Court of Appeal for Ontario

Date: 2022-06-30 Docket: C69342

Gillese, Pardu and Brown JJ.A.

BETWEEN

Catherina Demme Plaintiff (Appellant)

and

Healthcare Insurance Reciprocal of Canada Defendant (Respondent)

Counsel: Michael Burgar and Simon Cox, for the appellant Michael Girard and Jonathan Gutman, for the respondent

Heard: February 10, 2022 by video conference

On appeal from the order of Justice William S. Chalmers of the Superior Court of Justice, dated March 10, 2021, with reasons reported at 2021 ONSC 2095.

Brown J.A.:

I. Overview

[1] This appeal engages the issue of a commercial liability insurer’s duty to defend an action brought against an employee of the insured that is based on the tort of intrusion upon seclusion.

[2] The appellant, Catharina Demme, is a former registered nurse who worked at the Brampton Civic Hospital (the “Hospital”) until December 2016. The Hospital ended Ms. Demme’s employment at that time upon discovering that she had misused an automatic medication dispensing unit (“ADU”) over an extended period – from 2006 until 2016 – to obtain approximately 24,000 Percocet tablets. Ms. Demme had used patient records to wrongfully access the ADU and obtain the Percocet.

[3] The Hospital notified 11,358 patients whose medical records were affected. Subsequently, in 2017, 2018 and 2019 eight civil actions were started by patients against Ms. Demme and the Hospital (the “Underlying Actions”). One such action, Stewart v. Demme and William Osler Health System, CV-17-574574-00CP (“Stewart”), initially was certified as a class action but the certification was overturned on appeal to the Divisional Court: Stewart v. Demme, 2022 ONSC 1790, 81 C.C.L.T. (4th) 64 (Div. Ct.). [1]

[4] Similar, but not identical, allegations were made against Ms. Demme in all eight actions.

[5] The Hospital is a subscribing member of the Healthcare Insurance Reciprocal of Canada (“HIROC”), which insures hospitals and their employees. It is insured under Composite Healthcare Insurance Master Policy 2016/1 (the “Policy”). Employees of the Hospital may be additional insureds under the Policy under certain conditions.

[6] HIROC appointed counsel to represent the Hospital in the Underlying Actions.

[7] Ms. Demme requested HIROC also provide her with defences to the Underlying Actions. In July 2017, HIROC advised Ms. Demme that there was no coverage under the Policy for the allegations advanced against her.

[8] Ms. Demme filed defences in each Underlying Action using her own counsel.

[9] On July 25, 2019, Ms. Demme commenced this action against HIROC seeking a declaration that HIROC owes her a duty to defend the Underlying Actions and related relief. HIROC defended. In late 2020, Ms. Demme moved for summary judgment for such a declaration, a further declaration that she is an additional insured under certain HIROC policies of insurance and therefore is entitled to liability coverage, as well as payment of the legal defence costs she had incurred to date in defending the actions against her.

[10] By reasons dated March 10, 2021, the motion judge dismissed the motion and ordered costs of the motion in the amount of $20,000 against Ms. Demme.

[11] Ms. Demme appeals the dismissal of her summary judgment motion and seeks leave to appeal the costs award.

[12] For the reasons set out below, I would dismiss her appeal.

II. The Allegations Pleaded Against Ms. Demme

The allegations in the statements of claim

[13] As mentioned, similar, but not identical, allegations were made against Ms. Demme in the Underlying Actions. In the court below and on this appeal, counsel focused on the allegations against Ms. Demme pleaded in the Stewart action. The Amended Statement of Claim in the Stewart action asserted a single cause of action against Ms. Demme – the tort of intrusion upon seclusion, which was recognized by this court in Jones v. Tsige, 2012 ONCA 32, 108 O.R. (3d) 241.

[14] The main allegations pleaded in the Stewart action’s Amended Statement of Claim are as follows:

II. Intrusion Upon Seclusion

13. Beginning on a date which is known to the Defendants, but which the Defendants have not disclosed to the Plaintiff, and which is at least ten years ago, but probably more, and continuing until at least April 2017, the Defendant Demme surreptitiously accessed the confidential personal information of the Plaintiff and of the Class Members without their knowledge or consent. In so doing, she committed the tort of intrusion upon seclusion.

14. The intrusions upon seclusion committed by the Defendant Demme were enabled and facilitated by the Defendant Osler, which provided her with unfettered access to such information.

15. The intrusions upon seclusion in issue occurred at least hundreds, and possibly thousands, of times, and were committed by Demme for the purpose of obtaining illicit access to the narcotic drug Percocet, which she was both selling on the street for a profit, and consuming herself.

16. The intrusions upon seclusion committed by the Defendant Demme were committed by her during the course of her employment by Osler, using means which were furnished to her by the Defendant Osler at her workplace, during working hours.

17. The information accessed by the Defendant Demme provided the said Defendant with a window into the most intimate, personal, private, and embarrassing aspects of the Plaintiffs and Class Members' lives.…

18. The Plaintiff states and the fact is that the Defendant Demme had no legitimate purpose, whether business, medical, or otherwise, in accessing the confidential information of the Plaintiff and the Class Members. She was an electronic thief, stealing the Plaintiff and class members' data for her own personal gain.

III. Direct Liability

48. By conducting herself in the manner set out in this Amended Statement of Claim, Demme repeatedly committed the tort of intrusion upon seclusion and is liable to the Plaintiff and class members.

VII. Damages

72. The Defendant Demme intentionally or recklessly and without lawful justification intruded upon the seclusion of the private affairs and concerns of the Plaintiff and the Class Members in such a way that a reasonable person would regard as highly offensive, thereby causing distress, humiliation, anguish, and pecuniary losses to the Plaintiff and the Class Members. Moreover, she did so for the highly improper motives particularized hereinabove. Such misconduct ought to be strongly discouraged and punished, and a generous award is the only way to do so.

[15] Other Underlying Actions also plead claims against Ms. Demme for the tort of intrusion upon seclusion. [2] The Stewart and Draga actions are the only ones that plead intentional and reckless conduct by Ms. Demme in committing the tort; the others confine their pleading to intentional conduct only.

[16] Some of the Underlying Actions advance additional causes of action against Ms. Demme:

(i) Negligence: The pleading in the Calabretta action is representative of such a claim. It alleges that Ms. Demme failed to ensure the plaintiff’s personal and health information remained confidential and used such information for improper purposes; [3]

(ii) Breach of the provisions of the Personal Health Information Protection Act, 2004, S.O. 2004, c. 3, Sched. A, by accessing and misusing the plaintiff patient’s personal and health information; [4]

(iii) Breach of fiduciary duty by accessing and using the personal and health information of the patient to obtain narcotics; [5] and

(iv) Negligent infliction of mental and emotional distress by reason of the manner in which the patient’s privacy was breached by Ms. Demme. [6]

The status of the claims in the Stewart action

[17] In late 2019, Morgan J. heard two motions in the Stewart action. In one, the plaintiff sought to certify the Stewart action as a class proceeding. In the other, the Hospital and Ms. Demme sought summary judgment dismissing the Stewart action on the grounds that the Stewart plaintiff’s allegations did not meet the criteria for liability under the torts of intrusion against seclusion and negligence.

[18] By reasons dated January 6, 2020, Stewart v. Demme, 2020 ONSC 83, 63 C.C.L.T. (4th) 93, leave to appeal to Ont. C.A. requested, M53325. Morgan J. held that the claim alleging intrusion upon seclusion disclosed a cause of action under s. 5(1)(a) of the Class Proceedings Act, 1992, S.O. 1992, c. 6, but what he construed as a claim alleging negligence did not. He certified the action as a class proceeding but granted summary judgment dismissing what he construed to be the claims in negligence. [8]

[19] The Divisional Court allowed an appeal from Morgan J.’s certification order and dismissed Ms. Stewart’s motion to certify her action for intrusion upon seclusion: Stewart v. Demme, 2022 ONSC 1790. [9] The Divisional Court did not see any need to deal with the arguments regarding that part of the summary judgment which had dismissed the negligence claims.

[20] In my view, the decision of the Divisional Court does not affect the outcome of this appeal. The Stewart action remains alive, albeit reduced to a personal, singular claim by Ms. Stewart in which the cause of action asserted against Ms. Demme is intrusion upon seclusion.

III. The HIROC Policy and HIROC’s Denial of a Defence

[21] The HIROC Policy provides coverage for claims for bodily injury arising out of an “occurrence”:

1. COVERAGE A – BODILY INJURY

To pay on behalf of the Insured all sums which the Insured shall become legally obligated to pay as damages because of bodily injury, sickness or disease, including death at any time resulting therefrom, by any person or persons and arising from an occurrence during the POLICY PERIOD.

[22] The Policy defines “bodily injury” as follows:

Except with respect to advertising, broadcasting or telecasting by or in the interest of the Insured (unless specifically indicated on a Certificate of Insurance issued under this Master Policy), the term “bodily injury” means bodily injury, sickness or disease, including death and shall also include injury arising out of :

(c) Invasion or violation of the right of privacy, wrongful eviction or wrongful entry;

(d) Mental anguish, injury, shock, humiliation, disease, sickness or disability … [Emphasis added.]

[23] The Policy defines “occurrence” to mean:

… [A]n accident, including continuous or repeated exposure to substantially the same general conditions, which result in bodily injury or property damage neither expected nor intended from the standpoint of the Insured. [Emphasis added.]

[24] In denying Ms. Demme a defence, HIROC relies on two fortuity clauses in the Policy, the intentional act and criminal act exclusions, which read:

This insurance shall not provide insurance against liability:

1. Arising out of:

(b) Bodily Injury or Property Damage expected or intended from the standpoint of the Insured. This exclusion does not apply to bodily injury resulting from use of reasonable force to protect persons or property;

(e) Bodily injury, sickness or disease, including death at any time resulting therefrom, arising out of the performance of a criminal act, except in respect of the coverage provided in C1. This exclusion shall not apply to any Insured’s not having knowledge of or being a party to such a criminal act. [Emphasis added.]

[25] The Policy’s Special Provisions name, as additional insureds, all employees of the named insured Hospital, but “only in the course of their employment on behalf of” the Hospital. The Additional Insuring Agreements in the Policy include an agreement that HIROC will “[d]efend in the name of and on behalf of the Insured any suit against the Insured even if such suit is groundless, false or fraudulent ...”

[26] On the motion, HIROC relied on two sets of pleaded defences to explain why it is not required under the Policy to provide Ms. Demme with a defence.

[27] First, HIROC pleaded that the allegations in the Underlying Actions do not amount to an “occurrence” because the bodily injury arising from Ms. Demme’s conduct was “expected or intended” by her. Alternatively, but relatedly, HIROC pleads that the allegations are excluded by Policy exclusion 1(b) – the intentional act exclusion – as the bodily injury was expected or intended by Ms. Demme.

[28] Second, HIROC pleaded that the allegations against Ms. Demme in the Underlying Actions constitute the performance of a criminal act, which is excluded by Policy exclusion 1(e), the criminal act exclusion. Specifically, HIROC pleads:

10. On March 30, 2017, the plaintiff was charged with breach of trust and theft under $5,000 contrary to the Criminal Code in connection with the theft of medication from the Hospital. On September 1, 2017, the plaintiff pleaded guilty to the charges.

11. The conduct admitted by Demme also constitutes the crimes of fraudulent concealment contrary to s.341, unauthorized use of computer contrary to s.342.1, and destroying or altering computer data contrary to s. 430(1.1) of the Criminal Code and the crime of possession under the Controlled Drug and Substances Act s. 4(1).

IV. The Motion Judge’s Reasons

[29] There is no dispute the motion judge correctly stated the principles that guide a duty to defend analysis, namely:

• The insurer has a duty to defend if the pleadings filed against the insured allege facts which, if true, would require the insurer to indemnify the insured;

• If there is a mere possibility that the claim falls within the liability coverage, the insurer must defend;

• The court must look beyond the labels used by the plaintiff to ascertain the “substance” and “true nature” of the claims. It must determine whether the factual allegations, if true, could possibly support the plaintiff's legal claims;

• The court should determine if any claims pleaded are entirely “derivative” in nature, within the meaning of that term as set out in Non-Marine Underwriters, Lloyd’s of London v. Scalera, 2000 SCC 24, [2000] 1 S.C.R. 551. A derivative claim will not trigger a duty to defend;

• If the pleadings are not sufficiently precise to determine whether the claims would be covered by the policy, the insurer's obligation to defend will be triggered where, on a reasonable reading of the pleadings, a claim within coverage can be inferred;

• In determining whether the policy would cover the claim, the usual principles governing the construction of insurance contracts apply, namely, the contra proferentem rule and the principle that coverage clauses should be construed broadly and exclusion clauses narrowly, as well as the desirability, where the policy is ambiguous, of giving effect to the reasonable expectations of the parties;

• Extrinsic evidence that has been explicitly referred to in the pleadings may be considered to determine the substance and true nature of the allegations; and

• An insurer’s duty to defend is determined on the allegations made in the relevant statement of claim and policy; no other evidence generally is admissible.

See: Monenco Ltd. v. Commonwealth Insurance Co., 2001 SCC 49, [2001] 2 S.C.R. 699, at paras. 28-35; Progressive Homes Ltd. v. Lombard General Insurance Co. of Canada, 2010 SCC 33, [2010] 2 S.C.R. 245, at paras. 23-24; Panasonic Eco Solutions Canada Inc. v. XL Specialty Insurance Company, 2021 ONCA 612, 466 D.L.R. (4th) 276, at para. 22; and Tedford v. TD Insurance Meloche Monnex, 2012 ONCA 429, 112 O.R. (3d) 144, at para. 14.

[30] There is also no dispute that the motion judge’s analysis followed the correct sequence of steps. First, he reviewed the pleadings to determine the true nature of the claims that were properly pleaded; next, he considered whether any claims were wholly derivative in nature; finally, he considered whether any of the properly pleaded, non-derivative claims could potentially trigger the insurer’s duty to defend: Scalera, at paras. 50-52.

[31] As to the first step, the motion judge concluded that the true nature of the claims against Ms. Demme is the intentional tort of intrusion upon seclusion. He stated there can be no liability for the tort of intrusion upon seclusion unless there is a finding that the defendant intended to intrude upon the seclusion of another: at para. 31.

[32] At the second step, the motion judge determined that the claims in negligence pleaded in some of the Underlying Actions are entirely derivative of the intentional tort of intrusion upon seclusion: at paras. 39 and 40.

[33] Finally, in dealing with the third step of the analysis, the motion judge first considered whether the injuries alleged by the plaintiffs arose out of an “occurrence” and, then, whether the claims were excluded by the Policy’s intentional act and criminal act exclusions.

[34] The motion judge concluded there was no possibility the claims against Ms. Demme for intrusion of seclusion could fall within the insuring agreement because the injuries alleged were not caused by an “occurrence,” as defined in the Policy, as the injuries were not unexpected or unintended on the part of Ms. Demme. Although that conclusion was determinative of the motion, the motion judge went on to consider whether HIROC, as insurer, had established that the intentional act and criminal act exclusions applied to the claims asserted against Ms. Demme in the Underlying Actions.

[35] The motion judge concluded that HIROC had established the intentional act exclusion applied to the claims advanced, for reasons similar to those supporting his conclusion that an occurrence had not taken place: at para. 56. He also found that the statements of claim in the Underlying Actions alleged that the harm was caused by conduct of Ms. Demme that was criminal in nature, thereby attracting the application of the criminal act exclusion. As he stated at para. 64: “Accessing the patient records was part and parcel of the theft of the medication and arose out of the performance of a criminal act.”

[36] Finally, the motion judge did not accept Ms. Demme’s submission that to interpret the Policy in a way that denied coverage for claims asserting the tort of intrusion upon seclusion would run afoul of the jurisprudence directing courts to avoid an interpretation of a policy that would substantially nullify coverage: at paras. 70-72.

[37] For those reasons, the motion judge dismissed Ms. Demme’s motion for an order that HIROC was under a duty to defend the Underlying Actions.

V. The Issues on Appeal

[38] Ms. Demme argues that the motion judge erred in dismissing her motion by failing to consider the four corners of the pleadings in the Underlying Actions for all possibilities of coverage, misapplying the decision of this court in Oliveira v. Aviva Canada Inc., 2018 ONCA 321, 79 C.C.L.I. (5th) 65, and erroneously applying the Policy’s intentional act and criminal act exclusions. Based on my understanding of the appellant’s submissions, I propose to group and address the issues she raises on the appeal as follows:

• Did the motion judge misapply the pleadings rule?

• Did the motion judge err in his treatment of the issue of intentionality in respect of coverage for an “occurrence” and the intentional act exclusion?

• Did the motion judge err in applying the criminal act exclusion?

• Did the motion judge fail to interpret the Policy so as to avoid nullifying its coverage?

[39] I shall deal with each issue in turn.

VI. First Issue: Did the Motion Judge Misapply the Pleadings Rule?

[40] The “pleadings rule” governs the duty to defend analysis. According to the rule, an insurer must defend if the allegations in the pleadings in the third-party action raise the “mere possibility” that a claim within the policy may succeed. As mentioned in para. 30 above, the case law has developed a three-step process to apply the pleadings rule: Barbara Billingsley, General Principles of Canadian Insurance Law, 3rd ed. (LexisNexis Canada, 2020), at Ch. 4, C.2.a. There is no dispute the motion judge followed that three-step process.

[41] While the usual duty to defend analysis considers the allegations pleaded in the statement of claim against the insured, this court has recognized that all pleadings may be considered, albeit with the most weight given to the pleadings against the insured: Keys v. Intact Insurance Company, 2015 ONCA 400, 50 C.C.L.I. (5th) 189, at para. 4. Billingsley observes that the weight of lower-court authority recognizes considering defence pleadings that include admissions of fact, such as in the present case: General Principles of Canadian Insurance Law, at Ch. 4, C.2.b.

[42] The motion judge grounded his duty to defend analysis in the statements of claim in the Underlying Actions and admissions contained in Ms. Demme’s defences thereto. Ms. Demme does not argue the motion judge erred by taking into account facts she pleaded in her statements of defence. Indeed, the position she took below precludes her from so doing, for in her reply factum below she requested the motion judge to consider her statements of defence as part of his pleadings rule analysis. The motion judge did what Ms. Demme asked him to do.

[43] Ms. Demme’s pleadings-related complaint appears to boil down to the following: while it was open to the motion judge to use admissions pleaded in her statements of defence, he failed to give sufficient weight to two sets of facts pleaded in her defences when ascertaining whether there was a “mere possibility” that a pleaded claim would trigger coverage and therefore a duty to defend.

[44] The first set of pleaded facts was that at all relevant times Ms. Demme was suffering from an addiction to painkillers resulting from chronic hip and knee joint pain. Her statements of defence common to all the Underlying Actions pleaded that “she developed a narcotic painkiller addiction, which …. compelled her to seek another source of Percocet” and “she misused the ADU device for the purpose of procuring Percocet tablets solely for her own personal consumption.”

[45] Her second set of pleaded facts was that the intended targets of her actions were the Percocet pills, not the information of the patients contained in their records which she used to obtain Percocet from the ADU machine. In her statements of defence, she pleaded that:

• At no time did she have any malicious or devious intent to abuse private or confidential information. Her ability to formulate any conscious intent was compromised by her pain and her addiction. She was engaged in unconscious, drug-seeking behavior and had no specific intent to cause harm to the plaintiff or any patient; and

• She denied she committed the tort of intrusion upon seclusion against the plaintiffs because she did not have any intent to invade, or engage in any reckless conduct that related to an invasion of, the plaintiff’s private information or concerns. Instead, she was in the grips of an illness or disease and her behavior was unconscious or, alternatively, intent only on procuring Percocet to feed an addiction.

[46] While those pleaded explanations or justifications were not ignored by motion judge, they did not play a significant role in his duty to defend analysis. Understandably so. The motion judge’s analysis properly focused on considering the nature of the claims asserted against Ms. Demme within the terms of coverage provided by the Policy, rather than on her pleaded explanations for what she did or why she did it. Accordingly, I see no error in the pleadings he chose to review for his duty to defend analysis.

[47] The actual consideration the motion judge gave those two sets of pleaded facts shall be considered when dealing with the remaining issues on appeal.

[48] Finally on this ground of appeal, Ms. Demme criticizes the motion judge for referring to para. 15 of the Stewart Statement of Claim where that plaintiff alleged Ms. Demme not only consumed the drugs she stole, but also sold them on the street for a profit. [10] She argues that in so doing the motion judge “isolated and emphasized the most inflammatory and negative allegation” against Ms. Demme and gave it undue weight instead of more thoroughly reviewing the four corners of the entirety of the pleadings.

[49] I see no basis for this complaint. The use the motion judge made of para. 15 of the Stewart claim was limited to concluding that Stewart had pleaded a causal link between Ms. Demme’s numerous intrusions upon seclusion and the resulting access such intrusions gave her to the narcotics: at para. 61. What use Ms. Demme may or may not have made of the narcotics she ultimately obtained did not play a role in his analysis.

VII. Second Issue: Did the Motion Judge Err in His Treatment of the Issue of Intentionality in Respect of Coverage for an “Occurrence” and the Intentional Act Exclusion?

[50] The issue of the intentionality of the acts of Ms. Demme that are the basis of the claims against her has two parts: (i) the motion judge held that the claims for damages for bodily injury did not arise from an “occurrence” because Ms. Demme’s conduct did not result in bodily injury that was “neither expected nor intended from the standpoint of the Insured”; and (ii) the motion judge held that the claims for damages advanced fell within the intentional act exclusion that stipulated the Policy did not provide insurance against liability arising out of bodily injury “expected or intended from the standpoint of the Insured.” The motion judge found that the claims pleaded against Ms. Demme did not involve an “occurrence” and fell outside the Policy’s coverage by operation of the intentional act exclusion.

[51] Ms. Demme advances three submissions about why those conclusions by the motion judge were in error.

The decision in Oliveira

[52] First, Ms. Demme submits the motion judge erred by failing to follow the decision of this court in Oliveira v. Aviva Canada Inc., 2018 ONCA 321, which she contends stands as binding authority for the proposition that where a hospital’s insurance provides coverage for claims of “invasion or violation of the right of privacy,” actions against a hospital employee for unlawfully accessing patient records and information involve the sort of conduct the policy was intended to cover and respond to.

[53] I do not read the decision in Oliveira in that way. The issues about the language of coverage and exclusion at play on this appeal simply were not considered in Oliveira.

[54] In that case, the claims asserted in the underlying action included a pleading of the tort of intrusion upon seclusion: specifically, that Oliveira, a hospital nurse, had wrongfully accessed the records of the plaintiff patient, who was not under her care. The hospital’s policy provided coverage for a civil proceeding alleging damages due to personal injury, which was defined to include “invasion or violation of privacy,” and “invasion or violation of the right of privacy.”

[55] The hospital’s insurer declined to provide Oliveira with a defence, taking the position that she was not acting under the direction of the hospital in relation to the claim and because the claim against her did not arise from the operations of the hospital. As a result, according to the insurer, Oliveira did not fall within the policy’s definition of additional insured.

[56] The application judge rejected the insurer’s position. He held: the policy did not limit coverage for privacy breaches to hospital employees within a patient’s circle of care; Oliveira was “acting under the direction of” the hospital; and the allegations against her arose from the hospital’s operations. During the course of his analysis, the application judge noted that claims for intrusion upon seclusion fell within the covered conduct of “invasion of privacy” and such claims, by their nature, involved the unauthorized accessing of a patient’s information.

[57] On appeal, this court substantially agreed with the application judge’s reasons. However, this court’s short endorsement dealt only with the issue of whether the nurse employee was an additional insured under the hospital’s policy. Like the application judge, this court rejected the insurer’s argument that the unlawful accessing of patient records could not “arise” from the operations of a hospital or be considered “at the direction of the named insured”: Oliveira v. Aviva Canada Inc., 2018 ONCA 321, 79 C.C.L.I. (5th) 65, at paras. 2-3.

[58] As can be seen, the decisions of both courts in Oliveira focused on whether the employee nurse was an additional insured within the meaning of the policy’s language. Neither decision considered the effect of any definition of “occurrence” or an intentional act exclusion on the question of whether the insurer owed the employee nurse a duty to defend claims against her alleging intrusion of seclusion. The issues at play on this appeal about such language simply did not form part of the dispute in Oliveira and, consequently, did not receive judicial comment or analysis.

The element of “reckless” in intrusion upon seclusion

[59] Second, Ms. Demme argues that since the tort of intrusion upon seclusion covers conduct that is “intentional or reckless,” the motion judge erred by failing to find a mere possibility existed that the claims alleged against her could be regarded as claims for damages for bodily injury arising out of reckless conduct. That possibility would bring the claims within the Policy’s definition of “occurrence” (“neither expected nor intended from the standpoint of the Insured”) and remove the claims from the intentional act exclusion (“bodily injury … expected or intended from the standpoint of the Insured”).

[60] I am not persuaded by that submission. The starting point must be the formulation of the elements of the tort of intrusion upon seclusion adopted in Jones. The motion judge relied on the statement of the elements found at paras. 70 and 71 of Jones:

I would essentially adopt as the elements of the action for intrusion upon seclusion the Restatement (Second) of Torts (2010) formulation which, for the sake of convenience, I repeat here:

One who intentionally intrudes, physically or otherwise, upon the seclusion of another or his private affairs or concerns, is subject to liability to the other for invasion of his privacy, if the invasion would be highly offensive to a reasonable person.

The key features of this cause of action are, first, that the defendant’s conduct must be intentional, within which I would include reckless; second that the defendant must have invaded, without lawful justification, the plaintiff’s private affairs or concerns; and third, that a reasonable person would regard the invasion as highly offensive causing distress, humiliation or anguish… [Emphasis added.]

[61] Although the Jones decision does not contain a definition of “reckless,” it places reckless conduct side-by-side with intentional or deliberate conduct. Jones adopted the Restatement’s formulation of the tort as involving an intentional intrusion. As well, the decision limited claims for intrusion upon seclusion only to “deliberate and significant intrusions of personal privacy”: Jones, at para. 72. One cannot tease from the discussion in Jones any support for the proposition advanced by Ms. Demme that Jones’ inclusion of a reckless act within the tort of intrusion upon seclusion could involve unintentional conduct. [11]

[62] As well, Ms. Demme’s contention that reckless conduct possibly could amount to unintentional conduct runs counter to the thrust of Canadian insurance jurisprudence. The caselaw has been prepared to accept that an “accident” can include a negligent or grossly negligent act: General Principles of Canadian Insurance Law, at Ch. 3, B.2.a. Nevertheless, “accident” conveys the idea that the consequences of certain actions are unexpected: Martin v. American International Assurance Life Co., 2003 SCC 16, [2003] 1 S.C.R. 158, at paras. 13-15. By contrast, in Mutual of Omaha v. Stats, [1978] 2 S.C.R. 1153, both the majority and dissenting judge of the Supreme Court proceeded on the basis that what is typically called reckless conduct could not be regarded as accidental. The majority, at p. 1165, applied the principle that “[i]f … the person realized the danger of his actions and deliberately assumed the risk of it … his actions could not be characterized as accidental.” [12] Martland J., in dissent, stated, at p. 1173, that “[i]f a person voluntarily embarks upon a foolhardy venture from which personal injury could be foreseen as an almost inevitable consequence it cannot properly be said that when the mishap occurs, it is an accident.”

[63] The formulations in Stats closely resemble the concept of recklessness in Canadian criminal law as the attitude of one who, aware that there is danger that his conduct could bring about the prohibited result, nevertheless persists, despite the risk – that is to say, it is the conduct of one who sees the risk and takes the chance: Sansregret v. The Queen, [1985] 1 S.C.R. 570, at para. 16. [13]

[64] Whether one uses the concepts of recklessness described in Stats or our criminal law, reckless conduct stands very close to the intentional end of the conduct spectrum, far away from the unintentional end where Ms. Demme tries to place it.

[65] Finally, stepping back from the consideration of the definitional elements of the tort and the concept of recklessness, Ms. Demme’s duty to defend application proceeds against the background of allegations that she unlawfully accessed patient records thousands of times over the course of a decade. For Ms. Demme to contend that in the face of such claims there exists a “mere possibility” that her alleged conduct could be characterized as causing injury that was neither expected nor intended from her standpoint simply lacks any air of reality.

The intention to obtain pills as distinguished from the intention to access patient records

[66] Third, Ms. Demme contends the motion judge erred by failing to accept her argument that a material distinction exists between her intention to obtain the Percocet pills and her intentions regarding the patients’ records. Ms. Demme concedes she intended to obtain the Percocet pills from the ADU machines. However, she contends that her intrusions into patients’ records were not the result of any intention on her part to injure the patients but, instead, merely the unintended consequences of her intentional conduct to obtain the pills. As a result, she argues, those unintended consequences constituted a type of bodily injury that fell within the Policy’s coverage of an “occurrence.” Similarly, she submits that unless an intentional act – her intentional conduct to obtain the pills – is accompanied by an intention to cause bodily harm, the intentional act exclusion does not apply.

[67] The motion judge did not accept her argument. As required by the pleadings rule, he focused his analysis on the nature of the claims brought against Ms. Demme in the Underlying Actions. The motion judge held that their true nature is the intentional tort of intrusion upon seclusion, as defined in Jones. For that tort, the relevant intention is the defendant’s intention to access private patient records. If that is demonstrated, the nature of the tort is such that the intention to access the records amounts to an intention to cause injury. That is because under the tort the injury caused is the patients’ loss of control over their private information. Drawing on those elements of the tort, the motion judge concluded that the pleading of intrusion upon seclusion took the claims against Ms. Demme outside the Policy’s definition of “occurrence” and, as well, within the ambit of the intentional act exclusion. [14]

[68] I see no error in the motion judge’s conclusion. It flows logically from the elements of the pleaded tort of intrusion against seclusion, which he found to be the true nature of the claims against Ms. Demme.

Summary

[69] For the reasons set out above, I would reject this ground of appeal.

VIII. Third Issue: Did the Motion Judge Misapply the Policy’s Criminal Act Exclusion to Bar All Defence Coverage?

[70] Given that the motion judge did not err in his conclusions that the claims pleaded against Ms. Demme in the Underlying Actions were not “occurrences” under the Policy and fell within its intentional act exclusion, it is not necessary to comment on the motion judge’s treatment of the criminal act exclusion.

IX. Fourth Issue: Nullification of Coverage

[71] Finally, Ms. Demme submits that by concluding the claims against her for intrusion upon seclusion did not give rise to a mere possibility of coverage and, therefore, attract a duty to defend, the motion judge erroneously adopted an interpretation of the Policy that nullified coverage for liability for bodily injury arising out of “invasion or violation of the right of privacy.” Such an interpretation would offend the principle that courts should avoid an interpretation of a policy that would render the insurance protection obtained nugatory and would enable the insurer to pocket the premium without risk: see Consolidated-Bathurst v. Mutual Boiler, [1980] 1 S.C.R. 888, at p. 901.

[72] I am not persuaded by this submission. The motion judge was alive to the issue. He observed that the Policy language of “invasion of privacy” potentially covers much more than liability for intrusion upon seclusion, a tort based on intentional conduct. Since the Policy would cover bodily injury arising from negligence-based invasions of privacy, he concluded the lack of coverage for the intentional tort of seclusion upon intrusion would not nullify the Policy’s coverage. As he stated at para. 71:

Intrusion upon seclusion is, by definition, an intentional tort that requires an intention to access private information. Other privacy torts do not necessarily include an element of intentionality. One could imagine a wide range of claims for a breach of privacy that was not intentional, including a negligent release of private information, improper faxing of private information, incorrectly sent e-mails, erroneous attachments to correspondence or e-mail, loss of medical records, records improperly disposed of and negligent storage of records. Those claims for negligent privacy breaches would fall within the insuring agreement of the Policy.

[73] I see no error in that conclusion; it was a reasonable interpretation of the scope of the Policy.

X. Disposition

[74] For the reasons set out above, I would dismiss the appeal.

[75] Based on the agreement of the parties regarding the costs of the appeal, Ms. Demme shall pay HIROC its costs of the appeal fixed in the amount of $15,000, inclusive of disbursements and applicable taxes.

Released: June 30, 2022 “E.E.G.” “David Brown J.A.” “I agree. E.E. Gillese J.A.” “I agree. G. Pardu J.A.”

[1] The other seven actions are: 2017 Actions: (i) Darragh v. William Osler Health System et. al., CV-17-2065-00 (May 11, 2017); (ii) Calabretta v. William Osler Health System et. al., CV-17-3394-00 (August 8, 2017); 2018 Actions: D’Cruz v. William Osler Health System et. al., CV-18-597669 (May 11, 2018); Hanson v. William Osler Health System et. al., CV-18-00603616 (August 20, 2018); 2019 Actions: (v) Draga v. William Osler Health System et. al., Small Claims Court SC-19-3850 (July 10, 2019); (vi) Munt v. William Osler Health System et. al., CV-19-00001684 (April 18, 2019); and (vii) Emoff v. William Osler Health System et. al., CV-19-00001685 (April 18, 2019). The Emoff action has been dismissed without costs.

[2] Intrusion upon seclusion claims: Calabretta claim, paras. 10-11; Darragh claim, paras. 8-9; D’Cruz claim, paras. 8-9; Hanson claim, at para. 10; Draga claim, paras. 18, 27 & 30; Munt claim, paras. 8-9; Emoff claim, paras. 10-11.

[3] Negligence claims: Calabretta claim, para. 9C; Darragh claim, para. 7B; D’Cruz claim, para. 7B; Munt claim, para. 7B; Emoff claim, para. 9B.

[4] Breach of statute claims: Calabretta claim, para. 13; Darragh claim, para. 11; D’Cruz claim, para. 11; Draga claim, para. 29; Munt claim, para. 11; Emoff claim, para. 13.

[5] Breach of fiduciary duty claims: Calabretta claim, para. 14; Darragh claim, para. 12; D’Cruz claim, para. 14; Hanson claim, at para. 15; Munt claim, para. 12; Emoff claim, para. 14.

[6] Negligent infliction of mental and emotional distress: Hanson action, para. 19.

[7] Stewart v. Demme, 2020 ONSC 83, 63 C.C.L.T. (4th) 93, leave to appeal to Ont. C.A. requested, M53325.

[8] In his reasons, Morgan J. states that the Amended Statement of Claim pleaded a claim in negligence against Ms. Demme, notwithstanding that the pleading does not contain an express plea to that effect. At one point in his reasons, he describes the claim in negligence as one asserted against the Hospital: at para. 62; elsewhere, he describes it as a claim against both the Hospital and Ms. Demme: at para. 81. I do not read the Amended Statement of Claim as asserting a claim in negligence against Ms. Demme. In my view, it patently pleads only a claim for intrusion upon seclusion and my analysis proceeds on that basis.

[9] Ms. Stewart has sought leave to appeal to this court from the decision of the Divisional Court: Ont. C.A. court file no. M53325.

[10] Paragraph 15 of the Stewart Statement of Claim is reproduced above at para.14 of these reasons.

[11] The meaning of reckless conduct for the tort of intrusion upon seclusion was touched upon by the decisions of the Divisional Court in Owsianik v. Equifax Canada Co., 2021 ONSC 4112, C.C.L.T. (4th) 243 (Div. Ct.) but only in passing as the issue of the meaning of reckless conduct was not central to the reasoning of either the majority or the dissenting judge. The majority simply wrote, at para. 55, that “[t]he intrusion need not be intentional; it can be reckless.” The majority offered no further discussion of the concept. In her dissent, Sachs J., wrote, at para. 44: “In this case, as in Jones, the allegation is that the invasion was significant and that it was deliberate, a concept that Sharpe J.A. recognized could encompass recklessness.”

In a later decision, Del Giudice v. Thompson, 2021 ONSC 5379, 71 E.T.R. (4th) 23, Perell J. stated at para. 142: “The tort of intrusion upon seclusion has a mental element of intentionality. The Plaintiffs’ pleading seeks to elevate its copious allegations of negligence into recklessness, but carelessness is not the same mental state as intentionality or recklessness.”

[12] This formulation drew upon the decision of Grant J. in Candler v. London & Lancashire Guarantee & Accident Co. of Canada (1963), 2 O.R. 547 (Ont. H.C.).

[13] See also, R. v. Zora, 2020 SCC 14, 446 D.L.R. (4th) 358, at para. 117.

[14] The character and content of the tort of intrusion upon seclusion, with the injury or loss caused by the accessing of the private information, resembles, to some extent, the situation described by Professor Erik S. Knutsen in his article, “Fortuity Victims and the Compensation Gap: Re-envisioning Liability Insurance Coverage for Intentional and Criminal Conduct” (2014), 21 Connecticut Insurance Law Journal 209. There he proposed, at p. 243, that the most sensible solution to interpreting the applicability of either the intentional act fortuity clause or the criminal act fortuity clause would be to limit coverage denial to those circumstances where fortuity is truly frustrated, namely “when a loss has been made certain to occur by the purposeful conduct of a policyholder.”