The Superior Court’s decision in Labelle c. Jivestudio Inc., 2020 QCCS 3420, rendered in the midst of the pandemic, ruled on the underlying criteria to determine, at a preliminary stage, whether an insurer has an obligation to take up its insured’s defence.
The plaintiff was seriously injured while performing an acrobatic manoeuvre with a troupe from the defendant Jivestudio’s dance school. She is now paralyzed and must use a wheelchair. She, along with members of her family, sues the dance studio, its owners and the people who participated in the training on the day of the accident. She alleges that the manoeuvre she was asked to practice was dangerous and that the coaches and participants were not adequately trained.
The defendants were the dance studio and its owners, along with a member of the troupe who had been hired to create a choreography and train the dancers. All the defendants have called their respective insurers in warranty, requesting that, as insurers, they provide a defence to the claims and, eventually, pay any compensation that the defendants could be condemned to pay. Thus, South Western Insurance Group Ltd and Sovereign were sued as insurers of Jivestudio and its owners, and Intact Insurance was sued in warranty by its insured, the defendant member of the troupe. Sovereign argued that dance activities were excluded from the policy, while Intact claimed that its insured was only covered for her personal activities and not for her professional activities at Jivestudio. South Western requested that the call in warranty be dismissed, alleging that it was not Jivestudio’s insurer.
Mr. Justice Collier first set out the basic principles underlying the application of article 2503 of the Civil Code of Québec requiring the insurer to stand up for and defend any person entitled to the benefit of insurance. Those principles were set out by the Supreme Court of Canada in Progressive Homes Ltd. v. Lombard General Insurance Co. of Canada, 2010 SCC 33, [2010] 2 SCR 245, and reiterated more recently by the Court of Appeal of Quebec in Développement les Terrasses de l’Île inc. c. Intact, compagnie d’assurances, 2019 QCCA 1440. Accordingly, the Court must first rule on protection, then exclusions, and, finally, exceptions. The onus is on the insured to demonstrate that the claim may fall under the original protection: the burden is then reversed, and the insurer must prove that, under an exclusion clause, coverage is clearly and unequivocally excluded and that there is no possibility that the insurer be required to compensate the insured. Should this happen, the burden will again be reversed, and the insured will have to show that an exception to the exclusion applies.
Analysing the cases against each insurer separately, the judge concluded:
- As for Sovereign: the policy covers personal injury without specifying the type of accident under consideration. The judge then analyzed the exclusion from protection for personal injury relating to participation in “physical exercises, games, sports or athletic competitions” or whether the person “trains or acts as an instructor” [our translations]. The judge noted that the word “dance” was not used in the exclusion, although the insurer knew that the company operated a dance school. He therefore concluded that if the parties had intended to exclude dance from the activities, this should have been specifically mentioned, given that interpretation rules require the reasonable expectations of the parties to be considered. Holding the opposite would mean that Jivestudio was not insured for bodily damage resulting from the dance, which would limit its protection. Emphasizing the insurer’s obligation to demonstrate “clearly and unequivocally” the application of the exclusion, the judge concluded that Sovereign had failed in this respect and was therefore obliged to take the case of its policyholders.
- As for Intact: the policy covered damage caused by “any private activity of yours”. The question was whether, at the time of the accident, the insured’s participation in the training session was a private or a professional activity. The insured testified that her involvement in Jivestudio’s troupe was a hobby, although she had sometimes been paid by Jivestudio to choreograph and train dancers. However, on the day of the accident, neither she nor her friend, the victim and plaintiff, was paid by Jivestudio while training. This training was in preparation for a dance competition; the Court therefore concluded that it was for her personal pleasure and in a “private” capacity. Finally, the Court added that it would be up to the trial judge to hear the complete evidence and determine in what capacity the insured was participating in the session on the day of the accident. Intact was therefore held to defend its insured.
- As for South Western: the judge was unable to rule whether it was an insurer or a mere intermediary between various participating insurers and Jivestudio; its status was “nebulous”. He added that, at this preliminary stage, it was impossible to exclude a legal relationship between Jivestudio and South Western. As a result, the application to dismiss the call in warranty against South Western should be dismissed.
