Diocese Hiding Assets to Avoid Paying Sexual Abuse Judgements?

Andrew Sullivan has posted about the debate surrounding the San Diego Roman Catholic Diocese’s bankruptcy as a result of abuse claims. It appears the bankruptcy is being challenged due to allegations that the Diocese and some of it’s parishes have been hiding assets in an effort to avoid paying compensation to survivors of clergy sexual abuse.

It is generally accepted at law that all the assets of a Diocese, including those of it’s parishes, may be liquidated to satisfy civil judgements. The article states:

In response to the priest sex abuse liability crisis, there is a growing trend for diocesan assets to be divided among multiple incorporated entities.

In Canada the Christian Brothers of Ireland in Canada was the first charity in the Commonwealth to be wound up for tort liability (arising from the notorious Mt. Cashel abuse scandal.

In Canada there is an alternative argument to be made to prevent such egregious tactics by Churches. In the case of Re Winding up of the Christian Brothers of Ireland in Canada the Ontario Court of Appeal ruled:

When a charitable corporation is wound up, it ceases to carry out its charitable purposes, including the obligation to use assets held in trust for any special purposes. Hence, all assets held by the corporation, whether as a special purpose trust or not, were exigible to pay the tort claims made against the corporation.

Any assets held by an incorporated entity under Diocese are held for the charitable use and purpose of the Diocese. When that charitable purpose ends, so does any protection that the assets might have. Put simply, what could be less charitable than a Church trying to hide it’s assets from legitimate victims of sexual abuse?

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