COURT OF APPEAL FOR ONTARIO

DATE: 20000223

DOCKET: C32114

RE: SHINER AND ASSOCIATES INC., TRUSTEE OF THE ESTATE
OF THOMAS S. MISIRLIS, A BANKRUPT
(Plaintiff/Respondent) and THE CONTINENTAL
INSURANCE COMPANY (Defendant/Appellant)

BEFORE: AUSTIN, MOLDAVER AND BORINS JJ.A.

COUNSEL: Barry Percival Q.C., for the Defendant/Appellant
Warren Mueller Q.C. and Arie Gaertner, for the
Plaintiff/Respondent

HEARD: February 15, 2000

On appeal from the judgment of Cameron J. dated April 27, 1999

E N D O R S E M E N T

[1] This is an appeal by the appellant insurer from a summary
judgment granted in favour of the respondent, the trustee in
bankruptcy of the insured Thomas Misirlis, on an errors and
omissions policy of insurance issued by the appellant to the
bankrupt, Misirlis.

[2] The appellant’s position is that the motions judge erred, on
the basis of the record before him, in concluding that the
respondent had established that there were no genuine issues for
trial in respect to material facts requiring that the action
proceed to trial. In our view, the position taken by the
appellant is correct.

[3] Central to the coverage provided by the appellant is the
state of mind of Misirlis when he placed the insurance for
Phoenix Biomedical Products Limited with an offshore insurer,
Firestone Insurance Company, which was not registered to carry on
business in Ontario. When Firestone was unable to honour
Phoenix’s claim, Phoenix obtained a judgment against Misirlis
under what is now section 396 of the Insurance Act, R.S.O. c. I -
8. This action was brought by the respondent to enforce the
judgment which the appellant refused to pay relying on an
exclusion clause in the policy which precluded coverage for “the
consequences of any intentional wrongful act, error or omission
committed by the insured”. If Misirlis’ conduct in placing the
insurance with Firestone was an intentional wrongful act, error
or omission within the meaning of the exclusion clause, the
exclusion may be available to the insurer. Hence, the
significance of Misirlis’ state of mind at the time he placed the
insurance.

[4] The motions judge found that there was no genuine issue for
trial concerning Misirlis’ state of mind. We do not agree. In
our view, there was ample evidence adduced by the appellant in
satisfaction of its evidentiary burden on a Rule 20 motion to
require the action to proceed to trial.

[5] As well, we think there is a genuine issue for trial as to
whether the policy extended coverage to Misirilis notwithstanding
that he was not a registered insurance broker.

[6] Therefore, the appeal is allowed, the summary judgment is
set aside and it is ordered that the action proceed to trial.

[7] In the circumstances the costs of the motion and this appeal
shall be in the cause.

“Austin J.A.”

“M. Moldaver J.A.”

“S. Borins J.A.”