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All sex abuse claims against the Christian Brothers in Australia have been suspended after a court found they could face financial ruin within months, despite scrutiny over “disturbing” $1 property transfers.
The Catholic order was granted a moratorium at a hearing in the Supreme Court of NSW on Thursday, which also gave survivors time to consider whether they would support a property sell-off by the Christian Brothers to raise funds or pursue other legal avenues.
The court order has left survivors furious and declaring they won’t be “railroaded” into abandoning their claims or settling for less.
Lawyers for the religious order told the court it estimated it owed $774 million to survivors with current claims and ones that may be filed in future, but only had $216 million worth of assets.
Supreme Court Justice Scott Nixon granted the pause on cases, noting the Christian Brothers could run out of money if it weren’t granted.
“I’m satisfied that the moratorium order should be granted to preserve the opportunity for the scheme to be considered by claimants, given that opportunity may be lost,” he told the court.
A “carve-out” will allow survivors to consider the best path forward with options including continuing their cases despite the lack of funds.
Documents obtained by this masthead showed the Christian Brothers had previously transferred some of its most valuable colleges and properties to a separate trust, Edmund Rice Education Australia, for just $1 each.
Barrister Sera Mirzabegian, SC, representing the Commonwealth, told the court it was “abundantly clear” there appeared to be discrepancies concerning the value of the transferred properties.
“The Commonwealth is concerned whether those transfers were proper and appropriate, and it would be obviously very disturbing and concerning if arrangements were made to shield assets or limit institutional liability,” she said.
Outside court, lawyers for Rightside Legal, a firm representing multiple victims, said the Catholic order set up the Edmund Rice body and then gave it half a billion dollars’ worth of assets - including the prestigious schools such as Waverley College in Sydney’s eastern suburbs and St Kevin’s College in Toorak (which has subsequently broken away).
“Now they say they have no ability to access it for their victims. It’s a farce,” partner Laird Macdonald said.
He said they had won time for survivors to explore their options against the order.
“They won’t be railroaded into a cents-on-the-dollar scheme on the Christian Brothers’ terms.”
His colleague and firm partner Grace Wilson said there was nothing the religious order wouldn’t stoop to.
“We’ll force them to meet their obligations through courts and the legislature, not because we imagine they can be shamed into doing the right thing,” she said.
Survivors say they have been left devastated by the moratorium and ongoing legal battles with the religious order.
“It feels like everyone’s attention is now focused on whether there’s enough money left, instead of asking how so much of it came to be beyond the reach of survivors in the first place,” a survivor said in a statement.
“That’s what troubles me most.”
The man said he also struggled to understand the transfer of valuable properties for $1, while the order claimed there wasn’t enough money to compensate those who were abused. He said the legal action felt like a strategy to protect assets and keep survivors waiting.
“If they created the empty cupboard, they shouldn’t now be allowed to point at the empty cupboard as proof they can’t pay.”
He added that this latest action had left him “reliving all over again” the trauma of his abuse.
“It feels as though a wound that had slowly begun to heal has suddenly been torn open again.”
Arnold Thomas and Becker principal lawyer Jodie Harris, who represents the man, said the hearing offered a “glimmer of hope” for survivors who have endured a long journey toward justice.
“The important point raised in open court is that any scheme considered by the judiciary must firmly protect the interests of survivors,” Harris said.
“Institutions must take full responsibility for historical abuse across their entities and remain completely accountable for ensuring survivors are adequately compensated.”
She echoed concerns about the transfer of funds to Edmund Rice and how it could claim it isn’t associated with the Christian Brothers.
“How is it fair or right that they cannot help pay for the damage caused by the Christian Brothers?” Harris asked.
She said the firm’s focus was to shift towards appointing a “proper defendant” that would have the means and assets to satisfy compensation for clients.
“We will actively seek to legally appoint the Trustees of Edmund Rice Education Australia as the proper defendant in place of the Trustees of the Christian Brothers,” she confirmed.
Other firms were also considering the move and whether that would best serve their clients.
The Trustees of Edmund Rice Education Australia appear to be in robust financial health, with more than $345 million in cash and property valued at $2.28 billion, according to its latest financial report.
The body was set up in 2007 to govern and operate the schools transferred from the Christian Brothers.
“We sincerely hope the Christian Brothers find a path through their challenges, including planned asset sales, to allow them to continue their commitment to supporting survivors and victims of historic sexual abuse,” a spokesman for Edmund Rice Education Australia said in a previous statement.
The Oceania Province of the Christian Brothers said in a statement that neither the moratorium nor the scheme of arrangement was “intended to prevent any future civil claim being brought against Edmund Rice Education Australia (EREA) and or other Catholic institutions by victims and survivors of abuse.”
It had previously requested financial support from Edmund Rice Education Australia and the broader church, but no support was provided.
Another hearing will be held in September to determine the next steps for survivors.
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