[2011] O.J. No. 2558

2011 ONSC 2330

Ontario Superior Court of Justice

M.G. Ellies J.

May 11, 2011

The Belecques, as plaintiffs in a coverage action, were successful in obtaining a declaration that their insurer ("Allstate") was obliged to defend them under an automobile policy and to defend Gilles Belecque under a homeowners policy with respect to claims arising from a motor vehicle accident.

Amy Savage ("Savage") was injured in a motor vehicle incident. Savage commenced an action in which it was alleged that Michel Belecque was operating a car owned by his mother, Lynn Belecque, with her permission when it struck Savage. Savage further alleged that Michel Belecque was negligent and that Lynn Belecque was liable in law for the negligence of her son in the operation of the Belecque vehicle. Savage also claimed against Michel's parents, Gilles and Lynn Belecque, alleging negligent supervision. 

The Belecque vehicle was insured by Allstate at the time of the accident. Allstate also issued a homeowners policy to Lynn and Gilles Belecque. Allstate denied coverage to the Belecques under both the automobile and the homeowners policy. Allstate sought an order and was added to the action commenced by Savage as a third party pursuant to the provisions of s. 258(14) of the Insurance Act. The Belecque defendants commenced an action against Allstate seeking a declaration that Allstate had a duty to defend them in the main action and for indemnity for all damages claimed under both the automobile and the homeowners policy. Allstate denied coverage to the Belecques, alleging that they breached the terms of their automobile and homeowners policy by failing to give timely notice of the incident. Allstate also defended the coverage action by alleging that the claim made by Savage against Michel Belecque was with respect to an intentional act for which coverage was excluded under the policy.

In reviewing the policy breach denial, the Court noted that the statutory conditions forming part of the standard automobile policy required an insured person to notify the insurer in writing within seven days of any incident involving loss or damage to persons. The homeowners policy required the insureds to “promptly” give Allstate notice when an accident or occurrence took place. In this matter, Allstate failed to submit an affidavit on the part of its agent with respect to whether or not its agent received notification from the Belecques concerning the incident involving Savage. The Belecques provided affidavit evidence that the matter was reported to the agent within the week following the incident. The Belecques also provided evidence that they had discussions with the agent concerning the large increase in the required premium as a result of the accident and the conviction of Michel Belecque for careless driving. In the circumstances, the Court concluded that the agent had been aware of the circumstances surrounding the incident and Allstate was not entitled to deny coverage on the basis of late reporting.

In reviewing the issue as to whether or not the actions of Michel Belecque which caused injury to Savage constituted an intentional act, the Court reviewed the leading decision from the Supreme Court of Canada in Non-Marine Underwriters, Lloyds of London v. Scalera [2000] 1 SCR 551. The Court distinguished that decision, noting that in the case at bar the plaintiff had not pleaded that Michel Belecque acted intentionally at all and that there was nothing in the manner in which the plaintiff alleged the incident occurred that would make the characterization of the actions of Michel Belecque as being negligent a misnomer for what was otherwise an intentional act. The mere inclusion of an alternative pleading seeking punitive damages was not sufficient to transform the essential claim from an action in negligence to an action in assault. The Court concluded that the intentional act exclusion was not applicable and that Allstate was under a duty to defend the Belecques under the automobile policy.

The homeowners policy contained an exclusion for claims against “you” arising from the “ownership, use or operation of any motorized vehicle”. The Court noted that the claims against Lynn Belecque, as the owner of the vehicle, did arise from the ownership, use or operation of the motor vehicle. However, the claims against Gilles Belecque, for negligent supervision of his son, related solely to acts or omissions unrelated to control over the automobile, as opposed to control over Michel. As a result, the Court found that there was a duty to defend Gilles Belecque under the homeowners policy.

In the result, the Belecques were successful in their coverage action against Allstate and were awarded costs of the coverage action.