Case Law Comment: CURIE v. CGU Insurance Company of Canada (2007)

Published February 11, 2008

By Rachel Corbett

This Ontario Court of Appeal decision from the fall of 2007 created quite a stir among sport organizations in Ontario. Although the case was entirely a dispute between two insurers about who should bear the cost of an insurance claim, the case went to the heart of a sport organization’s bylaws – that obscure policy document that few people understand or pay attention to. This case is very important to the issue of bylaws within a sport organization, but at the same time, the case does not mean that the ‘sky is falling’ (which many sport administrators believed at the time the case was reported). As with almost all legal cases, this case turns on its specific facts and circumstances, which are not necessary common to all situations.

The case of CURIE v CGU began in 1996 when Chester Lam, a novice judo participant, was severely injured at the University of Windsor. Shortly after the accident, the University insurer provided immediate funds for the settlement and then sought a court-directed order as to the apportionment of liability among the various defendants, only one of whom was the University. Ultimately, the University was found 1/3 liable, the regular judo instructor was found 1/3 liable, and the substitute judo instructor (filling in for the regular instructor who was ill) was found 1/3 liable.

This case arose when CURIE later sought a contribution to the financial settlement from the insurer for Judo Ontario, which CURIE claimed carried overlapping coverage for the incident. The trial judge had ruled that Judo Ontario’s insurance did not apply because the student-organized judo club was not a member of Judo Ontario at the time of the accident. The Ontario Court of Appeal disagreed and upheld CURIE’s claim.

This finding raised a lot of concern among sport organizations in Ontario. The facts are that the judo club was a registered member of Judo Ontario in the 1994/95 academic year, and also in the 1996/97 academic year, but at the time of the accident (September of the 1995/96 academic year), the club had not registered as a member. The Court of Appeal ruled that the club should be construed as a member nonetheless and that the two instructors (who together were 2/3 liable) should be deemed to be volunteers of the club, thus insured at the time of the accident. Understandably this finding is alarming, as it suggests on the surface at least, that ‘once a member always a member’ and therefore always insured.

The Court of Appeal’s finding was based squarely on the wording in the bylaws of Judo Ontario. This wording provided that once admitted as a member, a club or an individual remained a member unless it resigned, was suspended or was expelled. There were no other references in the bylaws to membership duration. Suspension and expulsion could occur, as initiated by Judo Ontario, if the member failed to re-register and pay its dues. However, the long-standing practice of Judo Ontario was to not pursue members who did not pay dues, but rather to simply accept that they no longer wished to be members and therefore to believe that they no longer were members.

In essence, under Judo Ontario’s bylaws, a member could remain a member (although, it might be characterized as a ‘member not in good standing’) until it resigned or until such time as Judo Ontario took a positive step to suspend or expel the member. Whether the member was in good standing or not made no difference to its status as a member. In reaching this decision, the Ontario Court of Appeal merely gave the language of the bylaws its plain and ordinary meaning.

What is the lesson here? Firstly, we are reminded that policy is what’s written on paper, not what’s in the minds of the drafters of the policy, what is intended by the organization, or what historic practice has been. To quote Adjudicator David Lech in a recent dispute about selection (a different matter but following the same principle) – ‘[selection criteria] should say what they mean and will be interpreted to mean precisely what they say’. Judo Ontario had likely paid little attention to their bylaws and perhaps should have. Correcting the loophole that was the core issue of this case is easy – amend the bylaws to make it clear that membership is granted for a set period of time, then ends unless renewed or a new application made. For example, the wording in the bylaws of Boxing Ontario is as follows:

‘2.9 Duration - Membership is accorded on an annual basis, and all members shall re-apply for membership each year’.

This clause has the added benefit of giving the sport organization more control over membership, and in fact gives Boxing Ontario additional tools to deny a re-application for membership, which may be useful when dealing with problem members.

As noted at the top of this case comment, CURIE v CGU case does not mean that ‘the sky is falling’. It does mean that all sport organizations should pay close attention to their bylaws. Although they are the least interesting and sexy of all your policies, at the end of the day they are ultimately the most important. Be aware!

Canadian Universities Reciprocal Insurance Exchange (CURIE) v. CGU Insurance Company of Canada, 2007 Ont. CA 650

Originally published: Centre for Sport and Law Newsletter (2008) Vol. 4(1)