Roman Catholic Episcopal Corporation of St. John's: the court chooses pro rata

On October 30, 2026, Justice Garrett A. Handrigan answered the question the monitor of the Roman Catholic Episcopal Corporation of St. John's had put to the Supreme Court of Newfoundland and Labrador eight days earlier: how to divide a third interim distribution among abuse claimants, some of whom the Province had paid under its settlement in July and some of whom it had not. The order authorizes, directs and empowers the corporation to pay each Accepted Abuse Claimant and General Claimant "on a pro-rata basis in the amounts set out in the attached Schedule 'A' representing their share of their Proven Claim," and to pay the estate of any Testamentary Claimant on the same basis once satisfactory testamentary documentation is presented to the monitor. Then it settles what comes after: "Any future distributions to Accepted Abuse Claimants, General Claimants and Testamentary Claimants shall be made on a pro-rata basis," per the Third Interim Distribution, CCAA Termination, and Monitor Discharge Order, Oct. 30, 2026, paras. 3–5, the Monitor's Memorandum of Fact and Law, Oct. 26, 2026, para. 5 and the Twenty-Seventh Report of the Monitor, Oct. 22, 2026, paras. 16, 24.

The pro rata method, as the monitor's Twenty-Seventh Report and Representative Counsel's memorandum each describe it, pays on the net awards the Claims Officer fixed and, subject to a ceiling of 100 cents on the dollar from all sources, does not reduce them by what the Province paid. The alternative, which the report called the Narrowing Methodology, would have deducted those payments and shared the $3.2 million among 114 individuals, per the Twenty-Seventh Report, para. 19 and the Memorandum of Law of Representative Counsel, Oct. 28, 2026, paras. 3, 13. Nothing in the order's distribution paragraphs refers to the settlement payments, and the order gives no reasons; none are in the record. The same order provides for the CCAA to end when the monitor files a certificate, and directs the corporation to assign itself into bankruptcy with Ernst & Young Inc. as trustee, per the Oct. 30 order, paras. 21, 28.

The monitor's framework

The Twenty-Seventh Report, reported here on October 26, left the choice to the court, per the Twenty-Seventh Report, para. 24; the monitor's memorandum of October 26 declined to make it. "To be clear, the Monitor is not taking a position on whether such an alternate approach is more appropriate than a pro-rata distribution," it said. In the normal course, it noted, distributions would be made pro rata to creditors of the same rank, as the first two in these proceedings had been, per the Monitor's Memorandum, paras. 7–8.

The case for the alternative, as the memorandum set it out, ran through the Abuse Claims Protocol, under which Prior Amounts paid in other proceedings are deducted from awards in this one. "Once a damage claim has been valued, there should only be one recovery – even if that recovery comes from multiple sources," it says. The protocol, the memorandum concedes, "refers to awards made prior to these proceedings and does not address subsequent awards," though "there is no reason the two should be treated differently should this Court be so inclined," per the Monitor's Memorandum, paras. 13–14, 17.

"The Monitor has not been able to locate any reported decision where the ability of a Court to consider subsequent payments in the manner proposed by the Monitor has been addressed," it wrote. The closest, it said, was Re J. LeBar Seafoods Inc., a 1981 bankruptcy decision on a creditor's claims against a principal debtor and a guarantor, which "does not appear to address rights among creditors" and does not consider the discretion s. 11 of the CCAA provides. It also quoted the Court of Appeal's 2024 decision in this proceeding, noting that "the context is different": "Creditors of equal rank must be treated equally," per the Monitor's Memorandum, paras. 18–22.

"Arguably," the memorandum went on, "not considering the post-CCAA recoveries from the Provincial Settlement where pre-CCAA recoveries have impacted claim values and distribution levels for other Accepted Abuse Claimants results in an unequal treatment of creditors of the same rank." It then repeated that the monitor "is not advocating in favour of the Narrowing Methodology," and asked for direction, per the Monitor's Memorandum, paras. 23–25.

Five questions by email

After that filing, according to the monitor's supplemental memorandum of October 27, the monitor "received a series of questions from the Court by email," which the memorandum sets out with the monitor's answers ahead of the hearing on Friday, October 30, per the Monitor's Supplemental Memorandum of Fact and Law, Oct. 27, 2026, Overview.

The first asked whether the group covered by the Province's settlement overlapped with the CCAA's accepted claimants. "All of the parties covered by the Settlement Agreement (268 in number) are Accepted Abuse Claimants," the monitor answered; another 99 Accepted Abuse Claimants and 7 General Claimants were not covered. The second asked whether the $45.8 million was an asset of the corporation. "No," the monitor answered. "These claims were pursued separately by Representative Counsel and the proceeds were never an asset of the RCECSJ." The settlement was approved within the CCAA, the answer continues, largely because many beneficiaries were Accepted Abuse Claimants and "the proceedings could offer a release for the Province which was necessary to allow the settlement to proceed." The payments do, the monitor added, "reduce the amount payable to the creditors of the RCECSJ estate," since no claimant can recover more than 100% of a claim award balance, per the Monitor's Supplemental Memorandum, questions 1–2.

The third asked whether, when and by what authority the settlement funds had been paid. They "were distributed several weeks ago," the monitor answered; the settlement's $500,000 contribution to counselling was being held by the monitor, for a counselling fund "intended to be administered by the Trustee in Bankruptcy, if approved by the Court." Asked the source of the $4.2 million in trust, the monitor said the money for the third distribution originates "from the continued disposition of the assets of the RCECSJ – largely ongoing real estate sales," per the Monitor's Supplemental Memorandum, questions 3–4.

The last asked whether the choice of method reached only the $3.2 million or the $45.8 million as well. "The choice of methodology applies to the Third Interim Distribution, and presumably future distributions will adopt or consider the methodology at the appropriate time," the monitor answered. "It has no application to the Provincial Settlement Funds as those funds have previously been distributed," per the Monitor's Supplemental Memorandum, question 5.

The claimants' five reasons

Representative Counsel's memorandum of October 28, filed for the claimant representatives, says that Representative Counsel and the counsel for represented abuse claimants it consulted, "constituting the majority of Abuse Claimants," opposed the narrowing method and asked for pro rata, for five reasons, per the Memorandum of Law of Representative Counsel, paras. 4–5.

Claimants filed on a protocol whose deductions, the memorandum says, were restricted to awards in the US and Canadian CBI bankruptcy proceedings and payments on settlements or judgments of claims against the corporation, so "no Abuse Claimant reasonably anticipated that any Abuse Claim would be adjusted based on other, post-filing recoveries like those represented by the Provincial Settlement." No settlement participant recovered 100% of the rest of a proven claim from the Government, it notes, and participants would reasonably have expected the remainder to keep ranking against the estate. The Claims Procedure Order, in Representative Counsel's reading, fixes claims as at the filing date, December 21, 2021, and the Provincial Settlement "did not come into being until the spring of 2026," per the Representative Counsel's memorandum, paras. 7–12.