Court to analyze whether commercial liability policy applies lawsuit arising from fatal injury on the job

An Ontario court finding, that Intact Insurance Company has a duty to defend an organization sued in connection with a worker killed on the job, lacked “analysis of the critical issues that had to be addressed,” the Court of Appeal for Ontario recently ruled.

Court records indicate that in August, 2013, Conrad Lafrenière, “suffered fatal injuries in the course of his employment” while carrying out maintenance work on a vehicle ramp at the National Gallery of Canada.

“When a vehicle approached to enter the underground garage, Mr. Lafrenière stepped back towards the ledge of the ramp and fell,” wrote Justices Paul Rouleau, Katherine Rensburg and Lois Roberts of the Court of Appeal for Ontario in a decision released Sept. 6, 2017.

Lafrenière worked for Lafleur de la Capitale Inc., which provided landscaping and maintenance services for the National Gallery.

Lafleur had a liability policy with Intact providing coverage of up to $5 million per occurrence of bodily injury or property damage. The National Gallery was a named insured, “only insofar as [its] Legal Liability arises vicariously out of the operations of [Lafleur] in connection with [its landscaping and snow removal services],” wrote the Court of Appeal for Ontario judges hearing Intact’s appeal.

Intact was appealing a ruling by the Ontario Superior Court of Justice ordering Intact to fund defences of two lawsuits – one by Lafrenière’s wife and the other by other family members of Lafrenière under the Family Law Act.

The National Gallery of Canada had asked for a declaration that Intact and Lafleur “are obliged to provide and fund its full defence in the underlying actions, relying on the terms of the maintenance contract and the CGL policy.”

The policy that Intact wrote excluded obligations under a workers’ compensation law and for bodily injury to an employee of arising from employment. The applications judge ruled that the allegations made in the lawsuits “could relate to issues of maintenance or of measures that should have been taken in the cause of maintenance.”

But the ruling ordering Intact to defend the National Gallery has been set aside. In its Sept. 6, 2017 decision – cited as National Gallery of Canada v. Lafleur de la Capitale Inc. – the Court of Appeal for Ontario ordered that National Gallery’s application be re-heard by a different judge.

The judge hearing that National Gallery’s application “had to undertake a detailed analysis” of the pleadings by the plaintiffs, the insurance policy and the maintenance contract, in the context of three questions, the appeal court ruled. One was whether the plaintiffs showed that the loss at issue is covered under the terms of the policy. The second was whether Intact demonstrated that an exclusion applies. The third was – if an exclusion did apply – whether the plaintiffs established that there is an exception to the exclusion.

The applications judge “did not conduct the necessary analysis of the pleadings, maintenance contract and policy, which were essential in this complex case, to address the coverage issue,” the Court of Appeal for Ontario found.

In Canada, workers’ compensation began when Sir William Ralph Meredith was appointed in 1910 to recommend a scheme for Ontario, Justice John Sopinka noted in the Supreme Court of Canada ruling in Pasiechnyk v. Saskatchewan, released in 1997.

“The bar to actions against employers is central to the workers’ compensation scheme as Meredith conceived of it: it is the other half of the trade-off,” Justice Sopinka wrote. “It would be unfair to allow actions to proceed against employers where there was a chance of the injured worker’s obtaining greater compensation, and yet still to force employers to contribute to a no-fault insurance scheme.”

In a ruling released in 2016, the Court of Appeal of Yukon allowed a lawsuit against a construction worker as well as two corporations, arising from a workplace injury, to proceed.

In Whitehorse in 2012, federal employee Linda Hill was struck on the head by a piece of wood that had fallen from the roof at the Elijah Smith Building.

Named as defendants in her lawsuit were construction worker Jason Tomandl Ketza Construction Corp. and SNC-Lavalin Group Inc. The defendants had argued that “the whole point of a universal scheme of compensation is to avoid lawsuits where employers and employees are involved,” Justice John Vertes of the Supreme Court of Yukon wrote in 2015 in his ruling allowing the lawsuit to proceed.

The Government Employees Compensation Act “extends benefits analogous to those under provincial and territorial workers’ compensation legislation to federal government employees,” and also “bars an employee who is eligible to receive compensation from bringing a civil claim against the federal Crown, its officers, servants, and agents,” wrote Justice Harvey Groberman of the Court of Appeal of Yukon.

But when GECA was revised in 1955, there was “no suggestion that the new legislation would curtail an employee’s right to sue an employer or worker other than the Crown and its servants,” Justice Groberman added.

An Ontario company that was sued by a worker injured on the job was Sam’s Auto Wrecking Co. Ltd., carrying on business as Wentworth Metal, in Hamilton. A Wentworth Metal vice-president had his right leg severed below the knee after he was run over by a crane. He was not covered by the Workplace Safety and Insurance Board of Ontario because in 1989 or 1990, Wentworth Metal opted to purchase private insurance for executives.

In 2013 the Court of Appeal for Ontario upheld a 2011 finding that Lombard General Insurance Company did not have a duty to defend Wentworth.

One exclusion in the Lombard policy was for “bodily injury to an employee of the Insured arising out of and in the course of employment by the Insured.”