No Escape from a Policy Breach Even Years Later: A Case Commentary of Trial Lawyers Association of British Columbia v. Royal & Sun Alliance Insurance Company of Canada, 2021 SCC 47

Introduction

On November 18, 2021, the Supreme Court of Canada rendered its decision on whereby an insurer may be allowed to deny coverage based on a policy breach discovered several years down the road.

In Trial Lawyers Association of British Columbia v. Royal & Sun Alliance Insurance Company of Canada (“TLABC v. RSA”)[1], Royal & Sun Alliance Insurance Company of Canada (“RSA”), defended an action arising out of a motor vehicle accident (“the accident”) on behalf of its insured, the deceased, Steven Devecseri (“Devecseri”), commenced against his estate.  RSA defended the estate in two lawsuits commenced by individuals who allegedly sustained injuries as a result of the accident, including Mr. Jeffrey Bradfield (“Bradfield”). Three years following the accident, RSA became aware that the deceased had consumed alcohol immediately prior to the accident, thereby breaching the terms of the insurance policy. As a result, RSA took an off-coverage position, leaving the claimants’ collective entitlement to the statutory minimum limits of $200,000, rather than the $1,000,000 issued to Devecseri.  Bradfield sought a declaration of entitlement to recover judgement against RSA. 

One of the fundamental issues considered by the Court was whether RSA had waived Devecseri’s breach of the policy, and whether RSA was estopped from denying coverage to Devecseri’s estate.