An organization may have to provide insurance coverage to its members, even if the members have not paid their dues and are not in good standing

A University’s Insurer was successful, on an appeal to the Ontario Court of Appeal, to compel the Insurer for Judo Ontario to contribute to a settlement agreement reached between the University and one of its students who had sustained injuries while sparing with a classmate.  The fact that the University Judo club had not paid it’s dues to Judo Ontario meant that the Judo Club’s instructors were not members in good standing.  This did not preclude the instructors from coverage under Judo Ontario’s insurance policy.

Canadian Universities Reciprocal Insurance Exchange v. CGU Insurance Co. of Canada, [2007] O.J. No. 3612, Ontario Court of Appeal, J.M. Simmons, E.A. Cronk, R.A. Blair J.J. A., September 25, 2007

In September 1996, the Plaintiff, a judo student at the University, was injured and rendered a quadriplegic while sparing with a classmate following a formal judo class session at the University. The University had a policy of insurance which provided coverage to both the University and the two judo instructors who were responsible for running the judo course. The Plaintiff and his family sued the University, Judo Ontario and the two instructors. Judo Ontario and its “Member Clubs” were covered under a separate policy of insurance. The claims were settled with the Insurer for the University funding the settlement. The settlement agreement expressly provided that the Defendants’ respective liability and the Insurers’ responsibility would be determined subsequently. This was done with the Trial Judge apportioning liability equally between the University, as occupier of the premises where the incident occurred, and the two instructors, for failing to ensure the safety of the students. The Trial Judge found no liability on the part of either Judo Ontario or the student who was directly responsible for causing the Plaintiff’s injuries.

After the Trial Judge had apportioned liability, a dispute arose as to each Insurer’s responsibility. There were three Insurers in total: the Insurer which provided coverage to the University and the two judo instructors, the Insurer which provided coverage to Judo Ontario and its Member Clubs, and a third Insurer that provided separate coverage to one of the instructors. The Insurer for Judo Ontario (the Respondent in this proceeding) and its member clubs acknowledged that its policy was primary and the University’s policy was excess, but disputed that the instructors were insured under the policy at the time of the incident. This issue was initially determined by Mr. Justice W. Siegel in favour of the Insurer for Judo Ontario.

In the Court of Appeal, the Respondent Insurer argued that coverage was not extended to the instructors because they were “volunteers” and were not acting within the scope of their duties assigned to them by a Member Club or by Judo Ontario. Whether the University Club was a “Member Club” of Judo Ontario was the principal issue for determination on appeal.

The Court of Appeal considered Judo Ontario’s governing By law, which contemplated both individual members and club members with the only distinction being between a “member” and a “member in good standing”. Members of Judo Ontario were those admitted to membership by the Judo Ontario board of directors. The Court noted that members remain members of Judo Ontario unless they resign, or are suspended or expelled, and that none of these things had occurred with respect to the University Club which was admitted into membership during the 1994-1995 academic year. While the Club had failed to pay its fees for the 1995-1996 academic year, Judo Ontario had not taken any steps to suspend or expel the Club. The Court of Appeal disagreed with the Trial Judge and concluded that the University Club was still a member of Judo Ontario at the time of the incident, albeit not a “member in good standing”.

As a result, the Respondent Insurer was required to extend coverage under its policy to the instructors who were volunteers acting within the scope of their duties assigned to them by a Member Club of Judo Ontario. The Court of Appeal ordered the Respondent to contribute to the settlement agreement in the sum of one million dollars as well as subrogate the University’s Insurer for cost and expenses of the main action.

This case was originally summarized by Shanti Davies and originally edited by David W. Pilley.

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