Recently, the Ontario Court of Appeal considered an insurer’s obligation to indemnify its insured under an Ontario automobile policy in circumstances in which it was alleged that the insured intentionally caused harm to the Plaintiff.
In Savage v. Belecque, the 14-year-old Plaintiff, Amy Savage, had been skating at an outdoor rink with friends. Similarly, the 16 and 17-year-old Defendants, Shayne Poitras and Michel Belecque, had been playing hockey at the rink like many good ol’ Canadian boys do on a crisp January day. After their game, Michel and Shayne returned to Michel’s car, which was parked in a nearby parking lot. At the same time, Amy was searching the parking lot for “someone who would give her a smoke”, so she approached the Belecque car to ask Shayne through his open rear window. As Amy did so, Shayne reached out the window and, while engaging in “horseplay”, grabbed her by her jacket. Michel then accelerated the car with Amy, who was still wearing her skates, in tow. Amy was then dragged alongside the car for some distance while upright on her skates. When she was eventually released by Shayne, Amy’s momentum carried her a further 15 feet before she fell to the ground, fortunately uninjured.
Unfortunately for Amy, the teenage antics of Michel and Shayne did not end there. You see, shortly after sending Amy for a spill, Michel realized he had forgotten something at the rink and decided to go back to get it. However, Michel’s hockey skills apparently exceeded his common sense that day and instead of slowly turning around to retrieve his forgotten item like most of us would do, he executed what was referred to by the Court as a “high-speed doughnut”, which caused the car to spin. Regrettably, in the course of performing this super-cool manoeuvre, the Belecque car struck and injured Amy, who was still on the ground from her earlier fall.
As a result of the injuries she sustained in the accident, Amy sued Michel and Shayne for their actions, as well as their parents for negligently supervising their children and her own parents’ insurer, CGU Insurance Company of Canada (“CGU”) for uninsured and inadequately insured motorist coverage. In turn, the Belecques sued their insurer, Allstate Insurance Company of Canada (“Allstate”), which had denied them coverage for the accident, for a declaration that Allstate was obliged to provide coverage for the loss under their automobile policy. Allstate denied coverage under the automobile policy for various reasons, including its assertion that Michel’s actions were deliberate when he struck Amy while performing the doughnut.
The main action between Amy, Michel and Shayne eventually settled for $450,000. The only question that remained was which insurer was to fund the settlement. The answer to this question was dependant largely on whether Michel’s conduct was negligent (in which case he was covered by Allstate up to his $1 million policy limits) or whether he intentionally caused Amy’s loss (in which case coverage by Allstate would be excluded, except for the $200,000 statutory minimum limit). CGU, which was potentially liable as the excess insurer, therefore moved for summary judgment seeking a declaration that Allstate’s policy covered Michel.
The motion judge ultimately decided that in the circumstances of this case, Allstate had a duty to defend, as well as indemnify, Michel under the automobile policy. Allstate appealed this decision, arguing that Michel’s actions were deliberate when performing the doughnut, such that he was statutorily excluded from coverage.
The Duty to Indemnify
One of the primary issues for consideration by the Court of Appeal was Michel’s intention at the time of the accident, as this was determinative of whether the accident was excluded from coverage under the policy pursuant to section 118 of the Insurance Act, which excludes coverage for conduct contravening any criminal or other law “with the intent to bring about loss or damage”.
In support of its assertion that the accident was excluded from coverage, Allstate argued that Michel’s act of doing the doughnut was deliberate and, therefore, the harm sustained by Amy was caused intentionally. In support of this position, Allstate relied on Michel’s conviction for careless driving under the Highway Traffic Act, as well as the argument that Michel’s driving was so reckless that it amounted to an intentional act.
In deciding the case, the Court of Appeal distinguished between the intention to commit an act (i.e. intending to do a doughnut) and the intention to cause harm (i.e. intending to strike Amy with the car). The Court of Appeal held that while Michel’s act of doing the doughnut may have been intentional, there was no indication that he intended to harm Amy. In coming to this conclusion, the Court of Appeal was mindful of Michel’s “unshaken testimony” that he had absolutely no intention to harm Amy. This evidence was supported by Shayne and was not refuted by Amy. The Court of Appeal also observed that there was no animosity between any of the parties involved in the accident.
In the foregoing circumstances, the Court of Appeal held that Michel did not intend to bring about loss or damage to Amy, such that coverage was not excluded under the policy. As such, Allstate’s appeal was dismissed and it was required to fund the settlement of the main action.
The Court of Appeal’s decision in Savage v. Belecque is significant for several reasons. First, it reminds us that insurers will often owe a duty to provide coverage for seemingly “intentional acts” so long as the harm that such acts cause is unintentional. Second, and perhaps more importantly, it reminds us that one must exercise extreme caution when executing radical moves like doughnuts in public places.