The Supreme Court of Canada ruled Friday that Ottawa should not be held fully liable for damages suffered by students abused at a church-run school on Vancouver Island.

The court also said charities such as the United Church of Canada cannot claim immunity from damage claims because they try to do good work.

"Parties may be more or less vicariously liable for a wrong depending on their level of supervision and direct contact," said the unanimous ruling in the case known as Blackwater v. Plint.

The United Church carried out most of the day-to-day operations at Port Alberni Indian Residential School, where six aboriginal students claimed they were abused by a dormitory supervisor from the 1940s to the 1960s. The federal government appointed the school's principal and owned the land on which the building was located.

Originally, a British Columbia judge said vicarious responsibility for the students' physical, sexual and mental abuse should be split 75-25 between the federal government and the church. The provincial Court of Appeal then ruled that Ottawa held 100 per cent vicarious liability for damage claims by the former students.

Friday's ruling restored that portion of responsibility to 75 per cent, assigning 25 per cent of the liability to the United Church of Canada.

As employer, church had no immunity

The Supreme Court said people who worked at the school were employed by the United Church of Canada, so the church must accept some responsibility for their actions.

The justices rejected the B.C. Court of Appeal finding that the United Church held charitable immunity from vicarious responsibility in the case.

"Exempting non-profit organizations when government is present would not motivate such organizations to take precautions to screen their employees and protect children from sexual abuse," the ruling said. "The presence of the government does not guarantee the safety of children, particularly where, as in this case, the non-profit organization has day-to-day management of the institution."

Lead claimant to get $200,000

As a result of the decision, the United Church will have to pay one quarter of roughly $200,000 in damages awarded to the lead claimant in the case, Frederick Leroy Barney.

The ruling has implications for other Canadian churches that ran residential schools for native students throughout the 20th century, including the Roman Catholic, Anglican and Presbyterian churches.

Many religious organizations have warned that having to pay damages in abuse cases will leave them severely short of funds, meaning they may have to sell off church buildings and restrict operations.