R.C. and J.M. v. Western Assurance Company, 2022 ONSC 100

COURT FILE NO.: CV-21-00000236-00 DATE: January 5, 2022

ONTARIO SUPERIOR COURT OF JUSTICE

BETWEEN:

R.C. and J.M. Applicants – and – WESTERN ASSURANCE COMPANY Respondent

Counsel: Robert J. Reynolds, for the Applicants Mark M. O’Donnell, for the Respondent

HEARD: December 13, 2021

REASONS FOR DECISION ON DUTY TO DEFEND APPLICATION

MUSZYNSKI J.

[1] The applicants, R.C. and J.M., are named insureds on a homeowner’s policy issued by the respondent, Western Assurance Company (“Western”), that includes general liability coverage.

[2] In separate litigation, it is alleged the applicants’ son, A.C., perpetrated a schoolyard assault on a classmate (the “Underlying Action”). A.C., R.C., and J.M. are all named defendants in the Underlying Action. The claims against R.C. and J.M. relate to their alleged failure to prevent the assault.

[3] The applicants requested that Western provide them with a defence in the Underlying Action. Western denied any duty to defend due to the application of certain exclusions under the policy.

[4] The applicants now seek a declaration that Western has a duty to defend them in the Underlying Action and a declaration that they have the right to retain and instruct counsel of their choice at Western’s expense.

ISSUES

[5] Does Western have a duty to defend the applicants in the Underlying Action?

[6] If so, are the applicants entitled to appoint and instruct counsel of their choice to conduct the defence at Western’s expense?

RESULT

[7] For the reasons that follow, I find that Western does not have a duty to defend the applicants in the Underlying Action. Given my decision, it is not necessary to address the issue of legal representation.

BACKGROUND FACTS

[8] The applicants are insured by Western under Policy No. WAH016288363 (the “Policy”). The Policy includes general liability coverage.

[9] The applicants’ son, A.C., was a student at Harry J. Clarke Elementary School in Belleville, Ontario in April of 2019.

[10] On or about March 22, 2021, J.O., a former classmate of A.C., commenced the Underlying Action (Court file No. CV-21-00000081-00) seeking damages against several defendants, including A.C., R.C., and J.M. The statement of claim includes the following relevant allegations:

a. On or about April 1, 2019, the plaintiff was informed by a friend during first recess that two of his classmates intended to assault him during second recess.

b. A.C. provided instructions to other students to film the assault of the plaintiff.

c. A.C. pushed, prodded, heckled and insulted the plaintiff in an attempt to goad him into violent confrontation.

d. A.C. punched, kicked, and struck the plaintiff with his knees.

e. The video of the assault was uploaded to a social media platform and was widely circulated.

f. As it relates to A.C. and another alleged perpetrator:

i. They verbally harangued J.O. when they knew or ought to have known that such verbal assault would instil fear, worry and anxiety in their victim;

ii. They pushed J.O., attempting to goad him into confrontation;

iii. They punched J.O. repeatedly;

iv. They pulled, dragged and manhandled J.O. in an attempt to lay him low, embarrass and humiliate him;

v. They struck J.O. with their knees and feet, repeatedly;

vi. They caused their assault upon J.O. to be filmed with the intent of using the acquired digital imagery to further their humiliation of J.O. and thereby increased the injury caused;

vii. They failed to conduct themselves in a proper and prudent fashion;

viii. They acted with careless disregard for J.O.’s well-being;

ix. They acted with callous disregard for J.O.’s safety; and

x. They had the last clear chance to prevent the assault but failed to do so.

g. As it relates to the applicants and the parents of the other alleged perpetrator:

i. They failed to inculcate in their children a sense of respect for others;

ii. Having been apprised of their respective son’s propensity for violence, they took no or insufficient remedial steps;

iii. They failed to properly monitor the activities of their children relating to the use of smart phones and social media;

iv. They permitted their children to engage in recreational activities, including but not limited to video gaming, that heightened their propensity for and their comfort with violence;

v. They failed to take the necessary steps to learn about the peer associations their children were forming and to investigate the character of those peers; and

vi. They had the last clear chance to prevent the assaults herein and failed to do so.

h. The posting of the video of the assault on social media increased the harm inflicted on the plaintiff by adding embarrassment, mortification and humiliation.

i. As a result of the assault, the plaintiff sustained serious, lasting and grievous personal injury including, neck strain, eyestrain, headaches, difficulty sleeping, whiplash, a concussion, emotional upset, diminished self-esteem, humiliation, anxiety, an impairment of the ability to engage in day-to-day activities, and a curtailment of recreational and social activities.

[11] R.C., J.M., and A.C. were insured under the Policy subject to certain exclusions, including but not limited to:

We do not insure claims arising from: … 6. personal injury or property damage caused by any intentional or criminal act or failure to act by: a) any person insured by this policy; or b) any other person at the direction of any person insured by this policy; 7. a) sexual, physical, psychological, or emotional abuse, molestation or harassment, however caused, including corporal punishment by, at the direction of, or with the knowledge of any person insured by this policy; or b) failure of any person insured by this policy to take steps to prevent sexual, physical, psychological or emotional abuse, molestation or harassment or corporal punishment, however, caused; [herein the “Abuse Exclusion”] … 12. The distribution or display of data by means of an internet website, the internet, an intranet, extranet, or similar device or system designed or intended for electronic communication of data; Data is defined in Section II to have the same meaning as in “Section I”, which in turn is Defined to mean “representations of information or concepts in any form.”

[12] After being served with the statement of claim in the Underlying Action, R.C. and J.M. forwarded a copy of the pleading to Western. Western ultimately took the position that the above noted exclusions applied and advised that no defence would be provided.

POSITION OF THE PARTIES

[13] The applicants acknowledge that the exclusion listed at section 12, related to electronic communication of data, applies to the portion of the claim related to the uploading of the video to social media. Accordingly, it is agreed that Western has no duty to defend the applicants with respect to those portions of the Underlying Action.

[14] The remaining exclusions at issue can be placed into two categories: 6(a)(b) and 7(a), hereinafter referred to as the “deliberate acts / with knowledge exclusions”; and 7(b) or the “failure to prevent exclusion.”

[15] The parties agree that Western has no duty to defend A.C. as the claims made against him fall within the deliberate acts / with knowledge exclusions.

[16] The applicants rely on Unifund Assurance Company v. E. (D.), 2015 ONCA 423 [Unifund] to support their submission that the deliberate acts / with knowledge exclusions are not applicable to the negligence claims advanced against them. The applicants further submit that it is plausible that the allegations raised in the statement of claim fall outside the scope of the failure to prevent exclusion, which results in a duty to defend on the part of Western.

[17] While not necessarily agreeing with the outcome in Unifund on this point, at the hearing of the application, Western acknowledged that Unifund is the current authority in Ontario in cases such as this and, based on that authority, the deliberate acts / with knowledge exclusions would likely not apply. The chief issue in dispute on this application is therefore the failure to prevent exclusion. Western takes the position that the allegations advanced against the applicants in the Underlying Action clearly fall within the scope of the failure to prevent exclusion resulting in no duty to defend the applicants.

ANALYSIS

[18] A duty to defend will arise “where the action alleges acts or omissions which might be payable under the policy, and the mere possibility that a claim within the policy will succeed is sufficient”: Uniroyal Chemical Ltd. v. Kansa General Insurance Co., [1996] OJ No. 644 (Ont CA) at para 1.

[19] Courts must apply the following principles of interpretation when examining insurance policies:

a. The contra proferentem rule;

b. Coverage provisions should be interpreted broadly and exclusions narrowly; and

c. Where the policy is ambiguous, the desirability of giving effect to the reasonable expectations of the parties: Reid Crowther & Partners Ltd. v. Simcoe & Erie General Insurance Co., [1993] 1 SCR 252 at 37.

[20] Keeping these principles in mind, I will address the exclusions at issue in this case.

Deliberate Acts / With Knowledge Exclusions

[21] With respect to the deliberate acts / with knowledge exclusions, I accept the submissions of the parties that Unifund is the leading authority and applicable to this case. The applicants in Unifund, who were parents of an alleged bully, sought a declaration that their insurer had a duty to defend them in an action arising from the bullying, harassment, and physical assault of their daughter’s classmate. The allegations against the parents are similar to those advanced in the Underlying Action, that being, failing to prevent the bullying, harassment, and physical assault.

[22] The insurer in Unifund took the position that the negligence claims advanced against the parents were derivative of the claims made against the daughter, which involved intentional acts or conduct. On that basis, the insurer relied on an exclusion in their policy which prevented coverage in cases involving intentional actions of an insured: Unifund at para 13. The Court of Appeal rejected the insurer’s argument and confirmed that the application judge properly determined that that the negligence claims advanced against the parents were not derivative of the intentional tort claims made against their daughter: Unifund at para 20.

[23] This is consistent with the approach in Durham District School Board v. Grodesky, 2012 ONCA 270 [Durham] where it was held that an insurer had a duty to defend the parents of an alleged teenage arsonist in an action alleging the parents failed to prevent the arson. In Durham, the Court of Appeal for Ontario concluded: “The elements of the intentional tort claim against the son and the negligence claim against the parents are entirely distinct. Therefore, the negligence claim is not derivative of the intentional tort, and should not be subsumed under it for the purposes of applying the exclusion clause” (para 14).

[24] Based on the appellate authorities of Unifund and Durham, I find that the deliberate act / with knowledge exclusions contained in sections 6(a)(b) and 7(a) of the Policy do not apply in this case. The allegations against the applicants contained in the Underlying Action are based in negligence and are distinct from the intentional tort claim made against A.C.

Failure to Prevent Exclusion

[25] Section 7(b) of the Policy provides that Western will not insure claims arising from a “failure of any person insured by this policy to take steps to prevent sexual, physical, psychological or emotional abuse, molestation or harassment or corporal punishment, however, caused.”

[26] The applicants submit that since the statement of claim does not include specific allegations that they failed to prevent “sexual, physical, psychological or emotional abuse, molestation or harassment or corporal punishment” the exclusion does not apply. The applicants take the position that the statement of claim includes allegations of a schoolyard assault, which implies a singular event, as opposed to the language in the exclusion which suggests an ongoing occurrence. Further, the applicants state that the language of the Policy must be read from the perspective of the ordinary person. On that basis, the applicants submit that an ordinary person would not understand that failing to prevent a schoolyard assault would be an exclusion under the Policy. Further still, the applicants state that situations can be contemplated that fall within the allegations pled, but outside the language of the exclusion, which should be narrowly interpreted.

[27] I accept the submission of the applicants that, when interpreting insurance policies, terms like “assault” and “physical abuse” should be construed as they are understood by ordinary persons: Gibbens v. Co-operators Life Insurance Co., 2009 SCC 59 at para 22.

[28] The failure to prevent exclusion does not include the word “assault.” The statement of claim does not include the term “physical abuse.” Accordingly, the applicants submit that Western cannot rely on this exclusion. In contrast, Western states that an ordinary person would understand that the word assault is synonymous with the term “physical abuse.”

[29] In support of its position, Western provides numerous examples of the terms “assault” and “physical abuse” being used interchangeably, including:

a. The Government of Canada: “Physical abuse, including assault, is the intentional use of force against a person without that person’s consent.” https://www.justice.gc.ca/eng/cj-jp/fv-vf/about-apropos.html.

b. American Psychological Association: Physical abuse is defined as: “deliberately aggressive or violent behavior by one person toward another that results in bodily injury. Physical abuse may involve such actions as punching, kicking, biting, choking, burning, shaking, and beating…” https://dictionary.apa.org/physical-abuse.

c. Simpson v. Cuff, 2019 ONSC 2856 at para 7: “The Applicant says the Respondent has been physically abusive assaulting her in the presence of the children; and threatening violence against her.”

d. R. v. McAuley, 2012 ONSC 3732 at para 35: “…the last documented incident of physical abuse was the assault on the applicant by the victim.”

e. Catholic Children’s Aid Society of Hamilton v. N.C., 2012 ONSC 5430 at para 9: “He has been physically abusive to her and in fact pleaded guilty to assaulting her and was placed on probation…”

[30] In deciding whether an insurer has a duty to defend, courts are not bound by the “legal labels chosen by the plaintiff” and must “look beyond the choice of labels, and examine the substance of the allegations contained in the pleadings”: Non-Marine Underwriters, Lloyd’s of London v. Scalera, 2000 SCC 24 at para 50.

[31] Among other things, the statement of claim in the Underlying Action alleges that the applicants’ son punched, kicked, dragged, prodded, heckled, goaded, and struck the plaintiff. While the statement of claim does not reference physical abuse, when read as a whole, I find that the substance of the allegations amount to physical abuse, and arguably harassment, which are both specifically mentioned in the failure to prevent exclusion. This is consistent with the approach in Unifund where the Court of Appeal held that the failure to prevent exclusion applied even though the statement of claim alleged “bullying” which was not specifically mentioned in the policy exclusion.

[32] I further reject the submission of the applicants that the failure to prevent exclusion applies to multiple acts or ongoing activity as opposed to a discrete event such as the schoolyard assault. The failure to prevent exclusion does not contain any wording that limits its scope to ongoing activity or multiple acts.

[33] Finally, I reject the applicants’ argument that a duty to defend arises because situations can be contemplated that fall within the allegations contained in the statement of claim, but outside of the exclusions contained in the Policy. The applicants concede that the substance of the claims advanced against them is a failure to prevent their son from assaulting a classmate. I cannot imagine a situation that would fall within the scope of the pleadings and yet outside the language in the failure to prevent exclusion in the circumstances of this case.

[34] I find that the failure to prevent exclusion contained in section 7(b) of the Policy applies in this case.

Legal Representation

[35] Given my decision that Western does not have a duty to defend the applicants in the Underlying Action, it is not necessary to address the issue of whether the applicants are entitled to appoint and instruct counsel of their choice to conduct the defence at Western’s expense.

CONCLUSION

[36] Western does not have a duty to defend R.C. and J.M. in the Underlying action. The application is dismissed.

COSTS

[37] Costs of this application are reserved. If the parties cannot come to an agreement on the costs of the motion on or before January 21, 2022, counsel shall file costs submissions (a maximum of 3 pages) in accordance with the following schedule: the respondent shall serve and file its costs submissions on or before January 28, 2022; the applicants shall serve and file their responding costs submissions on or before February 4, 2022; after which time I will determine the issue of costs based on the material filed.

[38] Counsel shall file their respective cost submissions by sending them by email to the Superior Court of Justice Judicial Assistant for Belleville/Picton at Mary-Ann.Valiquette@ontario.ca.

Muszynski J. Released: January 5, 2022