When an Insured no longer has his or her policy of insurance, the court may rely upon secondary evidence to establish the existence of a policy. In such circumstances, the court may infer that the terms and conditions of the policy of insurance are similar to the terms and conditions in other policies written by the insurance company. Allegations of vicarious liability against an employer for sexual assaults perpetrated by an employee prior to the initiation of an insurance contract, will not be covered by an occurrence-based policy. This is true even if the full extent of the damages suffered by the victim are not discovered until the policy is in force.

09. November 2004 0

Synod of the Diocese of Edmonton v. Lombard General Insurance Co. of Canada, [2004] A.J. No. 1287, Alberta Court of Queen’s Bench

T.L. made allegations of vicarious liability against the Synod of the Diocese of Edmonton (“Diocese of Edmonton”) in 2001. The allegations stated that a minister employed by the Diocese of Edmonton sexually assaulted T.L. from 1979 to 1984. T.L. had no further contact with the minister, or the Diocese of Edmonton, after his 14th birthday which occurred in 1984. In the pleadings issued against the Diocese of Edmonton, T.L. pled that he was aware of the sexual assaults at the time that they occurred, but that the injuries resulting from the assaults did not manifest themselves until many years later.

The Diocese of Edmonton commenced an action for indemnity against its insurers, Lombard General Insurance Co. (“Lombard”) and Le Assicurazioni D’Italia Spa (“Assitalia”). The Edmonton Diocese did not have a copy of the Assitalia policy, but provided Affidavit evidence stating that a policy was in place with Assitalia from April 1, 1982 to December 31, 1984. The Diocese of Edmonton entered into a policy issued by Lombard after December 1984.

With respect to the action commenced against Assitalia, Belzil J. noted that the insured has the burden of proving the existence of a policy of insurance on a balance of probabilities. Since neither the Diocese of Edmonton nor Assitalia could locate the policy, the Court was required to rely upon secondary evidence to determine if a policy was in existence. The Diocese of Edmonton provided Affidavit evidence from its insurance broker indicating that he had placed a policy of insurance on behalf of the Diocese of Edmonton with Assitalia. The Court found this sufficient to establish that a policy existed. The Diocese of Edmonton was also required to establish the terms of the policy that was in place. Belzil J. noted that secondary evidence is admissible to establish the terms of a contract when the written contract no longer exists, citing The Law of Evidence in Canada, Sopinka and Lederman, 2nd ed. Butterworths, 1999, p. 1008 and Catholic Children’s Aid Society of Hamilton-Wentworth v. Dominion of Canada General Insurance Co., [1998] O.J. No. 3720. The general wording of the Assitalia policies for the period of April 1, 1982 to December 31, 1984, were provided to the Court through Affidavit evidence. Belzil J. ruled that the policy in place between the Diocese of Edmonton and Assitalia contained wording identical or very similar to the policy wording found in the Assitalia policies that had been issued for the relevant time period. Belzil J. further ruled that Assitalia’s duty to defend the Diocese of Edmonton had been triggered by the filing of the T.L.’s action against the Diocese of Edmonton.

With respect to the action commenced against Lombard, the Diocese of Edmonton acknowledged that the allegations pled by T.L. indicated that the abuse ended before it entered into the policy of insurance with Lombard. The Diocese of Edmonton argued that the Plaintiff’s allegations that damages relating to the abuse manifested themselves years later was sufficient to trigger Lombard’s duty to defend.

Belzil J. noted that in Reid Crowther & Partners Ltd. v. Simcoe & Erie General Insurance Co., [1993] 1 S.C.R. 252, the Supreme Court of Canada recognized that, generally speaking, insurance contracts are either claims-made or occurrence-based policies, and that it is critical to analyze the insurance contract in question to determine if the claim as pleaded would trigger the Insurer’s duty to defend. Belzil J. concluded that the Lombard policy contained no “claims-made” wording, that is, the policy would not respond to a claim made within the policy period if the “occurrence” occurred outside of the policy period. Because of the lack of “claims-made” wording in the policy, Belzil J. determined that the Lombard policy was an occurrence policy intended to respond to “liability inducing events” which occurred only during the policy period.

Lombard argued that since the allegations pled against the Diocese of Edmonton stated that T.L. had no contact with the Diocese, and the minister, after 1984, there could be no “liability inducing event” during the time that the Lombard policy was in effect.

The Diocese of Edmonton argued that the Statement of Claim indicated that the Plaintiff only became aware of the full extent of damages from the alleged abuse after the Lombard policy came into effect and cited a number of discoverability cases in support of its argument that the Lombard policy should respond to the Plaintiff’s claim. Belzil J. noted that it was critical that T.L. did not allege that he was unaware of improper touching during the time of abuse, but that the full extent of damages arising from the abuse did not become apparent until the Lombard policy was in place.

In these circumstances Belzil J. found that the discoverability concept had no application to the law of insurance and concluded that the discoverability of the full extent of T.L.’s damages during the time that the policy was in effect did not trigger a duty for Lombard to defend the Diocese of Edmonton.

To stay current with the new case law and emerging legal issues in this area, subscribe here.