our content providers ("Contributors") who contribute Content for free for your use.

Mondaq hopes that our registered users will support us in maintaining our free to view business model by consenting to our use of your personal data as described below.

Mondaq has a "free to view" business model. Our services are paid for by Contributors in exchange for Mondaq providing them with access to information about who accesses their content. Once personal data is transferred to our Contributors they become a data controller of this personal data. They use it to measure the response that their articles are receiving, as a form of market research. They may also use it to provide Mondaq users with information about their products and services.

Details of each Contributor to which your personal data will be transferred is clearly stated within the Content that you access. For full details of how this Contributor will use your personal data, you should review the Contributor’s own Privacy Notice.

Please indicate your preference below:

Yes, I am happy to support Mondaq in maintaining its free to view business model by agreeing to allow Mondaq to share my personal data with Contributors whose Content I access
No, I do not want Mondaq to share my personal data with Contributors

Also please let us know whether you are happy to receive communications promoting products and services offered by Mondaq:

Yes, I am happy to received promotional communications from Mondaq
No, please do not send me promotional communications from Mondaq
Terms & Conditions (the Website) is owned and managed by Mondaq Ltd (Mondaq). Mondaq grants you a non-exclusive, revocable licence to access the Website and associated services, such as the Mondaq News Alerts (Services), subject to and in consideration of your compliance with the following terms and conditions of use (Terms). Your use of the Website and/or Services constitutes your agreement to the Terms. Mondaq may terminate your use of the Website and Services if you are in breach of these Terms or if Mondaq decides to terminate the licence granted hereunder for any reason whatsoever.

Use of

To Use you must be: eighteen (18) years old or over; legally capable of entering into binding contracts; and not in any way prohibited by the applicable law to enter into these Terms in the jurisdiction which you are currently located.

You may use the Website as an unregistered user, however, you are required to register as a user if you wish to read the full text of the Content or to receive the Services.

You may not modify, publish, transmit, transfer or sell, reproduce, create derivative works from, distribute, perform, link, display, or in any way exploit any of the Content, in whole or in part, except as expressly permitted in these Terms or with the prior written consent of Mondaq. You may not use electronic or other means to extract details or information from the Content. Nor shall you extract information about users or Contributors in order to offer them any services or products.

In your use of the Website and/or Services you shall: comply with all applicable laws, regulations, directives and legislations which apply to your Use of the Website and/or Services in whatever country you are physically located including without limitation any and all consumer law, export control laws and regulations; provide to us true, correct and accurate information and promptly inform us in the event that any information that you have provided to us changes or becomes inaccurate; notify Mondaq immediately of any circumstances where you have reason to believe that any Intellectual Property Rights or any other rights of any third party may have been infringed; co-operate with reasonable security or other checks or requests for information made by Mondaq from time to time; and at all times be fully liable for the breach of any of these Terms by a third party using your login details to access the Website and/or Services

however, you shall not: do anything likely to impair, interfere with or damage or cause harm or distress to any persons, or the network; do anything that will infringe any Intellectual Property Rights or other rights of Mondaq or any third party; or use the Website, Services and/or Content otherwise than in accordance with these Terms; use any trade marks or service marks of Mondaq or the Contributors, or do anything which may be seen to take unfair advantage of the reputation and goodwill of Mondaq or the Contributors, or the Website, Services and/or Content.

Mondaq reserves the right, in its sole discretion, to take any action that it deems necessary and appropriate in the event it considers that there is a breach or threatened breach of the Terms.

Mondaq’s Rights and Obligations

Unless otherwise expressly set out to the contrary, nothing in these Terms shall serve to transfer from Mondaq to you, any Intellectual Property Rights owned by and/or licensed to Mondaq and all rights, title and interest in and to such Intellectual Property Rights will remain exclusively with Mondaq and/or its licensors.

Mondaq shall use its reasonable endeavours to make the Website and Services available to you at all times, but we cannot guarantee an uninterrupted and fault free service.

Mondaq reserves the right to make changes to the services and/or the Website or part thereof, from time to time, and we may add, remove, modify and/or vary any elements of features and functionalities of the Website or the services.

Mondaq also reserves the right from time to time to monitor your Use of the Website and/or services.


The Content is general information only. It is not intended to constitute legal advice or seek to be the complete and comprehensive statement of the law, nor is it intended to address your specific requirements or provide advice on which reliance should be placed. Mondaq and/or its Contributors and other suppliers make no representations about the suitability of the information contained in the Content for any purpose. All Content provided "as is" without warranty of any kind. Mondaq and/or its Contributors and other suppliers hereby exclude and disclaim all representations, warranties or guarantees with regard to the Content, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. To the maximum extent permitted by law, Mondaq expressly excludes all representations, warranties, obligations, and liabilities arising out of or in connection with all Content. In no event shall Mondaq and/or its respective suppliers be liable for any special, indirect or consequential damages or any damages whatsoever resulting from loss of use, data or profits, whether in an action of contract, negligence or other tortious action, arising out of or in connection with the use of the Content or performance of Mondaq’s Services.


Mondaq may alter or amend these Terms by amending them on the Website. By continuing to Use the Services and/or the Website after such amendment, you will be deemed to have accepted any amendment to these Terms.

These Terms shall be governed by and construed in accordance with the laws of England and Wales and you irrevocably submit to the exclusive jurisdiction of the courts of England and Wales to settle any dispute which may arise out of or in connection with these Terms. If you live outside the United Kingdom, English law shall apply only to the extent that English law shall not deprive you of any legal protection accorded in accordance with the law of the place where you are habitually resident ("Local Law"). In the event English law deprives you of any legal protection which is accorded to you under Local Law, then these terms shall be governed by Local Law and any dispute or claim arising out of or in connection with these Terms shall be subject to the non-exclusive jurisdiction of the courts where you are habitually resident.

You may print and keep a copy of these Terms, which form the entire agreement between you and Mondaq and supersede any other communications or advertising in respect of the Service and/or the Website.

No delay in exercising or non-exercise by you and/or Mondaq of any of its rights under or in connection with these Terms shall operate as a waiver or release of each of your or Mondaq’s right. Rather, any such waiver or release must be specifically granted in writing signed by the party granting it.

If any part of these Terms is held unenforceable, that part shall be enforced to the maximum extent permissible so as to give effect to the intent of the parties, and the Terms shall continue in full force and effect.

Mondaq shall not incur any liability to you on account of any loss or damage resulting from any delay or failure to perform all or any part of these Terms if such delay or failure is caused, in whole or in part, by events, occurrences, or causes beyond the control of Mondaq. Such events, occurrences or causes will include, without limitation, acts of God, strikes, lockouts, server and network failure, riots, acts of war, earthquakes, fire and explosions.

By clicking Register you state you have read and agree to our Terms and Conditions