In Oliveira v Aviva Canada Inc et al, 2017 ONSC 6161, the court reiterated the test for interpreting insurance provisions, and underscored the expansive approach that Canadian courts will take regarding an insurer’s duty to defend. This decision was affirmed by Ontario’s Court of Appeal in Oliveira v Aviva Canada Inc et al, 2018 ONCA 321, and is consistent with the jurisprudence to date.

In this case, a nurse was alleged to have repeatedly accessed a patient’s hospital records without any reason for doing so. This amounted to unauthorized access to medical records of a patient outside her circle of care. In the underlying lawsuit, the plaintiff patient pled the tort of intrusion upon seclusion. The nurse had a workplace insurance policy, which provided coverage for civil proceedings alleging damages because of personal injury and mental anguish, which were defined to include “invasion or violation of privacy, invasion or violation of the right of privacy.” The policy covered employees “acting under the direction of” the hospital in respect of liability “arising from the operations” of the hospital. When Aviva, the insurer, refused to defend her claim, the nurse applied for a declaration that the hospital’s insurer owed her a duty to defend. The case focused on the interpretation of the actual wording of the policy. At issue was whether the unlawful unauthorized conduct perpetrated by the nurse could be classified as arising from the operations of the hospital and at the direction of the hospital. 

Aviva argued that no duty to defend was owed because the alleged tortious conduct could not be said to “arise from the operations of” the hospital. Essentially, because the nurse was alleged to have acted contrary to the hospital’s practices and procedures in accessing information about someone who was never her patient, she could not have been “acting under the direction of” the hospital. Similarly, Aviva claimed the “operations” of the hospital could not reasonably include unauthorized and offensive accessing of patient information.

Justice Koehnen, in siding with the nurse, confirmed the legal principles applicable to the interpretation of insurance policies, which are settled law in Canada. The courts must:

i. look to the pleadings filed against the insured which are given the widest possible latitude;

ii. acknowledge that the duty to defend is broader than the duty to indemnify (even the mere possibility that a claim falls within the policy will suffice to trigger a duty to defend); 

iii. construe coverage provisions broadly while interpreting exclusion clauses narrowly; and

iv. avoid interpretations of policies that substantially nullify coverage.

In applying these principles, Justice Koehnen held that Aviva’s arguments were contrary to, or ignorant of, the entire point of insuring against claims of invasion of privacy. The court explained that a person will only be held liable under the tort of intrusion upon seclusion where she has intentionally obtained information about another and where the invasion would be “highly offensive” to a reasonable person. As such, since Aviva had agreed to insure against invasion of privacy claims and, by definition, this must include coverage for claims that an employee accessed information in an offensive manner, it would make little sense if only authorized access to private information were covered by the policy. The court supported this interpretation by way of the legal principles applicable to the interpretation of the insurance policy, as coverage should be construed broadly, and should not result in the nullification of intended coverage.  Aviva appealed.

Court of Appeal Upheld the Decision

In dismissing the appeal, the Court of Appeal agreed that the nurse, while on duty, in the course of the hospital’s operations –which falls expressly under the language of the policy– accessed records she had apparently no business accessing. She was acting under the direction of the hospital when she was on duty. The Court of Appeal thus found that a common-sense interpretation of the language in the policy, as it covered invasions of privacy, must conclude that the insurance was intended to cover this type of conduct. 

What the insurer should know

Here again, the courts remind insurers that the duty to defend is broad and cannot be narrowly construed as to nullify intended coverage.  Insurers should take note of this decision, and the reconfirmed test applied to the interpretation of insurance provisions before contesting their duty to defend. Where the argument will focus on wording of the policy, an insurer is wise to take an expansive view of their own documents, and expressly exclude claims they do not intend to cover.

Shawn O’Connor, Kate Agyemang & Makena Korte Moore