Lawyers for the federal government say they are concerned at the “disturbing” potential that the Christian Brothers Catholic order may have inappropriately transferred property to another entity years before claiming it was broke and couldn’t afford to pay abuse survivors’ civil claims.
The New South Wales supreme court on Thursday ordered a moratorium on all abuse claims against the Christian Brothers, a Catholic order that played a significant role in the church’s child sexual abuse scandal.
The Christian Brothers sought the moratorium because the order said it was going broke and wanted to establish a separate scheme to sell off its remaining property and divide the proceeds between a range of creditors, including survivors.
The Christian Brothers estimates it owes $774m to survivors with current or future abuse claims against it. It says it has 36 remaining properties worth $216m under its control.
The moratorium will give time for survivors to consider whether to support the Christian Brothers’ proposal.
But significant concerns have emerged about the way the Christian Brothers has transferred property – land, school buildings and homes around the sites of its former schools – out of its control to another entity, Edmund Rice Education Australia, over the past decade.
Property records obtained by the Guardian show those transfers were made for $1 each, even in cases where they involved multimillion-dollar homes in Sydney. EREA, named after the founder of the Christian Brothers, was established as an independent entity in 2007 to assume control of former Christian Brothers schools.
In a hearing before the NSW supreme court, Sera Mirzabegian SC, representing the commonwealth, said the federal government was “concerned to ensure that institutions take responsibility for abuse [and] that they provide appropriate compensation”.
Mirzabegian said the commonwealth had particular concerns about “historical asset transfers between the Christian Brothers and EREA” and whether they were “proper and appropriate”.
She said it would be “obviously disturbing” if the transfers resulted in assets not being available to compensate survivors.
The court heard that the scheme proposed by the Christian Brothers would preserve the rights of creditors, including survivors, to pursue assets transferred to EREA.
The Christian Brothers has provided 15 pages of evidence to the court about the nature of those property transfers.
But Mirzabegian said the evidence contained significant “discrepancies”, including about the value of the land that had been transferred.
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“What is abundantly clear from that evidence is that it unfortunately raises more questions than it answers,” Mirzabegian said.
A Christian Brothers spokesperson previously told the Guardian the property was transferred as part of a slow, progressive process of turning over Christian Brothers school land and property to EREA, which was delayed by what the spokesperson describes as the “complexity of transferring individual titles across multiple jurisdictions”.
Justice Scott Nixon ordered the moratorium on Thursday, halting claims against the Christian Brothers.
The moratorium will give time for survivors to consider the property sell-off scheme and decide whether they wish to support it. Without the moratorium, Nixon said, the opportunity to consider the scheme would be lost.
The Christian Brothers has previously said that, if their proposed scheme is not supported, the order will go into liquidation and survivors will likely receive even less.
