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A family was insured through a homeowners policy. The son sexually assaulted two children who were being babysat by the parents. An action was commenced against the son for sexually assaulting the children and against the parents for negligently supervising the children, and failing to warn the children’s parents of their son’s propensity to molest children. The son was not entitled to insurance coverage pursuant to the homeowner’s policy because it contained an exclusion for actual or alleged sexual molestation. The parents were not entitled to coverage under the policy because the claims against them arose from an event for which coverage was expressly excluded.

November 9, 2004

D.C. v. Royal & Sun Alliance Insurance Co. of Canada, [2004] O.J. No. 4587, Ontario Superior Court of Justice

The D.C.s had a homeowner’s insurance policy with Sun Alliance Insurance Co. of Canada (“Sun Alliance”). The D.C.s had a son, S.C. The D.C.s operated an after-school daycare program from their home. On or about January 16, 1997, the D.C.s were babysitting two children, and S.C. was at home studying for exams. While the parents left S.C. alone with the children for five minutes, S.C. sexually assaulted one of them. Approximately six days later, S.C. was left alone again with the children for about 10 minutes. During this time, S.C. sexually assaulted the other child.

The parents were not aware of the sexual assaults until S.C. was charged and convicted of two counts of sexual assault in February of 1997. The children commenced an action against S.C. for sexually assaulting them, and against the D.C.s for negligence in failing to adequately supervise them and for failing to warn the children’s parents of S.C.’s propensity to molest children. The D.C.s and S.C. commenced an action for coverage under their homeowner’s policy against Royal & Sun Alliance. The D.C.s homeowner’s policy contained a clause excluding coverage for claims resulting from actual or alleged sexual molestation, or sexual harassment by a person insured by the policy. The parties agreed that S.C. was not entitled to coverage due to the sexual molestation/sexual harassment exclusion clause.

Stewart J. noted that the claims against the D.C.s were true claims of negligence and not intentional torts “dressed up” as negligence claims in order to avoid potential coverage problems. The Court further noted that the claims could have been advanced against D.C. separate and apart from any cause of action that might have been available against S.C. Thus the claims were not “entirely derivative” of S.C.’s sexual assault on the children solely because the injury would not have occurred had S.C. not sexually assaulted the children.

The characterization of the claims as being based in negligence and/or failure to supervise did not alter the fact that the claims “arose from” an event for which coverage was expressly excluded. Stewart J. cited R. v. Kansa General Insurance Co. (1994), 17 O.R. (3rd) 38 for this proposition and noted that this conclusion was essentially the same as the one reached by the Ontario Court of Appeal in Thompson v. Warriner, [2002] O.J. No. 1769. In Thompson, the Ontario Court of Appeal provided commentary and guidance on the “concurrent cause” analysis provided by the Supreme Court of Canada in Derksen v. 539938 Ontario Ltd., [2001] 3 S.C.R. 398. The Court considered that the “concurrent cause” was of no application to the facts of Thompson:

In Derksen, the exclusion clause excluded one cause of the injuries but did not exclude a second cause of the injuries which was entirely separate and stood alone. … Here, the exclusion speaks to claims arising out of the event or occurrence and excludes them. The supervision claims derive from the claim for sexual assault. The underlying elements of these claims are insufficiently disparate to render them unrelated. The supervision claims are subsumed into the intentional tort claim for the exclusion clause analysis.

In the result, the Court concluded that there was no possibility that the policy extended coverage to the D.C.s because the underlying cause of the claim was excluded from coverage by the clear language of the policy.

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Important Notice: The information contained in this Article is intended for general information purposes only and does not create a lawyer-client relationship. It is not intended as legal advice from Harper Grey LLP or the individual author(s), nor intended as a substitute for legal advice on any specific subject matter. Detailed legal counsel should be sought prior to undertaking any legal matter. The information contained in this Article is current to the last update and may change. Last Update: January 16, 2024.

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