The Duty To Defend In The Face Of Exclusions: Allegations Of Intentional Acts And The Use Or Operation Of Vehicles

• Published date: 27 May 2020
• Author: Mr Sean McGarry
• Subject Matter: Litigation, Mediation & Arbitration, Trials & Appeals & Compensation
• Law Firm: Miller Thomson LLP

On May 7, 2020, the Supreme Court of Canada denied leave to appeal from a notable decision of the Ontario Court of Appeal on an insurer's duty to defend.

In Pembridge Insurance Company of Canada v. Chu,¹ the defendant, Fabrizi, drove through a red light, causing an accident. Shortly before the accident, he was involved in an incident with Chu, who exited his vehicle and threatened Fabrizi, hitting his car. Fabrizi issued a third party claim against Chu in which he alleged the negligent operation of Chu's vehicle and the threatening actions are what caused Fabrizi to flee and drive through the red light.

Pembridge insured the home in which Chu resided. Dominion was Chu's motor vehicle insurer. Dominion acknowledged it had a duty to defend Chu. Pembridge brought an application for a declaration that it owed no duty to defend in relation to the threats and assault allegations.

The Pembridge policy insured Chu for "legal liability arising out of [his] personal actions anywhere" but contained an exclusion for claims arising from "the ownership, use or operation of any motorized vehicle" and for "intentional or criminal acts". The application judge found that both exclusions applied on the basis of the pleadings. This finding was overturned on appeal.

The Court of Appeal noted there was an argument available that the chain of causation between Chu's use of his motor vehicle and his subsequent actions was broken. He was standing outside of his car when the alleged threats and assault took place, and when Fabrizi fled and drove through the intersection. On this basis, the alleged threats and assault did not arise out of the use or operation of a motorized vehicle.

The duty to defend arises from the allegations in the pleadings. The allegations of threats and assault were sufficient to...