COURT OF APPEAL FOR ONTARIO
RE:
FRESH TASTE PRODUCE LIMITED (Plaintiff/Appellant) v. THE SOVEREIGN GENERAL INSURANCE COMPANY (Defendant/Respondent)
BEFORE:
WEILER, ROSENBERG and GILLESE JJ.A.
COUNSEL:
Howard C. Cohen
for the appellant
Hillel David
for the respondent
HEARD: RELEASED ORALLY:
September 16, 2005 September 16, 2005
On appeal from the order of Justice Spence of the Superior Court of Justice dated April 8, 2005.
E N D O R S E M E N T
Nature of Appeal:
1This is an appeal from a motion for summary judgment in which the plaintiff’s claim for damages for breach of an all risk insurance contract was dismissed and costs of $4,000 were awarded against him. The issues are whether the motions judge should have granted an adjournment to permit the appellant to introduce evidence as to the reasonable expectations of the parties and whether his interpretation of the exclusion clauses of the contract were correct.
Facts:
2The appellant is an importer and wholesale distributor of fresh fruit, and is insured by the respondent Sovereign General Insurance Company under a policy that covers all risks other than those specifically excluded. On August 14, 2003 there was a widespread blackout in Ontario that resulted in a 20-hour power failure. Due to the power failure the appellant’s refrigerator equipment stopped working, allowing the temperature to rise substantially where the produce was being stored. As a result the majority of the produce deteriorated, became damaged, and was dumped.
3The respondent relied on two exculpatory provisions in the insurance policy to deny the appellant’s claim:
The Mechanical or Electrical Breakdown or Derangement exclusion stated:
“5.B. PERILS EXCLUDED:
This form does not insure against loss or damage caused directly or indirectly:
(d) by…mechanical or electrical breakdown or derangement in or on the “premises”, unless fire ensues and then only for the loss or damage caused directly by such ensuing fire;”
The Changes of Temperature Exclusion:
“5.B. PERILS EXCLUDED:
This Form does not insure against loss or damage caused directly or indirectly:
(e) by…changes of temperature…but this exclusion does not apply to loss or damage caused directly by ‘Named Perils,’ rupture of pipes or breakage of apparatus not excluded under paragraph (m) of Clause 5.A. hereof…”
4Named Perils is a defined term under the policy and is defined to mean damage from fire, smoke, leaking from fire protective equipment, lightning, some explosions, riots, vandalism or malicious acts, windstorm or hail, or the impact by aircraft, spacecraft or a land vehicle. Thus, damage arising from any of these events is not excluded.
5At the motion for summary judgment and towards the end of his submissions before the motions judge, the appellant sought an adjournment in order to file affidavit material concerning the reasonable expectations of the insured respecting the policy. The motions judge refused to grant the adjournment. He held that the application was late and, on the materials available, there was no reason to expect that the proposed affidavit evidence would materially alter the situation. He also concluded that there was no ambiguity apparent in the wording of the two exclusion clauses. He granted summary judgment in favour of the insurer and costs of $4000.
Issues:
- Did the motion judge err in refusing to allow the appellant an opportunity to adduce evidence as to the reasonable expectations of the parties under the contract?
6The appellant submits that the motions judge erred in concluding that any proposed affidavit material would not affect the issue of whether there was a genuine issue for trial, that any such conclusion was speculative, and that he ought to have been granted an adjournment.
7The doctrine of reasonable expectations was recognized by this court in Chilton v. Co-operators General Insurance Co., [1997] 32 O.R. (3d) 161. At that time, Laskin J.A. recognized that the doctrine of reasonable expectations applies primarily when the court is required to construe an ambiguity in a provision of the contract. He noted that some courts in the United States have given the principle a broader meaning and have applied it in cases where the policy appeared to unfairly deny coverage to the insured. He added, however, that in Canada, no appellate court had yet embraced the broader application of the principle although he went on to state there might be some instances where a broader application of the principle might be appropriate.
8Even assuming the motions judge erred in principle in refusing to grant an adjournment, the appellant has not shown that the refusal to grant an adjournment would likely have affected the result. On this record we have no basis for saying that this is the kind of case warranting a broader application of the doctrine of reasonable expectations. The appellant did not put forward the proposed affidavit he would have filed had an adjournment been granted.
9On the question of whether the exculpatory clauses were clear and unambiguous, even if an argument can be made that an electrical derangement “in or on the premises”, did not include a power failure from outside the premises, the language of the clause excluding changes in temperature, other than from the perils named, is clear and unambiguous. The clause is not concerned with how the change in temperature is caused nor does it distinguish between losses due to natural and unnatural causes as the appellant suggests. Thus, we see no basis for interfering with the motions judge’s decision.
10Accordingly the appeal is dismissed with costs to the respondent fixed in the amount of $3,000 all inclusive.
“Karen M. Weiler J.A.”
“M. Rosenberg J.A.”
“E.E. Gillese J.A.”