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Court of Appeal Overturns Coverage Decision in Sexual Abuse Claim

In a previous blog post, we discussed a decision in which an insurer was ordered to defend a training academy for allegations related to the alleged sexual abuse of a student. The decision was overturned yesterday by the Court of Appeal.

In Southside Muay Thai Academy Corporation v. Aviva Insurance Company of Canada, 2020 ONCA 385, Southside Muay Thai Academy and one of its employees were sued.

The plaintiff, who is a minor, alleged that, while on a flight back from Thailand following a training trip, the employee touched her in a sexual manner without her consent.

Aviva denied coverage to Southside and to the employee under an abuse exclusion in the insurance policy. On a coverage application, Justice Sossin ruled in favour of Southside.

One of the plaintiff’s allegations was that “Southside Muay Thai Academy was negligent in its failure to supervise the Plaintiff, ensure she was safe while on their premises and under their care and control, in particular on the flight from Thailand on or about May 1, 2017″.

Justice Sossin stated that the plaintiff pled negligent supervision against Southside for settings outside of the flight from Thailand and, as such, held there is a possibility that Southside could be liable for breaching a duty of care in situations not arising directly or indirectly from the alleged abuse.

As there was a possibility of coverage for a portion of the claim, Justice Sossin held that Aviva owes Southside a duty to defend.

On appeal, the Court of Appeal said that the only claim or action set out in the Statement of Claim arises from the May 1, 2017 incident. Moreover, all of the damages claimed relate to the alleged sexual abuse.

The Court of Appeal noted that any claim arising from the sexual abuse is clearly excluded from coverage under the policy. As a result, Aviva has no duty to defend the claim.