Catholic Church approved legal fees from fund meant for residential school survivors: documents

New details have emerged about the Roman Catholic Church's controversial multimillion-dollar legal bill paid from a fund intended for residential school survivors.

In documents obtained Friday by CBC News, one of the church's lawyers admits that the money came from that fund and said everything was done with full approval of all 50 Canadian "Catholic entities" contributing to the fund.

Legal and ethics experts interviewed Friday say they're horrified, calling it another example of the Catholic Church's betrayal of survivors.

"Church officials and the lawyers and other professionals they retained to bilk residential school survivors should not be sleeping restfully," said Arthur Schafer, founding director of the Centre for Professional and Applied Ethics at the University of Manitoba in Winnipeg.

According to the documents, W. Rod Donlevy and his Saskatoon firm McKercher LLP and Pierre L. Baribeau and his Montreal firm Lavery Lawyers were each paid $1.1 million for legal and consulting work related to the 2005 landmark Indian Residential Schools Settlement Agreement (IRSSA). Other firms working on the file for the Catholic Church also received a total of roughly $500,000.

The $2.7 million in legal expenses were paid from a fund meant to compensate residential school survivors for the sexual and physical abuse, cultural shaming, medical experimentation, malnutrition and other deprivations experienced in the 70 per cent of Canadian residential schools operated by the Catholic Church.

Testifying in a 2015 case, Baribeau said the billings were necessary due to all of the additional work required. Baribeau died in November 2020, while Donlevy died in December 2014. No one from the McKercher or Lavery law firms consented to a CBC interview on Friday.

None of the other churches involved in the IRSSA — United, Presbyterian or Anglican — deducted any legal fees from their payments to survivors.

Documents stem from 2015 case

The documents formed part of the court record in a 2015 case involving the federal government and the Catholic entities that signed on to the settlement agreement. The government argued that the church had violated the 2005 IRSSA by failing to pay and by diverting funds elsewhere.

The Catholic Church made three promises to help survivors under the IRSSA.

First, it promised to give "best efforts" at fundraising $25 million, but it raised just $3.9 million.

Second, it pledged to provide $25 million worth of "in-kind services." No Catholic entities contacted by CBC News this month agreed to supply a comprehensive list of those services. In documents from the 2015 case, the church's own accountant admitted that "he has not audited these records and accounts, has no basis on which to value these services, and relies only on minutes of meetings" supplied by Catholic officials.

Third, the church promised to make a cash payment of $29 million to programs directly benefiting survivors. The $2.7 million in legal fees — as well as millions more in administration, defaulted loans and other expenses — were removed from this pot.

In his affidavit during the 2015 case, Baribeau said the Catholic Church was asked to take on more work than originally planned, such as participating in the Truth and Reconciliation Commission and disclosing archival records of "missing children and unmarked graves."

"There were many meetings held with government officials ... they met reasonably frequently," Baribeau said in his affidavit.

He said these activities and additional duties have been "manifestly obvious" to all parties from the start. This includes his and Donlevy's dual roles awarding and receiving funds.

Transcript shows testy exchange between lawyers

Baribeau was also questioned as a witness for the case in a Toronto office in 2014.

In a transcript of that questioning, performed by federal government lawyer Alexander Gay, Baribeau admitted that representatives of all 50 Catholic groups involved approved of the scenario.

He testified that "not only did we advise them, we didn't ask to be directors, we were asked to be directors by the AGM of the Catholic entities. And it was understood by all of the members that we would still continue as counsel or as agents for the corporation."

In the transcript, Gay repeatedly asked Baribeau about the work billed for consulting. Baribeau admitted he charged full legal fees for acting as a Catholic Church consultant at meetings for the Truth and Reconciliation Commission and other events. At one point, another church lawyer, Gordon J. Kuski, interrupted.

"I think we can get to the bottom of this without too much fencing," Kuski said.

Gay said he is "amazed" that Baribeau can't recall basic details of the agreement, especially since he drafted it and it was sitting in front of him at that moment.

Kuski interjected again.

"Mr. Gay, we came here in the hope and expectation that the discourse would be unheated: We are lecturing him. We are telling him it is remarkable he doesn't know this, or he doesn't know that. That's not going to get us anywhere," Kuski said.

Kuski, with Donlevy sitting beside him as co-counsel, then advised Baribeau not to answer Gay's question.

Gay attempted to ask Baribeau other questions, but Baribeau complained about Gay's tone.

Baribeau: "Sir, you are not respectful and I will —"

Gay: "I am extremely respectful."

Baribeau: "No, you are not at all. You are not at all, sir."

Gay: "And I am asking the question, and if you could allow me to ask my question."

Baribeau: "No, you are not at all respectful."

'Morally shabby and legally dubious'

The 2015 case was supposed to test whether the legal fees and other expenses were permissible and whether the Catholic Church had honoured its commitment to survivors. On the eve of the hearing, Saskatchewan Court of Queen's Bench Justice Neil Gabrielson accepted Kuski's controversial request to impose a settlement and the case was closed.

Mary Ellen Turpel-Lafond, a former Saskatchewan provincial court judge and director of the University of British Columbia's Indian Residential School History and Dialogue Centre in Vancouver, said she can't believe any of this was permitted.

She said these new documents "demonstrate another level of arrogance by the representatives of the Catholic entities, such as refusing to answer basic questions."

Turpel-Lafond has analyzed the transcripts at the request of CBC News. She said Gay and the other federal lawyer, Anne McConnville, did an excellent job unearthing violations by the church, even if it was never held accountable.

"Canada had legal counsel on this matter ... who was prepared to stand up to these bullies," she said.

CBC News requested an interview with an official from the McKercher and Lavery law firms on Friday.

"McKercher's policy is not to discuss the details of any client file past or present and as such we will not be able to grant your request for an interview," McKercher chief operating officer Veronica A. Bendig said in an email Friday afternoon.

Lavery senior communications adviser Jean-François Lemieux emailed a response.

"The client-lawyer privilege prohibits us from revealing or confirming any specific information relating to this case. Notwithstanding the existence of the litigation ... concerning the deductibility of certain fees or expenses by our clients, the case has been settled. Therefore, we understand that this entire matter has been resolved to the satisfaction of the parties and of the court," Lemieux wrote.

No one from the Canadian Conference of Catholic Bishops returned an interview request this week.

Schafer, of the Centre for Professional and Applied Ethics, said these and other revelations show a Catholic Church with little regard for society's most vulnerable.

"The Catholic Church's failure to honour either the letter or the spirit of its commitment properly to compensate residential school victims is both morally shabby and legally dubious," Schafer said.

"The Roman Catholic Church had little moral credibility left after the scandals of priestly sexual abuse and coverup. This latest scandal must finally strip away any remaining illusions."