Civil Fraud Results in Denial of Automobile Coverage
What Happened in Wong v. Aviva Insurance Company of Canada?
Ms. Wong was driving her mother’s vehicle with permission when she was involved in a motor vehicle collision. At the time, Ms. Wong’s driver’s licence had expired. Concerned about potential legal consequences, she contacted her mother, Ms. Tieu, and asked her to attend the accident scene and state that she had been driving the vehicle. Ms. Tieu agreed.
At the scene, Ms. Wong and Ms. Tieu persuaded the other driver, Ms. Robertson, to go along with this version of events. They later attended a Collision Reporting Centre and completed the required forms identifying Ms. Tieu as the driver. Ms. Wong subsequently contacted Aviva Insurance Company of Canada, which insured the vehicle, and reported the accident while pretending to be Ms. Tieu.
Several months later, Ms. Robertson commenced a lawsuit against Ms. Tieu for damages arising from the collision. Under the automobile insurance policy, Aviva appointed defence counsel for Ms. Tieu. Over two years later, during her examination for discovery, Ms. Tieu continued to maintain that she had been the driver. Evidence later showed that Ms. Wong assisted her mother with answering questions off-camera.
During the litigation process, Aviva learned that a younger woman—not Ms. Tieu—had been driving at the time of the accident. Aviva denied coverage to both Ms. Wong and Ms. Tieu under section 233(1)(b) of the Insurance Act, which provides that where an insured commits fraud or breaches a term of the policy, the claim may be invalid and the right to indemnity forfeited.
Following the denial of coverage, Ms. Wong applied to the Ontario Superior Court of Justice seeking a declaration that Aviva still owed her a duty to defend. In the alternative, she requested relief from forfeiture under section 98 of the Courts of Justice Act and section 129 of the Insurance Act, arguing that the misrepresentation amounted to imperfect compliance with the policy.
Court’s Findings on Insurance Fraud and Policy Breach
Application Hearing (2024 ONSC 1111)
Justice Antoniani dismissed Ms. Wong’s application, finding that she had breached the automobile insurance policy and committed civil fraud. The Court concluded that Ms. Wong’s conduct—including lying to police, misleading Aviva, and assisting her mother in providing false testimony under oath—disentitled her from relief from forfeiture.
In reaching this conclusion, the Court reviewed the elements of civil fraud:
- A false representation made by the defendant;
- Knowledge that the representation was false, or recklessness as to its truth;
- Reliance on the representation by the plaintiff; and
- Resulting loss.
Ms. Wong admitted that the first two elements were satisfied. After reviewing the evidence, the Court found that Aviva had relied on the misrepresentation and that the remaining elements of civil fraud were also established.
Loss and Irreparable Harm
Ms. Wong argued that Aviva suffered no loss because the misrepresentation did not affect the core issue in the underlying lawsuit—namely, Ms. Robertson’s damages. The Court rejected this argument. Justice Antoniani noted that Ms. Tieu’s credibility was central to issues such as speed, sobriety, and observations at the scene, and that the false testimony undermined the integrity of the defence.
Although Ms. Wong offered to reimburse Aviva for defence costs incurred to date, the Court held that the loss was irreparable. Repayment could not restore Aviva to the position it would have been in had the misrepresentation not occurred.
The Court also considered Ms. Wong’s request for relief from forfeiture, applying the following factors:
(i) The conduct of the applicant;
(ii) The gravity of the breach; and
(iii) The disparity between the value of the property forfeited and the damage caused by the breach.
Justice Antoniani found that the misconduct was serious and prolonged, and that the fraud went to the core of the insurance relationship. This was not a case of minor or technical non-compliance. As the Court stated:
“Lying about who the actual driver was and perpetuating the misrepresentation… in civil litigation for over two years is a breach which goes to the heart of the contract between the insured and the insurer.”
Court of Appeal Affirms Denial of Coverage
Ms. Wong appealed the decision to the Ontario Court of Appeal (2024 ONCA 874), arguing that Aviva had not suffered a measurable loss. The Court of Appeal dismissed the appeal, agreeing that Aviva was placed at a disadvantage due to the significant impact the misrepresentation had on the credibility of the insured parties.
Key Takeaways
Insured individuals must be honest and transparent with their insurance providers. Misrepresentations or dishonest conduct, even if initially motivated by fear or convenience, can result in a complete loss of coverage.
While insurers owe a duty of good faith to their insureds, that duty is mutual. Providing inaccurate information or withholding material facts in an effort to obtain a defence or indemnity under an insurance policy may constitute a breach of the policy and justify a denial of coverage.