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Court of Appeal Upholds Coverage Denial for Intrusion Upon Seclusion

By Meryl Rodrigues

In its recent decision of Demme v. Healthcare Insurance Reciprocal of Canada[1], the Court of Appeal addressed the commercial liability insurer’s duty to defend actions based on the tort of intrusion upon seclusion against an employee of the insured, ultimately affirming the insurer’s denial of coverage under the responding policy.

The plaintiff, Catharina Demme, a former registered nurse, commenced the action against the insurer, the Healthcare Insurance Reciprocal of Canada (“HIROC”) after HIROC denied her request for coverage in respect of eight underlying actions advanced against Ms. Demme and her employer, the Brampton Civil Hospital (“the underlying actions”). The underlying actions were commenced as result of Ms. Demme having accessed over 11,000 patients’ medical records over the course of 2006 to 2016 in order to wrongfully access an automatic medication dispensing unit to obtain approximately 24,000 Percocet tablets.

With respect to the underlying actions against Ms. Demme, similar, but not identical, allegations were made against her in each action. All pleaded claims for the tort of intrusion upon seclusion, though some included additional causes of action in negligence, breach of statutory provisions, breach of fiduciary duty, and negligent infliction of mental and emotional distress.

In the action against HIROC, Ms. Demme brought a summary judgment motion with respect to her claims for a defence and coverage in the underlying actions under the responding HIROC policy. The motion was dismissed, prompting the appeal to the Court of Appeal.

Summary Judgment Motion

On Ms. Demme’s motion for summary judgment in her action against HIROC, HIROC’s position grounding its denial of a defence to Ms. Demme in the underlying actions was two-fold.

First, HIROC contended that the allegations in the underlying actions did not amount to an “occurrence” under the policy, which was defined in the policy as an “…accident, including continuous or repeated exposure to substantially the same general conditions, which result in bodily injury or property damage neither expected nor intended from the standpoint of the Insured.” HIROC’s rationale was that the bodily injury arising from Ms. Demme’s conduct was “expected or intended” by her.

Alternatively, HIROC contended that the allegations in the underlying actions fell within an intentional act exclusion in the policy.

Second, HIROC contended that the allegations against Ms. Demme in the underlying actions amounted to performance of a criminal act, thus falling within a criminal act exclusion in the policy.

The motion judge accepted HIROC’s position, concluding that there was no possibility that the claims against Ms. Demme for intrusion upon seclusion, being the true nature of the claims against her, could fall within the insuring agreement. The judge agreed that the injuries alleged in the underlying actions were not caused by an “occurrence”, as defined in the policy, because they were not unexpected or unintended on her part.

Further, the judge concluded that the claims advanced in the underlying actions fell within both the intentional act exclusion and the criminal act exclusion, as argued by HIROC.


The Court of Appeal framed four issues raised by Ms. Demme on her appeal.

First, the Court considered whether the motion judge misapplied the pleadings rule, which governs the duty to defend analysis, and the three-step process developed in the jurisprudence with respect to its application, namely:

  1. reviewing the pleadings to determine the true nature of the claims properly pleaded;
  2. considering whether any claims are wholly derivative in nature; and
  3. considering whether any of the properly pleaded, non-derivative claims could potentially trigger the insurer’s duty to defend.

While the Court noted that the usual duty to defend analysis considers the allegations pleaded in the statement of claim against the insured, it recognized that other pleadings may be considered as well as part of the analysis. However, the greatest weight must be given to the statement of claim against the insured.

Nevertheless, defence pleadings that include admissions of fact can be considered. The motion judge’s analysis was accordingly grounded in the statements of claim in the underlying actions, as well as Ms. Demme’s statements of defence.

Ms. Demme argued on appeal that the motion judge failed to give sufficient weight to two sets of facts pleaded in her statements of defence to the underlying actions when determining whether there was a “mere possibility” that a pleaded claim could trigger coverage under the policy.

The first set of facts relied on by Ms. Demme was her pleading that at all relevant times, Ms. Demme was suffering from a painkiller addiction due to chronic hip and knee pain. The second set of facts was that the intended target of her actions was the Percocet medication, not the information of the patients in the medical records she accessed.

The Court of Appeal did not accept that argument. The Court noted that those explanations or justifications by the plaintiff were not ignored by the motion judge, but understandably did not play a part in his analysis, which properly focused on the nature of the claim asserted against Ms. Demme and the terms of coverage provided by the policy.

The Court then considered Ms. Demme’s second ground of appeal, whether the motion judge erred in his treatment of the intentionality issue in respect of coverage for an “occurrence” and the intentional act exclusion.

In this regard, Ms. Demme argued that the motion judge failed to follow the Court of Appeal’s decision in Oliveira v. Aviva Canada Inc.[2] She contended that this decision was binding authority for the proposition that “where a hospital’s insurance provides coverage for claims of ‘invasion or violation of the right of privacy,’ actions against a hospital employee for unlawfully accessing patient records and information involve the sort of conduct the policy was intended to cover and respond to.”

The Court rejected this argument, noting that the focus in Oliveira was on whether or not the employee nurse was an additional insured under the policy. That consideration is a separate issue from whether any policy definition of “occurrence” or intentional act exclusion may preclude coverage for and any duty to defend claims alleging intrusion upon seclusion against the nurse.

Ms. Demme also argued that the tort of intrusion upon seclusion encompasses not only intentional conduct, but also reckless conduct. As such, she argued that the motion judge had erred in failing to find a mere possibility that the claims against her in the underlying actions could be regarded as claims for damages bodily injury arising out of reckless rather than intentional conduct, which could bring such claims within the definition of “occurrence” in the policy, and remove them from the ambit of the intentional act exclusion.

The Court was not persuaded by this submission, finding that the discussion in Jones v. Tsige[3] established the tort of intrusion upon seclusion did not support the proposition that a reckless act in the context of the tort equated to unintentional conduct. Rather, Jones placed reckless conduct on par with intention or deliberate conduct.

Ms. Demme also asserted that intrusion into patient medical records was simply an unintended consequence of her intentional conduct to obtain the Percocet pills, and those unintended consequences amounted to bodily injury that fell within the policy definition of “occurrence” and outside the scope of the intentional act exclusion.

The Court did not give effect to this argument either, however, noting that the relevant intention with respect to the tort of intrusion upon seclusion in this case is the intention to access private medical records, which, if demonstrated, amounts to an intention to cause the injury of the patients’ loss of control over their private information.

Given the Court’s conclusions on the second ground of appeal, that the motion judge did not err in concluding that the claims in the underlying actions were not “occurrences” and were subject to the intentional act exclusion, the Court did not comment on Ms. Demme’s this ground of appeal, the motion judge’s treatment of the criminal act exclusion.

Finally, Ms. Demme contended that by the motion judge concluding as he did, he erroneously adopted an interpretation of the policy that nullified coverage for liability for bodily injury arising from “invasion or violation of the right of privacy,” thereby offending the principle that courts should avoid a policy interpretation that would render obtained insurance null, and would enable the insurer “to pocket the premium without risk”.

The Court, however, was not convinced by this submission. The Court noted that since the policy would cover negligence-based invasions of privacy, the lack of coverage for intentional intrusion upon seclusion would not nullify coverage under the policy.

Accordingly, the Court dismissed Ms. Demme’s appeal, fixing costs in favour of HIROC in the amount of $15,000 all-inclusive.

[1] 2022 ONCA 503.

[2] 2018 ONCA 321.

[3] 2012 ONCA 32.