The Court of Appeal, in the recent decision of Saanich (District) v. Aviva Insurance Company of Canada 2011 BCCA 391, addresses the test for finding whether an additional named insured’s liability “arises out of the named insured’s operations or activities”.
The District of Saanich operated a recreation centre and entered into a rental contract with the Pacific Rim Field Lacrosse Association (Lacrosse Association) to allow them use of a specified area of the recreation centre for lacrosse practice. On November 6, 2007 Mr. Wright attended at recreation centre for a dog obedience class and while on the premises was hit in the head with a lacrosse ball. Mr. Wright brought an action against the Lacrosse Association and Saanich. This lawsuit plead that the Lacrosse Association and Saanich were occupier’s of the recreation centre within the meaning of the Occupier’s Liability Act and also alleges negligence against both of them.
Aviva insured the Pacific Lacrosse Association for bodily injury and property damage arising out of lacrosse activities (the “Policy”). Saanich was an additional named insured under the policy but “solely with respect to the liability which arises out of the activities of the named insured”.
Saanich sought coverage under the Policy but was denied. At trial the court held that Aviva had a duty to defend Saanich holding that:
[46] … The claim brought by Mr. Wright does not allege that his injuries were caused by anything other than the errant lacrosse ball. The pleadings do not disclose a cause of injury independent of the lacrosse activities. Mr. Wright does not assert that his fall and resultant injuries may have been caused by, say, debris from the vending machines or water on the floor, or that his injuries in any way result from Saanich’s failure to generally maintain its premises in a safe manner for its patrons. But for the lacrosse activity, there would have been no obligation on Saanich to provide alternate access to the patrons of the dog obedience class. The only reason the usual source of access to the dog obedience class allegedly became unsafe was because lacrosse was being played at the centre at the time the dog obedience class took place.
…
[50] In the present case, there is a clear nexus or causal connection between the possible liability of Saanich and the activities of the named insured.
[emphasis added]
On appeal Aviva argued that the trial judge misconceived the causal test applicable to Mr. Wright’s claim as evidence by the use of the her words, “but for” and by focusing on the alleged cause of the injury (the lacrosse ball).
The Court of Appeal stated that the essence of the issue was that there must be “an unbroken chain of causation to engage the potential liability of the insurer.” [para. 24]
The Court went onto note that, although the trial judge did refer to the alleged cause of the injuries being the lacrosse activities, she demonstrated in the balance of her reasons an appreciation of the need for such an unbroken chain of causation. Thus, they held that she had not misunderstood or misapplied the test for determining coverage.
In the circumstance of the case, the Court of Appeal held that there was a direct causal link between lacrosse activities and Saanich’s potential liability:
[32] I conclude there is, in the pleadings, a causation link between the alleged delict of Saanich and the injury to Mr. Wright; the unbroken chain of causation, alleged in the pleadings encompasses both the actions of the unknown lacrosse player and the actions of Saanich that placed Mr. Wright in a position to be struck by the lacrosse ball. The true nature of the substance of the claim is a claim arising from the lacrosse associations’ activities, in the context of Saanich’s role in facilitating them, whether or not liability attaches to the lacrosse associations. In other words, the pleadings contain allegations of the requisite unbroken chain of causation; there is no independent fault alleged against Saanich which would support an action in negligence absent the activities of the lacrosse associations. Consideration of the “errant” aspect of the lacrosse ball intimately implicates the actions of Saanich.
The Court of Appeal distinguished the Ontario Supreme Court decision of Atlific Hotels and Resorts Ltd. v. Aviva [2009 CanLii 24634 (ONSC)] upon which Aviva had relied. There Atlific was an additional insured with respect to liability arising out of a snow removal contractor’s activities on its behalf. An action was commenced for injuries a guest sustained in a slip and fall on a snowy /icy path. The Ontario court held that the insurer did not have a duty to defend a claim in negligence against Atlific for its manner of operations, which allegedly included inadequate lighting, lack of non-slip matting and failing to organize activities so that guests did not have to navigate snowy / icy paths. The Court there held that, while the insurer was required to defend Atlific on a complaint of negligent snow removal, the broader claims relating to the manner in which it organized guest activities or designed safety features were not matters arising from the activities of the snow removal contractor and were thus outside of coverage.
The Court of Appeal distinguished Atilfic in that it involved three separate complaints against the resort (inadequate lighting, lack of non-slip matting, failure to ensure guests did not have to navigate hazardous paths). The Court noted that those three separate complaints, could support a claim independent of the adequacy of snow removal. Here the Court of Appeal stated that the case against Saanich could not stand absent the errant lacrosse ball.
This decision confirms that coverage for an additional named insured which only “arises out of the activities of the named insured” requires a direct causal link, or unbroken chain of causation, from these activities to the potential liability of the unnamed insured.
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