On June 30, 2022, the Ontario Court of Appeal (the Court) issued its decision in Demme v. Healthcare Insurance Reciprocal of Canada, 2022 ONCA 503 (Demme), confirming that a commercial liability insurer had no duty to defend against claims that were based on the tort of intrusion upon seclusion.

The underlying facts in Demme are summarized in our previous E-TIPS® Newsletter here, where the Ontario Superior Court of Justice overturned the certification of a class action lawsuit against Ms. Demme and William Osler Health System. 

In Demme, Ms. Demme’s previous employer, the Brampton Civic Hospital (the Hospital) was insured by the Healthcare Insurance Reciprocal of Canada (HIROC). Ms. Demme requested that HIROC provide her with a defence to claims against her that resulted from her unauthorized access to patients’ records. HIROC informed Ms. Demme that it had no duty to defend under the Hospital’s commercial liability policy (the Policy). Subsequently, Ms. Demme brought a motion for summary judgment for a declaration that HIROC had a duty to defend her.   

On March 10, 2021, the motion judge dismissed Ms. Demme’s motion for the following reasons:

  1. The true nature of the claims against Ms. Demme is the intentional tort of intrusion upon seclusion;
  2. The injuries were not caused by an “occurrence” (as defined in the Policy), since the injuries were not unexpected or unintended by Ms. Demme; and
  3. The intentional act exclusion and the criminal act exclusion found in the Policy excluded any duty of HIROC to defend Ms. Demme.

Demme is the appeal of the dismissal of the summary judgment motion. The Court agreed with the motion judge that the underlying nature of the claims against Ms. Demme was the intentional tort of intrusion upon seclusion. Although Ms. Demme provided explanations for her conduct, the Court concluded that such explanations should not play a significant role in considering whether the nature of the claims asserted against Ms. Demme could be covered under the Policy.

The Court also rejected Ms. Demme’s argument that since the tort of intrusion upon seclusion covers conduct that is “intentional or reckless”, there is a possibility that the claims asserted against her could be regarded as claims for damages for bodily injury arising out of reckless conduct (which would have brought the claims within the Policy’s definition of “occurrence” and removed the applicability of the intentional act exclusion).  The Court stated that “Ms. Demme’s contention that reckless conduct possibly could amount to unintentional conduct runs counter to the thrust of Canadian insurance jurisprudence.”

The Court then considered Ms. Demme’s submission that she only intended to obtain the Percocet pills and had no intention to access patient’ records. She then contended that unless her intentional conduct to obtain the pills was accompanied by an intention to cause bodily harm, the intentional act exclusion in the Policy did not apply. The Court rejected this argument and agreed with the motion judge that the relevant intention for the tort of intrusion upon seclusion was Ms. Demme’s intention to access private patient records, finding that the claims against Ms. Demme based on this tort were outside the Policy’s definition of “occurrence”, and were within the scope of the intentional acts exclusion.

Lastly, the Court considered whether the decision of the motion judge to deny coverage under the Policy for the tort of intrusion upon seclusion gave rise to an interpretation “that would offend the principle that courts should avoid an interpretation of a policy that would render the insurance protection obtained [for bodily injury arising out of invasion or violation of the right of privacy] nugatory and would enable the insurer to pocket the premium without risk.” The Court agreed with the motion judge’s conclusion that since the Policy would cover bodily injury arising from negligence-based invasions of privacy, the lack of coverage for the intentional tort of intrusion upon seclusion would not nullify the Policy’s coverage.

Ultimately, the Court dismissed the appeal, and awarded costs against Ms. Demme.

Summary By: Olalekan (Wole) Akinremi


22 07 27

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