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Insurer Allianz has persuaded the Federal Court that it is not liable to cover the majority of child sex abuse insurance claims made against the prestigious Knox Grammar School, ending a long-running legal battle with the Uniting Church’s Property Trust.
The complex dispute centred on who would bear financial responsibility for a surge of compensation claims made by former students who suffered sexual and physical abuse at Knox Grammar, one of Sydney’s most prestigious private boys’ schools.
While public attention has largely focused on the victims’ heart-breaking accounts, behind the scenes a fierce legal contest played out between insurers and church authorities over who should pay.
Between 1999 and 2011, Allianz (and its predecessor, Mercantile Mutual) provided a series of liability insurance policies to the Uniting Church in Australia Property Trust (NSW), which managed insurance for the church’s network of schools and organisations, including Knox Grammar. Initially, Allianz honoured claims made under the policies. But as more disturbing revelations emerged after 2013, the insurer sought to withdraw cover.
Central to Allianz’s defence was a 2004 investigative report commissioned by Knox Grammar known as “LKA2.” Delivered to then headmaster John Weeks, the report outlined numerous allegations against former teacher Adrian Nisbett and other staff, revealing that senior figures at the school had long been aware of widespread abuse. Allianz argued that this prior knowledge should have been disclosed at the time, and failure to do so invalidated coverage under the Insurance Contracts Act.
Under the policy terms, coverage was excluded for claims arising from facts known to the insured prior to the commencement of each policy period. Allianz maintained that by 2004 — years before some of its policies began — Knox Grammar’s leadership already knew of the systemic abuse and that the Property Trust failed to notify Allianz “as soon as reasonably practicable,” as required by law.
The Property Trust, in response, argued it was merely a passive legal entity with no operational role at Knox Grammar, and therefore not responsible for the school’s failure to disclose this information.
Initially, the Federal Court sided with the Property Trust, ruling that notifications provided in 2007 and 2009 were sufficient.
Allianz appealed.
The Full Court found that once the Property Trust assumed responsibility for settling abuse claims, it could not distance itself from the knowledge already held by Knox Grammar’s leadership. The appeal judges ruled that the 2004 LKA2 report contained facts that ought to have been disclosed and that Allianz was entitled to deny indemnity for most claims.
Categories: sexual abuse