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Appeal frees insurer from costs of compensating Knox Grammar’s sexual abuse victims
Under a landmark appeal, the Uniting Church can no longer rely on its insurance with Allianz Australia to cover the costs of settlements and litigation to resolve historic claims of sexual abuse made by former students of its elite Sydney school, Knox Grammar.
Naomi Neilson
The Federal Court’s Justices Sarah Derrington, Craig Colvin and Timothy McEvoy reversed a March 2023 order that Allianz Australia cover the compensation payments made by Uniting Church to the children who were sexually abused by Knox Grammar School staff.
In the trial and the appeal, Allianz argued the insureds – including members of the school council and headmasters – were aware of the relevant facts that gave rise to the risk of litigation. It contended that the Uniting Church became aware of those facts from 1 May 2013.
By failing to provide notice of those facts to Allianz, as required under the Insurance Contracts Act 1984, the insurer said it was not liable to provide indemnity for sexual abuse claims made by Uniting Church.
In both trials, Allianz relied on a report prepared by private investigator Grahame Wilson and provided to then-headmaster, John Weeks, on 7 May 2004. In addition to detailing the abuse by Adrian Nisbett, the report also identified a “number of other teachers”.
In the March 2023 decision, Justice Michael Lee said that while the report was indicative of a “problem”, it was of a “substantially lesser type than the bulk notifications which were subsequently given the school”. He also relied on the fact that at the time of the report’s delivery in May 2004, only one claim had been made to the school.
Justice Lee then characterised the report as giving rise to a “bare possibility” of the making of a claim, which was held to be insufficient to qualify as a “fact” that needed to be reported to Allianz.
“With great respect … the revelations contained in [the report] were far more significant than His Honour’s description of them,” Justices Derrington said in her written reasons for judgment.
Contrary to Justice Lee’s finding that the report gave rise to no more than the “bare possibility” of a further claim being made, Justice Derrington said the report identified “at least the possible existence of actual historical sexual abuse of students at the school by more than one teacher and of an environment and activities from which it might be expected that further instances of it would emerge”.
“While it may be that the subsequent making of numerous substantial claims … opened the floodgates for further claims, that did not diminish the immediacy of the potential for such claims from the matters revealed by [the report],” Justice Derrington added.
Specifically, Justice Derrington said the report revealed that Knox had employed a number of teachers who engaged in grooming and the sexual abuse of students over a number of years.
While the evidence concerning Nisbett was “by far the strongest”, there were “strong indications” that other teachers had engaged in similar behaviour and “no fulsome investigation” had occurred.
In his original judgment, Justice Lee said the prospect of a student coming forward with a claim after two decades was “remote”.
However, Justice Derrington noted Wilson notified Knox’s headmaster of the “existing risks” of “as yet unmade claims”.
A claim by Uniting Church that the report contained only “mere rumour or innuendo” was dismissed because of the “significant array of evidence” that supported Wilson’s conclusions, including firsthand observations of actual misconduct, reports from boys who were subjected to abuse, and some “widely repeated rumours”.
As for the Uniting Church’s knowledge about the facts, Justice Derrington said the “necessary and, indeed, inevitable conclusion” that, as a result in accordance with protocol, by making a claim under a policy against Allianz on behalf of an insured entity, Uniting Church was fixed with the knowledge of that entity.
“It is sufficiently clear the headmaster was the agent of the school council for the purposes of receiving information in relation to the school’s activities and that the latter was aware of [the report] in its own right when the report was tabled at the school council’s meeting.
“For the purposes of the school council’s indemnity under its insurance policies, the [Uniting Church] is taken to have had its knowledge,” Justice Derrington said.
The case is Allianz Australia Insurance Limited v Uniting Church in Australia Property Trust (NSW) [2025] FCAFC 8.
Naomi Neilson
Naomi Neilson is a senior journalist with a focus on court reporting for Lawyers Weekly.
You can email Naomi at:
