Cyber risk is an increasingly complex subject for the insurance
industry. Emerging issues include coaching and threat response, and
a developing body of case law deals with liability for cyber
breaches, in addition to drafting and interpretation of cyber risk
policies and exclusions.
Recent class action certification decisions out of Ontario
provide some insight into the possible difficulties facing
businesses, governments and regulatory bodies in the area of cyber
risk, as well as the associated challenges and opportunities for
the insurance industry.
In Evans v. The Bank of Nova Scotia, 2014 ONSC
2135 (leave to appeal refused in Evans v. The Bank of Nova Scotia, 2014 ONSC
7249) the court dealt with the question of whether the
Bank could be vicariously liable for privacy breaches committed by
one of its employees, where the employee acted without knowledge or
authorization of the Bank in providing his girlfriend with his
customer’s confidential information. The girlfriend then used
the information to commit identity theft and fraud. The court found
that even though the Bank was not involved in the improper conduct,
it was arguable that the Bank created the opportunity for the
employee to steal the customer information by allowing him
unsupervised access to the client files. The claim based on the new
tort of “intrusion upon seclusion” was allowed to
Similarly, in March 2014, the Federal Court certified a class
action in Condon v. Canada, 2014 FC 250 partly on
the basis of intrusion upon seclusion. (In Condon v. Canada, 2015 FCA 159, the
Federal Court of Appeal later allowed an appeal and referred the
matter back to the Federal Court to include claims for negligence
and breach of confidence.) The case involved the loss of
confidential student information on an external hard drive
collected for the Canada Student Loans Program by the Government of
Canada. As in Evans, the Court determined that the
claim was not bound to fail, and allowed the class action to
The “intrusion upon seclusion tort” is a developing
area of law. While courts in some provinces have not yet recognized
the tort, the Evans v. The Bank of Nova Scotia decision
confirmed that the door is open for evolving claims in this area,
and by association, increased risk for employers who are found not
to have sufficient employee monitoring systems in place.
The content of this article is intended to provide a general
guide to the subject matter. Specialist advice should be sought
about your specific circumstances.
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