Aviva and RBC Insurance are headed to the Ontario Court of Appeal in a $2 million coverage dispute rooted in fabricated evidence.
In a decision filed April 10, 2026, the court dismissed a motion to quash the insurers' appeal, confirming it has jurisdiction over the case. The ruling clears the path for a hearing on whether the insurers can add a civil fraud defence to their pleadings - a question with real implications for how insurers handle claims tainted by policyholder dishonesty.
The story begins in 2012, when Maria Natario fell through a hole in the attic of her friends' home and was left paraplegic. The home was insured under an RBC Insurance home insurance policy. At the time, the homeowners were doing renovations in the attic without a building permit. Afraid of the legal fallout, they told a different story - for seven years, they claimed Natario had slipped on debris while going down a staircase. In 2019, they admitted their evidence at examinations for discovery was fabricated.
The insurers said the misrepresentation was a material breach of the policy and refused to cover the homeowners. Aviva, which had acquired RBC Insurance and assumed responsibilities under the policy in 2016, kept defending the lawsuit to minimize any judgment. The case was eventually dismissed on consent in 2021, but with a key carve-out: Natario could still pursue a direct action against the insurers under section 132 of Ontario's Insurance Act, and she would not be required to prove damages up to the $2 million policy limit.
She filed her claim in February 2022.
The turning point came in December 2024, when the Court of Appeal issued its decision in Wong v. Aviva Insurance Company of Canada, 2024 ONCA 874. That ruling clarified the availability of the civil fraud defence for insurers in coverage actions. In Wong, the trial judge found that the elements of civil fraud were met where defendants made material misrepresentations in examinations for discovery, and the insurer was not responsible for coverage.
Armed with that precedent, the insurers in Natario moved in September 2025 to amend their Statement of Defence to add the defence of civil fraud. The motion judge said no - allowing the amendment would cause non-compensable prejudice to the plaintiff.
The insurers appealed. Natario tried to have the appeal quashed, arguing the order was procedural and belonged before the Divisional Court. The Court of Appeal disagreed, finding that an order denying leave to add a new substantive defence is a final order. The panel noted that civil fraud is distinct from the defences already on the table, including those based on specific policy provisions and breach of the duty of good faith. It carries its own requirements: a false representation, knowledge of the falsehood or recklessness, reliance, and loss.
The appeal has been expedited, with the trial scheduled for September 2026. Costs of $5,000, inclusive of HST and disbursements, were awarded to the insurers.
For insurers and claims professionals, this is one to watch. The real question - whether the civil fraud defence should be allowed in this case - is still open. The answer could shape how Ontario insurers respond when policyholders are dishonest during litigation.
