Liberty Mutual v. Hollinger Inc., (2004) 183 O.A.C. 146 (CA)

• Judge: Rosenberg, MacPherson and Sharpe, JJ.A.
• Court: Court of Appeal (Ontario)
• Case Date: February 13, 2004
• Jurisdiction: Ontario
• Citations: (2004), 183 O.A.C. 146 (CA)

Liberty Mutual v. Hollinger Inc. (2004), 183 O.A.C. 146 (CA)

MLB headnote and full text

Temp. Cite: [2004] O.A.C. TBEd. FE.070

Liberty Mutual Insurance Company (as represented in Canada by Liberty International Canada) (appellant) v. Hollinger Inc., Hollinger International Inc. and The Ravelston Corporation Limited (respondents)

(C38237)

Indexed As: Liberty Mutual Insurance Co. v. Hollinger Inc. et al.

Ontario Court of Appeal

Rosenberg, MacPherson and Sharpe, JJ.A.

February 13, 2004.

Summary:

A terminated employee sued for damages for, inter alia, intentional discrimination on the basis of age and race contrary to United States human rights legislation. The employer settled the suit and claimed against its general liability insurer to contribute to the defence costs and indemnify the employer respecting the discrimination claim. The insurer refused, submitting that the policy did not extend coverage to intentional discrimination. The insurer applied for a declaration that coverage was excluded and that it had no duty to defend.

The Ontario Superior Court dismissed the application. The insurer appealed.

The Ontario Court of Appeal allowed the appeal. The insurer was not under a duty to defend the claim. Coverage for intentional discrimination was excluded under the policy on the basis of the fortuity principle (i.e. indemnity excluded where insured intended the very harm which gave rise to the claim).

Insurance - Topic 3302

Payment of insurance proceeds - Actions - Defences - Intentional act by insured to bring about loss or damage (public policy rule) - [See Insurance - Topic 6950 ].

Insurance - Topic 3303

Payment of insurance proceeds - Actions - Defences - Criminal act by insured to bring about loss or damage - [See Insurance - Topic 6950 ].

Insurance - Topic 6950

Liability insurance - Defences - Intentional act by insured - An employer who intentionally discriminated against an employee settled the employee's damages claim - The employer's general liability insurance policy covered discrimination claims, but excluded claims arising out of wilful violation of a penal statute - The insurer denied coverage, submitting that (1) intentional discrimination contrary to human rights legislation constituted a wilful violation of a penal statute; (2) indemnity insurance covered only fortuitous acts, excluding coverage where the very harm claimed for was intentionally caused (fortuity principle); and (3) it was contrary to public policy to extend insurance coverage to intentional discrimination - The Ontario Court of Appeal held that coverage was not excluded under the wilful violation of a penal statute clause, because human rights legislation was remedial, not penal - However, coverage was excluded under the fortuity principle - The policy was an occurrence based policy covering only accidental or fortuitous losses - Where an insured intentionally caused the very harm giving rise to the claim (as opposed to an intentional act with unintentional consequences), coverage was excluded - The court discussed, without deciding, whether coverage for intentional acts was excluded on public policy grounds - See paragraphs 9 to 21.

Cases Noticed:

Nichols v. American Home Assurance Co. et al., [1990] 1 S.C.R. 801; 107 N.R. 321; 39 O.A.C. 63, refd to. [para. 8].

Slough Estates Canada Ltd. v. Federal Pioneer Ltd. et al. (1994), 20 O.R.(3d) 429 (Gen. Div.), refd to. [para. 8].

Action Travail Des Femmes v. Canadian National Railway Co. et al., [1987] 1 S.C.R. 1114; 76 N.R. 161; 40 D.L.R.(4th) 193, refd to. [para. 14].

Scalera v. Lloyd's of London, [2001] 1 S.C.R. 551; 253 N.R. 1; 135 B.C.A.C. 161; 221 W.A.C. 161, refd to. [para. 16].

Stats v. Mutual of Omaha Insurance Co., [1978] 2 S.C.R. 1153; 22 N.R. 91, refd to. [para. 17].

Murphy v. Lloyd's of London (2000), 137 O.A.C. 10 (C.A.), refd to. [para. 17].

Fenton v. Thorley (J.) & Co., [1903] A.C. 443 (H.L.), refd to. [para. 17].

Hodgkinson v. Economical Mutual Insurance Co. (2003), 180 O.A.C. 177 (C.A.), refd to. [para. 18].

Boston Housing Authority v. Atlanta International Insurance Co. et al. (1992), 781 F. Supp. 80 (D. Mass.), refd to. [para. 23].

American Guarantee and Liability Insurance Co. v. Vista Medical Supply (1988), 699 F. Supp. 787 (N.D. Cal.), refd to. [para. 23].

Save Mart Supermarkets v. Underwriters at Lloyd's London, Sphere Drake Insurance PLC (1993), 843 F. Supp. 597 (N.D. Cal.), refd to. [para. 23].

Solo Cup Co. v. Federal Insurance Co. (1980), 619 F.2d 1178 (7th Cir.), refd to. [para. 24].

Public Service Employee Relations Commission (B.C.) v. British Columbia Government and Service Employees' Union, [1999] 3 S.C.R. 3; 244 N.R. 145; 127 B.C.A.C. 161; 207 W.A.C. 161, refd to. [para. 25].

Authors and Works Noticed:

Brown, Craig, and Menezes, Julio, Insurance Law in Canada (2002 Looseleaf), pp. 18-178, 18-179 [para. 18].

Mootz, F.J., Insurance Coverage of Employment Discrimination Claims (1997), 52 U. Miami L. Rev. 1, pp. 32, 38 [para. 18].

Counsel:

Brian J.E. Brock, Q.C., for the appellant;

Glenn Smith and Nina Bombier, for the respondents.

This appeal was heard on November 19, 2003, with additional written submissions on January 23, 2004, before Rosenberg, MacPherson and Sharpe, JJ.A., of the Ontario Court of Appeal.

The judgment of the Court of Appeal was delivered by Sharpe, J.A., and released on February 13, 2004.