Feb 17, 2021

Insurance: Coverage; Alcohol Prohibition; Estoppel

Bradfield v. Royal Sun Alliance Insurance, 2019 ONCA 800 (CanLII)
Mr. Devecseri was insured by the Respondent Royal Sun Alliance Insurance Company of Canada (RSA) under a standard motor vehicle policy. Under this policy, Mr. Devecseri was prohibited from operating a motorcycle with any alcohol in his bloodstream. To do so would constitute a policy violation. The Applicant, Jeffrey Bradfield, Mr. Devecseri and Paul Latanski were riding their motorcycles. Mr. Devecseri drove onto the wrong side of the road and collided with Jeremy Caton’s automobile. Mr. Devecseri was killed. Mr. Caton and Mr. Bradfield were injured. RSA engaged an adjuster to investigate the accident. The adjuster obtained the police report, which made no mention of alcohol. The adjuster noted the Coroner’s report would confirm whether alcohol had been a factor in the accident, but neither he, nor RSA took steps to obtain the report. Mr. Bradfield commenced and later settled an action against Mr. Devecseri’s estate and his own insurer, for uninsured and underinsured coverage, and Mr. Caton successfully brought a personal injury action against Mr. Devecseri and Mr. Bradfield. RSA retained counsel to defend Mr. Devecseri’s estate in both actions. Three years after the accident, RSA became aware Mr. Devecseri consumed beer before the accident, and took steps to obtain the Coroner’s report. The report confirmed Mr. Devecseri’s blood alcohol level was above zero at the time of death, confirming he had breached the insurance policy. This entitled RSA to take an off-coverage position and cease defending Mr. Devesceri’s estate. RSA took an off-coverage position shortly after. Mr. Bradfield commenced an action against RSA alleging it was too late for RSA to take an off-coverage position. Mr. Bradfield argued RSA was or should have been aware of the policy breach, but nevertheless undertook to defend Mr. Devesceri’s estate to the point of examinations for discovery. In his view, RSA had waived Mr. Devecseri’s policy breach, or was estopped for denying the coverage. Sosna J. granted the application; however, the C.A. allowed RSA’s appeal and set aside that decision.