Publication
title
Insurer to indemnify radio station for damages awarded to victim of defamation
DATE
August 30, 2005
EXPERTISE
In an August 5, 2005 decision, Justice Jean Bouchard of the Quebec Superior Court ordered Chubb Insurance Company of Canada to reimburse its insured, a radio station whose rights had since been acquired by TVA Group Inc., some $948,000, consisting of an amount of $326,000 paid to a victim of defamation, $242,000 representing the fees which the insured had paid to defend itself and its employee in the defamation proceedings and accrued interest on these amounts.
Ogilvy Renault (Jean-Charles René) represented the interests of TVA Group Inc. in this matter.
The underlying proceedings had arisen out of comments made in 1980 and 1981 by radio show host André Arthur following the publication of a public inquiry report on white collar crime in the Quebec City area. Arthur had used words such as "gangsters", "crooks" and "criminals" on air to describe certain individuals, including Louis Dorion, whose behaviour the report had seriously questioned, and these individuals later sued Arthur and the broadcaster for defamation.
The broadcaster and Arthur were initially defended in these various proceedings by Chubb, their liability insurer. However, in 1986, following an adverse decision in one proceeding in which the Court concluded that Arthur had intentionally defamed the plaintiff and ordered both Arthur and the broadcaster to pay punitive damages, Chubb withdrew from the defence of the action instituted by Dorion and denied that it had a duty to defend or indemnify its insureds.
In 1995, judgment was rendered in favour of Dorion against the broadcaster and Arthur, who appealed the decision. A settlement was reached in 1998, and TVA Group, which had in the meantime acquired the broadcaster's rights against its insurer, sought to recover the aforementioned amounts from Chubb.
With respect to its duty to defend, Chubb maintained that it was entitled to rely on the conclusion reached by the Court in the related, albeit distinct matter, to conclude that its insureds' acts had been intentional, thereby allowing Chubb to cease defending them. Insofar as its duty to indemnify was concerned, Chubb maintained that the evidence established that Arthur had intentionally damaged Dorion's reputation and that the broadcaster's behaviour, notably the great latitude given to Arthur, amounted to wilful conduct of such a nature as to deprive the insureds of the benefit of coverage.
On the duty to defend, the Court ruled that its existence had to be determined solely having regard to the allegations made against the insureds and that, as long as there remained a possibility of an adverse decision which would be covered by the policy, the insurer was bound to defend. In this case, where the allegations against the broadcaster were clearly covered by the policy (the insurer being bound, under Quebec law, to indemnify the broadcaster for its vicarious liability for its employee's intentional fault), no exception to this well-established principle was available to relieve the insurer from its duty to defend. The decision rendered in the distinct matter could not affect this duty, since each of these cases involved a different plaintiff and had to be decided on its own merits and since, in any event, the broadcaster had been found vicariously liable with Arthur and not on the basis of its own intentional fault.
On the duty to indemnify, the Court concluded that Arthur had intentionally defamed Dorion. However, in spite of the latitude given by the broadcaster to Arthur, this finding did not allow one to conclude that the broadcaster itself had committed an intentional fault. Indeed, an insurer will only be entitled to deny coverage on this basis when its insured has shown a deliberate intention not only to act in the way it did but also to cause harm to the victim. Here, the Court gave weight to the broadcaster's position that it believed at the time that Arthur was simply expressing in his own words the comments made in the public inquiry report.
The purpose of this document is to provide information as to developments in the law. It does not contain a full analysis of the law nor does it constitute an opinion of Ogilvy Renault LLP or any member of the firm on the points of law discussed.
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