British Columbia Medical Association v. Aviva, 2011
BCSC 1399, decision rendered October 19, 2011
A plaintiff cannot circumvent a defendant's insurance
coverage for defamation by simply pleading that the publications
were made with an intent to injure and with knowledge of their
falsity. The British Columbia Supreme Court held on October 19,
2011 that such pleadings will not enable a defendant's insurer
to deny coverage by relying on the common policy clause which
excludes coverage for acts of intentional wrongdoing.
The British Columbia Medical Association and its board members
were sued in defamation. Although they had insurance coverage for
defamation claims, their insurer, Aviva, denied coverage by relying
on the exclusion clause for acts of intentional wrongdoing. The
insurer based its position on the plaintiff's allegations in
her statement of claim that the statements at issue constituted a
"campaign of vilification" published by the defendants
with an intent to injure the plaintiff and with knowledge of their
Madam Justice Ross, applying Non-Marine Underwriters,
Lloyd's of London v. Scalera,  1 S.C.R. 551 (S.C.C.),
noted that an insurer's duty to defend is triggered by the mere
possibility that a claim within the policy may succeed. As such, it
is the true nature of the substance of the claim that is to be
determined, not the particular labels used by the plaintiff. Where
the pleadings are found to contain "properly pleaded
allegations of both intentional and non-intentional torts, the
court must decide whether the harm allegedly inflicted by the
negligent conduct is derivative of that caused by the intentional
misconduct." If the underlying elements of the two claims are
sufficiently disparate, the non-intentional claim will not be
derivative and the duty to defend will apply.
In determining if there is a possibility of coverage, the Court
must consider the possibility that some but not all of the
plaintiff's allegation will succeed at trial.
The Court correctly acknowledged that the elements of a
defamation claim do not require proof of conduct with intent to
"If the allegations of intent to injure and knowing
publication of falsehood are removed, sufficient facts remain to
support a pleading of defamation.... A plaintiff alleging
defamation does not have to establish that the defendant had any
level of knowledge or blameworthy mental state. Here, the policy
exclusions address such blameworthy mental state but do not exclude
publications that were made intentionally..."
The Court not only declared that the insurer is, and at all
material times had been, under an obligation to pay for the
defence, but also declared that the defendant insureds were
permitted to conduct the defence with legal counsel of their
choosing, and that counsel for the insureds is not required to
report to the insurer with respect to any matter bearing on the
issue of liability. The latter ruling was found after the Court
heard the insured's argument that there was a conflict in the
present case, as the coverage questions will depend upon all
aspects of the insured's conduct at issue in the litigation, in
particular to the intention, knowledge and purpose of the
defendants in the underlying action.
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