Snaak, by his Litigation Guardian, Snaak, et al. v. The Dominion of Canada General Insurance Company
[Indexed as: Snaak (Litigation Guardian of) v. Dominion of Canada General Insurance Co.]
61 O.R. (3d) 230
[2002] O.J. No. 1438
Docket No. C36897
Court of Appeal for Ontario,
Austin, Moldaver and MacPherson JJ.A.
April 19, 2002*
- Note: This judgment was recently brought to the attention of the editors.
Insurance -- Exclusion clauses -- Parents and son insured under policy which excluded coverage for "intentional or criminal act by any person or any named insured" -- Son sued for intentional torts of assault, battery and intimidation -- Parents sued in negligence for failure to supervise and control son -- Exclusion clause ambiguous -- One possible interpretation of exclusion clause was that only person who committed intentional tort was excluded from coverage -- Ambiguity to be resolved in favour of insured -- Insurer had no duty to defend son but did have duty to defend parents. [page231]
KF was allegedly attacked by the plaintiff JS on school property. KF and his parents brought an action against JS, his parents, the school and the school board. The action against JS was framed in intentional tort. The action against his parents was framed in negligence. JS's parents had a homeowner's insurance policy with the defendant. The policy contained an exclusion clause which provided that it did not apply to "intentional or criminal acts, meaning bodily injury or property damage resulting from . . . an intentional or criminal act by any person or any named insured who is insured by this policy . . .". The defendant took the position that the exclusion clause meant that it did not need to defend either JS or his parents. JS and his parents brought an action against the defendant, seeking a declaration that the defendant had a duty to defend them in the F action. They brought a motion for summary judgment. The motions judge held that the defendant had no duty to defend JS but did have a duty to defend his parents. The defendant appealed.
Held, the appeal should be dismissed.
The exclusion clause in question was ambiguous. One possible interpretation was that only the person who committed the intentional tort was excluded from coverage. The ambiguity in the policy had to be resolved in favour of the insured.
APPEAL from a judgment of MacKinnon J., [2001] I.L.R. 1-4000 (S.C.J.) interpreting an insurance policy.
G.P. v. D.J., 2000 50975 (ON SC), [2001] O.J. No. 313 (S.C.J.); Godonoaga (Litigation Guardian of) v. Khatambakhsh (2000), 2000 5737 (ON CA), 49 O.R. (3d) 22, 188 D.L.R. (4th) 706, [2000] I.L.R. 1-3864, 2 C.C.L.T. (3d) 1 (C.A.), supp. reasons (2000), 2000 16891 (ON CA), 50 O.R. (3d) 417, 191 D.L.R. (4th) 221, [2001] I.L.R. 1-3913 (C.A.); Wilkieson- Valiente v. Wilkieson, [1996] I.L.R. 1-3351 (Ont. Gen. Div.), consd Other cases referred to Non-Marine Underwriters, Lloyd's of London v. Scalera, 2000 SCC 24, [2000] 1 S.C.R. 551, 75 B.C.L.R. (3d) 1, 185 D.L.R. (4th) 1, 253 N.R. 1, [2000] 5 W.W.R. 465, 50 C.C.L.T. (2d) 1, [2000] I.L.R. 1-3810 (sub nom. Scalera v. Lloyd's of London, Sansalone v. Wawanesa Mutual Insurance Co., Nonmarine Underwriters v. Scalera); Sheppard v. Co-operators General Insurance Co. (1997), 1997 2230 (ON CA), 33 O.R. (3d) 362, [1997] I.L.R. 1-3437 (C.A.), revg (1995), 1995 7184 (ON SC), 23 O.R. (3d) 117, [1995] I.L.R. Â1-3231 (Gen. Div.)
Paul Daffern and Andy Cassolato, for respondents. Peter Boeckle and Christopher Morrison, for appellant.
The judgment of the court was delivered by
MACPHERSON J.A.: --
A. Introduction
[1] This appeal concerns an insurance company's duty to defend under a homeowner's insurance policy. The central issue on the appeal is whether a clause in the policy which excludes coverage for injuries caused by intentional or criminal acts by an insured extends to also exclude coverage for the alleged negligence of another insured in failing to supervise the person who caused the injuries. [page232]
[2] On a motion for summary judgment, Justice J. Robert MacKinnon interpreted the insurance policy in favour of the policy holder. The insurance company appeals from that decision.
B. Facts
(1) The parties and the events
[3] Kenneth Fleming ("Kenneth") lived in Springwater Township and was a student at the Minesing Central Public School, an elementary school in the County of Simcoe. In 1995, when he was nine years old, he fell from playground equipment and broke his back. His parents say that in early 1996 they informed school administrators and teachers that precautions were necessary to prevent aggravation of the existing injury and re-injury through sports or contact with fellow students. The parents specifically say that they warned school officials about Jeffrey Snaak ("Jeffrey"), a fellow student who, they say, had demonstrated aggressive, pushing and threatening behaviour towards Kenneth on school property.
[4] On July 7, 1997, the Flemings allege that Jeffrey and a group of boys attacked Kenneth on school property. They claim that this attack caused serious and permanent injury to Kenneth's back.
[5] The Flemings brought an action against Jeffrey, his parents, the Minesing Central Public School and the Simcoe County District School Board.
[6] The action against Jeffrey, as reflected in the Statement of Claim, was framed in intentional tort:
The plaintiffs state and the fact is that the actions of Jeff amount to assault, battery and intimidation for which he and his parents, as his legal guardians, are liable.
[7] The action against Jeffrey's parents, William and Desiree Snaak ("the Snaaks" or "the Snaak parents"), was framed in negligence.
The plaintiffs state and the fact is that Mr. and Mrs. Snaak were advised of Jeff's early misconduct and were negligent by their lack of supervision of Jeff and for their failure to discipline and control Jeff when they knew or ought to have known that such failure would lead to harm.
[8] The Snaaks had a homeowner's insurance policy with The Dominion of Canada General Insurance Company ("Dominion"). In addition to the Snaak parents, the policy covered a number of unnamed insureds, including their son, Jeffrey. Once the Snaaks and Jeffrey were sued by the Flemings, they asked Dominion to defend the action and to permit them to choose their own counsel to conduct the defence. [page233]
[9] The insurance policy contained several exclusion clauses. In the section of the policy dealing with personal liability, one of the exclusion clauses provided, inter alia:
EXCLUSIONS . . .
This policy does not apply to
- INTENTIONAL OR CRIMINAL ACTS, meaning bodily injury or property damage resulting from:
-- an intentional or criminal act by any person or any named insured who is insured by this policy, . . . .
[10] Dominion decided that this provision meant that they did not need to defend either Jeffrey or his parents in the Fleming action. Dominion informed the Snaaks of its decision in a letter dated June 22, 1999:
We have reviewed the Statement of Claim with respect to this matter.
The allegations indicate the damages, so claimed, flow from an intentional act committed by Jeffrey Snaak. As indicated on prior occasions, the said policy excludes liability coverage for damages caused by intentional acts by any insured. Accordingly, we are denying William Snaak, Desiree Snaak, and Jeffrey Snaak both a Defence and Indemnity for this claim.
(Emphasis in original)
(2) The litigation
[11] The Snaaks and Jeffrey then brought an action against Dominion. They sought a declaration that Dominion had a duty to defend them in the Fleming action, that they had a right to choose their own counsel in the Fleming action, and that Dominion had a duty to fully indemnify them for the legal costs incurred in the Fleming action.
[12] The Snaaks made a motion for summary judgment with respect to the relief sought in their action against Dominion. The motion was heard by Justice MacKinnon.
[13] The motion judge held that Dominion had no duty to defend Jeffrey. Since the allegations by the Flemings against Jeffrey "sound in intentional tort", the exclusion clause in the homeowner's policy was triggered.
[14] The motion judge held that Dominion did have a duty to defend the Snaaks in the Fleming action. He found that "[t]he essential true nature of the claims against Desiree and William Snaak is that they negligently failed to supervise, discipline and control their own son . . . The essence of the claim against [page234] them sounds in negligence." The motion judge further held that the application of the exclusion clause to the negligence claim against the Snaak parents was ambiguous, and that the ambiguity should be resolved in favour of the policy holders. He concluded that "[t]he insurer has not satisfied me that the allegations against Mr. and Mrs. Snaak cast the Fleming claim solely within the policy exclusions."
[15] Finally, the motion judge held that the Snaaks were not entitled to choose their own counsel to defend the Fleming action. He said: "I do not believe there is reason to be concerned that counsel chosen by the defendant will not represent the adult plaintiffs appropriately."
[16] The Snaaks do not appeal from the motion judge's decision respecting a duty to defend Jeffrey or choice of counsel. However, Dominion does appeal from the component of the motion judge's decision relating to its duty to defend the Snaak parents in the Fleming action.
C. Issue
[17] There is a single issue in the appeal: did the motion judge err by concluding that Dominion had a legal obligation to defend the Snaak parents in the Fleming action?
D. Analysis
[18] The interpretation of insurance contracts, including exclusion clauses, was recently the subject of a comprehensive review and restatement in Non-Marine Underwriters, Lloyd's of London v. Scalera, 2000 SCC 24, [2000] 1 S.C.R. 551, 185 D.L.R. (4th) 1. Under the rubric General Principles of Insurance Contract Interpretation, Iacobucci J. considered the problem of ambiguity at p. 591 S.C.R.:
Since insurance contracts are essentially adhesionary, the standard practice is to construe ambiguities against the insurer: Brissette Estate v. Westbury Insurance Co., 1992 32 (SCC), [1992] 3 S.C.R. 87, at p. 92; Wigle v. Allstate Insurance Co. of Canada (1984), 1984 45 (ON CA), 49 O.R. (2d) 101 (C.A.), per Cory J.A. A corollary of this principle is that "coverage provisions should be construed broadly and exclusion clauses narrowly": Reid Crowther & Partners Ltd. v. Simcoe & Erie General Insurance Co., 1993 150 (SCC), [1993] 1 S.C.R. 252, at p. 269; Indemnity Insurance Co. v. Excel Cleaning Service, 1954 9 (SCC), [1954] S.C.R. 169, at pp. 179-80, per Estey J. Therefore one must always be alert to the unequal bargaining power at work in insurance contracts, and interpret such policies accordingly.
[19] Against the backdrop of this general principle relating to ambiguity in insurance contracts, I turn to a consideration of the exclusion clause relied on by Dominion in this case. In my view, a useful departure point is the decision of this court in Godonoaga (Litigation Guardian of) v. Khatambakhsh (2000), 2000 5737 (ON CA), 49 O.R. (3d) 22, 188 D.L.R. (4th) 706 (C.A.) [page235] ("Godonoaga"). The facts in Godonoaga were remarkably similar to the facts in the present case. A nine-year-old boy was assaulted by a group of fellow students. He sued two brothers on the basis of assault. However, he also sued the parents of the brothers, alleging a negligent failure to supervise them.
[20] The parents had a tenant's insurance policy with Allstate Insurance Company of Canada ("Allstate"). Allstate denied all coverage on the basis of a clause in the insurance policy which provided:
You are not insured for claims arising from:
(5) Bodily Injury or Property Damage caused intentionally by or at your direction or resulting from your criminal acts or omissions;
[21] The parents brought a third party claim against Allstate. They conceded that the insurance policy did not cover the claim against their two sons because it sounded in intentional tort which came within the exclusion clause. However, the parents asserted that the exclusion clause did not apply to the negligence claim against them.
[22] This court agreed with the parents' position on the issue of whether Allstate had a duty to defend the plaintiffs' negligence claims against the parents. Allstate's argument, which is identical to Dominion's in the present case, was described by Finlayson J.A. in this fashion, at p. 27 O.R.:
Allstate asserts that the terms "you" and "your" have the same meaning throughout the policy. Thus, in effect, where the exclusion states that you are not insured against bodily injury or property damage caused intentionally by or at your direction or resulting from your criminal acts or omissions, the references to "you" and "your" embrace all four of the insured defendants. In the result, if any one of the four is excluded from coverage, all four are excluded.
(Emphasis in original)
[23] Finlayson J.A. rejected this submission, essentially for two reasons. First, he said that it ignored the language in the "Coverages" section of the policy to the effect that "[e]ach person is a separate Insured but this does not increase the limit of insurance." Applying this language, Finlayson J.A. reasoned, at p. 27 O.R.:
In my view, a proper interpretation of the policy is that the parents and the two children are each separately insured to the face value of the policy. The insurer does not have to respond to the claims against the two sons because their separate policies exclude claims arising from bodily injury caused intentionally by them. However, the parents are in a different position under [page236] their separate policies. They are sued in negligence, which is not an excluded claim, and the fact that the pleadings allege intentional assaults by their children does not disentitle them to coverage.
(Emphasis added)
[24] Second, citing this court's decision in Sheppard v. Co- operators General Insurance Co. (1997), 1997 2230 (ON CA), 33 O.R. (3d) 362, [1997] I.L.R. 1-3437 (C.A.), Finlayson J.A. stated "it is self-evident that if there is any ambiguity in the policy before this court, it must be resolved in favour of the insured" (p. 28 O.R.). He found, as had the court in Sheppard, that there was ambiguity about the use of [the] words "you" and "your" in the policy.
[25] In the present case, the motion judge relied on the same two reasons to reach his conclusion that Dominion had a duty to defend the component of the Fleming action relating to the negligence claim brought against the Snaak parents. The motion judge said:
In my view, the exclusion clause . . . considered in the fullness of the whole policy, is ambiguous in that:
(a) The use of the words "any person" in the exclusion must be considered in the context that it is possible that the insurance coverage applies to more than one person. Objectively construed, one possible interpretation of the exclusion wording is that only the person who commits the intentional act is excluded from coverage;
(b) Under the heading "AMOUNT OF INSURANCE" in the policy it is stated that:
"Coverage applies separately to each person who is insured, but this does not increase the amount of insurance provided by this policy."
This wording is at odds with the exclusion clause which seeks, on the defendant's view of it, to lump all of the insureds together in excluding coverage.
[26] The appellant acknowledges that there is a 'separate coverage' provision in the Snaaks' homeowner's policy. Accordingly, Dominion does not attack that component of the motion judge's reasoning.
[27] However, Dominion asserts that the language of the exclusion clause in its policy is different [from] the clause in Godonoaga. This difference in language is pivotal, Dominion contends, and requires a different result in terms of the interpretation of its exclusion clause. For ease of reference, I set out again the two exclusion clauses:
Allstate policy (Godonoaga)
You are not insured for claims arising from:
. . . . . [page237]
(5) Bodily Injury or Property Damage caused intentionally or at your direction or resulting from your criminal acts or omissions;
Dominion policy (Present case)
This policy does not apply to
- INTENTIONAL OR CRIMINAL ACTS, meaning bodily injury or property damage resulting from:
-- an intentional or criminal act by any person or any named insured who is insured by this policy, . . . .
[28] Dominion contends that the use of the words "you" and "your" in the Allstate policy justified Finlayson J.A.'s interpretation in Godonoaga to the effect that the exclusion clause applied only to the intentional acts of the insured, and not to the negligent acts of other insureds. The absence of these words in the Dominion policy, and the use of the more general words "This policy does not apply to" and "any person", require a different interpretation.
[29] In support of its position, Dominion relies on two decisions by superior court judges in Ontario, Wilkieson- Valiente v. Wilkieson, [1996] I.L.R. 1-3351 (Ont. Gen. Div.), ("Wilkieson") and G.P. v. D.J., 2000 50975 (ON SC), [2001] O.J. No. 313 (S.C.J.).
[30] In Wilkieson, a clause in an insurance policy excluded liability for intentional conduct "by or at the direction of an insured". Reilly J. drew a distinction between "an insured" and "the insured". He said [at p. 4133 I.L.R.]:
I conclude that 'an insured' must be given its ordinary, common-sense meaning. 'An' is an indefinite article, and it means 'any' insured. Therefore, intentional conduct by Wilkieson, or any other insured, excludes the obligation to indemnify on the part of the insurer.
Reilly J. went on to say that the use of the word "the" instead of "an" suggested a different result. It either meant "the insured making the claim" or it was ambiguous.
[31] I need not finally decide whether Reilly J.'s analysis is correct or incorrect. However, in my view, the distinction he draws between "an" and "the" is a fine one. More importantly, the case report of Wilkieson contains only eight words of the exclusion [clause]. Without knowing the wording of the entire exclusion clause or any of the wording of the coverage sections, Wilkieson is not particularly helpful in the interpretation of other insurance contracts.
[32] In G.P. v. D.J., the exclusion clause was similar, but not identical, to the Dominion policy. The clause provided: [page238]
You are not insured for claims arising from:
- bodily injury or property damage caused by any intentional or criminal act or failure to act by:
(a) any person insured by this policy; or
(b) any other person at the direction of any person insured by this policy;
(Emphasis added)
[33] Mossip J. carefully considered this court's decision in Godonoaga. She reasoned, at pp. 4-5:
A plain reading of the two exclusion clauses leads me to the inescapable conclusion that the different language used in the exclusion clauses results in the following:
(a) in Godonoaga, it is only the criminal acts or omissions of the insured claiming under the policy that allows the insurer to deny coverage to that insured. In that case, the parents of the assailants were sued for damages in negligence. This claim and the factual underpinning of the claim were not subsumed by the assault, and thus the claim was not caught by the exclusion clause.
(b) in the case before me it is not only the criminal act of any insured, in this case the husband, D.J., but also the failure to act by any insured, in this case the wife, R.J., that fall within the exclusion clause. Accordingly, R.J. is not covered by the policy and, in the result, Halwell is not under a duty to defend her.
(Emphasis added)
[34] It can be seen that in this passage Mossip J.'s distinguishing of Godonoaga turned entirely on the words "failure to act" in the exclusion clause. These words are not contained in the section of Dominion's policy in issue in this appeal. [See Note 1 at end of document] Accordingly, this line of reasoning does not assist Dominion in the present case.
[35] However, Dominion points out that in the penultimate paragraph of her reasons, under the rubric "Decision", Mossip J. advanced a second basis for applying the exclusion clause in G.P. v. D.J. She said, at p. 5:
I therefore find that Halwell may rely on the exclusion clause in R.J.'s insurance policy to deny coverage, and that the insurer has no duty to defend the claim in negligence against her, for either or both of the following reasons:
(1) "any person insured by this policy" means that the alleged intentional or criminal act of the insured, D.J. bars her claim, as well as D.J.'s claim, against Halwell; and/or [page239]
(2) the claim in negligence against R.J., arises from her alleged "failure to act", with regard to protecting the minor plaintiff from D.J., and that allegation is specifically caught by the exclusion clause.
[36] The second of these reasons in Mossip J.'s summary relates to the core of her consideration of Godonoaga; since it flows from the "failure to act" wording in the exclusion clause it is inapplicable in the present case because Dominion's policy does not contain that wording.
[37] The first reason is similar to Reilly J.'s analysis in Wilkieson. However, with respect, there is no discussion of this point in the analysis component of Mossip J.'s reasons; rather, she makes the point as a bald conclusion in the Decision portion of her reasons. For the reasons stated above, although I concede that her interpretation of "any person" is a possible one, it is not self-evident to me that it is the only reasonable interpretation. Judicial distinctions between the single words "any" and "the", and different results flowing from such distinctions, strike me as overly refined and, potentially, unfair in a matter as important as insurance coverage.
[38] In the end, I agree with MacKinnon J. that the exclusion clause in Dominion's policy is ambiguous. As he put it: "Objectively construed, one possible interpretation of the exclusion wording is that only the person who commits the intentional tort is excluded from coverage."
[39] I agree with MacKinnon J.'s conclusion. The interpretation of the exclusion clause which he proposes is a reasonable interpretation. It is not -- and MacKinnon J. does not claim otherwise -- the only reasonable interpretation of the clause.
[40] In my view, the respondents adopted a similarly sound position in their factum. In an analysis which I found both useful and fair, they submitted that there were two reasonable interpretations of the exclusion clause:
On the one hand, the word "any" in the exclusion clause can be interpreted in the manner advanced by Dominion. The intentional act of any one insured will exclude coverage for all insureds. Under this interpretation, if there are twenty (20) individuals insured under the policy, the intentional act of one insured will exclude coverage for the nineteen (19) others, even if the other nineteen (19) others [sic] did not commit the intentional act.
On the other hand, the word "any" in the exclusion clause can be interpreted differently. The word "any" simply recognizes the fact that the insurance policy provides coverage to many individuals, and if any one of these individuals commits an intentional act, coverage will be denied, but only for that individual. Under this interpretation, if there are twenty (20) individuals insured under the policy, the intentional act of any one of the twenty (20) individuals will exclude coverage, but only for that individual, and not for the nineteen (19) others who have not committed the intentional act. [page240]
[41] I agree with this analysis. I also agree with MacKinnon J.'s conclusion that there are "obvious interpretive ambiguities in the wording of the exclusion in this policy". On the basis of longstanding case authority, those ambiguities must be resolved in favour of the insured.
E. Disposition
[42] I would dismiss the appeal. The respondents are entitled to their costs of the appeal which I would fix at $5,000 inclusive of disbursements and GST.
Appeal dismissed.
Notes
Note 1: The "failure to act" wording is contained in a different section of the policy. Both counsel agreed that this other section was not relevant to this appeal.