IN THE SUPREME COURT OF BRITISH COLUMBIA

Date: 20121224

Docket: 12-1348

Registry:
Victoria

Between:

Joseph
Gilbert Dube

Plaintiff

And

BCAA
Insurance Corporation

Defendant

Before:
The Honourable Mr. Justice Kelleher

Reasons for Judgment

[1]            
This is an application by the defendant, BCAA Insurance Corporation (“BCAA”),
pursuant to Rule 9-7 of the Supreme Court Civil Rules.  BCAA seeks to
dismiss the plaintiff’s action.

[2]            
The action was brought in April 2012.  It arose from the defendant’s
letter to the plaintiff in April 2011 advising that it was denying coverage
under an insurance policy.

[3]            
The plaintiff is a former teacher who was employed by the Greater
Victoria School Board.  He was insured under a residential insurance policy (the
“policy”) issued by the defendant.

[4]            
In February 2011, the plaintiff was named as a defendant in an action: Luca
Whittaker Camaiani, an infant by his guardian ad litem, Suzanne Whittaker v.
Joseph Gilbert Dube and Board of School Trustees of School District 61 (Greater
Victoria) (the “Underlying Action”).

[5]            
The Underlying Action is for damages.  Luca Camaiani was a grade one
pupil at a school in Victoria operated by School District 61.  Mr. Dube
was his teacher.

[6]            
The original notice of civil claim alleged assault and battery on the
part of Mr. Dube and negligence on the part of School District 61 and Mr.
Dube.  The allegations of assault and battery are as follows:

Assault and Battery

7.         Between the dates of September 6, 2005 and January
27, 2006 the Plaintiff Luca, while under the direct care and supervision of the
Defendant Dube, who wrongly and intentionally committed assault and battery on
Luca, particulars of the assault and battery are as follows:

(a)        Repeatedly
yelling, screaming and ridiculing Luca;

(b)        Repeatedly
lifting Luca off the floor by his clothing, shaking him and dropping him on the
floor;

(c)        Repeatedly
striking Luca with a pointer stick; and

(d)        Picking
up Luca and throwing him across the classroom into a wall.

8.         In addition to the assault and battery, the
Defendant Dube intentionally refused to allow Luca access to the bathroom,
while knowing Luca had a medical condition of the bowels called encopresis.

9.         In addition to the assault and battery, Luca also
witnessed verbal and physical assault and battery of other children by the
Defendant Dube.

10.       On or around January 25, 2006 the parent and
guardian ad litem of Luca initiated a complaint to School District 61
and Dube was eventually removed from his teaching position on or about January
27, 2006.

11.       Criminal proceedings
were commenced against the Defendant Dube and on April 18, 2007 the Defendant
Dube pled guilty to assaulting Luca, contrary to section 266 of the Criminal
Code.

Negligence of School District 61

12.       At all times material to this action the
Defendants, School District 61 and Dube, owed a duty of care to Luca and to
take reasonable care for his health, safety and emotional well being during
school hours.  That duty arose from the fact that the Defendants were acting, inter
alia, in loco parentis.

13.       That duty of care also extended to School District
61 to also ensure that all teaching staff teaching elementary school children
were suitable for teaching elementary school children, that any reports of
physical altercations between teachers and pupils were immediately dealt with
and that any indication that a teacher was not suitable for teaching young
children were removed from his or her position.

14.       Between January 2005 and January 2006 the Defendant
School District 61 knew, or ought to have known, that the Defendant Dube had
psychological and/or mental health issues, particularly since reports of
assault by the Defendant Dube had been made by parents of two other children in
or around January 2005, while the Defendant Dube worked at Willows Elementary
School in Victoria, British Columbia.  Further particulars of the negligence of
School District 61 include:

(a)        failing
to take adequate steps to remove the Defendant Dube from his position once
reports of assaults were made by parents of the other children in 2005;

(b)        failing
to take adequate steps, or at all, to protect Luca from assaults and battery by
Dube;

(c)        failing
to adequately supervise the Defendant Dube from further assaults on children,
including Luca;

(d)        allowing
the Defendant Dube to continue teaching elementary school children, including
Luca, when they knew, or ought to have known, the Defendant Dube was
emotionally unstable and had psychological and/or mental health issues.

15.       As a result of the assault and battery on Luca by
the Defendant Dube, and the negligence of School District 61, Luca has suffered
loss and damage and will continue to suffer in that he:

(a)        has
been unable to undergo normal and proper peer development;

(b)        suffered
psychological damage and post-traumatic stress to the extent he is unable to
attend public school;

(c)        continuing
fear of school teachers;

(d)        continuing
fear of humiliation and embarrassment, in particular regarding his encopresis;

(e)        depression,
anxiety and feelings of lack of self worth and low self-esteem;

(f)         his
normal education course has been interrupted, such that he has lost several
years of schooling and will likely continue to lose schooling which will likely
manifest in lost opportunities and employment;

(g)        other material and emotional
disorders, the particulars of which will be available at trial.

[7]            
In Part 3 of the notice of civil claim, the plaintiff set out the legal
basis of his claim:

1.       Assault and battery

2.       Negligence of the
Defendants, School District 61 and Dube.

[8]            
In April 2011, Mr. Dube advised BCAA of the Underlying Action.

[9]            
On April 29, 2011, an adjuster wrote to Mr. Dube on behalf of the
defendant, denying coverage for the cost of the defence and indemnity of the Underlying
Action.  The relevant part of the letter provides as follows:

BCAA has now concluded a thorough review of the notice of
civil claim and the pleadings contained within it.  This document confirms that
the allegations against you are based upon the tort of assault and battery.

We draw your attention to the insuring agreement in s. 2.2
“Coverage E – Legal Liability” which agrees to “pay all sums that you become
legally liable to pay as compensatory damages because of unintentional bodily
injury or property damage”.

We also refer you to section 2.6 “Loss or Damage Not Insured”
which excludes claims arising from:

(5) bodily
injury or property damage caused by any intentional or criminal act or failure
to act by:

(a)        any person insured by
this policy;

As the allegations against you do
not fall within the coverage provided and furthermore, are clearly excluded by
this policy, the BCAA Insurance Corporation denies coverage: for the costs of
defence of this claim or for indemnity of any judgements brought against you. 
Please accept this letter as formal notification that coverage for your claim
is denied.

[10]        
Mr. Dube then brought this action seeking, among other things, a
declaration that BCAA is required to defend the claim and to indemnify the
plaintiff.

[11]        
This Rule 9-7 application is dated June 7, 2012.  BCAA seeks an order
that Mr. Dube’s claim be dismissed and declarations that there is no duty to
defend the plaintiff or indemnify the plaintiff with respect to the claims made
in the Underlying Action.

[12]        
On June 14, 2012, the plaintiff in the Underlying Action amended the
notice of civil claim by adding s. 12(a):

12(a)    The plaintiff says that Dube breached the duty of
care, particulars of which are as follows:

(a)        failing
to ensure Luca was in a safe learning environment;

(b)        failing
to ensure Luca did not sustain physical and emotional trauma;

(c)        failing
to recognize that he was not emotionally suitable for teaching grade 1
students;

(d)        failing
to take steps to address his emotional, psychological and/or mental health
issues, including anger management, when he knew, or ought to have known, that
he was unable to control his emotions; and

(e)        failing to allow Luca to use
the bathroom when he knew or ought to have known, that Luca’s medical problems
would be exacerbated by such refusal.

[13]        
The applicant presented its case on the basis of s. 2.2, first
paragraph, as well as s. 2.6(5) of the policy:

2.2       We will pay all sums that you become legally liable
to pay as compensatory damages because of unintentional bodily injury or
property damage.

…

2.6       You are not assured for claims arising from …

(5)        bodily
injury or property damage caused by any intentional act or criminal act by

(a)        any
person insured by this policy; or

(b)        any other person at the
direction of any person insured by this policy.

[14]        
In the course of deliberations, I reviewed the policy as a whole.  I
noted that s. 2.6(9) also excluded claims arising from:

(9)        Sexual,
physical, psychological or emotional abuse, molestation or harassment,
including corporal punishment by, at the direction of, or with the knowledge of
any person insured by this policy; or failure of any person insured by this
policy to take steps to prevent sexual, physical, psychological or emotional
abuse, molestation or harassment or corporal punishment.

[15]        
The court contacted counsel and inquired whether the defendant relied on
this clause as well.  Counsel for the defendant advised that it did indeed rely
on this provision.  The court therefore invited written submissions addressing
this section of the policy.

[16]        
Those submissions were received and considered.

LEGAL PRINCIPLES

[17]        
The applicable principles were recently summarized by Madam Justice Ross
in British Columbia Medical Association v. Aviva Insurance Company of
Canada, 2011 BCSC 1399:

Duty to Defend

[39]      The parties are in substantial agreement with
respect to the relevant legal principles. The general principles concerning the
interpretation of insurance policies were set out by the Supreme Court of
Canada in Progressive Homes Ltd. v. Lombard General Insurance Co. of Canada,
2010 SCC 33 [Progressive], at paras. 22-24. I have summarized some
of them here:

(a)        the primary interpretive
principle is that when the policy is unambiguous, the court should give effect
to the clear language of the policy, reading the policy as a whole. The focus
of the exercise is on the language of the policy;

(b)        where the language of
the policy is ambiguous, the general rules of contract construction are to be
employed. These include preferring constructions that are consistent with the
reasonable expectations of the parties, avoiding constructions that would not
have been in the contemplation of the parties, and ensuring that similar
policies are interpreted in a consistent fashion;

(c)        where these rules of
construction fail to resolve an ambiguity, the principle of contra
proferentem is applied against the insurer. One corollary of this rule is
that coverage provisions are to be construed broadly and exclusion clauses are
to be given a narrow interpretation.

[40]      Also, policies are to be interpreted as they would
be understood by the average person applying for insurance not as they might be
viewed by someone “versed in the niceties of insurance law” (see National
Bank of Greece (Canada) v. Katsikonouris, [1990] 2 S.C.R. 1029 at p. 1043).

[41]      The pleadings govern the duty to provide a defence
(see Monenco Ltd. v. Commonwealth Insurance Company, 2001 SCC 49 at para. 28).
An insurer, under a liability policy stating a duty to defend, is required to
provide for a defence where facts alleged in the pleadings, if proven to be
true, could require the insurer to indemnify the insured for the claim. The
duty is triggered by the mere possibility that a claim within the policy may
succeed (see Progressive and Nichols v. American Home Assurance Co.
(1990), 68 D.L.R. (4^th) 321 at p. 326 (S.C.C.)). In this
regard, it is the true nature of the substance of the claim that is to be
determined, not the particular labels used by the pleader (see Progressive
and Conservation Council of New Brunswick v. Encon Group, 2006 NBCA 51).

[42]      In Non-Marine Underwriters, Lloyd’s of London v.
Scalera, [2000] 1 S.C.R. 551 [Scalera], the Supreme Court of Canada
outlined a three step process to be applied in determining whether a duty to
provide a defence arises. First, the court is to determine if the plaintiff’s
legal allegations are properly pleaded. In doing so the court is to look beyond
the choice of labels and examine the substance of the allegations.

[43]      The second stage is a determination if any claims are
entirely derivative in nature. Where the pleadings are found to contain
properly pleaded allegations of both intentional and non-intentional torts, the
court must decide whether the harm allegedly inflicted by the negligent conduct
is derivative of that caused by the intentional conduct.

[44]      In this regard, a claim will be derivative where
both torts arise from the same actions and cause the same harm. If the
non-intentional claim is found to be derivative, it will be subsumed into the
intentional tort for the purpose of the exclusion analysis. If the underlying
elements of the two claims are sufficiently disparate, the non-intentional
claim will not be derivative and the duty to defend will apply.

[45]      The third stage is a
determination of whether there are any properly pleaded, non-derivative claims
that could fall under the policy’s coverage.

[18]        
Here, BCAA argues that there is no duty to defend the plaintiff because
there is no allegation in the Underlying Action that could potentially give
rise to indemnity under the policy.  The plaintiff’s claim in the Underlying
Action is for the intentional tort of assault.  The policy excludes liability for
intentionally caused injuries.

[19]        
BCAA argues that the assertions in the pleadings are not determinative. 
Otherwise, the parties to an insurance contract would be “at the mercy of the
third-party pleader”:  see Non-Marine Underwriters, Lloyd’s of London v.
Scalera, 2000 SCC 24, [2000] 1 S.C.R. 551 at para. 79.

ANALYSIS

[20]        
There is no argument about the meaning of section 2.6(5) of the policy. 
There is no suggestion of ambiguity or of the need for the application of the
principle of contra proferentem.

[21]        
There is no dispute that if the allegations against the plaintiff were
limited to assault and battery, there would be no duty to defend or indemnify
Mr. Dube.  Assault and battery are not torts resulting in “unintentional bodily
injury”.  They are as well excluded by section 2.6 of the policy, which
excludes claims arising from:

5)         bodily
injury … caused by any intentional or criminal act or failure to act by:

a)         any person insured by this
policy….

[22]        
There are also allegations of negligence on the part of Mr. Dube.  BCAA
argues, however, that the allegations of negligence are entirely derivative as
that term is explained by Ross J. in paras. 43-44 of Aviva.

[23]        
In Scalera, the Supreme Court of Canada described the
distinction.  The Court said, at para. 85:

… [A] claim for negligence will
not be derivative if the underlying elements of the negligence and of the
intentional tort are sufficiently disparate to render the two claims unrelated.
If both the negligence and intentional tort claims arise from the same actions
and cause the same harm, the negligence claim is derivative, and it will be
subsumed into the intentional tort for the purposes of the exclusion clause
analysis.  …

[24]        
The Court went on to say that a plaintiff may plead in the alternative,
and that could raise a duty to defend.  The Court said (at para. 85):

… A claim should only be
treated as "derivative", for the purposes of this analysis, if it is
an ostensibly separate claim which nonetheless is clearly inseparable from a
claim of intentional tort.

[25]        
In Aviva, Ross J. considered the possibility that some but not
all of the plaintiff’s allegations might succeed at trial.  If so, there is
sufficient disparity to trigger the duty to defend.

[26]        
Mr. Dube argues:

10.       On a reading of the
pleadings in the Underlying Action as a whole, it is clear that the true nature
of the claim against the Respondent is for damages for the unintentional torts
allegedly committed by the Respondent.

[27]        
I respectfully disagree.  The true nature of the claim are the
allegations of assault and of battery.  There are allegations of negligence but
for the most part both tort allegations arise from the same action and caused
the same harm.

[28]        
But one cannot proceed on the assumption that all facts alleged in the
pleadings will be established at trial.  As Ross J. stated in Aviva, at
para. 60, that would be too restrictive:

[60]  In my view,
Aviva’s contention that, for purposes of the present analysis, the court must
proceed on the assumption that all the facts in the alleged underlying Claim
will be made out is overly restrictive. To my mind, it is also inconsistent
with the principle reiterated by the court in Progressive that a duty
to defend exists if there is a possibility that the claims could fall within
the insurance coverage. I think that it is implicit in that test that in
considering the issue, the court should address possible outcomes at trial
based upon the claims alleged in the statement of claim. In other words, in
order to determine if there is a possibility of coverage, the court should
consider the possibility that some but not all of the plaintiff’s allegations
will succeed at trial. [Emphasis added.]

[29]        
Her Ladyship went on:

[64]  The Court [in The Co-operators General
Insurance Company v. Morrison, 2004 NBCA 62] concluded that there was a
duty to defend, rejecting the submission that the negligence claim was purely
derivative. The Court considered the possible outcomes at trial in the
course of its analysis at para. 29:

Having said all this, I am not
convinced that, in a case such as this, a plaintiff could not claim that Mr.
Morrison intentionally caused the collision in an attempt to stop the Dedam
vehicle from leaving his property or, in the alternative, that he caused the
injuries by driving his vehicle in a negligent manner. It is arguable, in my
view, that the two torts involve different acts or conduct based upon Mr.
Morrison’s state of mind, one being an intentional tort and the other a
non-intentional tort. The Statement of Claim would obviously contain a claim potentially
within coverage. At trial, the claim based upon the intentional tort could fail
and the negligence claim succeed. This is different from the allegations in Scalera
where it was alleged in the Statement of Claim that the defendant had caused
damages to the plaintiff by engaging in non-consensual sexual intercourse. In
that case, the negligence claim was not legally viable because on the facts as
alleged, there was no possibility that a claim within coverage could succeed.
That is so because "[e]ither there was consensual sexual intercourse, in
which case the claim would be dismissed, or there was non-consensual
intercourse, in which case the claim in battery would succeed." In the
latter case, the claim would not be within the coverage provided by the policy
(see G. Hilliker, Liability Insurance Law in Canada, 3d ed. (Toronto:
Butterworths, 2001), at pp. 69-71).

…

[67]  In the present
case it cannot be said that the plea of defamation is in any way subservient to
the allegations of intentional misconduct. Rather, those allegations can be
seen as aggravating factors with respect to the defamation. Further, it is
clear that the elements of the defamation claim do not require proof of conduct
that proves intent to injure. Accordingly, the allegations, while related, are
in my view sufficiently disparate such that it cannot be said that the
defamation is derivative. If the allegations of intent to injure and knowing
publication of falsehood are removed, sufficient facts remain to support a
pleading of defamation (for further examples of these principles, see Unrau
v. Canadian Northern Shield Insurance Co., 2004 BCCA 585 and Rocky
Mountain House (Town of) v. Alberta Municipal Insurance Exchange, 2007 ABQB
548 at paras. 68-75).

[Emphasis added.]

[30]        
In Rocky Mountain House (Town of) v. Alberta Municipal Insurance
Exchange, 2007 ABQB 548 at para. 69, Verville J. made the following
comment:

69     A helpful way of determining
whether two claims "arise from the same actions and cause the same
harm" is set out in Unrau v. Canadian Northern Shield Insurance Co.,
2004 BCCA 585, 246 D.L.R. (4th) 412. In Unrau, the plaintiff sued two
insureds alleging bodily injury resulting from their failure to take action
when the plaintiff was being assaulted with a baseball bat. As in Scalera,
supra, the issue before the Court was whether the claim in negligence set
out in the Statement of Claim was derivative of the claim for intentional tort
which was expressly excluded by the policy. In conducting its analysis the
question asked was whether, it you take away the facts which set out the
factual basis for the intentional tort, there are remaining facts sufficient to
support the claim in negligence. If so, the two claims are independent of
each other. [Emphasis added.]

[31]        
In the present case, there are two allegations which are not derivative
and which could be found to constitute negligence.

[32]        
First, the plaintiff in the Underlying Action states in paragraph 8 of
the notice of civil claim:

8.         In addition to the
assault and battery, the Defendant Dube intentionally refused to allow Luca
access to the bathroom, while knowing Luca had a medical condition of the
bowels called encopresis.

[33]        
The plaintiff may not be able to prove that Mr. Dube intended to harm
him by intentionally not permitting him to use the washroom.  But Mr. Dube’s
intentional refusal to let the plaintiff use the washroom could be found to be
negligence.

[34]        
Second, there is the complaint in paragraph 9 of the notice of civil claim:

9.         In addition to the
assault and battery, Luca also witnessed verbal and physical assault and
battery of other children by the Defendant Dube.

[35]        
A possible outcome of this allegation is a finding that Mr. Dube
assaulted other children in the plaintiff’s presence and that Mr. Dube did not
intend to harm the plaintiff, but that the plaintiff was in fact harmed.  Mr.
Dube again could be found liable in negligence.

[36]        
It is irrelevant that these two allegations are under the heading
“Assault and Battery”.  The Court must examine the true nature of the claims, not
the particular labels employed by the plaintiff: Aviva at paras. 41 and
42.

[37]        
Up to this point in my analysis, I am satisfied that there are facts
alleged in the pleadings which, if they are proven to be true, could require
BCAA to indemnify Mr. Dube.  However, I must now examine the effect of s.
2.6(9) of the policy.

[38]        
I find that the plaintiff’s allegations in the Underlying Action fall
squarely within the exclusion clause found in s. 2.6(9) of the policy. That is,
the gravamen of Luca Camaiani’s allegations is that he was the subject of
physical, psychological or emotional abuse or harassment, including corporal
punishment, by Mr. Dube.

[39]        
Mr. Dube argues that the words “injury” and “abuse” in the policy are
“virtually interchangeable”.  Therefore, he argues, clause 2.6(9) does not add
anything substantive to the policy that is not already contained in ss. 2.2 or
2.6(5).

[40]        
I disagree.  The terms “injury” and “abuse” have distinctly different
meanings.  In the Oxford Dictionary of English, (2nd Ed. 2003), “injury”
is defined as “an instance of being injured … the fact of being injured; harm
or damage.”  The term “abuse” has definitions including “unjust or corrupt
practice” and “cruel and violent treatment of a person or animal”.

[41]        
I am satisfied that the unambiguous words of s. 2.6(9) of the policy
apply to the allegations in the Underlying Action.  On that basis, I conclude
BCAA has no duty to defend.

[42]        
I uphold the position of the defendant under Rule 9-7.  The plaintiff’s
action is dismissed.

“S.F. Kelleher J.”
The Honourable Mr. Justice S.F. Kelleher