The obligation of a liability insurer faced with the intentional fault of the servant, employee, or mandatary of its insured
The Quebec Court of Appeal rendered another decision on liability insurance in Royal & SunAlliance du Canada, société d'assurances v English,1 on November 1, 2012. In this decision, the Court found a liability insurer liable for the intentional fault of its insured's servant, employee, or mandatary.
On November 1, 2012, the Quebec Court of Appeal ruled, for a third time in as many months,2 on the application of article 2464 of the Civil Code of Québec to liability insurance policies, more particularly in regard to gross and intentional fault.
The facts of this case are as follows. Ms. English had to move. To do so, she retained the services of Transport Matton Inc. ("Matton"). On moving day, Mr. Denis, the stepson of Matton's owner, presented himself under a fake name at Ms. English's home. He wore a company uniform and drove a truck bearing the company's name.
After being put into storage, the property disappeared. The police investigation revealed that the theft had been orchestrated and committed by Denis, who, moreover, pled guilty.
At trial, the Superior Court ruled that Ms. English had a direct right of action against Matton's insurer, Royal & SunAlliance, which had issued a policy covering Matton's liability at the relevant time, and that consequently, Royal & SunAlliance had to pay to Ms. English the admitted amount of the loss, $37,760.14, equivalent to the depreciated value of her property.
In a relatively short judgment, the Court of Appeal upheld this ruling. It concluded that Ms. English was the victim of fraud orchestrated by Denis and that as Matton had, at all relevant times, let it be believed that Denis was its servant, employee, or mandatary, it was liable for Denis's intentional fault.
The Court ruled that Royal & SunAlliance was Matton's liability insurer at the relevant time and that because the obligation of coverage of the insurer that is liable for injury caused by a person for whose acts the insured is liable subsists regardless of the nature or gravity of the fault, Royal & SunAlliance was required to indemnify Ms. English for Denis's intentional fault.
This case serves as a reminder that the situations in which an insurer may deny coverage to its insured as a result of gross or intentional fault are relatively limited. It provides a perfect illustration of a case in which, even if its insured (the employer) committed no fault, the liability insurer is nevertheless required to indemnify a third party for the consequences of the gross or intentional fault of a servant, employee, mandatary, or apparent mandatary of its insured, notwithstanding the exclusions that the policy may contain.
Footnotes
1 2012 QCCA 1939.
2 See Souscripteurs du Lloyd's v Alimentation Denis & Mario Guillemette Inc., 2012 QCCA 1376; and Audet v Transamerica Life Canada, 2012 QCCA 1746.
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