On September 8, 2017, in the case of El-Ferekh c. Intact, compagnie d’assurance, 1 the Superior Court of Québec ruled on the insurable interest of someone who acted as a nominee in the context of the deeds pertaining to the acquisition of an immovable property covered by an insurance policy. The insurer had denied coverage on several grounds, namely, the absence of insurable interest, the misleading representations at the time of the underwriting of the policy and an increase of risk. The facts The plaintiff, Robbie El-Ferekh (“Robbie”), instituted proceedings against Intact compagnie d’assurance (“Intact”), claiming $296,941.38 for damages caused to a property which Intact insured. At the time the mortgage was purchased, Steven El-Ferekh (“Steven”) had asked Robbie to act as a nominee in the context of the sale for tax and financing reasons. The deeds of mortgage and sale were both made in Robbie’s name even if, in fact, Steven was assuming the payment of the mortgage and all expenses related to the property. When purchasing the insurance policy on the property, Steven posed as his brother as he answered the questions of the insurance broker. Since Steven declared that he would live in the property, a homeowner policy was issued by Intact. Prior to the closing of the sale of the property and purchasing the insurance policy, and contrary to his representations to the insurance broker, Steven rented the property to a third party. The tenant occupied the property for more than three years. Several months after the tenant left, a fire, the cause of which remains undetermined, entirely destroyed the property. Robbie filed a claim with Intact. Intact denied coverage on the grounds that the policy was null ab initio for lack of insurable interest and because of the false and misleading representations of the El-Ferekh brothers. The judgment The Court first confirmed that an insured had to demonstrate that he suffered financial harm as a result of the loss of the property to justifying an insurable interest. Accordingly, a nominee has no insurable interest since he cannot suffer direct and immediate harm as a result of the loss of such property. Robbie first alleged that an implicit partnership existed between himself and his brother and that their patrimonies were merged. This argument was rejected by the Court since a private arrangement cannot be effective against third parties. Secondly, Robbie alleged that he had an insurable interest as a mortgage debtor. However, the evidence demonstrated that Steven assumed all expenses on the property and that, accordingly, Robbie was not exposed to any financial loss as a result of the fire. The Court thus ruled that the policy was void ab initio because of the lack of insurable interest. Although this conclusion was enough to dismiss the action, the Superior Court nevertheless ruled on the other grounds for denial raised by Intact. The Court confirmed that Intact was justified in invoking the nullity of the policy taking into account the bad faith of the insured and the false statements made respecting the occupation of the property. On the one hand, it was proved that Robbie never lived in the property and that a homeowner policy has issued. On the other hand, although Intact Créneaux, a division of Intact, could have accepted to cover the property as leased property, it is a separate entity from Intact. Therefore, the Court concluded that the insured acted in bad faith when he purchased the insurance, which also justified the ab initio nullity of the policy. As for the risk increase, the evidence demonstrated many aggravating circumstances during the coverage period, namely: criminal activities on the property (the culture of cannabis), police interventions, a change of the electrical system, failure to supply the property with electricity and a situation where the property was left vacant. The Court determined that Intact was well-founded in denying coverage for that reason. Conclusion In brief, the Superior Court concluded: that the simple fact that someone is a mortgage debtor does not constitute evidence of insurable interest in the property; that a nominee has no insurable interest since he cannot suffer any direct and immediate harm resulting from the loss of such property. In other words, in the absence of an exposure to financial loss, a nominee cannot demonstrate an insurable interest in a property.   2017 QCCS 4077 (Judge Guylène Beaugé).

Last May 2, the Court of Appeal granted a motion to dismiss an appeal against a significant decision in the area of civil liability in the context of the practice of a sport.1 Decision at trial2 The facts in the case date back to October 3, 2010. A few seconds after the start of a hockey game between two junior teams, the plaintiff, Andrew Zaccardo, was violently body checked from behind by the defendant Ludovic Gauvreau-Beaupré, a player on the opposing team. Zaccardo, who became quadriplegic as a result of the incident, brought an action in damages against Gauvreau-Beaupré and his insurer, Chartis, claiming $8 million in damages. We commented this decision in a previous publication.3 At trial, Justice Daniel W. Payette noted that a hockey rink is not [translation] "a law-free zone".4 The Court found that by body checking Zaccardo from behind, Gauvreau-Beaupré had breached the basic rules of care, thereby committing a fault within the meaning of the civil law. In addition, the Superior Court pointed out that while it is true that hockey involves certain inherent risks, Zaccardo could not reasonably have expected to become quadriplegic as a result of an illegal body check. Gauvreau-Beaupré and Chartis, his insurer, were therefore ordered to indemnify Zaccardo for $8 million, which amount had been the subject of an agreement between the parties. Court of Appeal's decision In a short decision, the Court of Appeal dismissed the appeal by Chartis and Gauvreau-Beaupré against the decision at trial, noting that it had no reasonable chance of success, since the trial judge had carefully assessed the evidence in reaching his decision. Moreover, the Court dismissed the argument by Chartis that Gauvreau-Beaupré had committed an intentional fault when he made the body check from behind, stating that [translation] "where the insured is accused of committing an intentional fault, the intention must relate not only to the act committed, but also to the results of that act".5 At trial, Chartis had, moreover, waived the right to invoke this exclusion. Ultimately, the Court of Appeal upheld the award against the insurer to pay the total amount of $8 million in compensation for the injuries suffered by Zaccardo. This amount is certainly one of the highest ever granted by a Canadian court in such a context. Chartis Insurance Company of Canada c. Zaccardo, 2016 QCCA 787 ["decision of the Court of Appeal"]. Zaccardo c. Chartis Insurance Company of Canada, 2016 QCCS 398. Need to Kwow publication, march 2016. Supra note 2, at paragraph 10. Paragraph 5 of the decision of the Court of Appeal.

Last April 4, in the case of Aldo Group Inc. v. Chubb Insurance Company of Canada,1 the Court of Appeal ruled on the insurer’s duty to defend its insured and on the interpretation to be given to a clause excluding insurance coverage for liability contractually assumed by the insured. The decision highlights the difficulties of interpretation sometimes faced by the parties and the courts in situations involving complex contracts where the parties have adduced no evidence of what their respective intentions were at the time the contract was concluded. It also illustrates the importance of assessing each insurance policy on a case-by-case basis. Facts Aldo Group Inc. (“Aldo”) had concluded various agreements including, in particular, with Moneris (“Moneris”), an agent of the Bank of Montreal (“BMO”), in order to facilitate purchases made by its clients with MasterCard credit cards. Pursuant to these agreements, Aldo agreed with Moneris to abide by certain IT security standards in order to protect the personal information of its clients. In particular, it undertook to pay penalties and other charges in the event of a breach of these standards. Moneris, in turn, entered into similar agreements with MasterCard. Aldo’s computing system was subsequently hacked, thereby jeopardizing its clients’ data. Pursuant to the aforesaid agreements, MasterCard charged Moneris with more than $4.8M in penalties and other costs, which Moneris in turn charged against Aldo. No debate was held on this issue as these charges were automatically deducted, so that they could not be contested by Aldo. Instead, Aldo filed a claim in Ontario against Moneris and MasterCard, alleging that the amounts were deducted unfairly. Aldo then applied to the Superior Court of Québec for an order against its liability insurer, Chubb Insurance Company of Canada (“Chubb”), to pay for its legal costs, i.e. its defence, in the action instituted in Ontario. Trial judgment The Superior Court dismissed the motion to force Chubb to pay for Aldo’s legal costs2 (its defence) in the action instituted in Ontario against Moneris and MasterCard. While the judge came to the conclusion, after interpreting the terms of the insurance contract between Aldo and Chubb, that the action instituted by Aldo was a valid claim within the meaning of the insurance policy, she found that the exclusion relating to liability assumed by contract applied. She also found that Aldo had contractually waived certain rights that it could have asserted against Moneris or MasterCard, thereby justifying the refusal by Chubb to assume its defence. Court of Appeal judgment Two preliminary comments by the Court of Appeal are important for parties and lawyers faced with resolving problems in the interpretation of insurance policies. Firstly, the Court of Appeal noted that this decision was not intended to “set a precedent” (“translation”), since it dealt with the analysis of contracts between the parties and an insurance policy specific to that case. In other words, each situation must be assessed in light of the particular insurance policy and the specific facts of each situation. Secondly, the Court of Appeal stressed that there was no evidence of the circumstances surrounding the negotiation and conclusion of the insurance contract between Aldo and Chubb, including the specific exclusion at issue in this case. In the absence of evidence of the negotiations that led to the conclusion of the contract, or of the application of this exclusionary clause in the past, the court’s analysis was limited to the text of the insurance policy alone, according to the applicable rules of interpretation. On the merits, the Court of Appeal concluded, firstly, that the action instituted by Aldo against Moneris and MasterCard was a claim within the meaning of the insurance policy. Given the terms of the contract, the mere fact that Aldo itself had instituted the proceeding instead of being sued was not a sufficient reason, by itself, to conclude that Chubb’s duty to defend had not been triggered. Secondly, the Court of Appeal held, contrary to the trial judge, that Aldo had not contractually waived the ability to assert certain rights against MasterCard and Moneris, as Chubb had claimed. The mere fact that deductions had been made for the amount of the penalties did not constitute a waiver of the right of contestation. Furthermore, Aldo could not be accused of having failed to cooperate with Chubb. Thirdly, the Court of Appeal confimed the trial judgment and concluded that Moneris’ claim against Aldo was contractual in nature. The exclusion contained in the insurance policy for any liability assumed by contract therefore applied. In interpreting the policy, the Court held that this was a clause by which the insurer excluded claims from the liability insurance policy so as to avoid being held liable for any defaults by the insured in fulfilling its contractual obligations, such as unpaid accounts or other debts to third parties. In addition, the Court held that the exception to this exclusion relating to extra-contractual liability did not apply because Moneris could not have asserted its rights against Aldo in the absence of the contract. The fact that third parties, such as the victims of the leak of personal information, might potentially have been able to assert their rights against Aldo, was not a situation that enabled the exception to the exclusion to apply in this case. The Court of Appeal therefore concluded that Chubb did not have the obligation to pay for Aldo’s legal costs (its defence) in the claim brought in Ontario against Moneris and MasterCard. Conclusions In summary, the Court of Appeal concluded as follows: while no legal action was brought against Aldo, Aldo’s claim against Moneris and MasterCard was a valid claim within the meaning of the insurance policy and the duty to defend it would have been triggered, had it not been for the exclusion; Aldo had not waived the ability to assert any right whatsoever which prejudiced Chubb, and Chubb could therefore not claim on this basis that its duty to defend Aldo was not triggered; Chubb nevertheless had no duty to pay for the legal costs, i.e. the defence, of Aldo’s claim against Moneris and MasterCard because this situation was covered by the clause excluding insurance coverage for any liability contractually assumed by Aldo. As the Court of Appeal noted, this case in no way changes the principles governing the duty to defend. In this regard, Justice Bich wrote as follows: [Translation] [53] One cannot deny the atypical nature of this situation, which is certainly not an ordinary case. But, one must also see that the interpretation reached by the trial judge is not meant to be a general postulate that is intended to transform the duty to defend. It is a specific solution, based on the specific terms of a specific contract. The fact that we are outside the norm does not mean, by itself (subject to a palpable and overriding error), that we are justified in substituting the trial judge’s interpretation of the text of the policy with a reading that would be consistent with Chubb’s conception thereof. [54] The defence contemplated in clause 16 is not therefore limited to contesting a legal action brought against the insured. This is, moreover, in no way incompatible with the meaning given by current dictionaries to the verb “to defend”/”défendre”, which is not limited to a defence against a duly instituted court action, but more generally connotes such concepts as to protect, sustain, help, intercede and support. The Court of Appeal also issued a warning to the parties to the insurance contract: if a contract such as an insurance policy must be interpreted with the help of other elements than the text, then evidence must be presented. Otherwise, only the text will guide the court, in light, of course, of the rules of interpretation as provided in the legislation and case law. Finally, each insurance contract must be construed in accordance with its own wording and the facts of the case. Therefore, even in the presence of similar terms, insurers and insureds must nevertheless avoid speaking in generalities when the time comes for determining whether, for instance, the insurer has the duty to defend or indemnify.   2016 QCCA 554 (Justices Yves-Marie Morrissette, Marie-France Bich and Marie St-Pierre); reasons given by Justice Bich. Aldo Group.inc. c. Chubb Insurance Company of Canada 2013 QCCS 2006 (Justice Marie-Anne Paquette).

On February 1, 2016, the Superior Court of Québec rendered a significant decision in the area of civil liability in the context of the practice of a sport1. The judgment was widely reported in the media due, on the one hand, to the importance of the amount granted by the judge (8 million dollars) and, on the other hand, because it is closely related to the practice of the national sport of Canadians. Will this judgment, through which a junior hockey player who became quadriplegic after receiving a check from behind has been allowed such an important amount as compensation, change the rules of the game? The facts The plaintiff, Andrew Zaccardo (hereinafter, “Zaccardo”), who was 16 years old at the time of the events, was a junior amateur hockey player. On October 3, 2010, his life took a turn for the worse when he received a check from behind from another player, defendant Ludovic Gauvreau-Beaupré (hereinafter, “Gauvreau-Beaupré”), who violently hit him from behind. Zaccardo became quadriplegic. The video clip, filed as evidence at the trial, shows a sequence resembling those routinely seen by hockey fans in sports information bulletins (at 0:15 to 0:30 more specifically). Zaccardo instituted civil proceedings against Gauvreau-Beaupré, his insurer, as well as Hockey Québec and Hockey Canada, claiming damages, particularly for the costs and expenses related to the care required by his physical condition for the remainder of his life. Prior to the hearing, Zaccardo discontinued his action against Hockey Québec and Hockey Canada. The hearing showed that for many years both entities had systematically discouraged and condemned checking from behind. At the time of the hearing, the parties agreed to an admission as to the quantum of damages for an amount of 8 million dollars. Mr. Justice Daniel W. Payette came to the conclusion that Gauvreau-Beaupré had committed a fault and found him liable for the damages suffered by Zaccardo. The Judgment At the outset, Justice Payette stated that players participating in hockey games are subject to the law as any other citizens: [TRANSLATION] “an ice rink is not a law-free zone”2. Justice Payette reviewed the relevant case law, both from Quebec and the common law provinces and concluded that strictly speaking, “sports liability” does not exist as a separate area of liability: players are subject to the usual rules governing civil liability and are thus required to act like [TRANSLATION] “reasonable players placed in the same circumstances”. The judge also confirmed that the practice of hockey involves inherent risks which a player accepts by participating in a game, but that by doing so, he is not however deemed to accept unreasonable risks which he is not aware of. Accordingly, the violent check suffered by Zaccardo did not constitute a risk which he should have foreseen when participating in the game. Moreover, the judge noted that a breach of the rules of the game, whether sanctioned by a penalty or not during the game, will not always constitute a fault within the meaning of civil law. Therefore, the court ordered Gauvreau-Beaupré and his insurer to pay to Zaccardo the admitted amount of 8 million dollars. It must be noted that at the beginning of the hearing, Gauvreau-Beaupré’s insurer informed the court that it was not alleging the intentional fault of the insured and, accordingly, the judgment does not deal with this issue. In the circumstances, the court also ordered the insurer to indemnify Zaccardo for the damages he suffered. The surgical precision with which the judge dissected the sequence of the check shows that he no doubt has experience of the practice of hockey and leads one to believe that this may have influenced the conclusions of the judgment. In addition, the legal reasoning put forward confirms that the efforts made by Hockey Québec and Hockey Canada to promote the safe practice of hockey are still encouraged. Echoes beyond the legal sphere In addition to being the highest amount ever granted to a victim of an injury in such a context, at least in Canada according to our verifications, this judgment already echoes beyond legal circles. For the time being, it is difficult to determine the scope that this decision will have and whether it will impact sports in general. Indeed, despite the magnitude of the amount granted to Zaccardo which, again, had not been contested, the judge noted that each case is dealt with on its own merits and only involves the application of general civil liability principles. In that sense, each situation is to be considered according to its own set of facts. In an era where class actions are instituted by former professional athletes who suffered concussions3 and following numerous other cases of violent actions with serious consequences4this decision may have an impact on the prevailing culture of hockey, which is more than ever called upon to change. Lastly, it must be noted that on March 2 2016, Gauvreau-Beaupré and his insurer appealed the decision5. The conclusions reached by the judge regarding liability will therefore be reviewed in the following 18 to 24 months. Conclusion The judgment in favour of young Zaccardo and the impressive monetary compensation he was granted attest to the numerous efforts made during the last few years to raise players’ awareness to the risk of serious harm associated to the practice of contact sports. The often critical attitude of Justice Payette toward the aggressor also demonstrates that this awareness had at least already entered the mind of the judge. Despite the fact that all the calls for prudence, by-laws and increased sanctions have not succeeded in actualizing the culture of hockey6, it is to be hoped that the whistle blown by Justice Payette will accelerate the changes. Zaccardo v. Chartis Insurance Company of Canada, 2016 QCCS 398, appeal pending: 500-09-025937-160 and 500-09-025938-168. Paragraph 10 of the judgment. For illustration purposes, a group of over 100 former players of the National Hockey League filed an application to be authorized to institute a class action against the NHL for damages suffered as a result of repeated shocks received to the head while they played as professionals: http://www.cbc.ca/sports/hockey/nhl/grand-ledyard-nhl-lawsuit-1.3432273. Also see: http://www.nhlconcussionlitigation.com For example we may think about the action of Todd Bertuzzi against Steve Moore, following which Moore was unable to continue his professional hockey career: https://www.youtube.com/watch?v=Fz9RE9RGrVY. The hockey stick hit given by Marty McSorely to Donald Brashear constitutes another example: https://www.youtube.com/watch?v=eTOfsoJAij4 500-09-025937-160 and 500-09-025938-168. Only a few days ago, another young hockey player from the Montreal region suffered an injury to the neck following a check from behind by another player. However, the young man has been “luckier” than young Zaccardo since his spinal cord was not damaged: http://montrealgazette.com/news/local-news/local-midget-hockey-player-suffers-broken-neck-after-illegal-hit