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| Nicolas Sacha Nesviginsky |
In Centre dentaire Boulevard Galeries d’Anjou inc., the Superior Court of Quebec was seized of an application to authorize a class action against l’Unique assurances générales inc. (l’Unique). Contrary to the two previous cases, the court deemed that there were distinctions between the insurance policies, thereby granting the authorization and ascribing the status of representative to the applicant.
Facts
The applicant, Centre dentaire Boulevard Galeries d’Anjou inc. (CDSGA), operated a dental clinic. On or around March 16, 2020, pursuant to the government’s orders, CDSGA closed its dental clinic, thereby ceasing its activities with the exception of emergency procedures.
CDSGA contended that its clinic was deemed dangerous and that its property was affected. L’Unique nevertheless refused to indemnify pursuant to its business interruption claim.
CDSGA had a policy for buildings and equipment for professional use as well as for goods which provided coverage for “[…] all perils that may directly affect the insured property” (see para. 3). With regards to the insured property, it notably provided coverage to building(s), equipment, stock, contents of all kinds and property of all kinds while at the location(s) specified in the Declarations.
In addition, CDSGA also benefited from business interruption insurance:
1. NATURE AND SCOPE OF INSURANCE
This insurance covers the loss of business income actually sustained and directly resulting from the necessary reduction or interruption of the Insured’s activities caused by an insured peril that has affected the insured property described in the Declarations [para. 5].
CDSGA submitted that there were distinctions between l’Unique’s policy and those examined in the previous decisions. Indeed, Promutuel’s policy covered “[Translation] all risks of loss or material damages directly caused to an insured good” (para. 19). The court however noted that the notion of direct damage was absent from l’Unique’s policy which covered “The Insured property described in the Declarations” (para. 19).
CDSGA therefore contended that the policy’s wording was not only vast, but that coverage should be determined at trial. Moreover, it submitted that the government’s orders affected its goods and that its application was not frivolous.
For its part, L’Unique pleaded that the Superior Court should follow its prior decisions: the business interruption guarantee only applied if there was a covered loss (i.e. a damage to goods which resulted in a business interruption). The business’ goodwill and the clinic were not covered risks.
Analysis
In this instance, the Superior Court had to determine if CDSGA presented an arguable case. Justice Thomas M. Davis adopted the same two-step analysis as in Centre de santé dentaire Gendron Delisle inc.
First, the court concluded that there was a common question to be determined (Article 575(2) of the Code of Civil Procedure (CCP)): is l’Unique required to indemnify the class members for business interruption insurance due to COVID-19 in accordance with the terms and conditions of the insurance policy following the government’s order-in-council?
Second, the court had to establish whether the policy was sufficiently clear to enable it to decide the coverage issue at this juncture of the proceedings (art. 575(2) CCP). Pursuant to article 1427 of the Civil Code of Quebec (CCQ), the clauses of a contract are interpreted in light of the other. The court noted that the policy referred to the concept of physical damage for certain guarantees, but not in the case of business interruptions.
As such, basing itself on the decision in Ateliers Impact inc. c. Groupe Commerce (Le), compagnie d’assurances 2010 QCCS 15, which examined the distinction between a loss affecting goods and a loss causing physical damages to goods, the court noted that a possible interpretation of l’Unique’s policy was that property damage was not required if damaged by a loss.
Justice Davis concluded that the policy contained ambiguities which would enable such an interpretation. Furthermore, while coverage extended to all risks that could directly affect the insured property, the business interruption section, presented as a separate insurance, offered coverage that affected “the insured property described in the Declarations” (Centre de santé dentaire Gendron Delisle inc., para. 37). The court, basing itself on the Supreme Court of Canada’s decisions in Reid Crowther & Partners Ltd. v. Simcoe & Erie General Insurance Co. [1993] 1 S.C.R. 252 and Progressive Homes Ltd. v. Lombard General Insurance Co. of Canada [2010] 2 S.C.R. 245, noted that the ambiguities in l’Unique’s policy implied that coverage could not be decided without proceeding to a detailed analysis in order to establish whether it was an occurrence or claims-made policy.
Third, the court concluded that the proposed group made it impractical, if not impossible, to apply the mandate or joinder of proceedings rules (Article 575(3) C.C.P.). There could be an important number of dentists insured by l’Unique across Quebec.
Fourth, the court established that CDSGA would be in position to properly represent the class members.
Conclusion
In light of the above, the Superior Court of Quebec authorized the application to bring a class action ascribing CDSGA the status of representative of the persons included in the group described as “All businesses engaged in the practice of dentistry or a subspecialty of dentistry in the province of Quebec who were forced to reduce or interrupt their businesses as a result of COVID-19 and were denied coverage for Business Interruption Insurance by L’Unique Assurances Générales Inc” (para. 61).
In addition, the questions of fact and fact to be treated collectively were:
a) Must L’Unique indemnify class members for Business Interruption Insurance due to COVID-19 in accordance with the terms and conditions of its insurance policy?
b) Are the Class members entitled to claim damages plus interest and the additional indemnity set out in the Civil Code of Quebec on these amounts, from the date of service of the Application for authorization? [Para. 62.]
b) Are the Class members entitled to claim damages plus interest and the additional indemnity set out in the Civil Code of Quebec on these amounts, from the date of service of the Application for authorization? [Para. 62.]
Given the increasing number of class actions, particularly following the COVID-19 pandemic, it will be interesting to monitor whether other professions will commence the same type of proceeding.
This is the final part of a three-part series. Part two: COVID-19, class actions and business interruption: 9306-6876 Québec inc.; part two: COVID-19, class actions and business interruption: 9306-6876 Québec inc.
Nicolas Sacha Nesviginsky is a qualified lawyer in civil and common law member of the Ontario, Quebec and Paris bars. He also completed a postgraduate certificate in international dispute resolution at the Queen Mary University of London. He is fluent in English, French and Spanish.
Photo credit / Maridav ISTOCKPHOTO.COM
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