By Isha Sandhu
Introduction
In the recent decision of Natario v. RBC Insurance Company of Canada, the Court of Appeal for Ontario addressed whether an order denying two insurers leave to amend their Statement of Defence to plead the defence of civil fraud was final or interlocutory. In finding that the order was final, the Court held that civil fraud is a distinct defence, and that refusing leave to plead it would preclude the insurer defendants from raising that defence at trial.
Factual Background – The Personal Injury Action
In 2012, the plaintiff Maria Natario suffered serious injuries that rendered her paraplegic after falling through a hole in the attic of her friends’ home.[1] She commenced an action against the homeowners (the “insureds”) and their insurers (the “insurers”).[2]
The circumstances surrounding the fall were the subject of a prolonged factual dispute. The plaintiff initially pleaded that she fell down a set of stairs after tripping over construction debris, but in 2015 she amended her claim to plead that she fell through an opening or unstable floorboards in the attic.[3] The motion judge noted that the inconsistency was likely the result of her inability to communicate in English.[4]
For seven years, the insureds maintained that the plaintiff had slipped on debris while going down a staircase in their home, despite this not being true.[5] They denied that she fell through the attic floor out of concern about potential consequences as they had been conducting unpermitted renovations.[6]
In 2019, the insureds admitted that their evidence at examinations for discovery had been fabricated.[7]
The insurers took the position that the insureds’ misrepresentation constituted a material breach of the policy and denied indemnity, although they continued to defend the action in order to minimize any potential judgment.[8]
In 2021, the action was resolved by a consent dismissal without costs.[9] The consent order reserved the plaintiff’s right to commence an action against the insurers under section 132 of the Insurance Act.[10]
Factual Background – The Coverage Action
In February 2022, the plaintiff sued the insurers pursuant to s. 132(1) of the Insurance Act, seeking damages in the amount of $2 million.[11]
In December 2024, the Court of Appeal for Ontario rendered its decision in Wong v. Aviva Insurance Company of Canada, which clarified the availability of civil fraud as a defence.[12]
In September 2025, the insurers moved for leave to amend their Statement of Defence to plead civil fraud, based on the insureds’ false statements.[13] The motion judge denied leave to amend and dismissed the motion, finding that the proposed amendments would cause non-compensable prejudice to the plaintiff.[14]
The insurers appealed this decision directly to the Court of Appeal for Ontario.[15] The plaintiff then moved to quash their appeal, arguing that the order denying leave was interlocutory and could only be appealed to the Divisional Court with leave.[16]
Issue and Outcome
The issue before the Court of Appeal was whether the order denying the insurers leave to amend their Statement of Defence to add civil fraud was a final or interlocutory order.[17] The Court of Appeal found that the order was final for the reasons below.
Analysis
(1) The Test for Final vs. Interlocutory Orders
The starting point for the Court of Appeal’s analysis was the well-established test from Hendrickson v. Kallio, which holds that an interlocutory order is one that does not determine the real matter in dispute but addresses only a collateral issue.[18]
The Court further noted that it is settled law that an order refusing leave to amend a pleading to advance a new substantive claim or defence is a final order.[19] This principle reflects a broader proposition: an order that conclusively disposes of an issue raised by way of defence, or that precludes a defendant from raising a defence altogether, deprives the defendant of a substantive right and is therefore final.[20]
(2) Civil Fraud as a Distinct and Substantive Defence
The Court found that civil fraud is a defence that differed from those already pleaded by the insurers, including defences based on specific provisions of the policy and the common law breach of the duty of good faith.[21] This distinction matters because the Rules of Civil Procedure require that affirmative defences, like civil fraud, be specifically pleaded to avoid surprise at trial.[22]
Pleading civil fraud requires the following particulars to be pleaded: a false representation, knowledge of the falsehood or recklessness as to its truth, reliance on the representation, and a resulting loss.[23] Refusing leave to allow the insurers to plead these particulars effectively deprived them of the ability to raise the defence at trial and rendered the motion judge’s order final.[24]
Takeaways
Natario offers a clear and important restatement of the distinction between final and interlocutory orders in the context of pleadings amendments. The decision confirms that the characterization of an order does not turn on how the motion was framed or the stage of the litigation at the time it was issued.
For insurers, this decision provides meaningful clarity when denied leave to plead a defence like civil fraud. Where such an amendment is refused, any appeal of the resulting order should be made directly to the Court of Appeal.
[1] Natario v. RBC Insurance Company of Canada, 2026 ONCA 263 at para 7 [Natario].
[2] Ibid.
[3] Ibid at para 8.
[4] Ibid.
[5] Ibid at para 9.
[6] Ibid.
[7] Ibid at para 10.
[8] Ibid at para 11.
[9] Ibid.
[10]Ibid.
[11] Ibid at para 12.
[12] Ibid at paras 13, citing Wong v. Aviva Insurance Company of Canada, 2024 ONCA 874.
[13] Ibid at para 14.
[14] Ibid.
[15] Ibid at para 1.
[16] Ibid at para 1-2.
[17] Ibid at para 4.
[18] Ibid at para 15, citing Hendrickson v. Kallio, [1932] O.R. 675 (C.A.).
[19] Ibid at para 16.
[20] Ibid at para 17.
[21] Ibid at para 19.
[22] Rules of Civil Procedure, RRO 1990, Reg 194, r 25.06(8).
[23] Natario, supra note 1 at para 20.
[24] Ibid at para 21-22.
