BB v Helena College Council Inc t/as Helena College
[2021] WADC 42
•28 MAY 2021
JURISDICTION : DISTRICT COURT OF WESTERN AUSTRALIA
IN CIVIL
LOCATION: PERTH
CITATION: BB -v- HELENA COLLEGE COUNCIL INC t/as HELENA COLLEGE [2021] WADC 42
CORAM: SHARP DCJ
HEARD: 26 NOVEMBER, 1-4 DECEMBER, 8 DECEMBER & 10 DECEMBER 2020
DELIVERED : 28 MAY 2021
FILE NO/S: CIV 1904 of 2020
BETWEEN: BB
Plaintiff
AND
HELENA COLLEGE COUNCIL INC t/as HELENA COLLEGE
Defendant
QBE INSURANCE (AUSTRALIA) LTD
First Third Party
INSURANCE AUSTRALIA GROUP LTD
Second Third Party
BERKSHIRE HATHAWAY SPECIALTY INSURANCE COMPANY
Third Third Party
Catchwords:
Damages - Psychiatric injury - Historical institutional child sexual abuse - Section 6A Limitation Act 2005 (WA) - Section 15A Civil Liability Act 2002 (WA) - Child sexual abuse - General damages - Insurance - Losses occurring liability - Claims made liability - Construction of insurance policy - Reasonable precautions - Accident
Legislation:
Associations Incorporation Act 2015 (WA)
Insurance Contracts Act 1984 (Cth)
Limitation Act 2005 (WA)
Result:
Third parties liable to indemnify defendant for settlement sum paid to plaintiff and for defendant's defence costs of defending plaintiff's claim
Representation:
Counsel:
| Plaintiff | : | Mr T J Hammond |
| Defendant | : | Mr G J Pynt |
| First Third Party | : | Mr S Donaldson |
| Second Third Party | : | Mr G R Hancy |
| Third Third Party | : | Ms J A Thornton |
Solicitors:
| Plaintiff | : | Rightside Legal |
| Defendant | : | Jackson McDonald |
| First Third Party | : | Thompson Cooper Lawyers |
| Second Third Party | : | HWL Ebsworth Lawyers |
| Third Third Party | : | Minter Ellison |
Case(s) referred to in decision(s):
A. F & G. Robinson v Evans Bros Pty Ltd [1969] VR 885
Alex Kay Pty Ltd v General Motors Acceptance Corporation and Hartford Fire Insurance Company [1963] VR 458
Allianz Australia Insurance Ltd v Inglis [2016] WASCA 25
Australian Casualty Co Ltd v Federico [1986] HCA 32; (1986) 160 CLR 513
Australian Paper Manufacturers Ltd v American International Underwriters (Australia) Pty Ltd [1994] 1 VR 685
BAE Systems (Operations) Ltd v Konczak [2017] EWCA Civ 1188
Barrie Toepfer Earthmoving and Land Management Pty Ltd v CGU Insurance Ltd [2016] NSWCA 67
Black Box Control Pty Ltd v Terravision Pty Ltd [2016] WASCA 219
CGU Insurance Ltd v Lawless [2008] VSCA 38
Fenton v J Thorley & Co Ltd [1903] AC 443
Fraser v BN Furman (Productions) Ltd [1967] 3 All ER 57
HL Bolton (Engineering) Co Ltd v TJ Graham & Sons Ltd [1957] 1 QB 159
HLB Kidsons (a firm) v Lloyd's Underwriters subscribing to Lloyd's Policy No 621/PK1D00101 [2008] EWCA Civ 1206
Icon Co (NSW) Pty Ltd v Liberty Mutual Insurance Company Australian Branch trading as Liberty Specialty Markets [2020] FCA 1493
Limit (No 3) Ltd v ACE Insurance Ltd [2009] NSWSC 514; (2009) 15 ANZ Insurance Cases 61-823
McCann v Switzerland Insurance Australia Ltd (Allens Case) [2000] HCA 65; (2000) 203 CLR 579
Mount Albert City Council v New Zealand Municipalities Co-operative Insurance Co Ltd [1983] NZLR 190
New South Wales v Lepore (2003) 212 CLR 511
Prince Alfred College Inc v ADC [2016] HCA 37; (2016) 258 CLR 134
Selected Seeds Pty Ltd v QBEMM Pty Ltd [2010] HCA 37; (2010) 242 CLR 336
Wallaby Grip Ltd v QBE Insurance (Australia) Limited; Stewart v QBE Insurance (Australia) Ltd [2010] HCA 9; (2010) 240 CLR 444
WFI Insurance Ltd v Manitowoq Platinum Pty Ltd [2018] WASCA 89
SHARP DCJ:
Introduction
The plaintiff (plaintiff or BB) was born on 31 August 1978. She commenced as a student at Helena College Primary School (School) in Darlington, Western Australia in 1986. She remained there until the end of 1990, when she was 12 years of age and had completed Grade 7.
The defendant, Helena College Council Inc, (defendant or Council) owns and operates the School.
The first third party (or QBE), the second third party (or IAG) and the third third party (or Berkshire Hathaway) were, at certain times, the Council's insurers.
Ian Stanley Brown (Brown) was employed by the Council in 1984 as a teacher in the School. In 1988 he was BB's Grade 5 class teacher.
Brown resigned from the School in December 1989.
In 2006, Brown stood trial on an indictment dated 30 November 2004 containing 26 counts alleging indecent assault of a girl under the age of 13 years and aggravated sexual penetration in 1988. The circumstances of aggravation in each case were that the person penetrated was under the age of 16 years.
On 27 March 2006, a jury found Brown guilty of 17 of the 26 counts, including those counts where BB was the victim, namely counts 14, 15, 16, 21, 23 and 24 (together, the Offences).
On 31 March 2006, Brown was sentenced to 5 years and 4 months' imprisonment for the Offences and for offences against two other complainants.
On 23 May 2020, BB commenced proceedings against the Council. A writ was issued, generally indorsed with a claim for damages from the Council for personal injuries, loss and damages which BB sustained as a result of child sexual abuse whilst a pupil at the School. The indorsement states that the child sexual abuse suffered by BB at the School occurred as a result of the negligence and/or breach of statutory duty of the Council or the Council's servants and/or agents.
On 30 September 2020 the Council filed a statement of claim against the first and second third parties, and on 26 October 2020 the Council filed a statement of claim against the third third party, as the Council's insurers.
Legal basis of the action against the defendant
This action was able to be brought by the plaintiff against the defendant because of amendments to the Limitation Act 2005 (WA) (Limitation Act) which came into effect on 1 July 2018.
Section 6A(2) of the Limitation Act now removes the limitation period for 'child sexual abuse actions', as that term is defined in the Limitation Act.
Liability of the Council admitted
The matter was listed for a 12 day trial commencing on 24 November 2020. Following the filing of amendments to the defendant's defence on 16 November 2020, the parties agreed that the trial could commence on 26 November 2020 for a duration of 10 days.
The court was then informed by the parties that the plaintiff had settled her claim against the defendant on 1 December 2020, and the terms of the agreement were recorded in a settlement agreement executed on 7 December 2020.
What is still in dispute?
The plaintiff having settled its claim against the defendant, the defendant is liable to pay damages to the plaintiff of an amount which has been agreed between them. What remains to be determined is the defendant's claims against each of the third parties.
I do not understand any of the third parties to be disputing that the terms of the settlement are reasonable, both as to the admission of liability by the defendant and the amount of damages. However, the first third party and the third third party have both denied any liability to the defendant, for different reasons. The second third party has accepted that it must indemnify the defendant but not for the whole of the defendant's liability to the plaintiff.
I will set out the issues in more detail later in these reasons, but in short the third parties' respective positions can be summarised in the following way.
QBE does not accept that it must indemnify the defendant for the whole of its liability to the plaintiff, unless the defendant proves that the plaintiff's psychiatric conditions are the 'result of an accident' and if and unless the defendant has complied with the 'reasonable care' condition in the relevant policy.
There is a further dispute between the defendant and QBE as to who bears the onus of proving that the Council complied with the 'reasonable care' condition in the relevant policy.
As I have said, IAG has agreed to indemnify the defendant. However, IAG considers that it is liable for only half of the amount of the defendant's liability to pay damages and costs to the plaintiff, 'being its assessment of that proportion of the defendant's liability incurred in the second third party's policy period': second third party's opening submissions dated 2 December 2020, par 1.
Berkshire Hathaway does not accept that it must indemnify the defendant for its liability to the plaintiff, because of the application of the 'Prior Notification Exclusion' in its policy. In effect, Berkshire Hathaway says that the Council in 2001 and 2002 had notified its then insurer about BB's claim and, by doing so, enlivened the 'Prior Notification Exclusion'. Berkshire Hathaway says that the effect of this is that its liability to the Council is excluded.
Berkshire Hathaway accepts that it has the onus of proving that the 'Prior Notification Exclusion' applies.
The background facts
The following background facts are unchallenged and in any event are not controversial. At [24] ‑ [40] I set out my findings of fact as to the background to this matter.
The School and its management
At all material times, the defendant owned and operated the School, which at the relevant time was a small independent primary school. The School was established late in the 19th century, at one point being located in Cottesloe. However, during the 1940s, the School was moved to Ryecroft Road in Darlington. Around 1972, Ms Sally Herzfeld and her family purchased the School and Ms Herzfeld was appointed principal. She eventually decided that the School should not be run by a family and the Council was formed.
The defendant was incorporated on 15 October 1973 and is an incorporated association under the Associations Incorporation Act 2015 (WA). It was originally named Helena School Council Inc. On 11 July 1990 it changed its name to Helena College Council Inc: exhibit 21.
In 1983, the School had approximately 150 students. By 1987, that number had increased to around 230 students.
In 1987, a decision was made that a high school was required. The high school was established in or around 1988.
The Council's Articles of Association at the relevant time (exhibit 21), (Articles), state that they were adopted at a General Meeting of the Council held on 9 December 1986. The Articles provide that the objects of the Council are to conduct a school or schools providing a broad education based on Christian principles and 'emphasizing integrity, creativity, responsibility and tolerance and encouraging individual development in harmony with other members of a small total school community'.
Under cl 4 of the Articles, the Council at any General Meeting may appoint a member or members so that the total membership of the Council shall be not less than five and not more than eight persons. The Council has a Chairman (Articles cl 11(a)) and a Secretary (Articles cl 10).
The Articles (cl 6) provide that the Council is responsible for the general control and management of the affairs, property and finances of the Council. This is achieved by way of decisions of the Council taken at its ordinary meetings. An ordinary meeting of the Council must be convened by the Secretary on the requisition of not less than two members of the Council: Articles cl 7. That requisition must clearly state the reasons why such meeting is being convened and the nature of the business to be transacted.
The Secretary has custody of and conduct the correspondence of the Council and is responsible for the preservation of its documents: Articles cl 12.
Principal and staff
A principal of the School is to be appointed by the Council: Articles cl 14(a).
The principal of the School is responsible to the Council for the teaching standards, the effective and economic use of all resources placed at his or her disposal, the maintenance of good relations between parents and the School, staff and the Council, the maintenance of grounds, buildings and property and the general administration of the School: Articles cl 14(a).
The Council may appoint such other teaching and other staff members as may be considered necessary: Articles cl 14(b).
Suspension of staff
The Articles provide at cl 14(e) that the principal for the time being may suspend, with or without pay, any staff member for alleged misconduct, and must report the fact to the Council, stating the grounds of the suspension. The Council at a General Meeting must then inquire into the matter and may reinstate or, if it is of the opinion that the staff member has been guilty of gross misconduct, summarily dismiss the staff member.
Principal Hassell
Brian Anthony Hassell (Principal Hassell) was employed by the Council as the principal of the School in 1983. He retired in 1989. He had been teaching, including as a principal, since 1957. He was principal of the School from 1983 until he retired from that position at the end of First Term 1989. He currently owns a business bookkeeping company.
Principal Hassell described the School as having a 'non‑competitive atmosphere', a family school with parents very much involved and family orientated. Principal Hassell said that what he particularly liked about the School was that, unlike in a government school, the School could choose its own staff and could choose its students.
Principal Hassell employs Brown
Principal Hassell recruited Brown as a teacher at the School in 1984. Brown was employed from 16 April 1984 until he resigned in December 1989: exhibits 2 and 18.
Prior to his employment at the School, Brown had been teaching in the primary school section of Scotch College for about 15 years. Brown was an Education Department teacher for 8 years before that.
Brown was employed to be a classroom teacher in the School. He was BB's Grade 5 teacher in 1988, when BB was 9 or 10 years of age.
Principal Hassell's early impressions of Brown
Principal Hassell gave evidence at the trial in this proceeding.
Principal Hassell said that, before he recommended Brown's appointment, he had spoken by telephone to the head of Scotch College primary school and asked how the head had found Brown as a teacher.
Principal Hassell said that the head had told him that Brown was a very valued member of staff at Scotch College and that they would be sorry to lose him: ts 99.
Principal Hassell said (ts 99) that at the time he recruited Brown he had known him:
… for some 30 years. He was a member of our church congregation in Darlington. In fact, I think he was chairman there for a time … And I also knew that he was very artistic, and his wife also is very artistic. And he was also very musical …
… We were always friendly, but not close friends. But friendly. Yes …
… I knew that he had children, two boys and a girl, that I knew of. And his wife used to sell pottery from their home, and we used to buy pottery there from time to time.
Principal Hassell said that Brown, in addition to his teaching duties, would also get involved in 'after school options' (ts 100), including computing. He would accompany students on school camps and on school excursions which were held after school.
When asked how Brown had fitted into the School, Principal Hassell replied (ts 100):
Very well. He was popular with the children, popular with most of the parents and popular with the staff. He was very personable, very friendly, very talented with music and art, and he fitted in very well, initially.
Concerns emerge about Brown
Principal Hassell gave evidence that by 1987 he had become aware of 'problems' with Brown (ts 101). However, he said that he had no recollection of a group of Year 7 students presenting him in 1986 with 'something in the nature of a petition' about Brown's behaviour (ts 124).
Prinicpal Hassell, when asked about the problems with Brown he was referring to, said (ts 106):
I was concerned that he was touching children. At the same time, I was aware of the fact that he was a very touchy sort of person. He touched adults. If he would greet me it was usually with a hug, not just a handshake or anything like that. But he would do that with any staff member. He was just a very touchy sort of person, and I felt that he was unwise, but I didn't think there was anything sinister in what he was doing.
… I was disappointed in his performance as a teacher. I was disappointed in his planning and his preparation and the thoroughness of his teaching …
He explained (ts 101):
The main problems were - one problem emanated from a camp that was at Albany in the south‑west, and at that camp there were rumours that he had shared a sleeping bag with one of the senior girls, one of the older girls on the camp. There were also some concerns coming from some of the students that he was touching them, and they were feeling uncomfortable with the touching. Yes.
…
That led to me interviewing a number of the girls, interviewing a number of parents and - to find out if there was anything sinister about what [Brown] was doing.
Principal Hassell made handwritten notes (exhibit 3) of the interviews he conducted in the course of his investigation into his concerns about Brown. He said (ts 121):
It was always my practice, whether I was doing minutes or taking notes of an interview, to do them as soon as possible ‑ to fill them out as soon as possible after the interview, so that I could have complete recall of what was said.
He also made a typewritten record dated 3 November 1987 (exhibit 4) of his interviews and of the other steps that he took up to and following his presentation to the Council at a meeting of the Council which was held on 31 October 1987 (31 October meeting). That record included the Council's conclusions and resolutions at the 31 October meeting.
Principal Hassell's notes refer to two interviews with Brown on Monday, 19 October 1987 and Wednesday, 28 October 1987 in which Brown:
(a)conceded that he had cuddled or patted students from time to time;
(b)denied there was anything sinister in cuddling or patting School students from time to time; and
(c)denied he had ever shared a sleeping bag with a student or students on School camps.
Principal Hassell also notes that on Wednesday, 21 October 1987, a group of students approached teacher Ms Dedman with their concern that Brown was 'touching' them in ways that made them feel uncomfortable: exhibits 3 and 4.
Principal Hassell noted that he conducted separate interviews with some of those students on 22 October 1987 in his office. Principal Hassell observed that the students all 'spoke freely and without duress' when he spoke to them, 'with the intervening door to Mrs Gillian Young left open': exhibits 3 and 4.
The notes (exhibit 4) for that day continue:
All felt varying degrees of discomfort from 'cuddles' given by [Brown]. None felt any touching of intimate parts except for occasional brushing of the breast area or upper buttocks. [One of the students] asserted that [another student] had shared a sleeping bag with [Brown] during a beach sleepover at the Albany camp. [That student], when interviewed, said that [Brown] had shared a sleeping bag twice ‑ at the Jerramah Forest campover and at Albany. That afternoon I interviewed [a parent], who was concerned at the amount of parent gossip circulating and [her child]'s discomfort in the class situation. She advised of no known touching of intimate parts.
In a telephone call at 7.30 am on Friday, 23 October 1987, Principal Hassell recalls that another parent informed him that:
… she was aware of the talk taking place regarding [Brown] and had discussed the matter fully with [her daughter]. She felt that [Brown] was a very caring person and she wanted him (Brown) to know that she supported him (Brown) in this situation. [The parent] said that she felt the pre‑pubescent girls were over-reacting.
Exhibits 3 and 4.
Principal Hassell also recorded that on Monday, 26 October 1987 he asked Ms Anne Fyffe, a Grade 7 teacher at the School, to interview a particular student (S1) in private: exhibits 3 and 4. Ms Fyffe was one of a number of teachers who had noted and commented to Principal Hassell about Brown's 'intimacy' with children in his classes: ts 122.
After the interview, Principal Hassell says in his handwritten notes (exhibit 3) that Ms Fyffe reported to him that S1 had told her that Brown:
… had touched her vaginal area for 'a few seconds'. Felt it could have been accidental. [S1] said they were not together in the same bag but Ian had lain next to her, unzipped his bag & placed it over the top of hers & himself for added warmth. There is inconsistency [illegible] how did he touch the vaginal area? Anne not sure.
On Tuesday, 27 October 1987, Principal Hassell noted that he himself questioned S1 about 'the sleeping bag incidents': exhibits 3 and 4. Principal Hassell says S1 responded by stating:
… that on both occasions she had not actually 'shared' a sleeping bag. [Brown] had unzipped his bag, unzipped her bag, and placed the two bags over them both 'like a doona'. At Albany there were layers of carpet squares underneath the bags for warmth.
Principal Hassell agreed that when S1 spoke to Ms Fyffe on 26 October (ts 133):
… either [S1] wasn't telling the truth, or [Brown] wasn't telling the truth?---Yes.
And is that what you were referring to, with there being inconsistency?---Well, I did refer, in the notes, to the fact that their stories differed, and that I had no reason to think that [Brown] was a liar, or that [S1] was a liar. I think I made the entry that I had no reason to consider either of them was a liar. And their stories did not gel.
No. And obviously, one of them wasn't telling the truth?---Yes.
Principal Hassell was asked (ts 138):
Tell me, did you consider that if [S1] was telling the truth, [Brown's] conduct was conduct of a criminal nature?---No
…
[S1]'s allegations?---[S1]'s allegations. Yes. [S1] never - her - she didn't - she didn't suggest that [Brown] had touched her in an - in a criminal way. She never ever said that.
If what [S1] was saying was true, there was absolutely no reason for [the parent referred to at [55]] to be relieved, was there? ---I suggested in a letter that his touching of the children was unwise, but that it wasn't a criminal nature.
This continued (ts 140):
And that was where your investigation sat when it was concluded; correct? --- Yes. I did a number of interviews with [S1] and, in each of those interviews, I was anxious to find out if she had been touched in a sexual way. And I gave her every opportunity to tell me whether she had or not and she continually told me that, no, she had not been touched in any sexual way. And regardless of sleeping bags and unzipping of sleeping bags and covering of sleeping bags, there never was any accusation from her or any of the other girls that they had been touched or interfered with sexually, that is, by stimulation or any of that sort of nature. And so my conclusion was that [Brown] was too touchy-feely with the girls and he needed to stop, but that he wasn't being a criminal in [any] way. And I wrote the letters with those assumptions.
In the second interview with Brown conducted by Principal Hassell on Wednesday, 28 October 1987 (exhibits 3 and 4), Principal Hassell recorded that Brown told him:
[t]here was nothing sinister in his actions - he was motivated by care and concern. [Brown] said he treated boys in the same way when he felt it necessary …
[Brown] was agreeable that his actions were unwise and he resolved not to touch the children in future … I said that I would need to make further enquiries and consider further courses of action including an attempt to overcome the concern of the Year 6 class as a whole.
In a further interview on Thursday, 29 October 1987, Principal Hassell questioned S1 'closely' regarding the incidents at the two camps: exhibits 3 and 4.
Principal Hassell's notes show that on Friday, 30 October 1987, Principal Hassell, in Brown's presence (exhibits 3 and 4):
… spoke to the Year 6 class as a whole and told them that because some children felt uncomfortable being touched or cuddled by [Brown], he would not touch anyone in future. This did not mean that he felt any less affection for the children. [Brown] then spoke and apologised for making children feel uncomfortable. He looked upon the children as 'family' and he was a touching person with his family. However, he would not do it again with the children in the class.
However, Principal Hassell's oral testimony was that it was resolved at the 31 October meeting that he and Brown would address the class sometime after the meeting: ts 105.
On Saturday 31 October 1987, Principal Hassell spoke with another parent, about the incidents at the school camps. That parent had accompanied Brown and a group of girls to a camp at Jarramah and was one of the accompanying parents at a camp at Albany. She said to Principal Hassell that (exhibits 3 and 4):
… she had no reason to suppose there had been anything untoward occurring on either camping occasion. She felt [Brown] to be very caring and concerned but unwise in the extent of some of his actions. His physical touching did not seem to upset [her] daughter ...
In exhibit 4 under the heading 'Additional remarks', Principal Hassell expresses the view that Brown:
… is a very caring person in my experience and does touch people - boys, girls and adults in displays of support, affection or concern …
My other concern is the definitive assertion by [S1] regarding the camping incidents. She seemed exact and certain about the incidents and what exactly took place. [Brown] denies her statement in one vital area - her sleeping bag. I cannot claim intimate knowledge of the relative honesty of [S1] or [Brown], I haven't had occasion in the past to doubt either of them …
The 31 October meeting
The 31 October meeting was convened, 31 October 1987 was a Saturday.
According to the Minutes (exhibit 8), the 31 October meeting was attended by Principal Hassell, Lloyd Butcher (the then Chairman, now deceased), Ms Sally Herzfeld, Mr (as he then was) Michael Murray QC (also now deceased) and three other parents, Mr Kim Valenti, Ms Sheila Ball and Ms Maureen Farthing. Mr Valenti is also a lawyer.
The following propositions were put to Principal Hassell at the trial (ts 119):
And by the time you got to [the 31 October meeting], it was your view that [Brown] should be dismissed, wasn't it? --- My view was that I would like to see him dismissed because I was concerned about his teaching performance.
And you were concerned, weren't you, that there was a risk that he was touching girls for his own sexual gratification?---At that stage, I didn't think that he was touching the girls for their sexual - for his sexual gratification.
Principal Hassell then said (ts 128):
I have to repeat, I didn't think that it was sexual gratification. I thought it was [Brown's] modus operandi of touching people: he did that to adults and children. And I just felt that he was being too touchy-feely, which is why I asked him to desist and promise not to do it and why I also sought to, later on, have him getting some particular help if that were possible …
I consider it very unwise that he was touching children the way he was, which is why we went to the class and he promised – and I promised that he would discontinue touching them.
The following further propositions were put to Principal Hassell: (ts 130):
You thought there was a very serious risk that there was something much more sinister involved?---I thought that he was being unwise in the way that he was touching the children, but I didn't think that there was sexual intent.
Well, I suggest to you that it was perfectly obvious to you that there was a real risk that there was sexual intent and that that was what you needed to carefully investigate?---I felt that I did need to investigate it and to record all the results of my investigations because of the nature of the occurrences that were happening.
And they suggested a real risk that there was sexual intent on [Brown's] part, didn't they?---There was that possibility.
Do you really shy away from the word 'real risk'?---Yes. I would shy away from 'real risk'.
At the 31 October meeting, Principal Hassell provided the Council with copies of 'all my notes': ts 104. Principal Hassell recalled in particular that Council members Mr Michael Murray QC and Mr Kim Valenti, the two lawyers, were in attendance at that meeting: ts 104. He also recalled Ms Herzfeld and Ms Sheila Ball, another member of the Council, being present: ts 105.
Principal Hassell says that the advice given by Mr Murray QC to the Council was that he (Mr Murray) 'was of the opinion that there was not enough evidence there to dismiss [Brown]': ts 104. Principal Hassell's recollection was that the Council resolved to 'speak to the class, and affirm to the class that [Brown] would cease touching any of the children, because if they felt uncomfortable, then he didn't want to make them feel uncomfortable, and that we would write to parents, and tell them what had happened, and what we had done': ts 105.
Principal Hassell went on to say (ts 105) that he subsequently addressed the class in accordance with the Council resolution and that, following that address, Brown himself then:
… apologised if he had made them feel uncomfortable. And he said that he would discontinue touching them, but that didn't mean that he didn't love them any less than he had previously.
Principal Hassell said that he then wrote letters to each of a number of parents as directed by the Council: exhibit 5. He said that he himself 'would have written the letters and … formulated the letters': ts 137.
In his letter to one of the parents (part of exhibit 5), Principal Hassell said:
I am satisfied that nothing untoward has occurred. [Brown] agreed that some of his physical touching of the children has been unwise and has agreed not to touch the children again.
I advised the Year 6 class as a whole that, because some girls felt uncomfortable, [Brown] would not touch anyone in future. I assured the class that this did not mean he had any less affection for them but was really just a protection for himself. [Brown] followed by apologising to the group and supporting my remarks.
The letters to the other parents were in similar terms.
Principal Hassell was asked whether the holding of the 31 October meeting, or indeed any other Council meeting, on a Saturday was unusual. Principal Hassell said that his recollection was that having such meetings on a Saturday was not unusual, although he then conceded, when taken to the minutes of other Council meetings, that that might not in fact have been the case.
The proposition was then put to Principal Hassell that the reason why the 31 October meeting was held on a Saturday was 'because it was a crisis' (ts 116). Counsel for QBE suggested to Principal Hassell that '[t]here was considerable concern amongst parents that [Brown] might be a paedophile, wasn't there'? Principal Hassell replied that '[t]here was considerable concern among parents that he was touching the children inappropriately, yes. There was no mention of the word paedophile, not 30 years ago' (ts 116).
Principal Hassell did not accept that there was a 'crisis', he said '[i]t was a concern, but not a crisis' (ts 118).
He said that at the time of the 31 October meeting, his 'state of mind … was that [Brown] was acting unwisely, but that he wasn't doing it for sexual gratification': ts 136.
Other witnesses
Other teachers, parents and former students also gave evidence at the trial.
Evidence of Alison Marjorie (Sally) Herzfeld
Ms Herzfeld:
(a)co‑founded the Council with her husband Tom in 1973: ts 154;
(b)was a former principal of the School between 1973 and 1982: ts 155; and
(c)was a member of the Council from 1973 to 2017: ts 169.
Her evidence was that she does not remember anything about the 31 October meeting or Principal Hassell's investigation in October 1987: ts 159 and ts 160.
When asked (ts 164) whether, in 1987, she would have concluded that Brown posed a very serious risk to the welfare of young female students, she replied: 'I don't know. Depends - I mean, he would have answered all these things negatively, wouldn't he, or giving an explanation'?
She was then asked whether the allegation that Brown unzipped a child's sleeping bag and slept with her for two nights was a matter that would have caused her grave concern about [Brown] if it were true, she said '[b]ut I didn't hear this for a long time. I didn't hear this till after '89, I don't think. Might have been at that meeting. I don't know. But I - I think I heard it from [another parent], actually'.
When it was put to her that allegations of that sort, if true, would indicate to her that Brown posed a very serious threat to young female students, she said (ts 165):
I don't know at that time whether it would have been considered very serious. It would have been considered inappropriate. And shouldn't be done … At the time I don't think we would have thought it a serious risk until there was a - a great - I suppose after all of them came together, and this one at the end of '89. Yes, he has been warned. So he has got to go.
She agreed (ts 166 ‑ ts 167) that if the Council knew that Brown was doing these things on purpose, then there was a risk of emotional injury or psychiatric injury to the children.
It was put to her (ts 167 ‑ ts 168) that, if Principal Hassell had communicated to the Council that he was unable to determine, on the basis of the information available to him, whether the student who alleged that he had slept in the sleeping bag with her was telling the truth, or whether Brown was telling the truth, Ms Herzfeld would have appreciated that it was an unacceptable risk to do nothing to seek to prevent sexual misconduct on Brown's part. She replied: 'Yes, but I didn't hear about the sleeping bag bit until years after it happened'.
It was then put to her that if Brown had been warned at least three times about touching girls then the only safe solution, to protect young female students, would have been to terminate his contract, she said: 'Yes, and that's what we did in 89. Yes'.
She said (ts 156 - 157) that the last time she spoke to Brown was in 'late 89'. She explained:
I had driven the bus on some excursion, and we got back to school. All the kids got off and raced off to go home, but some of the girls stood beside the bus looking pretty worried. And I have said, 'What's wrong girls'. And they say, 'Mr Brown put us on our laps and pinched our bottoms'. And I thought, that's enough (indistinct) hadn't. I mean, I hadn't been involved with all the warning that I found out later that he had had, but I knew from the council meetings, yes, that he had had warnings. That's it.
What I remember is practically nothing from that meeting, except that it was decided he should go. This was at the end of 1989 you mean?---Yes.
Evidence of Sheila Mary Ball
Ms Ball's two children attended the School: ts 174 - ts 175. Brown taught one of Ms Ball's children in 1984 and 1985: ts 176. Ms Ball was a member of the Council in 1987.
Ms Ball could not recall the 31 October meeting at all and at one stage expressed doubt that she was at it: ts 177 and ts 190 ‑ ts 191. However, when pressed, she said that 'if it had occurred I would have gone'.
It was put to her that if there had been a two hour discussion of Brown's alleged misconduct involving getting into a girl's sleeping bag at a school camp, she would surely remember that. She replied: 'I would remember that, because the first time I heard about him getting into sleeping bags was at that meeting in '89. As far as I remember'.
Her recollection was that it was not until she attended a meeting in 1989 that she became aware of any allegation of inappropriate behaviour by Brown.
In relation to Brown and the school parting ways at the end of 1989, she said (ts 188 - ts 189):
Well, I just remember the meeting we had because I was shocked when I heard about what had been going on. It was quite a big decision to make to sack somebody on the staff, but once we had all discussed it and I realised what a serious thing it had been, we all, I think, voted, well, I know we all voted that he should be terminated from the [School] …
Well, the thing that I suppose struck me most and what I remember most about it was that somebody said, 'If it was my child that was being molested I wouldn't want this man on our staff'. So that really struck me because I was a mother.
Evidence of Kim Ernest Valenti
Mr Valenti's three children attended the School: ts 235.
Mr Valenti accepted he was at the 31 October meeting but had no recollection of it: ts 243.
He was asked (ts 244), how he would have reacted if he had thought in 1987 that Brown was or might pose a sexual threat to the students at the School. He replied: 'I would have recommended he be dismissed summarily, and the matter be referred to the appropriate authorities'.
Evidence of Maureen Farthing
Ms Farthing's two children attended the School: ts 276. She was a member of the Council in 1987.
Ms Farthing said (ts 278):
Sally [Herzfeld] asked me to [join the Council] be a - because they had professionals on the council, you know, lawyers and accountants, and people like that, and then she just wanted a parent's point of view on the council … I thought it was a great honour to be asked.
Ms Farthing's recollection of the 31 October meeting was that:
(a)it was about a girl reporting that Brown had touched her inappropriately at a school camp: ts 279;
(b)she found out about the meeting when Ms Herzfeld telephoned to say there would be a special Council meeting: ts 278;
(c)she found out what the meeting was about when she got to the meeting: ts 279;
(d)it lasted one and a half to two hours: ts 280;
(e)she and the other Council members were shocked at the allegation that something like what was reported could happen at the School: ts 282; and
(f)the Council took the allegation very seriously and discussed it to find out the truth: ts 279.
Ms Farthing recalled that the outcome of the meeting was that (ts 280 and ts 282):
[Principal] Hassell … and Sally [Herzfeld] would speak to [Brown] and find out what had happened. And to speak to the child as well to see if they could get any further information, I guess.
And anything else about what the meeting resolved? --- No. We would just find out both sides of the story, I guess. Sorry …
Okay. That it was, I suppose, positive, because Sally and [Principal] Hassell were going to speak to [Brown] and speak to the child and it was, sorry.
When asked (ts 282), if at the time of the meeting she thought Brown was or might be sexually interfering with students at the School, how she would have responded, she said '[If] we thought he had, very differently'.
Ms Farthing did not recall the circumstances in which Brown left the School. However, by mid-1988 her children were no longer at the School and she considered it likely that at that point she was no longer a member of Council.
Evidence of Elizabeth Kim Douglas
Ms Douglas is the mother of a student. She says she went with her husband to see Principal Hassell to raise with him an issue of Brown 'flicking girls' bra straps': ts 302. However, while she recalled that this was in 1987, she could not recall when in 1987 that was: ts 306 and ts 308 ‑ ts 309.
This issue does not appear in Principal Hassell's notes and Principal Hassell does not recall that being raised with him: ts 127.
She says (ts 302) that Principal Hassell:
heard us out … He referred to [Brown] being a touching, affectionate sort of teacher. We said we didn't want any touching, affectionate or not. I think [Principal] Hassell said he would have a word with [Brown].
She disputed aspects of Principal Hassell's handwritten notes (exhibit 3): ts 303. She recalled speaking to Brown after speaking with Principal Hassell: ts 305 and ts 308. She also recalled she and her husband saw Principal Hassell and then Brown at school: ts 305.
She was asked (ts 306) whether she had mentioned to Principal Hassell, either during that latter meeting or at all, that her daughter was having nightmares regarding Brown. She replied that she did not recall raising anything about nightmares. She was then asked whether she recalled mentioning to Principal Hassell, either at that meeting or some other time, the pact that her daughter and her friend had about speaking up for each other. She replied that she thought she did.
Evidence of Anne Fyffe
Ms Fyffe, who as I have mentioned was a Grade 7 teacher at the School, said (ts 312) that over time she would have spoken with Principal Hassell and his successor, David Harrison, with concerns about Brown and his touching of children, but she could not remember which things she talked about to which principal.
She said that on one occasion a child was sitting on Brown's lap in the classroom when she walked in: ts 312 ‑ ts 313. She said he had his arms around her, and he was showing her how to do some maths while she was sitting there.
She said she could not remember her exact words to Principal Hassell or David Harrison, but she said that she most certainly made it clear that she thought it was 'stupid … more than just inappropriate, that it was something that a teacher just does not do no matter how innocent'.
With regard to her conversation with S1, and Brown inviting S1 to share a sleeping bag (ts 313), she confirmed that she discovered from her interview with S1 that S1 had not shared a sleeping bag with Brown, but rather that he had laid down next to her and unzipped his bag, and put it over the top of the two of them.
However, she said (ts 313 - ts 315):
And it was during that time – whether they [S1 and another girl] were climbing in, he was climbing in, I don't know – but that's what that - they were complaining about being touched inappropriately then.
…
Because when I asked them– when we were talking, I said, you know, what happened, where did he touch you, and the girls, sort of, brushed with their hands from their breasts downwards, and that's when I said, well, could that have been accidental? And they said, no … because my memory of the event is that they were adamant that his touch was not accidental.
She was asked (ts 315), when she reported to Principal Hassell, whether she said to him that S1 told her that Brown had touched S1's vaginal area for a few seconds, she said that she did not recall that, but added that this did not mean that it did not happen, she simply did not recall it.
Evidence of SW
SW, a former student, said that she attended Helena College from 1979 or 1980 to 1987: ts 290.
SW said that while she was at the School, she and the other students approached Principal Hassell to report their concerns about Brown: ts 290. She said she was in Grade 6, and that was 1985: ts 295 ‑ ts 296. She said that she and other students told Principal Hassell about Brown's 'inappropriate touching' and him making students 'sit in his lap' and that (ts 290) 'he would do it in front of the other kids'.
She said that it was made clear to Principal Hassell the type of touching (ts 293):
This wasn't, like, touching you on the arm. He was touching our underwear, under our skirts, having us as 10, 11 year old girls sitting on his knee. He was also touching boys. So, yes, we made it clear to him the type of touching.
She could not remember the students handing Principal Hassell a written document: ts 290 ‑ ts 291 and ts 296.
Evidence of EA
EA, another former student, attended the School between 1978 and 1986. In 1986 she was in Grade 7. She recalled taking a letter to Principal Hassell which effectively asked the School to get Brown to leave the School because of his inappropriate behaviour towards female students: ts 321.
EA said (ts 321) that he told her that she was 'effectively being silly, and don't bring that subject up again'.
Brown's resignation in 1989
Correspondence between Principal Hassell and Brown in March and April 1989
Principal Hassell wrote to Brown on 29 March 1989 following up on a meeting that the two of them had had earlier that day: exhibit 6.
In the letter, Principal Hassell referred to 'a number of incidents [which cause] me some considerable concern' and asked for Brown's explanation in writing. Principal Hassell said:
Taken in isolation they would appear to be relatively harmless but my worry is that they follow incidents previously documented towards the end of 1987 and seem to be causing discomfort to the children. They also follow upon counselling that I have carried out with you over an extensive period of time about the inadvisability of handling female students …
If there is truth in any or all of the incidents it is my view that immediate counselling is called for. The problem … needs to be addressed immediately.
I have preliminary counselling available for you and feel that this is the next course of action to take in this matter.
The incidents to which Principal Hassell was referring were:
1.The 'uncomfortable feeling' that one of Brown's students had in his presence because of 'undue handling'. That student had spoken to her mother about Brown's arm being around her and about Brown 'fiddling with the elastic of her underwear' through her outer clothing;
2.A parent noted that Brown had pulled one of his Year 6 students onto Brown's knee while travelling on the bus to a camp. The parent felt that the student was 'somewhat uncomfortable' and moved away as quickly as she could in order to return to her own seat; and
3.A staff member saw him 'pinching' another student in the buttock area.
Brown replied by handwritten letter dated 7 April 1989: exhibit 7. In the letter, Brown 'explained' each incident raised by Principal Hassell 'openly and honestly' and assured him 'that these are isolated instances and there is nothing sinister or underhand in these actions'.
In relation to the first incident, Brown told Principal Hassell that he was merely acknowledging and encouraging the student concerned with a 'well done' in the form of 'a light pat on the head or tousle of the hair … and occasionally a pat on the back or a light hug to the shoulders'. In regard to the second incident, this occurred as students were moving around the bus and even if it 'appeared' that a child was sitting on his knee, he said it was for the briefest period of time, only the time it took to 'slide into their seat'. With regards to the third incident, this occurred during a game which was a kind of 'tagged you last' and involved a 'light nip to the tail' and there was nothing untoward about it.
Principal Harrison appointed and takes over the investigation
David Harrison (Principal Harrison) was appointed as principal of the School in April 1989.
Shortly after Brown's letter to Principal Hassell, Principal Harrison met with Principal Hassell, Margaret Dawkins, and Robyn Bates. Principal Harrison made a note of what was discussed at that meeting: 'Record of Informal Conversation with Margaret Dawkins, [Principal] Hassell, Robyn Bates and [Principal] Harrison on Friday 13th April, 1989' dated 9 December 1989 (part of exhibit 17).
Principal Harrison records in his note:
Margaret Dawkins, B.Psych.(Hons) Dip.Ed. U.W.A., a guidance officer, was asked by me to meet with the others in [Principal Hassell's] office. Margaret had experience working with a team collating resources to assist victims of child abuse …
Margaret read the record of correspondence relating to [Brown's] problems with female students.
It was her informal opinion that the students had genuine grievances and that so many broad-based comments from students demanded a constant vigilance on our part.
She also questioned the wisdom of keeping [Brown] on as a teacher if his integrity was constantly in question.
She remarked that statistically, using general data for child abuse offenders, there was a high probability that [Brown] would continue to have problems with female students. Problems of this nature are rarely once-off.
In a document headed 'Record of conversation with Gillian Young - late Third Term 1989' dated 8 December 1989 (part of exhibit 17), Principal Harrison recorded Ms Young informing him that she had gone into the photocopying room and seen Brown and a female student alone in the room. Ms Young said '[Brown] was showing [that student] how to use the controls and was pressed up against her'.
In a document headed 'Conversation with [Brown], Friday 27th October 1989' dated Saturday, 9 December 1989 (part of exhibit 17), Principal Harrison recorded:
We spoke after school in my office.
The following points were raised:
1]That I had been acquainted with [Brown's] previous incidents both verbally from [Principal] Hassell and by reading all relevant correspondence and records.
2]That within a week he was about to set off on camp where unstructured, informal circumstances would surround the camping supervision.
3]In view of the complications that had arisen on previous camps, I advised him that he was to ensure that he was never to be away from the eyes of other adults of the camp. I also told him to ensure that he was never to be in any circumstances that would compromise his integrity …
In a document headed 'Record of conversation with [another parent] in my office on Friday, 8 December 1989' dated Saturday, 9 December 1989 (part of exhibit 17), Principal Harrison recorded:
[The parent] is the mother of [a student] in Year 5 1989.
[The parent] told me that she was concerned about [Brown's] constant handling of [the student] in class in recent weeks. She said that [the student] was a well‑developed girl and that on several occasions [Brown] had put his arm around her. The arm was placed in such a way that [the student]'s breasts were brushed. [The student] had reported this to her mother and she said that [Brown's] action made her feel 'unnatural'.
Brown resigns
By letter dated 18 December 1989 to Principal Harrison (exhibit 18), Brown resigned from the School.
Brown's offences specifically against BB and Brown's conviction
Brown's conduct towards BB in 1988
The details of Brown's conduct towards BB in 1988 which follow are drawn from the plaintiff's Statement of Claim and are admitted by the defendant.
From about February 1988 until about December 1988, Brown would frequently call BB to his desk in her classroom and touch her inappropriately. On a number of occasions when BB was called to Brown's desk, as she sat down in the chair, he would slide his hand down the back of her tracksuit pants and under her underwear so that she was sitting on his hand. He would put his finger inside BB's vagina and move it around.
After a time, when BB was called to Brown's desk, he would place her hand on top of his penis over his clothing. He would move her hand up and down on his penis. He would make BB rub his penis for around 10 minutes at a time.
During classroom games of 'heads down thumbs up', Brown would wander around the classroom and fondle girls' breasts, including BB.
From between 11 September 1988 and 17 September 1988, on a school trip to Carnarvon, BB was attempting to sleep or was sleeping on a large tarpaulin with other students in Grade 5. During the night, Brown would sleep next to BB and fondle her breasts.
After Brown had unzipped BB's sleeping bag he put his hand into BB's sleeping bag, underneath her tracksuit pants and underwear and he proceeded to insert his finger inside BB's vagina.
Brown grabbed BB's hand, moved it towards his penis and attempted to get BB to touch him.
Brown removed his finger from BB's vagina and rubbed it all over her bottom and body.
He then put his hands down the front of BB's tracksuit pants and underneath her underwear and proceeded to reinsert his finger inside her vagina.
This occurred on a few nights while on this camp.
On 7 September 1988, BB attended a school celebration at a hall near the school in the evening. The students were driven to the hall by Brown after being dropped off at the school.
After the class was in the hall, Brown asked BB to accompany him to the bus where he said he had forgotten something. Brown stopped BB near the bus and placed his hand on her waist. He moved BB so that her back was against either the bus or another vehicle. He then placed his hands against her chest and fondled her breasts on top of her clothing. He placed his hand into BB's pants, underneath her underwear, and inserted his finger into her vagina.
Brown was rubbing his penis over his clothes with his other hand.
He then grabbed BB's hand put it into his pants so that BB was touching his penis. He placed his hand on top of BB's as she tried to pull her hand away.
Brown made BB rub his penis until he ejaculated.
On 24 March 1988, Brown accompanied BB's class on an excursion to the Observatory. BB and her class were dropped off at the school at night time and Brown drove the class by bus to the Observatory.
Brown cornered BB in a dimly lit room at the Observatory. He placed his hand down the back of BB's tracksuit pants and underneath her underwear. He rubbed BB's vagina and then inserted his finger inside BB's vagina.
Brown charged and tried in the District Court
Brown was charged on an indictment dated 30 November 2004 (exhibit 19) with numerous offences of sexual assault committed in 1988. He was subsequently tried at the District Court of Western Australia before a jury on 20 ‑ 27 March 2006.
Relevant to BB are counts 14 ‑ 16 inclusive, 21 and counts 23 ‑ 24 inclusive of the indictment.
Count 14 is as follows:
… on a date unknown between 1 September 1988 and 30 September 1988 at a place unknown between Carnarvon and Meekatharra, [Brown] sexually penetrated [BB] without her consent, by penetrating her vagina with his finger
AND THAT [BB] was under the age of 16 years.
Count 15 is:
… on the same date and at the same place as Count (14), [Brown] unlawfully and indecently dealt with [BB], a girl under the age of 13 years, by rubbing her bottom with his hand.
Count 16 is:
… on the same date and at the same place as Count (14), [Brown] again sexually penetrated [BB] without her consent, by penetrating her vagina with his finger
AND THAT [BB] was under the age of 16 years.
Count 21 is:
… on a date unknown between 4 February 1988 and 16 December 1988 at Perth, [Brown] unlawfully and indecently dealt with [BB], a girl under the age of 13 years, by touching her breasts.
Count 23 is:
…on the same date and at the same place as Count (21), [Brown] sexually penetrated [BB] without her consent, by penetrating her vagina with his finger
AND THAT [BB] was under the age of 16 years.
Count 24 is:
… on the same date and at the same place as Count (21), [Brown] unlawfully and indecently dealt with [BB], a girl under the age of 13 years, by placing her hand on his penis.
Brown found guilty and sentenced
The jury found Brown guilty of offences against the plaintiff alleged in counts 14, 15, 16, 21, 23, 24 of the indictment and of offences against two other complainants.
On 31 March 2006, Eaton DCJ sentenced Brown to 5 years and 4 months' imprisonment.
BB
It is not in dispute and I find that BB suffers from various psychiatric conditions including complex Post‑Traumatic Stress Syndrome with significant dissociation (also known as Disorders of Extreme Stress Not Otherwise Specified), Major Depressive Disorder, Anxiety (including PTSD symptoms), Dissociative Identity Disorder, Attention-Deficit Hyperactivity Disorder, Eating Disorder Not Otherwise Specified and a worsening of her dissociative symptoms associated with Dissociative Identity Disorder: exhibit 23, reports from Dr Lara Gurgone.
I accept the defendant's submission that these various psychiatric disorders should be regarded as a 'single indivisible injury' (defendant's closing submissions dated 9 December 2020 at par 9). The essential feature of a single indivisible injury is that there is no rational basis for an objective apportionment of causative responsibility for the injury: BAE Systems (Operations) Ltd v Konczak [2017] EWCA Civ 1188 [56].
I also accept Dr Gurgone's evidence. I find that all of the sexual assaults by Brown cumulatively materially contributed to her psychiatric conditions. I agree with the defendant (defendant's closing submissions dated 9 December 2020 at par 14), which is entirely supported by the medical evidence, that it is unrealistic to try and untangle the plaintiff's psychiatric conditions or separate the sexual assaults by time or by the nature, extent or severity of impact on the plaintiff of the sexual assaults, when regard is had to the fact that the assaults occurred when the plaintiff was 10 years old, the plaintiff not reporting the assaults for some 14 years after they happened and it being some 32 years since the assaults occurred. I would go further and say that it is not possible for those reasons to distinguish between the various episodes of assault in terms of the extent to which they materially contributed to BB's psychiatric conditions.
QBE accepts that no discrete injury sustained by BB can be attributed solely to the assaults that occurred outside its period of cover and that each sexual assault committed by Brown against BB caused or materially contributed to the injuries suffered by the plaintiff: first third party's written submissions dated 8 December 2020 at par 6.
As I said at [20], IAG, in its written submissions dated 2 December 2020 at par 1, asserted that it is liable for only half of the amount of the defendant's liability to pay damages and costs to the plaintiff, 'being its assessment of that proportion of the defendant's liability incurred in the second third party's policy period'. In the same submissions at par 13, however, IAG goes on to say that there is no basis for distinguishing between the injuries in the QBE period of insurance and those in the IAG period of insurance 'except that the injuries in the first (QBE) period may have already caused the harm that manifested as the plaintiff's psychiatric and later damaged physical condition'.
IAG then says in its later submissions that the injuries that precipitated the plaintiff's ultimate psychopathology and associated major functional impairment occurred between February and August 1988, when QBE was the insurer. Damage from the assaults during the balance of the school year after 23 August 1988 added to, but was comparatively and substantially less significant than the functional impairment from damage from the first series of assaults: second third party's written submissions dated 9 December 2020 at par 9, ts 471.
I disagree with those latter submissions. It continues to be my conclusion that the plaintiff's psychiatric disorders are to be regarded as a single indivisible injury.
Council's claim against first third party – the issues
QBE has assumed the liabilities of MLC Insurance Ltd, which issued a liability insurance policy to the Council for the period 23 August 1987 to 23 August 1988 (MLC Policy): exhibit 22. Even though the MLC Policy was in force at the time of some, but not all of the sexual assaults committed by Brown against BB and which have been admitted by the Council, QBE nonetheless accepts that no discrete injury sustained by BB can be attributed solely to the assaults that occurred outside its period of cover.
However, QBE denies any liability to the defendant under the MLC Policy. QBE says that the plaintiff's injuries were not the result of an 'accident or happening' within the meaning of the insuring clause in the MLC Policy. It says that the defendant in any event failed to take reasonable precautions to prevent those injuries as required by the MLC Policy.
The MLC Policy in Section 1 relevantly provides as follows:
The Company will pay to or on behalf of The Insured all sums which [the Council] shall become legally liable to pay for compensation in respect of
(a)bodily injury (which expression in this Policy includes death and illness)
(b)damage to property (which expression in this Policy includes loss of property)
occurring during the Period of Insurance as a result of an accident and happening in connection with The Business.
This is therefore a 'losses occurring' liability policy, covering an insured against liability for an injury or an injury causing event which happens during the relevant policy period: second third party's written submissions dated 2 December 2020 at par 9.
In Section 3, entitled 'Law Costs', the MLC Policy relevantly provides as follows:
The Company will also pay all charges expenses and law costs incurred by The Company or by The Insured with the written consent of The Company in the settlement or defence of claims for compensation in respect of which The Insured is entitled to indemnity under the Policy or if sustained would be so entitled and all charges expenses and law costs recoverable from The Insured by claimants in connection with such claims.
The MLC Policy then contains a part entitled 'Conditions'.
Condition 5 is entitled 'Reasonable Care' and relevantly provides as follows:
The Insured shall
(a)exercise reasonable care that only competent employees are employed and take reasonable measures to maintain all premises, fittings and plant in sound condition
(b)take all reasonable precautions to
(i)prevent bodily injury and damage to property and
(ii)prevent the manufacture sale or supply of defective Products and
(iii)comply and ensure that his employees servants and agents comply with all statutory obligations by-laws or regulations imposed by any Public Authority in respect thereof or for the safety of persons or property …
I will refer to the requirements in Condition 5 as, collectively, the 'Reasonable Precautions Condition'.
Accordingly, the Council considers (defendant's closing submissions dated 9 December 2020 at par 2) and I agree that the issues between QBE and the Council are these:
1.Are BB's psychiatric conditions 'the result of an accident and happening'?
2.If:
(a)the Council has the onus of proving it complied with the Reasonable Precaution Condition, has it discharged that onus?
(b)QBE has the onus of proving the Council breached the Reasonable Precaution Condition, has it discharged that onus?
I do not understand QBE to be disputing that these are the issues to be resolved between the defendant and QBE: first third party's written submissions dated 8 December 2020 at pars 8, 9 and 38).
Council's claim against the second third party - are there any issues?
IAG is bound under a Commercial Union Assurance Company of Australia Limited policy, which insures against liability for an injury or injury causing event that happens during the relevant policy period. The period for IAG is 23 August 1988 to 1 February 1989 (exhibit 26).
This policy is also a 'losses occurring' liability policy.
IAG also agrees that the settlement between BB and the Council was reasonable, both as to the admission of liability by the Council and the basis for it and as to quantum of damages: second third party's written submissions dated 2 December 2020 at pars 1 and 5.
I have already found that BB's psychiatric disorders are to be regarded as a single indivisible injury. IAG, at least at 2 December 2020, accepted that there is no basis in fact for distinguishing between the injuries in the QBE policy period (23 August 1987 to 23 August 1988) and those in the IAG policy period: second third party's written submissions dated 2 December 2020 at par 13.
IAG has always agreed to indemnify BB for half of the amount of the Council's liability to pay damages: IAG's defence filed 5 October 2020 at par 13.2.
However, the Council says that there is no legal base for IAG to limit its liability to indemnify to less than a full indemnity.
The Council considers that IAG is obliged to fully indemnify the Council for its liability to BB and says that this requires IAG to pay:
(a)the settlement amount to the Council for on payment to BB, or direct to BB; and
(b)legal costs incurred by the Council in defending BB's action on a solicitor and client basis.
In the light of my finding that BB's psychiatric disorders are to be regarded as a single indivisible injury, and subject to any contribution claims, I therefore do not understand there to be any issues to be resolved between IAG and the defendant and the other third parties.
Council's claim against the third third party - the issues
Berkshire Hathaway first came on risk in relation to underwriting the National Independent Schools Scheme Insurance Program (NIS Scheme) for the policy period commencing 31 October 2015. The School was one of the independent schools which was covered by the NIS Scheme: third third party's submissions dated 18 December 2020 at par 1.2.
The insurance policy which was underwritten by Berkshire Hathaway was for the policy period commencing 31 October 2015 (2015/2016 Policy) (exhibit 38). The subsequent policy years relevant to the claim which the Council has made against Berkshire Hathaway were for the policy periods commencing respectively on 31 October 2016 (2016/2017 Policy) (exhibit 42), 31 October 2017 (2017/2018 Policy) (exhibit 43) and 31 October 2018 (2018/2019) (exhibit 44).
I will refer to the 2015/2016 Policy, the 2016/2017 Policy, the 2017/2018 Policy and the 2018/2019 Policy collectively as the Berkshire Hathaway Policies.
The Berkshire Hathaway Policies are each described as a combined general and products liability insurance policy: third third party's submissions at par 1.4.
Berkshire Hathaway was not an insurer of the Council prior to Berkshire Hathaway underwriting the NIS Scheme.
The Berkshire Hathaway Policies all have an extension of cover for child sexual molestation (Child Sexual Molestation Cover). Further to this extension and subject to the deductible (described as a self-insured retention), Berkshire Hathaway agreed to indemnify the Council against:
all sums which [the Council] becomes legally liable to pay as Compensation … as a result of a Claim first made against [the Council] and notified in writing to [Berkshire Hathaway] during the Period of Insurance by reason of Injury arising out of any actual, alleged or attempted sexual assault, sexual abuse or sexual molestation of any Child and/or Student by any person.
(Third third party's submissions at par 1.5.)
The Berkshire Hathaway Policies are therefore all 'claims made and notified' liability policies, covering an insured against liability as a result of a claim made against the insured and notified to the insurer during the relevant period of insurance: ts 394, second third party's written submissions dated 2 December 2020 at par 16, third third party's written submissions dated 18 December 2020 at par 2.1.
Each of the Berkshire Hathaway Policies define the term 'Claim' for the purposes of the Child Sexual Molestation Cover to mean:
… any writ, statement of claim, summons, application or other originating legal or arbitral process, cross claim, counterclaim or third or similar party notice issued against or served upon [the Council], or the receipt by [the Council] of any written notice of demand for Compensation made by a third party against [the Council].
The Berkshire Hathaway Policies all contain an exclusion in respect of the Child Sexual Molestation Cover (Prior Notification Exclusion) in exactly the same terms, namely:
The Insurer shall not be liable for any …
(d)circumstances that have been notified during a prior Period of Insurance or as part of the renewal declaration process, and where a subsequent Claim arises out of such previously notified circumstances during the Period of Insurance. However, this Clause (d) shall not apply where the Insurer was the Insurer during the Period of Insurance that such circumstance(s) were first notified to the Insurer.
The italics in the above quoted exclusion clause are mine. The words which I have italicised appear in the policies themselves in bold type and capitalised, suggesting that they might be read as being defined terms within the relevant policy. In their context, however, they are clearly not being used as defined terms. It has been conceded by both the Council and Berkshire Hathaway (properly in my view) that these capitalisations are printing errors only and each of those expressions should be regarded as having their ordinary meaning, not a defined meaning: ts 401 - ts 403.
Berkshire Hathaway does not dispute that the Council's liability to pay damages and costs to BB, as a result of the settlement the Council reached with her, falls within the Child Sexual Molestation Cover of each of the policies. Berkshire Hathaway also concedes that the settlement was reasonable: ts 394. However, there are two issues which are in dispute between Berkshire Hathaway and the Council.
The first is the date when notification was given by the Council to Berkshire Hathaway of the claim made by BB against the Council. Specifically, what communication by or on behalf of the Council to Berkshire Hathaway constituted a notification of circumstances that gave rise to the claim by BB against the Council? In other words, which of the Berkshire Hathaway Policies should be regarded as the policy which has been claimed upon?
The second issue between Berkshire Hathaway and the Council is the operation of the Prior Notification Exclusion in each of the policies.
Berkshire Hathaway's case is that, if a communication is found to be a notification and triggers a claim for indemnity under one of the Berkshire Hathaway Policies, the Prior Notification Exclusion operates to exclude liability for Berkshire Hathaway to indemnify the Council against the settlement sum or pay the Council's defence costs of BB's action against it: third third party's submissions at par 1.7. Berkshire Hathaway asserts that the Council notified a prior insurer in 2001 and 2002 of circumstances out of which a subsequent claim arose.
Construction of an insurance contract
The construction of an insurance contract involves determination of the meaning of the words of the contract by reference to its text, context and purpose: Black Box Control Pty Ltd v Terravision Pty Ltd [2016] WASCA 219 [42(2)]. An insurance contract is a commercial contract and should be given a businesslike interpretation: McCann v Switzerland Insurance Australia Ltd (Allens Case) [2000] HCA 65; (2000) 203 CLR 579 [22].
The construction is governed by ordinary principles of contractual interpretation: Icon Co (NSW) Pty Ltd v Liberty Mutual Insurance Company Australian Branch trading as Liberty Specialty Markets [2020] FCA 1493 [53].
The starting point for the exercise of construction is what the words of the policy convey, as a matter of contemporary language read in the context of the whole policy, to a reasonable non‑expert in this country: Australian Casualty Co Ltd v Federico [1986] HCA 32; (1986) 160 CLR 513, 525.
A limiting clause such as an exclusion clause or condition in an insurance policy should be given its natural and ordinary meaning read in the light of the contract as a whole: Selected Seeds Pty Ltd v QBEMM Pty Ltd [2010] HCA 37; (2010) 242 CLR 336 [29]; Allianz Australia Insurance Ltd v Inglis [2016] WASCA 25 [25] ‑ [26].
The insured, in this case the Council, bears the onus of proving its claim falls within the scope of an insuring clause: Australian Paper Manufacturers Ltd v American International Underwriters (Australia) Pty Ltd [1994] 1 VR 685; Alex Kay Pty Ltd v General Motors Acceptance Corporationand Hartford Fire Insurance Company [1963] VR 458, 461.
The insurer bears the onus of proving the insured's claim falls within the scope of an exclusion: Wallaby Grip Ltd v QBE Insurance (Australia) Limited; Stewart v QBE Insurance (Australia) Limited [2010] HCA 9; (2010) 240 CLR 444 (Wallaby Grip) [25] and [35]; Barrie Toepfer Earthmoving and Land Management Pty Ltd v CGU Insurance Ltd [2016] NSWCA 67 (Barrie Toepfer).
Which party bears the onus of proving compliance with a condition in an insurance policy is less clear and I will revert to this later in these reasons when dealing with QBE's Reasonable Precautions Condition.
QBE
Were BB's injuries the result of an 'accident'?
I find, and I do not understand either QBE or the Council to be in disagreement, that the Council bears the onus of proving that its claim falls within the scope of an insuring clause.
The Council says that BB's psychiatric disorders are the result of an accident if, at the end of the 31 October meeting, the Council did not appreciate that there was a risk that Brown was or might be a sexual predator: defendant's closing submissions dated 9 December 2020 at par 57.
The Council says in that regard that in 1987, neither Principal Hassell nor the Council appreciated that Brown was or might be a sexual predator, let alone recognised a high degree and seriousness of risk that Brown might sexually assault a student in 1988: defendant's closing submissions dated 9 December 2020 at par 58.
QBE on the other hand denies that BB's injuries are the result of an accident within the meaning of Section 1 of the MLC Policy.
'Accident' is not defined in the MLC Policy. Both the Council and QBE agree (defendant's closing submissions dated 9 December 2020 at par 57, first third party's written submissions dated 8 December 2020 at par 10) that it therefore has its ordinary and natural meaning which is an 'unlooked ‑ for mishap or an untoward event which is not expected or designed': Fenton v J Thorley & Co Ltd [1903] AC 443, 448.
QBE says that, while it is profoundly counterintuitive to describe the injuries sustained by BB as accidental, the question is approached, in this context, from the perspective of responsible officers of the Council: first third party's written submissions dated 8 December 2020 at par 11. QBE cites A. F & G.Robinson v Evans Bros Pty Ltd [1969] VR 885, 896 (Robinson v Evans), where Starke J applied the following test for whether an event was an accident for the purposes of an insurance policy:
The test I think is, whether an ordinary, reasonable sensible man, in the position of the responsible officers of the company, would or would not have expected the occurrence … The test is I think objective and not subjective: whether an ordinary, reasonable man with the knowledge, information and experience of Evans and Desler [two directors of the insured company] reasonably would have expected the event that did happen …
QBE says that the MLC Policy should not be construed as extending indemnity for deliberate injury caused by an employee of the insured in cases where the Council has not directed that the injury be inflicted. It says that the purpose of the requirement that injury be as a result of an accident is to distinguish between negligence and deliberately inflicted injury. That, QBE says, is a very important limit on the scope of cover. QBE says that a more nuanced approach to the meaning of 'accident' is necessary to give the MLC Policy a sensible commercial operation: first third party's written submissions dated 8 December 2020 at par 13.
QBE says that a determination of the question of whether an injury is accidental for the purposes of the MLC Policy can be approached by defining the range of whose knowledge of relevant matters is to be treated as knowledge of the Council. QBE finds support for this in HL Bolton (Engineering) Co Ltd v TJ Graham & Sons Ltd [1957] 1 QB 159, where Denning LJ at (173) says:
… the intention of the company can be derived from the intention of its officers and agents. Whether their intention is the company's intention depends on the nature of the matter under consideration, the relative position of the officer or agent and the other relevant facts and circumstances of the case.
QBE therefore submits that, for the purpose of considering whether the injuries sustained by BB were as a result of 'accidents', the knowledge and expectations of any or all of Brown, Principal Hassell and the Council is to be treated as the state of mind of the Council: first third party's written submissions dated 8 December 2020 at par 16.
QBE concedes that a complication in this case arises from the fact that Brown was committing criminal acts in the course of the performance of his responsibilities: first third party's written submissions dated 8 December 2020 at par 23. QBE accepts that criminal conduct formed no part of the performance of Brown's responsibilities and, indeed, was an anathema to the performance of those responsibilities.
However, QBE says that Brown's teaching responsibilities went beyond classroom education. He was responsible for the welfare of young children on excursions including the school camp in 1987 and also the camp in 1988. In the light of that delegated responsibility, QBE says that the Council was vicariously liable for Brown's acts at those camps. QBE says that if the assaults at those camps are to be treated as acts carried out by Brown in the course of the defendant's business, then it should follow that, for the purpose of determining what is and what is not an accident under the MLC Policy, the acts are sufficiently associated with the conduct, through Brown, of the defendant's business that Brown's knowledge of the assaults is knowledge of the defendant: first third party's written submissions dated 8 December 2020 at par 29.
Accordingly, QBE says that for the purpose of applying the test in Robinson v Evans, Brown was the relevant 'responsible officer of the company' and his assaults on the plaintiff cannot be regarded as 'accidents'. QBE says that '[t]hey were not "unexpected mishaps", rather, they were virtually inevitable': first third party's written submissions dated 8 December 2020 at par 30.
Alternatively, QBE says that a person in the position of Principal Hassell should have expected that Brown would 'touch' students in the future in a way that may cause mental harm. That knowledge was knowledge of the Council: first third party's written submissions dated 8 December 2020 at pars 31 and 32.
In the further alternative, QBE says that the information revealed to the Council at the 31 October meeting was such that the members of the Council themselves should have expected that in the future students would be touched in a way that caused them harm. QBE says that it is clear from exhibits 3 and 4 that Principal Hassel gave a full and frank account to the Council of the outcome of his investigations and that the Council was aware of Brown's conduct.
QBE concludes that a reasonable person having been given that information would conclude that there was a profound risk that students would be touched in the future in a way that caused them harm. QBE says that it follows that, based on the knowledge of the Council alone, the assaults were not 'accidents' within the meaning of the MLC Policy: first third party's written submissions dated 8 December 2020 at par 36.
Consideration
I agree that the plaintiff's psychiatric disorders will be as a result of an accident if each can be categorised as 'an unlooked-for mishap or an untoward event which is not expected or designed'.
I also respectfully concur with Cooke J in Mount Albert City Council v New Zealand Municipalities Co-operative Insurance Co Ltd [1983] NZLR 190, 194 (Somers and Jeffries JJ agreeing) who stated that:
... there is a category of cases falling short of a deliberate causing of the damage by the insured where his conduct is nevertheless so hazardous and culpable that the event cannot fairly be called an accident. It can only be a question of fact whether a case falls within this category. The insured's knowledge of the risk must be important, in that unless the evidence justifies the inference that he deliberately incurred the risk one would be very slow to find that the event was other than an accident. On the other hand it seems to me not decisive that the risk may have been deliberately run or calculated. For instance, if the risk was reasonably seen by the insured as not a high one, the occurrence might still be found to be an accident.
It is not profitable to essay precise rules or semantics in this field. Facts and risks vary too greatly. One expression that has been used in some cases, and was used by [the trial judge] here, is 'courting' the risk. If that is understood as a term stronger than merely running or incurring, and in the sense rather of inviting or wooing, I respectfully agree that it can be a useful test for the tribunal of fact to apply. So can Lord Macnaghten's definition [an unlooked-for mishap or an untoward event which is not expected or designed]. But in the end ... I doubt whether as a matter of law the Court can go further than to say that those are helpful but not necessarily exhaustive tests ...
For the reasons which follow, I consider that the plaintiff's psychiatric disorders are the result of an accident.
First, I consider that neither Brown nor Principal Hassell were 'officers' or 'agents' of the Council. In Robinson v Evans, the 'responsible officers', Mr Evans and Mr Desler, were directors of the insured. In contrast, Brown and Principal Hassell were employees of the Council.
So far as Brown is concerned, Brown's assaults on BB were not, from the Council's perspective, 'virtually inevitable'. In my opinion, his acts are so removed from what he was employed by the Council to do, namely to teach, that those acts cannot be regarded as acts in the course of his employment: New South Wales v Lepore (2003) 212 CLR 511 (Gleeson CJ). It is unclear whether Brown's teaching responsibilities included an actual expectation that he would accompany students on school camps. However, it is apparent that it was at least open to him to do so. It is equally apparent that other teachers and some parents of students would also attend the camps with the students. I do not believe that permitting or asking Brown to attend the camps in those circumstances could be said to constitute the Council giving Brown the 'authority, power, trust, control and the ability to achieve intimacy with the victim' so that Brown's assaults 'should be regarded as committed in the course or scope of employment …': Prince Alfred College Inc v ADC [2016] HCA 37; (2016) 258 CLR 134, 159 - 160.
I do not accept that Brown's knowledge of his conduct was the knowledge of the Council.
Principal Hassell was not a decision maker for the Council. Counsel for QBE accepted that: ts 132. Principal Hassell said that he was originally a member of the Council, but 'some time later they changed the constitution to make me ex officio'. He said that it followed that he did not have a vote on the Council: ts 114. I understand from this that Principal Hassell's evidence is that at the relevant time he was in attendance at Council meetings as the principal of the School, either to present or to observe, but he was not a member of the Council.
In particular, Principal Hassell did not have the power to dismiss Brown. Principal Hassell had the power under the Articles to suspend Brown's employment, but immediately following a suspension he was obliged to refer the matter to the Council for a decision on termination.
It follows that if Principal Hassell was not a member of Council but merely an employee, then it cannot be said that the knowledge of Principal Hassell was the knowledge of the Council.
There is no doubt that Principal Hassell's knowledge became the knowledge of the Council once Principal Hassell conducted an investigation of the concerns about Brown and provided a written report to the Council at the 31 October meeting.
However, notwithstanding Principal Hassell's full and frank account to the Council of the results of his investigation into Brown's conduct, I do not consider that the evidence adduced at trial supports the conclusion that the Council expected or intended Brown to sexually assault BB.
I agree with the defendant that there is no reason to believe that any of the witnesses were doing anything but trying their best to remember events of over 30 years ago: defendant's closing submissions dated 9 December 2020 at par 15. Subject to what I say in the next paragraph, I accept the entirety of the evidence of each of the witnesses.
However, where Principal Hassell's evidence contradicts the evidence of SW, EA or Ms Fyffe, it is my view that the evidence of Principal Hassell is to be preferred. All of the witnesses, including Principal Hassell, were remembering facts from over 30 years ago, at a time when, in the case of at least SW and EA, they were very young. Principal Hassell on the other hand had the benefit of his notes of events and his observations that were made at the time of those events.
In 1987, inappropriate touching of students by Brown was alleged and a detailed investigation was undertaken by Principal Hassell. He thought that the behaviour of Brown was a matter of serious concern: exhibits 3 and 4, ts 127 and ts 145. Principal Hassell did not consider that a sexual assault had occurred. He did not identify touching for sexual gratification: exhibits 3 and 5, ts 119, ts 128, ts 130, ts 136, ts 138, ts 144 and ts 150. Following Principal Hassell's investigation, Brown was counselled by Principal Hassell. Brown then agreed not to touch children again and he apologised to students: exhibits 3 - 5, ts 105, ts 128.
At the 31 October meeting, the results of Principal Hassell's investigations were reported to and considered by the Council: exhibit 8, ts 150. Principal Hassell's evidence is that the late Mr Murray QC, who was a member of the Council in 1987, considered that there was not enough evidence to dismiss Brown: ts 104, ts 148.
There were six members of Council in attendance at the meeting: exhibit 8. Each of the four surviving members gave evidence at trial, namely Ms Herzfeld, Ms Ball, Mr Valenti and Ms Farthing.
Ms Herzfeld said that if it was the case that she thought that Brown posed a sexual threat she would have asked him to go: ts 172. I infer from that statement that she did not consider that he posed a sexual threat to students and so she did not press for his dismissal.
Ms Ball said that no one had expressed any concerns to her about Brown: ts 178.
Mr Valenti did not remember the 31 October meeting: ts 238. He said, however, that if he had thought that Brown was or might pose a sexual threat to students, he would have recommended that Brown be dismissed and the matter referred to the appropriate authorities: ts 244. Again, I infer from this that Mr Valenti did not consider that Brown posed a sexual threat to students.
Ms Farthing said that she was shocked by the allegations, but they did not indicate to her that the children were not safe with Brown: ts 287.
I do not consider that there is sufficient evidence to support the conclusion that the Council deliberately exposed students to, or was indifferent to, the risk of sexual assault by Brown. Inappropriate touching was identified and investigated. Brown was spoken to about his conduct and the students were addressed. Brown then apologised to the students in his classes. There is no evidence to indicate that the Council perceived that there was a risk that Brown would sexually assault students at the School and deliberately incurred that risk.
Indeed, Principal Hassell's evidence was that he remained unpersuaded that Brown was a risk to students until as late as 2006. He said that after he gave evidence at the trial of Mr Brown in 2006 he was (ts 112):
… allowed to go into the courtroom to hear any subsequent evidence, and there was a - a video interview with one of the students, and that student, I believe, was [BB], and the evidence that she gave of a particular occurrence that happened during a school excursion convinced me that [Brown] was guilty of what he was being charged. Before that I - I felt that he was innocent. I felt that he had been very unwise in his actions, but I didn't think that what he was doing was criminal in any way, but after I heard that evidence, I felt personally that the girl could not have made up what she was saying, and that it was valid, and that he was guilty of what he was charged with.
Conclusion
It is my conclusion that the sexual assaults on BB that occurred in 1988 were unintended and unexpected. I do not consider that the Council deliberately invited or 'wooed' the risk of injury to the plaintiff and I find that BB's injuries were the result of an 'accident'.
Who bears the onus of proof in relation to compliance with the Reasonable Precautions Condition?
QBE says that the Reasonable Precautions Condition is a condition precedent to QBE's liability to indemnify the Council, rather than being a limitation on the extent of the indemnity or an exclusion to the insurer's liability to indemnify the insured. QBE says that this means that it is the Council which bears the onus of proving that it has complied with the Reasonable Precautions Condition: first third party's written submissions dated 8 December 2020, par 38.
In CGU Insurance Ltd v Lawless [2008] VSCA 38 [38] Redlich JA said that an insurer will successfully defend a claim in reliance on a condition in an insurance policy that the insured must take all reasonable precautions to prevent injury in:
(a)the United Kingdom, New Zealand, South Australia, Queensland and the Northern Territory if the insurer proves the insured breached the condition; and
(b)New South Wales and Victoria if the insured fails to prove it complied with the condition.
As the defendant points out (defendant's closing submissions dated 9 December 2020 at par 54), there was no mention of Western Australia.
In WFI Insurance Ltd v Manitowoq Platinum Pty Ltd [2018] WASCA 89, Martin CJ [93] accepted, without discussion, that for the purpose of the insurance policy in question, the insurer carries the onus of establishing a breach of condition which results in the denial of indemnity.
Barrie Toepfer dealt with the 'onus of proof' issue in relation to a reasonable care condition. In Barrie Toepfer, Meagher JA said at [50]:
The High Court also explained in [Wallaby Grip] … that the legal burden of proof arises from the principle that he who alleges must prove. Earthmoving claimed that its liability to the RTA for damage to the bridge was caused by the use of its motor vehicle. As such that liability was within the description in Section 2 and the insurers' liability to indemnify arose, subject to the application of an exclusion or there having been a breach of a condition which was causative of all or part of that liability. Accordingly, to justify a refusal to pay all or part of that claim by reference to condition 3, the insurers had to allege and prove breach of the condition and causation. It follows that the insurers bore the onus in that respect and that ground 5 must be upheld.
Consideration and conclusion
While the Council accepts that QBE is not obliged to pay a claim that falls within the insuring clause if the Council has not complied with the Reasonable Precautions Condition, it is QBE who is alleging that the Reasonable Precautions Condition has not been complied with. Because it is QBE who is refusing to pay a claim because a condition has not been complied with, it is my opinion and finding that it is QBE and not the Council who bears the onus of proving that the Council breached the Reasonable Precautions Condition.
Compliance with the Reasonable Precautions Condition
QBE says that there are two limbs to the Reasonable Precautions Condition. First, the Council is required to exercise reasonable care to employ only competent employees. Second, the Council is required to take all reasonable precautions to prevent bodily injury to third parties.
QBE does not suggest that the Council took insufficient steps in respect of the first limb, namely to address the risk when Brown was hired. QBE acknowledges that Brown was an experienced teacher and that his existing employer recommended him as a suitable candidate for a teaching position: first third party's written submissions dated 8 December 2020 at par 53.
However, QBE considers that the Council disregarded or inadequately dealt with the second limb, namely the requirement to take all reasonable precautions to prevent bodily injury to third parties.
QBE cites Diplock LJ in Fraser v BN Furman (Productions) Ltd [1967] 3 All ER 57, 61 as follows:
What in my judgment is reasonable as between the insured and the insurer, without being repugnant to the commercial purpose of the contract, is that the insured, where he does recognise a danger, should not deliberately court it by taking measures which he himself knows are inadequate to avert it. In other words, it is not enough that the [insured's] omission to take any particular precautions to avoid accidents should be negligent; it must be at least reckless, i.e, made with actual recognition by the insured himself that a danger exists, not caring whether or not it is averted.
QBE then quotes Rein J in Limit (No 3) Ltd v ACE Insurance Ltd [2009] NSWSC 514; (2009) 15 ANZ Insurance Cases 61-823 [222] as follows:
I proceed upon the basis that if an insured establishes that it did not know of the relevant risk it cannot be said that it courted the risk. I accept too that if an insured, aware of the risk, subjectively believed that steps to be taken by it would be reasonable to exclude or minimise the risk that would satisfy the condition. In this sense then, the test is subjective, although there are limits to acceptance of evidence that the insured believed a particular fact or matter, which limits may equate to a requirement for the belief to be reasonable. Where no action is taken by an insured to deal with a known risk I do not think that the condition will be readily satisfied by an assertion by the insured that it thought there was little likelihood of the risk materialising …
QBE says that, on one view of the matter, risk of sexual abuse of young children in a school environment is recognised by every reasonable operator of a school. QBE says that there is no reason to treat the Council as unusually obtuse in this regard. QBE says that it is clear beyond argument that the Council was aware of an acutely enhanced risk that Brown was a sexual predator and that it knew that the risk had not been addressed. QBE says that Brown was not officially warned or sanctioned in any way. The Council simply resolved at the 31 October meeting that Principal Hassell should talk to Brown, discuss carefully with him the ramifications of his actions and point out to him the difficulties that had been created for the Council and the School: first third party's written submissions dated 8 December 2020, pars 47 ‑ 49.
Further, QBE says that, despite those warnings and in light of the fact that Brown's behaviour had escalated rather than improved, the Council must have known that the risk had not been adequately addressed. QBE says that the Council should have terminated Brown's employment or restricted his duties so that he did not participate in activities apart from classroom teaching. QBE also says that the Council should have otherwise ensured that Brown was not in the presence of students without appropriate supervision: first third party's written submissions dated 8 December 2020, par 54.
Consideration and conclusion
The 31 October meeting went on for about two hours. Beyond Principal Hassell's notes, we do not know what was discussed at that meeting.
Clearly, Principal Hassell:
1.Conducted an investigation as requested by some parents;
2.Investigated the matter thoroughly over a 12 day period ending on the day of the 31 October meeting;
3.Presented the Council with a substantial amount of material for it to consider; and
4.Reached the conclusion that Brown's touching of students was unwise but not sexual, sinister or criminal and not for sexual gratification.
The length of the meeting suggests that there was some extended discussion about the matter.
It is clear from the resolutions of the Council that were passed at the end of the 31 October meeting that the Council did not consider Brown to be a sexual predator. I agree with the defendant (defendant's closing submissions dated 9 December 2020 at par 36) that it is inconceivable that any member of Council would knowingly expose students, including in the case of some of the members their own children, to that risk. That is the effect of the evidence given by the four surviving members of Council present at that meeting.
With the benefit of hindsight, the steps that were then taken by the Council in 1987 were self-evidently inadequate to prevent the sexual assaults that occurred in 1988. However, the steps that were taken were, in my view, commensurate with the Council's knowledge at that time of the risk concerning Brown.
There is no evidence before the court of any complaints about Brown during 1988. The issues concerning Brown resurfaced in 1989 when Principal Hassell wrote to Brown on 29 March 1989 (exhibit 6). It is apparent that, by December 1989, the Council had ceased to accept Brown's explanations for his conduct and he resigned.
I find that the steps taken by the Council in 1987 were sufficient to satisfy the Reasonable Precautions Condition. QBE is liable to indemnify the Council for the settlement amount of its liability to BB and the defendant's defence costs of the plaintiff's action against it.
IAG
IAG accepts that from the perspective of the Council and for the purposes of the insuring clause of its policy, the sexual assault injuries that happened during its policy period were an 'Occurrence'. They were an 'event [occurring during the period of insurance] … which results in Personal Injury … neither expected nor intended from the standpoint of the Insured' within the wording of the insuring clause: second third party's written submissions dated 2 December 2020 at par 11.
I find that IAG is liable to indemnify the Council for the settlement amount of its liability to BB and the defendant's defence costs of the plaintiff's action against it.
Berkshire Hathaway
Under which policy does the claim fall?
Berkshire Hathaway says, and I agree, that cover under 'claims made' policies is triggered for claims which are first made or notified to the insurer within the relevant period of insurance: third third party's written submissions dated 18 December 2020 at par 2.1.
Berkshire Hathaway also accepts that under some circumstances a claim can be made on an insurance policy after the relevant period of insurance has expired: third third party's written submissions dated 18 December 2020 at par 2.2.
Under section 40(3) of the Insurance Contracts Act1984 (Cth), the cover under the insurance policy may still be triggered so long as the insured, during the relevant period of insurance, provided notice to the relevant insurer of the circumstances which gave rise to the claim.
It is not disputed that the Council engaged the services of an insurance broker to attend to its insurance needs and that the company now named Willis Towers Watson (Willis) was at all relevant times the Council's insurance broker.
In an email sent by Willis to Berkshire Hathaway on 31 January 2017 (exhibit 32), Willis advised Berkshire Hathaway that the Council had been contacted by a former student who attended the school 30 years previously (Former Student), asking the Council to provide free education for her children because a former teacher had sexually abused her.
In another email from Willis to Berkshire Hathaway, this one dated 3 August 2017 (exhibit 33), Willis notified Berkshire Hathaway that the Former Student had issued a demand for compensation from the Council for injuries sustained as a result of the student having been sexually abused by Brown.
Proceedings were commenced by the Former Student against the Council on 19 October 2018 in the District Court. During the course of those proceedings a written statement dated 8 December 2017 by Principal Hassell was provided to the Former Student's lawyers. This statement identified BB as one of the complainants that led to Brown's conviction.
The Council therefore contends that these emails and the written statement together constitute notice to Berkshire Hathaway under the 2016/2017 Policy and that it is the 2016/2017 Policy which responds to the Council's claim for indemnity: defendant's closing submissions dated 9 December 2020 at par 84, ts 467.
Berkshire Hathaway, on the other hand, refers to an email sent by Willis to Berkshire Hathaway on 31 October 2019 (exhibit 35) which states as follows:
In 2006, a former employed teacher of [the Council], [Brown], was found guilty and sentenced to jail in respect of the sexual assault of 3 former primary school students of [the Council], including [a particular student]. Some of the sexual assaults occurred during the course of the student's schooling.
…
The other 2 students whose complaints led to the conviction of [Brown] may well also make claims against [the Council] for damages.
This notification given to Berkshire Hathaway on 31 October 2019 specifically referred to the possibility of claims by the two other former students who were part of the same indictment for which Brown was charged and found guilty. BB was one of those former students. This was, Berkshire Hathaway says, in contrast to the notifications given during 2017: third third party's written submissions dated 18 December 2020 at par 2.9.
Berkshire Hathaway therefore considers that the email of 31 October 2019 is a notification of circumstances that give rise to the claim by BB against the Council in 2019: third third party's written submissions dated 18 December 2020 at par 2.7.
Berkshire Hathaway says that it follows from this that it is the 2018/2019 Policy, not the 2016/2017 Policy, that is the policy which responds to the Council's claim for indemnity, subject to the application or otherwise of the Prior Notification Exclusion.
The significance of which policy the claim falls under is that the 2016/2017 Policy has a $25,000 self-insured retention. The 2017/2018 Policy and the 2018/2019 Policy, in contrast, both have a $200,000 self‑insured retention because for both of those policy years Brown was recorded as a 'Known Perpetrator' in relation to the Council.
Conclusion
In my view, the emails of respectively 31 January 2017 and 3 August 2017 and the statement dated 8 December 2017 by Principal Hassell, either collectively or individually, do not constitute notification of a claim made against the Council other than notification of the claim made by the Former Student. In particular, it does not refer or specify any claim made by BB against the Council. It or they may constitute notification that BB had made a complaint against Brown to the police, but nothing more.
In contrast, the email notification given by Willis on behalf of the Council to Berkshire Hathaway on 31 October 2019 specifically refers to the possibility of a claim by BB against the Council. I consider that this is the first notification received by Berkshire Hathaway of the claim by BB against the Council.
I therefore find that the indemnity being sought by the Council against Berkshire Hathaway is under the 2018/2019 Policy, not the 2016/2017 Policy.
Does the Prior Notification Exclusion apply?
As I have said at [22], Berkshire Hathaway accepts that it has the onus of proving that the Prior Notification Exclusion applies.
Berkshire Hathaway says that irrespective of which communication is found to be a notification and triggers a claim for indemnity under one of the Berkshire Hathaway Policies, the Prior Notification Exclusion operates to exclude liability for Berkshire Hathaway to indemnify the Council against the settlement sum or pay the Council's defence costs of the plaintiff's action against it: third third party's written submissions dated 18 December 2020 at par 1.7.
Berkshire Hathaway asserts (third third party's written submissions dated 18 December 2020 at par 3.3) that the Prior Notification Exclusion operates because the court is able to conclude that:
(a)shortly after May 2001, the Council notified a prior insurer of the circumstances which may lead to possible claims being made against the Council;
(b)the circumstances which were notified were that Brown was being investigated by the police for sexual abuse of former students of the School;
(c)the Council notified further circumstances to an insurer in 2002, namely that Brown had been charged with sexual assaults against three former students of the School;
(d)in both 2001 and 2002, the circumstances were notified because the Council was concerned that one or more of these former students, including BB, may bring a claim against it by reason of Brown's sexual assaults against them; and
(e)the claim being made against the Council by BB in these proceedings arises out of such previously notified circumstances, within the terms of the Prior Notification Exclusion.
Berkshire Hathaway has been unable to provide copies of any actual notification which the Council or someone on behalf of the Council provided to an insurer in 2001 and 2002. It concedes that the notifications to the insurers to which it refers have not been found but says that nonetheless it is open to the court to make a finding that such notifications were sent to earlier insurers.
Berkshire Hathaway also contends that it does not need to establish which insurer received the notification of circumstances in either 2001 or 2002. Berkshire Hathaway actually does not know who the prior insurers are: ts 442. However, Berkshire Hathaway says that this does not matter. It says that all it needs to establish, on the balance of probabilities, is that a notification was sent to an insurer who was on risk for the Council in a prior period of insurance. In this regard, Berkshire Hathaway submits that the Council's records show that it did 'notify an insurer' in 2001: ts 405 and ts 441.
Berkshire Hathaway says that the evidence before the court allows the court to:
(a)conclude that a notification was or notifications were sent to an insurer by the Council; and
(b)draw an inference that the content of that notification or those notifications related to the charges being brought against Brown in relation to his sexual assaults on three of the School's former students, including the plaintiff, who may subsequently bring claims against the Council.
Certain members of the Council during the relevant periods in 2001 and 2002, namely Mr Leonard Gregory Calder, a lawyer and a parent of children at the School, Mr Arthur John Allen-Williams, the principal of the high school from 1990 to 2010 and, as already mentioned, Ms Herzfeld all gave evidence at the trial.
Ms Herzfeld's evidence was limited to the steps taken at each Council meeting with regard to confirmation or otherwise of the accuracy of the minutes of the preceding meeting.
Neither Mr Calder nor Mr Allen-Williams had any particular recollection of attending the Council meetings in 2001 and 2002, or about what was said. However, Mr Calder and Mr Allen-Williams both said that there was no reason to doubt the accuracy of the minutes, despite the lack of any independent recollection by either of them of attending those meetings.
Mr Calder's evidence was that he had no direct involvement with the Council's insurers or insurance brokers. He said that that was Ms Pitcher's role: ts 431.
Ms Betty Pitcher, the School's Bursar at the relevant times, also gave evidence. She was a member of the Council 'ex officio because of (her) position as Bursar': ts 407. Ms Pitcher said that her job as Bursar was 'huge'. She said that the principal was head of the teaching staff and the Bursar did 'everything else'. That included 'secretarial, administration generally, accounting, cleaning, gardening, maintenance' and an 'involvement in the School's insurance': ts 407.
Ms Pitcher said that all of her dealings with regard to insurance were with Willis, 'and not direct to the insurance company': ts 419. I am satisfied that she understood the difference between an insurer and an insurance broker.
She also said she did not remember particular Council meetings in 2001 and 2002, being so long ago, but she said that her memory had been refreshed by reading the minutes of the relevant meetings: ts 408. Like Mr Calder and Mr Allen-Williams, she had no doubt as to the accuracy of the minutes.
Mr Prem Michael Papali who describes himself as Business Manager employed by the Council, swore an affidavit of discovery on behalf of the Council on 9 December 2020: exhibit 66. Mr Papali does not say how long he has held that position.
Mr Papali in his affidavit lists, in an attachment, documents relating to the third party proceedings that 'are or have been in the possession, custody or power' of the Council. The documents listed in Part 2A of the attachment are 'the documents relating to the matters in question in this action that were, but no longer are, in the possession, custody or power' of the Council and include:
•Document 3: any 'letter to insurers', referred to in the minutes of the Council meeting of 28 June 2001;
•Document 6: any correspondence which Ms Pitcher sent to insurers pursuant to her direction from the Council at the Council meeting on 30 May 2002 to 'update information to insurance company'; and
•Document 12: any draft letter from Mr Allen-Williams to an insurer which was presented to the Council at the Council meeting on 31 May 2002.
Mr Papali deposes that he is not aware of the date on which Documents 3, 6 and 12 were last in the possession, custody or power of the Council or what has become of those documents or who currently has possession, custody or power over those documents.
Berkshire Hathaway takes this to mean that Mr Papali is deposing that these documents did in fact exist at one time but are now no longer in the possession, custody or power of the Council. Berkshire Hathaway says that the Council cannot resile from these 'admissions'.
Consideration
The facts that have been established are as follows and I make these findings of fact:
(a)the police attended the school on 14 May 2001: document referred to by the third third party (ts 432) as the 'DPP Running Sheet', exhibit 64;
(b)Principal Harrison was contacted by the police on 17 May 2001 and 18 May 2001: exhibit 64;
(c)the minutes of an ordinary meeting of the Council held on 31 May 2001 (exhibit 51), under the heading 'Other Business' show that Mr Calder recommended that 'we put insurers on notice of an 'open circumstances that may give rise to a claim', and the Council considered a draft letter from Mr Allen-Williams, the principal of the high school, which notified 'our insurers in relation to an alleged incident now in the hands of the Police';
(d)the minutes of an ordinary meeting of the Council held on 28 June 2001 (exhibit 52), show that the Council approved the minutes of the previous meeting and recorded '[l]etter had been sent to insurers';
(e)the minutes of an ordinary meeting of the Council held on 28 February 2002 (exhibit 54) show that there was a discussion 'on matter of [Brown]' and that Mr Calder recommended that 'our insurers be put on notice'. Ms Pitcher is noted to have reported that this had been done;
(f)on or around 22 May 2002, Principal Harrison was advised by police that Brown had been arrested: exhibit 64;
(f)the minutes of an ordinary meeting of the Council held on 30 May 2002 (exhibit 56) show that the Council had asked Ms Pitcher to 'update information to insurance company'.
At best, from these facts and the evidence of Ms Pitcher, I can infer that the Council notified Willis of a future, unspecified claim or claims against the Council, but there is no evidence to suggest that Willis in turn notified the relevant insurer, if there was one, of the terms of the notification, if any.
The Council submits that the Prior Notification Exclusion does not in any event apply when the prior insurer's policy is a 'loss occurring' liability policy and only applies to a 'claims made' liability policy. However, I accept Berkshire Hathaway's submission that there is nothing in the Berkshire Hathaway Policies to support this contention.
Conclusion
I consider that the Prior Notification Exclusion does not apply, for these reasons.
First, Ms Pitcher's evidence was that she was responsible for all of the Council's insurance matters. She said that her dealings were all with Willis, the insurance broker. She said that she did not deal 'direct with the insurance company'.
Any reference in the Council's minutes to the 'insurer' must, in my view, be read as a reference to the insurance broker, Willis. There is nothing before the court to show that Willis passed on any notification to an insurer.
Second, even if I were in any event to find that a prior insurer had been 'notified', I am unable to make any findings as to the content of that notification. In particular, I could not know precisely what circumstances were notified. I accept the defendant's submission (ts 465) that, in any notification, it is necessary that the loss or claim notified 'should be sufficiently causally related to the fact, event, happening or condition which comprises the notified circumstance that it can be fairly said to have arisen out of it': HLB Kidsons (a firm) v Lloyd's Underwriters subscribing to Lloyd's Policy No 621/PK1D00101 [2008] EWCA Civ 1206 [78]. Having not seen the notification and having no knowledge of its content, I cannot make any finding in that regard.
What final orders are appropriate?
For these reasons, I find that each of the first third party, the second third party and the third third party are liable to the defendant for the whole of the settlement amount of its liability to the plaintiff, and the defendant's defence costs of the plaintiff's action against it, subject to any excesses payable by the defendant under the relevant policy or policies. The third third party's liability is under the 2018/2019 Policy.
I will hear from the parties as to the appropriate orders to be made.
I will also hear from the parties as to interest and costs.
I certify that the preceding paragraph(s) comprise the reasons for decision of the District Court of Western Australia.
TH
Associate to Judge Sharp
28 MAY 2021
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