HUGH KENNEDY AGAINST (FIRST) THE RIGHT REVEREND PAUL BONNICI, (SECOND) THE RIGHT REVEREND JAMES WARREN CUTHBERT MADDEN AND (THIRD) DENIS ALEXANDER

Factual and Procedural Background

The Plaintiff initiated this personal injury action alleging sexual and physical abuse during his time as a boarder at a boarding school operated by a religious community in the mid-1970s. The school and associated Abbey closed decades ago, and the trust related to the Abbey was allegedly wound up about a decade prior to the proceedings, with former trustees deceased. The Plaintiff claims that insurance was taken out by the trust which would indemnify trustees against such claims. The action is raised against two surviving trustees in their capacity as trustees to access the trust estate, specifically the contingent right of indemnity under the insurance.

The Plaintiff seeks damages of £5,000,000 for abuse primarily attributed to a former monk and teacher at the School, with allegations also involving two deceased lay teachers. The trust was established by a trust deed in 1936 for the Abbey and the Community, which ran the school as a fee-paying business. The Plaintiff asserts that trustees had control over the school and employed the teachers, rendering them vicariously liable for their acts. The current defendants are the last known trustees, sued solely in their trustee capacities. One defendant, the former monk, did not appear and had been convicted of sexual offences against the Plaintiff.

The court was asked to consider the novelty and importance of the issues, with parties submitting detailed notes and authorities in advance. The trustee defenders sought dismissal on grounds including lack of specification, absence of vicarious liability, the insurance policy not constituting trust assets, and limitation defences under the Prescription and Limitation (Scotland) Act 1973 as amended. The Plaintiff requested a proof or proof before answer.

Legal Issues Presented

1. Whether a trustee's contingent right to indemnity under an insurance policy forms part of the trust patrimony and whether this patrimony subsists despite the winding up of the trust.
2. Whether the Plaintiff has sufficiently specific and relevant averments concerning insurance, or whether any insurance policy is res inter alios acta.
3. Whether the Plaintiff has relevant averments that the trustees at the material time were vicariously liable for the acts of the alleged abusers, or whether legal provisions preclude liability of one trustee for another.
4. Whether the Plaintiff's action is barred by limitation under sections 17D(2) or 17D(3) of the Prescription and Limitation (Scotland) Act 1973, despite the amendments relating to historic sexual abuse claims.

Arguments of the Parties

Defenders' Arguments

• The Plaintiff's case lacks specification and is irrelevant on multiple grounds.
• Even if the Plaintiff's averments were proved, no vicarious liability arises against the trustee defenders.
• The insurance policy, if it exists, is neither a trust asset nor for the Plaintiff's benefit and is res inter alios acta.
• The action is not competent, relying on case authority where insurance cannot overcome fundamental defects.
• The trust patrimony theory is flawed; there are multiple patrimonies corresponding to individual trustees, not a continuing trust patrimony.
• The Plaintiff fails to provide fair notice of a close connection necessary for vicarious liability under recent Supreme Court jurisprudence.
• The Plaintiff's action is time-barred or barred due to inability to have a fair hearing under the 1973 Act, given the passage of time, loss of records, closure of the School and Trust, and death of witnesses.

Plaintiff's Arguments

• The Plaintiff relies on the "dual patrimony" theory, asserting a continuing trust patrimony including contingent rights of indemnity under insurance.
• The action is constitutive, seeking to establish trustee liability to trigger insurer indemnification.
• The trust deed's purposes and powers are broad enough to encompass running the school and employing teachers, supporting vicarious liability.
• Recent case law supports the competency of raising claims against trustees or executors after discharge to access insurance benefits.
• The Plaintiff has made reasonable efforts to specify the insurance policy based on information provided by the trustee defenders and requests opportunity to amend if necessary.
• The tailored test for vicarious liability in sexual abuse cases applies, focusing on conferral of authority on the tortfeasor by the trustees.
• The Plaintiff disputes the limitation defence, emphasizing the requirement of a very high standard to bar claims on fair hearing grounds and noting ongoing possibilities for evidence recovery and witness identification.

Table of Precedents Cited

Court's Reasoning and Analysis

The court began by framing the action as one for personal injury arising from historical abuse, noting the amended limitation regime which removes usual limitation periods but shifts the onus onto defenders to prove grounds for withholding the action. The Plaintiff’s claim is directed at the trust patrimony, specifically the contingent right of indemnity under insurance, to overcome the difficulty posed by the trust’s alleged winding up and the death of former trustees.

On the trust patrimony issue, the court accepted the dual patrimony theory as a useful and judicially approved concept explaining that a trust’s estate subsists independently of individual trustees and includes both assets and liabilities. The court rejected the defenders’ submission that there are multiple discrete trust patrimonies tied to individual trustees, holding instead that the trust patrimony is a unitary fund impressed with the trust purposes that subsists even without trustees in office.

Regarding the nature of the trust patrimony, the court held it includes liabilities, thus any liability incurred by former trustees remains part of the trust patrimony vested in current trustees. The Plaintiff’s action is constitutive, seeking to establish trustee liability to access indemnity under insurance policies. The court distinguished this from personal liability of trustees, which is excluded by statute and trust deed provisions limiting liability to individual intromissions.

On the competency challenge, the court found the Plaintiff’s action competent, relying heavily on the Forbes decision which permits claims against executors or trustees post-discharge to constitute claims against estates to access insurance. The court distinguished the Dunn case, noting it involved an application for judicial factor appointment which is not sought here.

Concerning the insurance issue, the court found the Plaintiff’s averments sufficiently relevant and specific to survive challenge, noting the existence of an outstanding specification for documents including insurance policy terms and that the Plaintiff is a stranger to the insurance contract. The court rejected the application of the maxim res inter alios acta since the Plaintiff does not claim directly against insurers but seeks to trigger indemnity through establishing trustee liability.

On vicarious liability, the court identified two relationships: (1) liability of current trustees as representatives of the trust patrimony for liabilities incurred by predecessor trustees, and (2) liability of Serving Trustees for acts of employees including alleged abusers. The court held that the first is representative liability, not vicarious liability, and the second properly engages vicarious liability principles.

The court applied the two-stage Supreme Court test for vicarious liability, emphasizing the tailored "close connection" test in sexual abuse cases focusing on conferral of authority. It found the Plaintiff’s averments that trustees exercised control, appointed the headmaster and teachers, and employed them, sufficient to instruct a case for proof. The court rejected the defenders’ argument that there was no sufficiently close connection.

Regarding limitation defences, the court preferred the Plaintiff’s submissions that the threshold to bar the claim on fair hearing grounds is high, and that the defenders had not discharged their onus at this stage. The court noted outstanding evidential issues, the recent criminal conviction of the abuser, and potential for further evidence. It held that limitation issues require evidential hearing or preliminary proof and reserved these defences.

Finally, the court recognized the novelty and practical importance of some issues, particularly the nature and subsistence of the trust patrimony, and the mechanics of proceeding against trustees, and invited parties to address the scope of a preliminary proof.

Holding and Implications

The court REJECTED the trustee defenders’ pleas to dismiss the action on grounds of relevancy, competency, lack of specification, and limitation at the debate stage.

The court held that the Plaintiff’s action is competent in principle to proceed against the trustee defenders in their capacities as trustees to establish liability and access any indemnity under insurance policies. The Plaintiff’s averments of vicarious liability against the Serving Trustees are sufficiently specific and relevant to warrant proof. Limitation defences under the Prescription and Limitation (Scotland) Act 1973 require further evidential hearing and are reserved.

The decision allows the case to proceed to proof or preliminary proof to resolve critical factual issues, including whether the trust has been wound up, the existence and terms of insurance, and the liability of trustees. No new precedent was established beyond applying existing legal principles to the novel factual matrix presented.