D.E. v. Unifund Assurance Company, 2014 ONSC 5243

Related: Unifund Assurance Company v. D.E., 2015 ONCA 423

Released September 11, 2014 CanLII

This was an application for a declaration that Unifund Assurance Company (“Unifund”) had a duty to defend and indemnify the applicants under a homeowner’s property insurance policy. The applicants were a married couple who lived with their minor daughter in Toronto. The daughter and parents were all sued as defendants in a lawsuit (“the bullying claim”). The plaintiff in the bullying claim alleged that the applicants’ daughter (and two other students) bullied, threatened and hit the plaintiff. The parents were sued in part because they allegedly failed to take reasonable steps to investigate the bullying, to remedy it and to prevent their daughter from bullying the plaintiff again.

The applicants asked Unifund to defend and indemnify them in the bullying claim. Unifund refused citing exclusions in the policy. The policy excluded “sexual, physical, psychological or emotional abuse, molestation or harassment, including corporal punishment by, at the direction of, or with the knowledge of any person insured by this policy and 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“(emphasis added).

Justice Stinson reviewed the applicable law. He observed that an insurer is obligated to provide a defence if the pleadings allege facts which, if true, would require the insurer to indemnify the insured for the claim. He noted that the duty to defend is much broader than the duty to indemnify. The mere possibility that the claim is within the policy is sufficient to trigger the duty to defend.

Justice Stinson ultimately held that Unifund did have a duty to defend the applicants. He held that there was a negligence claim pleaded against the parents that was distinct from the intentional tort claim against the daughter. The Judge applied the concept of contra proferentem and the principle that exclusion clauses are to be interpreted narrowly, and he concluded that the proper construction of the clause at issue was to limit it to intentional failure to take steps to prevent physical abuse or molestation; i.e. where the insured intentionally fails to act and thus permits the offensive conduct to continue. The exclusion was held not to extend to situations where that failure arose through negligence. Since there was no allegation that the applicants’ acts were intentional, the Judge held that coverage should not be excluded on this ground. The application was granted.

Read the full decision on CanLII


Written by

A partner at Oatley Vigmond, Ryan joined the firm in 2006 shortly after he was called to the bar in 2005. Ryan holds an Honours B.A. from York University, as well as a Bachelor of Laws (LL.B.) and a Master of Laws (LL.M.) (Civil Litigation and Dispute Resolution) from Osgoode Hall Law School.

When Ryan is not practicing law, he enjoys golfing and spending quality time with his wife and two young children.