COURT OF APPEAL FOR ONTARIO
RE: THE ROSE CORPORATION, TORONTO FILM STUDIOS INC., BLUEFIELD DEVELOPMENT INC., 1450755 ONTARIO INC., AND 1450756 ONTARIO INC. (Plaintiffs (Respondents)) – and – AMERICAN HOME INSURANCE COMPANY (Defendant (Appellant))
BEFORE: MOLDAVER, MACPHERSON and SIMMONS JJ.A.
COUNSEL: Robert J. Clayton For the appellant
Stephen R. Morrison and Thomas J. Donnelly For the respondents
HEARD: February 6, 2004
HEARD & RELEASED ORALLY: February 6, 2004
On appeal from the order of Justice Mary Lou Benotto of the Superior Court of Justice dated April 29, 2003.
E N D O R S E M E N T
1This is an appeal from the order of Madam Justice Benotto dated April 29, 2003 in which Justice Benotto declared that "at the time of the loss, the Plaintiffs owned, leased, operated or otherwise controlled 633 Eastern Avenue, Toronto, Ontario within the meaning of clause 3 of the declarations page of Policy Number 4508496, and was covered up to a limit of $20,075,000.00."
2Taking into account the nature of the policy (a substantial commercial policy involving a client known to carry on business in investment and real estate development), the broad wording used to describe the location and description of premises insured (all premises owned, leased, operated or otherwise controlled by the insured), the limited duration of the policy (one year from January 9, 2001 to January 9, 2002) and the failure to identify with precision those properties for which full coverage of over $20 million was intended during the policy period, we are inclined to think that it was open to the applications judge to conclude that the policy in question was effectively an "open" policy, such that the insured was entitled to full coverage not only on those premises which it owned, leased, operated or otherwise controlled at the inception of the policy, but those premises which it came to own, lease, operate or control during the policy period. However, for reasons that follow, we need not finally decide that issue.
3The question that remains is whether at the time of the loss, the insured "owned, leased, operated or otherwise controlled" the premises at 633 Eastern Avenue, Toronto. In that regard, we note that at the time of the loss, the insured had entered into an Agreement of Purchase and Sale to buy the subject property. The sale was conditional upon "court approval" and approval had not been obtained as of the date of the loss.
4Under clause 39 of the Agreement of Purchase and Sale, the insured acknowledged that the agreement was "personal to the purchaser" and that neither it, nor any monies paid under it created "an interest in the property". Under the same clause, the insured agreed that it would not register the agreement or cause or permit it to be registered and that no reference to or notice of it or any caution, certificate of pending litigation or other similar court process in respect of it was to be registered on title.
5In short, at the time of the loss, it would appear that the insured had bargained away any beneficial or equitable ownership interest it might otherwise have had at common law flowing from a binding Agreement of Purchase and Sale.
6That said, we do not read the terms of the Agreement of Purchase and Sale as meaning that the insured did not have an insurable interest in the subject property at the time of loss. We do however see it as a basis for rejecting the insured's submission that at the time of the loss, it had a beneficial or equitable ownership interest in the property, such that it was entitled to full coverage. Accordingly, we respectfully disagree with the finding of the applications judge to the contrary.
7Despite our view that the insured was not entitled to full coverage, we are nonetheless satisfied that it was entitled to the limited coverage (up to $2.5 million) provided for under the "Acquired Locations" clause of the policy. The wording of that clause is very different from the wording of the clause or clauses giving rise to full coverage. The "Acquired Locations" clause speaks of coverage from the date of acquisition, after the inception date of the policy, of premises purchased, occupied or for which the insured may become responsible.
8In our view, the word "purchased" in that clause is wide enough to cover the situation that existed at the time of the loss. In short, we think it can be said that the insured had "purchased" the subject property under the Agreement of Purchase and Sale. At very least, the language used in the "Acquired Locations" clause is sufficiently ambiguous to trigger the contra proferentem doctrine in favour of the insured. Accordingly, we think the insured was entitled to claim up to $2.5 million for the loss in question.
9These reasons address and are meant to address the particular, if not unique circumstances of this case. They should not be taken as an indication that we would necessarily have arrived at the same conclusion as the applications judge had the Agreement of Purchase and Sale been unconditional and had the insured not bargained away its common law beneficial ownership interest. Under those circumstances, we do not foreclose the possibility that the "Acquired Locations" clause would still govern. That however, is a matter for another day.
10For these reasons, the order of the applications judge cannot stand. In the result, the appeal is allowed, the order under appeal is set aside and in its place, an order will go declaring that at the time of loss, 633 Eastern Avenue, Toronto, Ontario, was an acquired location within the meaning of the "Acquired Location" extension in clause 4(a) of the Property Section of Policy Number 4508496 and was covered up to a limit of $2,500,000.
11With respect to costs, in the circumstances, the parties shall bear their own costs of the application and the appeal.
Signed: "M.J. Moldaver J.A."
"J.C. MacPherson J.A."
"Janet Simmons J.A."```