Under what circumstances will an insurer be required to defend a claim involving an intentional tort framed as negligence?  This question often arises in cases where personal injury litigants frame their actions in both negligence and assault.  In these cases, careful consideration of the elements of the intentional act and the negligence pleaded is warranted.  This was the case in a recent decision of the British Columbia Supreme Court, Henderson v. Northbridge General Insurance Corporation, 2021 BCSC 1841 ("Henderson.")

The underlying claim

Henderson involved a claim by Theresa Lee Henderson and Theresa Lee Henderson doing business as Dragonfly Daycare (collectively, "Ms. Henderson") for coverage under a commercial liability insurance policy (the "Policy") issued by Northbridge General Insurance Corporation ("Northbridge") in connection with an action brought on behalf of an infant litigant (CCL) for damages arising from violent shaking of CCL while CCL was in the care of Ms. Henderson (the "Action.")

CCL alleged the following "negligence" in the Action:

  1. In shaking CCL to such a degree that a brain injury resulted;
  2. In permitting other employees of the daycare to shake CCL;
  3. In managing the Dragonfly Daycare when she was not adequately trained to do so;
  4. Failing to care for or adequately meet the needs of CCL;
  5. Causing harm to CCL by negligent and/or inappropriate physical handling of CCL; and
  6. Failing to protect CCL from harm and danger …

CCL alleged, in the alternative, that Ms. Henderson's actions constituted an assault on CCL.

The commercial general liability policy

The Policy offered third party liability limits of $5 million.  Coverage under the Policy was subject to an exclusion for,

"Bodily Injury… expected or intended from the standpoint of the insured… also, as such, expected or intended results do not constitute an "occurrence" or "accident" under the policy Insuring Agreement"

(the "Initial Exclusion Clause")

The Policy also had an Abuse Limitation Endorsement with a $500,000 limit (the "Endorsement.") The Endorsement provided coverage for "bodily injury" sustained by any person arising out of or resulting from, (a) Claims or "actions" alleging actual or threatened "abuse" by or at the direction of an insured. Coverage under the Endorsement was subject to an exclusion for:

"bodily injury… sustained by any person arising out of or resulting from (a) Claims or "action" alleging actual or threatened "abuse" by or at the direction of an insured"

"abuse" is defined as "any act or threat involving molestation, harassment, corporal punishment or any other form of physical sexual or mental abuse."

(the "Second Exclusion Clause")

In her claim for coverage, Ms. Henderson sought the following declarations:

  1. That there was coverage under the Policy in relation to "an incident that occurred at the premises of [Ms. Henderson] on September 12, 2017" (the "Incident;")
  2. That Northbridge was required to defend Ms. Henderson, the named insured in respect of the Action; and
  3. A declaration that Northbridge was required to indemnify Ms. Henderson in respect of any damages, costs, legal fees, disbursements, expenses and taxes incurred or to be incurred respecting the Action.

The issues raised

Ms. Henderson conceded that it was premature to determine Northbridge had a duty to indemnify her with regard to the Action.  The remaining question to be determined by the Court was whether Northbridge had a duty to defend Ms. Henderson in CCL's action.  The test for what triggers an insurer's duty to defend is set out by the Supreme Court of Canada in Progressive Homes Ltd v Lombard General Insurance Company of Canada, 2010 SCC 33:

"An insurer is required to defend a claim where the facts alleged in the pleadings, if proven to be true, would require the insurer to indemnify the insured for the claim… What is required is the mere possibility that a claim falls within the insurance policy."

Whether or not Northbridge had a duty to defend Ms. Henderson raised two legal issues:  

  1. The first issue was whether an intentional act exclusion clause could be interpreted as ousting coverage only for an intent to injure, not an intent to act. Ms. Henderson argued that the alternative allegation of assault required an element of intent, but that a person could assault an infant without an intention to harm. Ms. Henderson argued that there was no evidence that she intended to harm the infant, so Northbridge's policy did not exclude her mere intention to act.
  2. The second issue was whether the allegations of assault and negligence were one and the same, such that the negligence claim was derivative of and subsumed by the assault claim. Northbridge argued that, despite the pleading of negligence, the violent shaking of the infant was intentional, and the true substance of the action was one of an intentional tort.

1.   There is no effective distinction between exclusion clauses that cover "intentional acts" and those that cover "intentional injuries"

Dealing with the first issue, the Court in Henderson considered the Supreme Court of Canada's decisions in Co-operative Fire & Casualty Company v Saindon [1976] 1 SCR 735 and Non-Marine Underwriters, Lloyd's of London v Scalera, 2000 SCC 24, as well as the Ontario Court of Appeal's decision in Buchanan v Gan Canada Insurance Co, [2000] OJ No 2616. The Court observed that there was no effective distinction between exclusion clauses that cover "intentional acts" and those that cover "intentional injuries:"  where an exclusion clause covers an intentional tort, it does not matter that the result of the intended act was more harmful than the actor should have or could have foreseen.

The Court concluded that the bodily injury exclusion clause in the Policy could not be interpreted as ousting coverage only for an intent to injure. Whether or not there was evidence that Henderson intended to harm the infant, the allegation of assault, being an allegation of an intentional tort, was excluded under the policy.

2.   The claim in negligence was subsumed by the assault claim

Having concluded that Northbridge's policy excluded coverage for the assault allegation, the Court turned to consider whether the claim in negligence was derivative of the assault claim such that Northbridge had no duty to defend Ms. Henderson in the Action.

The Court, referring again to Scalera, observed that where a plaintiff properly pleads allegations of both intentional and non-intentional tort, the court must determine whether the alleged harm inflicted by the negligent conduct is derivative of that caused by the intentional conduct. If both the negligence and intentional tort claims arise from the same actions and cause the same harm, the negligence claim is derivative and will be subsumed into the intentional tort for the purposes of the exclusion clause analysis. Applying this reasoning, the Court held that in Ms. Henderson's case, the claim in negligence and assault arose from the same actions and caused the same harm. Therefore, the negligence claim was subsumed under the intentional tort of assault and fell within the exclusion clause.

Northbridge was found to have no duty to defend Ms. Henderson in the CCL's action.

The takeaways

Henderson affirms that an insurer's duty to defend will not be triggered by the creative pen of a plaintiff's lawyer. Insurers should consider carefully the elements of and the facts pleaded in support of the third party's claim. Similarly, an insured served with a claim by a third party should seek early assistance from his or her insurance broker or legal advisor in assessing the likelihood of coverage.