The driver's parent falsely claimed to be the one driving the vehicle at the time of the crash
In an insurance dispute, the Ontario Court of Appeal affirmed that a driver committed civil fraud by misrepresenting details of a collision, which led to the denial of coverage and impacted the insurer’s ability to defend a related lawsuit.
The accident occurred in March 2019 when the driver, who believed her license had expired, was involved in a collision while driving her parent’s car. To avoid potential consequences, she contacted her parent, who arrived at the scene and falsely claimed to have been driving. This misrepresentation was repeated to authorities, including the Collision Reporting Centre and the police, as well as to the insurer during the claims process.
The insurer uncovered the misrepresentation during examinations for discovery in a lawsuit filed by the other driver involved in the accident. Following this discovery, the insurer denied coverage and refused to defend or indemnify the driver or her parent, citing breaches of the insurance policy. The driver sought a court declaration that the insurer owed her a defence, but the application judge ruled against her, finding she had breached the policy and committed civil fraud.
The driver appealed the finding of civil fraud, arguing it was unnecessary and unfounded because the insurer had not suffered measurable losses.
The Court of Appeal rejected the arguments and upheld the lower court’s ruling. The appellate court referred to the test for civil fraud, which requires proof of a false representation, knowledge or recklessness of the falsehood, causation, and resulting loss. The court agreed that these elements were satisfied based on the evidence presented.
The court also rejected the argument that the insurer incurred no losses. While the specific damages remain unquantified, the court found the insurer sustained a tangible loss in its ability to defend the lawsuit effectively due to the credibility issues caused by the misrepresentation. It determined this constituted a real, not speculative, loss directly tied to the driver’s actions. Ultimately, the court dismissed the appeal and ordered the driver to pay costs.
