On February 12, 2024, the Court of Appeal of Quebec handed down its decision in Société d’assurance Beneva inc. c. Bordeleau,1 dealing in particular with the burden of proof incumbent on an insurer when it denies coverage on the basis of an insured’s intentional fault, and an award of damages against an insurer for breach of its duty of good faith. The facts This decision was rendered further to a dispute between Société d’assurance Beneva inc. (hereinafter the “Insurer") and some of its insureds, including Mr. Michel Bordeleau, the owner of a multi-storey rental building that was damaged by fire. He lived in one of the units with his parents. According to the uncontested expert evidence presented, the fire originated in one of the storage spaces in the basement of the building, which was assigned to a lessee couple. Access to the basement and all storage spaces was locked. The cause of the fire was deemed to be intentional, given the traces of accelerant found in the area of the fire’s origin. The instigator or instigators were not identified. On November 21, 2016, 60 days after the fire, the Insurer denied coverage because of the intentional nature of the fire, which it attributed to its insured, Mr. Bordeleau. A few months later, on March 22, 2017, it reached an agreement with Mr. Bordeleau’s hypothecary creditor. The subrogation release provides for the Insurer’s payment of the balance of the hypothecary debt of $149,720.99, and subrogation to the creditor’s rights up to the amount paid. Mr. Bordeleau, in his belief that he had been harmed by the Insurer’s decision, instituted legal proceedings to recover the insurance benefit to which he claimed to be entitled, while also claiming damages. The Insurer filed a cross-application for recovery of the balance paid to the hypothecary creditor. The trial The trial judge, relying on the evidence, concluded that although the fire was intentional in nature, the Insurer had not discharged its burden of establishing the insured’s involvement in the fire. Taking this conclusion into account, she then proceeded to analyze the plaintiffs’ claim and to weigh the damages in light of the evidence and the limits of the insurance policy. In particular, she ruled in favour of Mr. Bordeleau’s claim for damages for the building, the amount of which was admitted. In addition, she ordered the Insurer to pay $15,000.00 in damages for nuisance and inconvenience caused by its conduct, which she considered faulty. This conclusion was based on the Insurer’s duty to act in good faith, to consider the facts and act on their basis, and to conduct a full investigation, duty which the Insurer had breached by failing to sufficiently follow-up on leads that could have identified who was responsible for the fire. In order to deny coverage, clear and compelling evidence of the insured’s involvement, going beyond mere suspicion, was necessary. Given the sometimes implausible and sometimes contradictory testimonies of the people met during the investigation, there was no such evidence. In other words, the claims adjuster had jumped to conclusions. In light of her conclusions, the trial judge dismissed the Insurer’s cross-application, which she deemed to be unfounded, without giving further reasons. The appeal The Court of Appeal first refrained from intervening in light of the Superior Court’s conclusions regarding the failure to demonstrate Mr. Bordeleau’s involvement in the fire. It did however intervene on the damages awarded for nuisance and inconvenience suffered by the insureds, and pointed out the following: [40] [translation] Firstly, apart from the strict mathematical calculation of the amounts payable, and perhaps other technical aspects not requiring the exercise of judgment, the processing of a claim is an obligation of means, not one of result. The fact that a court found at the end of a trial held many years after the incident that an insurer should have covered in the first place obviously does not mean that the insurer necessarily committed a fault other than its refusal to pay, making it civilly liable, let alone that it acted in bad faith. [41] In this case, there was nothing in the evidence to support a finding of fault or breach of the duty of good faith. [42] On the contrary, there is enough evidence to conclude that the investigation by the appellant and its experts, which led to the denial of coverage, was not botched. . . . In the opinion of the Court of Appeal, the evidence showed that the Insurer’s investigation had been done in a conscientious manner, in particular because it had transferred the claim file to a special investigative unit, mandated a fire origin and cause expert and external investigators, and interviewed many witnesses who could have provided information on the circumstances of the incident. Moreover, it had no allegations that the Insurer had failed to consider exculpatory evidence against its insured. In this context, although it took several years for the insured to obtain his due, with all the inconveniences of going through proceedings, the Insurer’s conduct could not be considered offending or revealing of bad faith. No damages could be awarded. Lastly, the Court of Appeal took a closer look at the question of the Insurer’s subrogation to the hypothecary creditor’s rights, which was little discussed in the judgment under appeal. Reiterating the fundamental principle in property and casualty insurance that the indemnification of an insured cannot result in enrichment, the Court of Appeal concluded that dismissing the Insurer’s cross-application would have such an effect. In addition to receiving an insurance benefit for the damages sustained, Mr. Bordeleau would also have had seen his hypothecary debt discharged. This would have given him a clear advantage. In this case, the benefit paid to the hypothecary creditor needed to be deducted from the damages claimed by the insured. The trial judge’s finding were thus revised accordingly. Conclusion Despite the clear principles addressed in this case, the Court of Appeal’s analysis points to practical difficulties that insureds and insurers can encounter when dealing with similar claims. It points to the coexistence of two factors that can be difficult to balance: First, the burden of proof where coverage is denied on the basis of the insured's intentional fault, and second, the insurer’s obligation of means in processing the associated claim. The dismissal of a coverage defence does not in itself warrant awarding damages. Société d’assurance Beneva inc. c. Bordeleau, 2024 QCCA 171

On October 13, 2017, the Supreme Court of Canada rendered an important decision1, putting an end to a jurisprudential and doctrinal debate on civil liability and prescription in the field of municipal liability. Facts In October 2010, Ms. Maria Altragracia Dorval ("Dorval") was murdered by her ex-spouse. The respondents, who were close relatives of Dorval, blamed the police officers of the City of Montreal ("City") for failing to follow up on Dorval's complaints in the weeks preceding her murder. In October 2013, the respondents instituted an action in damages against the City, as principal of the police officers. In a motion to dismiss, the City argued that the six-month time limit for prescription set out in article 586 of the Cities and Towns Act2 ("CTA") applied and that the respondents' action was prescribed. According to the City, the respondents were not direct victims of bodily injury and could nottherefore take advantage of the three-year prescription period set out in article 2930 of the Civil Code of Quebec3 ("C.C.Q."), which states, in particular, that an action based on bodily injury is prescribed by three years, notwithstanding any contrary provision. The respondents, in turn, argued that, even as indirect victims, they did benefit from prescription under article 2930 C.C.Q. on the basis that the purpose of the recourse is to compensate for damages arising from a bodily injury. Issue in dispute Was the respondents' recourse as indirect victims extinguished because they failed to comply with the prescription period of six months under the CTA, or did they also benefit from the three-year prescription period provided in article 2930 C.C.Q.? Case law and doctrine The disputed issue, while dealing with the prescription period, raised the question of how the injury was to be characterized. In this case, did the indirect victims suffer a bodily injury? The issue of characterizing the injury gave rise to two different lines of authority in the case law and doctrine. The first line of authority characterizes the injury, whether it be bodily, moral or material, on the basis of the consequences of the interference suffered by the victim. Thus, it focuses on determining the effects of the wrongful act, downstream, and on characterizing the injury as a function of the damages suffered. In this case, since the damages suffered by the indirect victims were not bodily in nature, they were not victims of bodily injury, but rather, of moral or material injury. The second line of authority characterizes the injury on the basis of the type of interference itself, and therefore upstream. The focus here is on characterizing the wrongful act itself, i.e., whether it pertains to the physical integrity of the person, his or her property, or psychological integrity. Next, the consequences of this interference are characterized as pecuniary or non-pecuniary damages. In this case, given the nature of the interference was a bodily injury, the injuries suffered by the victim's relatives would also be characterized as bodily in nature, causing them pecuniary and non-pecuniary damages, depending on the death's impact on those persons. Proceedings in the lower courts The Superior Court granted the City's motion and dismissed the respondents' action, holding that it was prescribed. Following the first line of authority, the court found that only immediate victims can take advantage of the three-year prescription period conferred by article 2930 C.C.Q., since only they have suffered a "bodily injury". The Court of Appeal, following the second line of authority, held instead that the respondents' action was not prescribed. It found that the injury must be characterized according to the type of interference that caused it, and not based on the nature of the damages claimed. Accordingly, since the respondents' action was founded on a bodily injury, it was therefore covered by the three-year prescription period under article 2930 C.C.Q. Supreme Court of Canada In a majority judgment written by Justice Wagner, the Court found that the basis of the action brought by the respondents was the reparation of Dorval's bodily injury resulting from the City's wrongful interference with her physical integrity. It therefore held that article 2930 C.C.Q. must be interpreted in favour of the indirect victims of a bodily injury. In reaching this conclusion, the Supreme Court first considered the decision of the Court of Appeal in the Tarquini case.4 In that matter, the plaintiff claimed damages from the City of Montreal as a result of the death of her spouse in a bicycle accident. As in this case, the City of Montreal pleaded the short prescription period under the CTA. The Court of Appeal found that the plaintiff's recourse was not prescribed on the basis that the bodily injury in question under article 2930 C.C.Q. did not solely contemplate the injury suffered by the immediate victim, but rather, any damages resulting from a bodily injury, including those of indirect victims. Next, the Supreme Court, acknowledging that the expression "bodily injury" must be interpreted as resulting from interference with a person's physical integrity, opted to resolve the issue by reference to the basis of the action as instituted, in accordance with the second line of jurisprudential and doctrinal authority. It submitted that the characterization of the victims' action, whether as direct or indirect, is determined on the basis of the type of interference alleged, whether bodily, material or moral. As for the consequences thereof, they correspond to the heads and the characterization of the damages claimed. The Supreme Court indicated that the purpose of article 2930 C.C.Q. is to protect personal integrity and ensure the full indemnification of victims. Consequently, eliminating the distinction between direct and indirect victims favours the achievement of this objective by conferring on all victims the benefit of an extended prescription period. Furthermore, the Supreme Court was of the view that to distinguish between immediate victims and collateral victims would have the effect of creating two different prescription periods for the same wrongful act. This inconsistency is avoided by favouring a broad interpretation of article 2930 C.C.Q. The Court also noted that, since the Tarquini decision, both the doctrine and case law had preferred this interpretation, favouring the stability of the law. The Court held that "any civil liability action instituted to claim reparation for the direct and immediate consequences of interference with a person’s physical integrity must be based on the obligation to make reparation for bodily injury caused to another"5 within the meaning of article 2930 C.C.Q., whether it be the recourse of the direct victim or indirect victim. Thus, indirect victims are also entitled to the prescription period of three years. Dissent We note that Justices Côté and Brown, preferring the first line of authority referred to above, issued a dissenting opinion. In their opinion, since the respondents were not direct victims of interference with physical integrity, they could not rely on article 2930 C.C.Q. Accordingly, they found that the respondents' action was based instead on the obligation to compensate for the moral and material injury they had suffered as a result of the death of their relative, and not on the bodily injury which was in fact suffered by Dorval alone. Only a person having suffered interference with his or her own physical integrity could benefit from the three-year prescription set out in article 2930 C.C.Q. In our view, the country's highest court has clearly resolved the debate on this issue.   Montréal (Ville de) c. Dorval, 2017 SCC 48 Cities and Towns Act, C.Q.L.R., c. C-19 Civil Code of Quebec, C.Q.L.R., c. CCQ-1991 Montréal (Ville) c. Tarquini, [2001] RJQ 1405 Montréal (Ville de) c. Dorval, 2017 SCC 48, para. 55

Autonomous cars have really taken off in the last few years, particularly due to the interest of both consumers and the businesses who develop and improve them. In this context, on April 5 and 10, 2017, the City of Montréal and the Government of Québec respectively announced significant investments in the electrification and intelligent transportation sector to make the Province of Québec a pioneer of that industry. Investments from the City of Montréal and the Government of Québec The City of Montréal intends to invest $3.6M toward the creation of the Institute on Electrification and Intelligent Transportation, created as a part of the Transportation Electrification Strategy developed to fight climate change and promote innovation. The creation of the Institute on Electrification and Intelligent Transportation is one of the ten strategic orientations that the Transportation Electrification Strategy puts forward. The City of Montréal explains that [TRANSLATION] “the Institute will rely on the collaboration of partners, including universities and the Innovation District, and on the availability of land near downtown Montréal in order to create a world-class site to develop, experiment and promote innovation and new concepts in the field of electric and intelligent transportation ”.1 The mission of the Institute is, among other things, to create a testing corridor and an experimentation area in downtown Montréal for autonomous vehicles. In addition, an autonomous shuttle project is already under way, involving “Arma” minibuses developed by Navya, a partner of the Keolis Group. These vehicles are automated at level 5, meaning that they are entirely automated. The first road test is anticipated to take place in the context of the International Association of Public Transport’s (UITP) Global Public Transport Summit, which will be held in Montréal from May 15 to 17, 2017. For its part, the Government of Québec has undertaken to invest $4.4M [TRANSLATION] “to support the electric and intelligent vehicles industrial cluster”2. This industrial cluster will be set up in spring 2017 and its business plan will be established by an advisory committee created for such purpose. [TRANSLATION] “The cluster will help position Québec among the world leaders in the development of ground transportation and their transition to an all-electric and intelligent transportation” stated Dominique Anglade, Minister of Economy, Science and Innovation and Minister responsible for the Digital Strategy. Issues related to driving autonomous vehicles in Québec Intelligent cars were introduced in the Québec market and have earned their place over the last few years. They are referred to as autonomous when they possess at least a “conditional” degree of automation, commonly referred to as level 3 on the scale of automation degrees.3 This level of automation allows for dynamic driving of the vehicle by its control system but requires the driver to remain available. Under the Québec Automobile Insurance Act4, the owner of an automobile is liable for the property damage caused by such automobile with some exceptions. This statute also provides for a no-fault liability regime allowing victims of a car accident to claim an indemnity for the bodily injuries they suffer. As to the Highway Safety Code5, it governs, among other things, the use of vehicles on public roads. To our knowledge, no legislative amendment has been proposed to this day to fill this legal void prior to autonomous vehicles appearing on the Québec roads. In this regard, it is appropriate to note that the Province of Ontario recently passed the Regulation 306/156, which outlines who may drive autonomous vehicles on Ontario roads and in which context. Comments Many questions remain unanswered as to the content of the projects and initiatives recently announced by the City of Montréal and the Government of Québec. This lack of information creates uncertainty as to the scope of specific regulations governing the use of autonomous vehicles in the Province of Québec which would possibly need to be passed. However, Ms. Elsie Lefebvre, Associate councilor for the City of Montréal, responsible for the Transportation Electrification Strategy, declared that [TRANSLATION] “there will be guidelines and the projects will be supervised to ensure that there is no danger on the road”, without giving details on the scope of such measures. In the wake of these announcements, many issues deserve to be discussed. What will be the degree of automation of the autonomous vehicles allowed to be driven in the Province of Québec? Who will drive these vehicles and who will insure them? Will special permits be required? Will these vehicles be allowed to be driven on public roads or exclusively on closed circuits? In the event of an accident, who will be held liable? What will be the legislative measures passed to adequately govern the use of these vehicles? Many questions remain and not many answers are provided for the time being. This is something to follow… Transportation Electrification Strategy 2016-2020, published by the City of Montréal. GOVERNMENT OF QUÉBEC, Information feed – “Québec annonce 4,4 millions de dollars pour soutenir la grappe industrielle des véhicules électriques et intelligents”, online. For more details, please consult the Need to Know newsletter, “Autonomous vehicles in Québec: unanswered questions”. Automobile Insurance Act, CQLR, c. A-25. Highway Safety Code, CQLR, c. C-24.2, art. 1. Pilot Project – Automated Vehicules, O Reg 306/15.