Is dancing at a nightclub within the scope of employment?
An articled student, Danicek, was injured when an associate lawyer from the same firm, Poole, fell on her on the dance floor of a nightclub. Both had attended a firm dinner and then proceeded to the night club. Poole sought a declaration that he was entitled to a defence and indemnity under the firm's insurance policy for an action brought by Danicek. The court held that while the duty to defend was triggered by an allegation in the pleadings that Poole was acting within the scope of his employment, there was no duty to indemnify because it was established at trial that Poole was not, in fact, acting in furtherance of the firm's business.
Danicek v. Alexander Holburn Beaudin & Lang, [2011] B.C.J. No. 78, January 21, 2011, British Columbia Supreme Court, S.F. Kelleher J.
This was the second phase of a trial of three related actions. The first action was commenced by the Plaintiff Danicek for damages from a fall on the dance floor of Bar None (the “First Action”). The Plaintiff brought an action against Mr. Poole and her then-employer Alexander Holburn Beaudin & Lang (“AHBL”). Lombard General Insurance Company of Canada (“Lombard”) was a third party and had a policy of insurance covering AHBL and its employees.
The second action arose from a motor vehicle accident in which liability was admitted. The third action was commenced by Co-operators General Insurance Company (“Co-operators”) against Lombard for restitution or contribution with respect to the amounts that Co-operators paid for the defence and indemnity of the Defendant Poole in the First Action. Co-operators issued a tenants insurance package, under which the Defendant Poole was an insured.
The second phase of trial addressed two issues. First, a claim by the Defendant Poole for a declaration that the Defendant Lombard was obliged to defend and indemnify him. Second, the claim by Co-operators for restitution or contribution from Lombard. Both claims involved a determination of whether the circumstances of the Plaintiff’s injury fell within the policy of insurance issued by Lombard covering AHBL’s employees.
Prior to her injury, the Plaintiff Danicek was at the AHBL associates’ dinner at Rodney’s Oyster House. After dinner several of the associates, including the Plaintiff Danicek and the Defendant Poole, proceeded to Bar None. Later that evening, Mr. Poole fell on Ms. Danicek and she struck her head on the floor.
Lombard argued that there was neither a duty to defend nor a duty to indemnify because Mr. Poole was not an insured as the actions in issue were not within the scope of his employment. The definition of insured was set out in Part II as follows:
Part II - WHO IS AN INSURED
2. Each of the following is also an insured:
a. Your employees, other than your executive officer, but only for acts within their employment by you. However, none of these employees is an insured for
1) Bodily injury or personal injury to you or to a co-employee while in the course of his or her employment; or
…
b. Any employee, or person under contract, or any person or personal corporation who provide or have provided services to or for the Named Insured under a personal services contract or personal services agreement or employees on loan from others working solely for and on behalf of the Named Insured or persons designated “Associate Counsel” or “of Counsel”, students or volunteers, but only with respect to their employment association, or their contract with the Named Insured.
Lombard argued that Mr. Poole’s claim fell within clause 2.a. and, since he was not acting within the scope of his employment, he could not be covered by the policy. Moreover, even if he was, Ms. Danicek was a co-employee and the claim was excluded under clause 2.a.1). Further, the parties could not have reasonably intended that a fellow employee could avoid the exclusion in 2.a.1) and invoke coverage under 2.b.
In contrast, Co-Operators argued that clause 2.b. was applicable with the relevant words being “any employee … with respect to their employment … with [AHBL]”. Further, Mr. Poole was an insured as long as there was some connection between his employment and the accident.
The Court found that Lombard had misapprehended the correct approach to assessing a duty to defend. Clearly, Mr. Poole, as an employee of AHBL, was an insured for acts within the scope of his employment. The allegations in the pleadings alleged that Mr. Poole was an employee and that his actions were within the scope of his employment. As a result, there was at least a mere possibility that Ms. Danicek’s claim fell within the scope of the Lombard policy. Thus, there was a duty to defend.
However, the Court held that there was no obligation to indemnify. The Court found that clause 2.a. was applicable and that Mr. Poole was not acting within the scope of his employment at the time of the fall. The after-work social event at Bar None was not performed in furtherance of AHBL’s business. The associates’ dinner had been paid for by AHBL but the attendance at Bar None was not an employer sponsored activity; therefore, Mr. Poole’s actions were not within the scope of this employment and there was no obligation to indemnify.
This case was digested by Aaron D. Atkinson and edited by David W. Pilley of Harper Grey LLP. If you would like to discuss this case further, please feel free to contact them directly at aatkinson@harpergrey.com or dpilley@harpergrey.com or review their biographies at http://www.harpergrey.com
