This is an appeal by the insurer of a motions court decision that it had a duty to defend an insured against a claim for the intentional tort of trespass to land. The insured, a schoolboy, allegedly started a fire on school property. On a motion, the Public Trustee of Manitoba, as Litigation Guardian of the student, brought a successful application to compel Co-operators to defend. Co-operators appealed on the basis of wording in the homeowner’s insurance policy an issue which excluded coverage for property damage caused intentionally. The Court of Appeal upheld the decision of the motions court, holding that even though the fire was alleged to have been started intentionally and the damages to the school may have been unforeseen, the claims as pleaded raised a possibility that a court could find that the act therefore was a negligent one.
R.D.F. (Litigation Guardian of) v. Co-operators General Insurance Co.,  M.J. No. 382, Manitoba Court of Appeal
R.D.F. was a child insured under his parents’ homeowner’s policy issued by the Appellant, Co-operators. Co-operators denied it had a duty to defend R.D.F. against a claim that seeks damages in negligence and, alternatively, in trespass. At issue was a small fire set on the grounds of R.D.F.’s school. Co-operators argued that the true nature of the allegation was that R.D.F. intentionally caused damage by starting a fire, therefore the exclusion in the policy for property damage caused intentionally or resulting from criminal acts excluded coverage. The Public Trustee did not dispute that the fire was set intentionally, but argued that there was a distinction between an intentional act, the lighting of the fire, and the intention to cause the damage to the school, which was, in the Trustee’s submission, required to trigger the application of the exclusion clause. Even if started deliberately, “intention” must mean starting a fire with the intention of burning the school.
The motions judge applied the decisions in Nichols v. American Home Assurance Co.,  1 S.C.R. 801, which held that the duty to defend is restricted to claims for damages which fall within the scope of the policy, and it will arise if there is a “mere possibility that a claim within the policy may succeed”. The motions judge distinguished the decision in Lloyds of London v. Scalera,  1 S.C.R., where the court held that the insurer did not have a duty to defend an insured alleged to have committed sexual battery among other things, holding that the other alleged torts were all derivative of the sexual battery and therefore were subsumed within the intentional tort. In this case, as opposed to Scalera, the motions court held that it was not stretching the pleadings to conceive of an intentional act that did not itself cause the damages complained of, but simply created a situation where damages occurred when the original fire was negligently allowed to spread.
The appeal court upheld the interpretation of the motions judge, and pointed out that the Statement of Claim alleges that the boys started a small fire, the circumstances and purpose for which was unknown. It was possible that the damages could be found to have been unintentional. The court went on to hold that the pleadings in the case at bar demonstrated no intention to cause injury, and although the fire was allegedly intentionally started, the physical consequences may very well have been unforeseen. The claim was framed in negligence and trespass to property as alternate not derivative claims and therefore the claims as pleaded raised a possibility that the act could be found to be unintentional. Co-operators had a duty to defend.
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