The evidence of an underlying plaintiff on examination for discovery does not fall into an exception to the extrinsic evidence rule

The insurer sought summary judgment on the question of whether it had a duty to defend the Temple in an action for sexual abuse. The Temple sought to adduce evidence from the underlying plaintiff’s examination for discovery.  The Temple argued this evidence showed that the alleged incidents were not sexual abuse and/or that the perpetrator was not acting in the course of his employment with the Temple at the time.  The Court held the discovery evidence did not fall within an exception to the extrinsic evidence rule.  On the pleading, the claim was excluded by the abuse exclusion. The insurer was not obligated to defend the Temple. 

Insurance law – Liability insurance – Duty to defend – Exclusions – Sexual assault – Notice; Practice – Summary judgments.

Lalit v. Hindu Sabha Temple, [2025] O.J. No. 4750, Ontario Superior Court of Justice, November 5, 2025, J.K. Trimble J.

The insurer of the defendant Temple applied for summary judgment on the issue of whether the insurer had a duty to defend the Temple in an action brought by the plaintiff for damages for sexual abuse by a Temple employee.  In the action, the plaintiff claimed against the Temple for vicarious liability for the actions of the employee and also claimed directly against the Temple for negligent supervision and failure to warn. 

At issue on the summary judgment motion was whether the claims for sexual abuse were excluded by the policy’s abuse exclusion, and whether the Temple breached the notice condition of the policy. The Court granted the insurer’s application on the basis of the abuse exclusion, but held it was premature to determine whether the Temple had breached the notice condition.

The abuse exclusion excluded coverage for claims arising from abuse committed by an insured; claims based on the insured’s hiring, supervision, or retention of any person alleged to have committed abuse; or claims alleging knowledge of alleged abuse or failure to report abuse to authorities. 

The Court held that, based on the facts as pleaded, the abuse exclusion applied.

The Temple sought to admit evidence of the plaintiff on examination for discovery to show that two of the pleaded incidents of abuse were not, in fact, abuse; and to show that the Temple’s employee was acting outside of the scope of his employment during the third pleaded incident of abuse. 

The general rule on a duty to defend motion is that the court may only consider the pleadings advancing claims against the insured and the policy.  The rationale for this rule is to avoid the motions judge making findings of fact or resolving live issues in the underlying litigation which could result in inconsistent findings or prejudice to the insured.  The rule also promotes the quick determination of coverage issues at the beginning of litigation so that insureds are not left to defend themselves while an insurer contests coverage. 

There are exceptions to this rule, including where a document is incorporated by reference into the pleading and where there are underlying facts that are unrelated to and not disputed in the action.

Neither exception applied in the present case.

The Court refused to consider the plaintiff’s discovery evidence.  The Court held it was inappropriate to consider the un-pleaded facts asserted by the Temple when determining the duty to defend because to do so would require the Court to make findings of credibility and fact that were at issue in the underlying litigation.  The Court further held it was inappropriate to consider the underlying plaintiff’s discovery evidence on a coverage motion because the discovery evidence had not been tested in Court; the discovery evidence was not incorporated by reference into a pleading; and the victim’s characterization of the incidents was not relevant to the legal characterization of the incidents that is relevant to the duty to defend.

Finally, the Court held that, had it found the abuse exclusion did not exclude the loss, it would have dismissed the motion for summary judgment with respect to breach of the notice provision.  The Court held that determination of the issue would require the Court to make determinations of credibility and fact, creating the possibility of inconsistent findings.

This case was digested by Emilie LeDuc and edited by Steven W. Abramson of Harper Grey LLP.  If you would like to discuss this case further, please feel free to contact them directly at [email protected] or [email protected].