Keys v. Intact Insurance Company, 2015 ONCA 400

Court of Appeal for Ontario

Citation: Keys v. Intact Insurance Company, 2015 ONCA 400 Date: 2015-06-05 Docket: C59928

Before: Juriansz, Lauwers and Huscroft JJ.A.

Between:

Spencer Keys Applicant (Appellant)

and

Intact Insurance Company Respondent (Respondent)

And Between:

Sharif Virani Applicant (Appellant)

and

Intact Insurance Company Respondent (Respondent)

Counsel: Owen Bourns, for the appellants Christopher Reil, for the respondent

Heard: June 2, 2015

On appeal from the order of Justice Timothy D. Ray of the Superior Court of Justice, dated December 19, 2014.

Endorsement

1The appellants appeal from the decision of the application judge that the respondent insurance company did not have the duty to defend them in a defamation action arising out of a video posted on the internet. The plaintiff in the action is the Canadian Federation of Students, a competitor of the Canadian Alliance of Student Associations (CASA), the named insured under the policy. The insurance policy provides coverage to CASA’s "volunteer workers" or "employees", “while performing duties related to the conduct of [CASA’s] business".

2The question before the application judge was whether there was a “mere possibility” that the appellants were acting in the course of their employment when they made the video and posted it on the internet: Progressive Homes Ltd v. Lombard General Insurance Co of Canada 2010 SCC 33. The application judge properly indicated that the pleadings including any cross claims or third party claims were relevant in defining the substance of the claim. He found the substance of the claim in no way implicated the appellants as employees of CASA making the video in the course of their employment.

3However, it is apparent that the application judge did not have a full appreciation of the record. He said: “There is no cross claim or third party claim against either of the applicants.” In fact there were cross claims against both appellants, and there are third party claims against CASA as well.

4We do not accept the respondent’s argument that the characterization of the claim for the purposes of the duty to defend is limited to the statement of claim. That may be the usual case, but our view of the authorities is that all the pleadings may be considered, with the most weight placed on pleadings against potential insured: Monenco Ltd. v. Commonwealth Insurance, 2001 SCC 49, [2001] 2 S.C.R. 699. The object of the exercise is to ascertain the “substance” and the “true nature” of the claims: Monenco at para. 35, and Non-Marine Underwriters, Lloyd's of London v. Scalera, 2000 SCC 24, [2000] 1 S.C.R. 551, at para. 79.

5The statement of claim, the cross-claims and third party claims in this case are claims against potential insureds within the meaning of the policy. The defence to the third party claims is a pleading filed by a party other than the appellants.

6When the pleadings in the cross-claims and third party claims are included in the consideration with the statement of claim, we have no difficulty concluding it may be reasonably inferred that there is at least the mere possibility that the appellants were employed by CASA and acting in the course of their employment when they made and posted the video on the internet.

7The appeal is allowed.