The City of Saint John has paid $446,000 to a private investigation firm working on the Kenneth Estabrooks case and taxpayers could be exposed to millions more in compensation settlements, according to a lawyer working for alleged victims.
Estabrooks was a city police officer who was found guilty in 1999 of indecent assault against four children in cases dating back to the 1950s.
In October 2012, Saint John council authorized $100,000 to have Investigative Solutions Network investigate other potential abuse cases.
In September 2013, private investigator Dave Perry, ISN's co-chief executive officer, reported that as many of 263 youths may have been sexually abused by Estabrooks over a three-decade period.
- Kenneth Estabrooks alleged victims' lawyer fights city's attempt to get names
- Kenneth Estabrooks' sex abuse victims file class action suit
By that point council had authorized three additional payments totaling $272,000 to be made to Perry's firm.
But a right to information request filed by CBC News reveals more than $100,000 in further payments to the firm were approved directly by the city manager's office.
ISN's Perry declined an invitation to discuss his company's billing.
Almost all of the money was taken from the municipality's human resources budget.
Of the $479,000 invoiced by ISN, $33,000 was recovered through HST rebates.
Estabrooks admitted in 1975 to sexually abusing children.
He wasn't fired or charged. Instead, he was transferred out of the police department into the city works department, where he was in charge of maintenance for city vehicles until he retired.
A later investigation determined he continued to abuse children after the transfer.
He was sentenced to six years in prison and died in 2005.
Class action lawsuit
A class action lawsuit was filed against the city in December 2013.
Robert Hayes filed the notice of action and statement of claim with the Court of Queen's Bench on behalf of himself and others who may have been abused by Estabrooks.
John McKiggan, the lawyer for Hayes and other plaintiffs, said should the class action be certified and the city is later found liable, the municipality may not have enough insurance to cover the settlements.
"How much insurance coverage the city actually has is an open question at this point," said McKiggan.
"I'm not even sure the city has the answer to that."
McKiggan said the amount of insurance coverage available depends on the year in which a victim was abused.
In some cases, claims could be made against insurance policies taken out by the city in the 1950s.
If compensation is awarded to a victim, and there is not enough money in the policy for the year the abuse occurred, city taxpayers would have to make up the difference.
McKiggan said in some years the city took out what are known as "diminishing reserve" policies that set a fixed limit on the amount that could be paid out in total claims.
"If the insurance policy limits in this case are not sufficient to meet the claims, the city has some pretty significant potential exposure," said McKiggan.
McKiggan points to a Nova Scotia case involving the former residents of the Home for Coloured Children, a closed Halifax orphanage, where a settlement agreement totaled $29 million.
An aide to Saint John Mayor Mel Norton said the city does not comment on ongoing legal proceedings.