The Court held that the insurer was not liable under s. 132 of the Ontario Insurance Act with respect to a damage award which had been returned unsatisfied as against its insured. The insured’s lack of co-operation with the insurer in not responding to the insurer’s letters amounted to a substantial and material breach of the insurance policy.
The plaintiff was employed as a bouncer by the insured when he was injured as a result of an assault by patrons. The plaintiff was successful in obtaining a judgment as against the insured. The defendant insurer did not defend the action.
The plaintiff commenced the subject action against the insurer under s. 132 of the Insurance Act, R.S.O. 1990, c. 18 for recovery of the judgment. The insurer took the position that it was not liable to pay for the following reasons: (1) the insured had violated the insurance policy by failing to co-operate; (2) the plaintiff’s claim was subject to the Workplace Safety and Insurance Act, 1997 S.O. 1997, c. 16; and (3) Exclusionary clauses in the policy stipulated that the policy did not cover the incident.
Approximately seven months after the insured was advised by the plaintiff that a claim would be brought, the insured’s lawyer wrote to the insurer requesting assurance that coverage would be provided. The insurer wrote a registered letter to the insured at the address provided in the policy requesting co-operation and stated that at that time it was unable to confirm coverage as there had been no contact. Two further registered letters were sent to the insured, with no response.
The Court noted that the insurer was aware of the proceeding against its insured and decided to refrain from defending. The Court further noted that in order to properly defend the action, the insurer required further information from the insured in relation to the nature of the employment of the plaintiff and the circumstances from which the claim arose. The Court found that the lack of co-operation by the insured by not responding to the letters or communicating in any other way amounted to a substantial and material breach of the insurance policy. In the result, the Court dismissed the plaintiff’s action.
While it was not necessary to do so, the Court also stated its findings with respect to the other defences raised by the insurer. The Court found that although the plaintiff worked irregular hours and was paid cash each night, the plaintiff was an employee of the insured and was thus covered by the Workplace Safety and Insurance Act. The Court further found that the insurer was entitled to rely upon the "bodily injury" exclusion in the policy to absolve itself of indemnifying the plaintiff.