Woman with catastrophic injury sought $2M in damages under s. 132(1) of Insurance Act
The Ontario Court of Appeal has upheld a decision denying two insurance companies permission to include civil fraud in their statement of defence against an injured party’s lawsuit seeking $2 million in damages under s. 132(1) of Ontario’s Insurance Act, 1990.
In 2012, the respondent in Natario v. RBC Insurance Company of Canada, 2026 ONCA 482, fell through a hole in the attic floor of her friends’ home, which was subject to a home insurance policy.
The respondent sued the insurer and the insureds for her catastrophic injuries. She initially claimed that she had tripped over construction debris and fallen down the stairs.
For seven years, the insureds insisted that the respondent slipped on debris while going downstairs. They denied that she had fallen through a hole in the attic, given the potential legal consequences of their renovations without a building permit.
In 2015, the respondent amended her claim to allege that she had fallen through a hole or unstable floorboards in the attic. In 2019, the insureds admitted to providing fabricated evidence during the discovery examinations.
While the insurers did not indemnify the insureds because of their misrepresentation, which allegedly materially breached the policy, the insurers continued defending against the respondent’s suit to minimize any judgment.
In 2021, the parties consented to the dismissal of the action without costs. The consent order required the respondent to sign a full and final release in the insureds’ favour, but preserved her right to sue the insurers under s. 132 of the Insurance Act.
In September 2025, following the respondent’s filing of the $2 million damages suit in 2022, the insurers moved for leave to amend their pleadings to add a civil fraud defence based on the insureds’ false statements and the material facts previously pleaded.
In December 2025, a motion judge denied the motion because allowing the insurers to amend their pleadings would result in non-compensable prejudice to the respondent.
The respondent moved to quash the insurers’ appeal. She argued that the insurers could only appeal the judge’s interlocutory order before the Divisional Court with leave under s. 19(1)(b) of Ontario’s Courts of Justice Act, 1990.
The insurers responded that the order was final since it prevented them from claiming civil fraud as a distinct defence. They added that the Ontario Court of Appeal had jurisdiction to hear the appeal and rule on whether to permit the new defence to proceed.
Last April, the Ontario Court of Appeal denied the respondent’s motion to quash. The appeal court decided that it had jurisdiction over the appeal under s. 6(1)(b) of the Courts of Justice Act, as the denial of the insurers’ request to amend their pleadings to include civil fraud was a final order.
Insurers’ appeal denied
Ultimately, the Court of Appeal for Ontario dismissed the appeal and ordered the insurers to pay the respondent’s costs of $15,000.
The appeal court rejected their argument that the motion judge had found that the civil fraud defence was never legally available in response to a s. 132(1) application. The appeal court disagreed that the judge had made such a finding.
The appeal court also did not see a need to resolve this issue, given the judge’s refusal of the insurers’ request to amend their pleadings due to non-compensable prejudice to the respondent. The appeal court found no reversible error and no reason to intervene in the judge’s conclusion of non-compensable prejudice.
Next, the appeal court held that preventing the insurers from explicitly describing the insureds’ actions as civil fraud would not prejudice the insurers.
Lastly, the appeal court pointed out that the insurers’ current pleadings, which addressed the insureds’ lies, would enable them to defend against the respondent’s requests for indemnity and relief from forfeiture.
