QBE appeal over historical sex abuse liability dismissed

The Supreme Court of Western Australia has dismissed an appeal by QBE after a ruling it must indemnify a school council for “significant damages” to a former primary school student who was sexually abused by a teacher.

In 2006, Perth man Ian Stanley Brown was found guilty of 17 charges when he was 67. He was jailed for almost five-and-a-half years for sexually abusing three female students while he was a teacher in the 1980s.

One of the victims, referred to as BB, commenced proceedings against the College Council in 2020 seeking damages for psychiatric injury resulting from the abuse. Her claim was settled by agreement.

A trial then proceeded between the College Council and three insurers: QBE, IAG and Berkshire Hathaway. Only QBE challenged the judgment against it.

In that trial a year ago, Judge Timothy Sharp found there was insufficient evidence that the College Council deliberately exposed students to, or was indifferent to, the risk of sexual assault by Mr Brown.

QBE appealed that it was liable for the compensation paid to BB, arguing Judge Sharp’s reasoning was unsound because recent experience demonstrates that “institutions have acted with reckless disregard for the safety of young children in closely comparable situations with alarming frequency”.

QBE’s appeal was based on a clause in its policy, originally issued by MLC, stating the College Council shall “take all reasonable precautions to prevent bodily injury”.

The College Council owned and operated Perth’s Helena College Primary School where BB was sexually abused in 1988 by Mr Brown, who had been employed in 1984 by then principal Brian Hassell.

Principal Hassell was made aware there were problems with Mr Brown at the time of the abuse but let him keep his job after he promised not to touch the students again.

The Principal investigated the matter thoroughly as requested by some parents over a 12‑day period ending in October 1987 and presented the College Council with a substantial amount of material for it to consider, but concluded Mr Brown’s touching of students was “unwise, but not sexual, sinister or criminal, and not for sexual gratification”.

Judge Sharp’s primary ruling states that “with the benefit of hindsight, the steps taken by the College Council in 1987 were self‑evidently inadequate”.

However, he ruled the steps taken were “commensurate with the knowledge” of the six council members of the risk concerning Mr Brown.

QBE was told by WA Supreme Court Justice Andrew Beech this month that to succeed on appeal, it must demonstrate Judge Sharp should have found that the College Council was “aware” of a material risk of injury to students and that the steps that it took in response to the risk were not adequate to address it.

“The proper conclusion on the whole of the evidence is to the contrary and accords with the primary judge’s conclusion,” Justice Beech said in dismissing the appeal.

“We accept that, as QBE submits … the College Council should have recognised … a risk of sexual offending against students existed. However, there is otherwise no evidence that Principal Hassell or any member of the council held or expressed a concern that their conclusion concerning Mr Brown’s conduct might be open to doubt.”

Justice Beech said the evidence “comfortably sustains the inference that neither Principal Hassell nor the College Council considered that a real risk existed that Mr Brown might sexually interfere with a student”.

The six council members took what they “considered to be appropriate steps in light of what it knew or believed as to Mr Brown’s conduct.”

Principal Hassell, who had known Mr Brown many decades before hiring him, said he was only persuaded the paedophile was a risk to students in 2006 when Mr Brown was convicted.

He had told the Year 6 school children in the 1980s that Mr Brown “will not touch them in any way in the future,” saying: “I have stressed with the children that this does not lessen the amount of affection that he has for them and I wanted their understanding of this to be quite clear.”

Mr Brown apologised to the class if they were uncomfortable and “pointed out that he was the kind of person who displayed affection through touching,” Mr Hassell’s notes stated.

Half the College Council’s own children attended the school. The six members included a lawyer, an airline executive and the late Michael Murray QC, who in 1987 expressed the view that there was not enough evidence to dismiss Mr Brown from his teaching post.

Judge Sharp said it was “inconceivable that any member of the College Council would knowingly expose students, including, in the case of some of the members, their own children, to that risk,” and it was clear from the resolutions passed at an October 1987 that the College Council did not consider Mr Brown to be a sexual predator.

“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’,” Judge Sharp’s primary ruling states regarding its decision that QBE’s policy responds to the loss.

Justice Beech backed this, saying it was “inherently unlikely that a group of apparently intelligent and genuine adults, several of whom are parents, would knowingly expose schoolchildren to a person whom they thought was or might be a sexual predator”.

He also rejected QBE’s submission that the question over the College Council’s knowledge “was to be approached afresh in this court,” saying the Supreme Court would not interfere with a finding by a primary judge “as to what the College Council did and did not know and the state of mind with which it acted” without incontrovertible facts or uncontested testimony.

Justice Beech also said the case of BB did not involve the conduct of an institution such as a church or religious order where “loyalty to an institution has, at times, lead to inexplicable and reckless failures to protect children.” BB’s case concerned only “the state of mind and conduct of the six identified people who comprised the College Council” whose primary connection to the school was their own children.

“No evidence establishes a plausible basis to infer that Principal Hassell had a motive to protect Mr Brown in the knowledge that he posed a risk to the children at the College and at the expense of putting those children at risk,” Justice Beech said.

“While he had a long-standing relationship with Mr Brown, by the time of the October 1987 meeting, Principal Hassell would have liked to see Mr Brown dismissed because of his teaching performance.

“It is difficult to conceive of why the six people comprising the College Council would have chosen the course they adopted while knowing that Mr Brown might be a sexual predator and knowing that what they were doing was inadequate to address the situation.”

See the full ruling here.