Ontario’s Court of Appeal says Aviva Canada does not have to defend a driver sued in an auto liability case because the driver’s conduct during the accident investigation not only breached the terms of her auto policy, but it “constituted civil fraud.”
In Wong v. Aviva Insurance Company of Canada, Victoria Pui Yu Wong sued Aviva Canada, saying the auto insurer owed her a duty to defend a legal action in which she was named as a defendant.
The auto accident triggering the court case happened on Mar. 18, 2019, when Wong was driving her mother’s car. At the time of the collision, Wong and her mother, identified in the decision as “Ms. Tieu,” were covered by the same auto insurance policy. Aviva denied coverage to Wong and her mother on the basis that they had breached the terms of their policy.
“Ms. Wong believed her driver’s license had expired, so she called her mother and asked her to come to the scene of the accident and represent that she had been driving at the time of the collision,” says the Court of Appeal’s decision, released Monday.
“Ms. Wong and her mother perpetuated this falsehood when they reported the collision at the Collision Reporting Centre and when they submitted the claim to Aviva. Ms. Wong and her mother continued such false representations when giving statements to the police and after the claim was instituted by the other driver [in the main action].”
Aviva discovered the false representation at examinations for discovery during the main legal action against their insureds. Aviva then declined to defend or indemnify Wong and her mother in the main action.
Wong appealed Aviva’s decision to a lower court. The judge dismissed Wong’s application for a declaration of coverage, finding she had violated the terms and conditions of her insurance policy and made material misrepresentations to Aviva and others. The justice agreed the elements of civil fraud were made out in the evidence before her.
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Wong appealed this decision to the Court of Appeal. She did not dispute the judge’s finding that she breached the terms of the auto policy; rather, she disputed the finding that what she did constituted civil fraud.
Caselaw says four elements must be present to establish civil fraud. To paraphrase: 1) a person has to have made a false representation; 2) the person must know the representation was false; 3) the false representation caused a person to act [for example, in this case, Wong acted by suing Aviva]; and 4) the person’s actions resulted in a loss.
Wong said it was unnecessary for the lower court judge to make a finding of fraud. What’s more, the finding was incorrect because Aviva didn’t suffer any loss because of the misrepresentation.
The court said it didn’t even need to hear from Aviva before dismissing Wong’s case.
“It is beyond dispute that Aviva has suffered losses to date because of Ms. Wong’s actions,” the Court of Appeal ruled. “The losses in terms of the defence of the main action cannot be quantified at the present time because the damages have not yet crystallized.
“However, it is clear [Aviva] has sustained a loss in terms of the manner in which it can defend that action. This is a real loss, not a speculative one, which is a direct consequence of Ms. Wong’s actions.”
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