Canadian Indemnity Co v Walkem Machinery [1975] SCC
Facts
- Canadian Indemnity (A) was ordered to indemnify Walkem (R) on third party proceedings against losses incurred by R arising out of another action
- Principal action arose due to collapse of a crane erected on a barge, it was found to be negligently repaired by R
- A issued to R a comprehensive business liability policy, TJ found that mishap was an “accident” “originating during the policy period” within the meaning of the policy liability should be covered, CA agreed
Whether the collapse of the crane was an “accident” within the meaning of the policy
Rules
- The word “accident” should be taken to mean “any unlooked for mishap or occurrence” (i.e. unanticipated or unavoidable occurrence)as per Halsbury
- An occurrence is an accident or a crime depending on whether it was done by or for the insured “with intent to bring about loss or damage”
Analysis
- At SCC, A argued that scenario alike criminal case, SCC found that there was no commission of crime
Then turned to issue of whether R made a calculated risk when it repaired the crane, majority found that R didn’t make a calculated risk
SCC noted that negligence was frequent source of liability, and foreseeability is essential element of negligence
If calculated risk and dangerous operations were always excluded from coverage, what would be left to be covered by insurance? – implying reasonable expectation principle
- The crane’s collapse was an accident within the meaning of the policy
Conclusion
- Appeal dismissed, crane collapse was an accident, A had to indemnify R
Liability insurance offers broad and comprehensive coverage for “accident”
Negligence is by far the most frequent source of exceptional liability and a policy that didn’t cover liability due to negligence could not be “comprehensive”
Sirois v Saindon [1975] SCC
Facts
- Sirois (A) had his fingers cut off by Saindon (R) when the latter brandished a lawn mower at the former
- A was awarded $39k at trial, R claimed indemnity under a Comprehensive Personal Liability Policy covering his premises in the village
- TJ found that R’s act was criminal and constituted a deliberate calculated act, so R could not recover indemnity from insurer, TJ also found that coverage did not apply “to bodily injury or personal damage caused intentionally by or at the direction of an insured” as per exclusion No.6 of insurance coverage, CA reversed this
Issues
- Whether A should indemnify R for the accident
- Whether R’s actions were criminal
Rules
- The fact that an act is committed with intent to bring about loss or damage, but the precise damage does not have to be anticipated doesn’t make an intentional act an “accident”
- An act may be intentional if the insured committed a deliberate act, which was the dominant cause of P’s injuries and such injury was foreseeable
Analysis
- The immediate cause of A’s injury was a combination of raising his hand in self-protection and the tipping of the lawnmower, but both flowed directly from R’s deliberate act in raising the lawnmower – SCC held this was the dominant cause of injury
- R’s act constituted criminal conduct that caused the damage and though it had more serious consequences than R anticipated, this didn’t alter the fact that this threatening gesture caused the damage
Thus there is a breach of the public policy rule in NB’s Insurance Act
Dissent
- “Intentionally” in the exclusion clause does not cover both intentional and reckless acts
TJ imported negligence concept into R’s conduct, that raising of lawnmower itself was enough to establish intention to cause injury
But within CC, showing reckless disregard for one’s safety is a standard that doesn’t import MR in the traditional sense of subjective intention
Where intent to cause injury is relied on by insurer to exclude coverage, insurer cannot succeed by showing that a deliberate act was involved which was not an accident, without also showing there was intent to cause the injury and not merely the likelihood that injury might result from the act
- W.r.t. public policy the exception is narrow and must relate to loss or damage intentionally brought about, which was not met
Conclusion
- Appeal allowed, R’s action was criminal and fell within the meaning of exclusion No.6 in the policy and s.2 of the NB Insurance Act, A did not have to indemnify R
