The Catholic church could facing spiralling compensation costs after an attempt to avoid liability for abuses committed by priests and nuns was dismissed by the UK supreme court.
The decision will have implications for a wide range of organisations by expanding the principle of "vicarious liability" to other churches, local authorities, charities that rely on volunteers, as well as Scouts and Guides. Lawyers said it could even affect claims involving Jimmy Savile's abusive past.
The refusal by the UK's highest court even to hear the church's challenge that clerics are not "akin to employees" marks the end of a potential legal escape route from responsibility for compensation.
Lawyers for the trustees of Portsmouth Roman Catholic Diocesan Trust had appealed against a decision in the court of appeal that they had a duty to compensate a young girl for alleged beatings inflicted by a nun and sexual abuse perpetrated by a priest as long ago as the 1970s – if the facts of the abuse were established.
But in a statement issued this week, the supreme court said it had refused permission to appeal "because the application does not raise an arguable point of law of general public importance". It believes the issue has now been settled.
Lawyers for the diocese have conceded they cannot take the case to the European court of human rights in Strasbourg and consequently the court of appeal's ruling becomes definitive.
The ruling stated that although a priest may not be directly employed by a diocese, "he is in a relationship with his bishop, which is close enough, and so akin to employer/employee as to make it just and fair to impose vicarious liability [on the church for the priest's acts]".
The claim was brought by a 48-year-old woman known as JGE, who cannot be named for legal reasons. She said that as a child she was beaten by a nun at a convent-run care home and later raped and sexually assaulted by a priest.
Father Wilfred Baldwin, who has since died, was said to have abused her in the robing room on the day of her first communion. The facts of what took place are disputed: the Portsmouth diocese denies there was any abuse and insists a priest is an officeholder, not an employee.
Unusually, the courts decided to settle the broader issue of the church's "vicarious liability" before establishing whether or not the woman was abused. A high court case will now have to consider the specific facts of her claim.
Cathy Perrin, a solicitor with the Catholic Church Insurance Association Services Ltd, who represented the Portsmouth diocese, said: "We are very disappointed. We had been hoping for clearer understanding of what 'akin to employment' means.
"This will not just affect Catholic priests. It will have impacts on commercial organisations and make local authorities responsible for the actions of foster carers. I don't think this is a case we can take to Strasbourg so this appears to be the end of it."
Tracey Emmott, the solicitor who represented the victim, said: "This case is likely to trigger further complaints against the church. Since it started I have had claims from four other people that this priest abused them. Its wider impact will extend to other organisations, such as Scouts, because they are like employers.
"It could even affect claims against Jimmy Savile, for example when he was volunteering as a hospital porter. The hospital would have to argue it was not vicariously liable."
Commenting on the decision, Keith Porteous Wood, of the National Secular Society, said: "It is hard to exaggerate the importance of this case : it will almost certainly become an international precedent, opening the door to financial liability against the church for tens of thousands of victims of abuse, worldwide.
"Evidence abounds of the shameless lengths to which the church has stooped for decades to evade financial responsibility for widespread abuse of children in its care. To have fought to evade liability for admitted abuse is both morally repugnant and a continuing blatant breach of the church's obligations under the UN convention on the rights of the child."