Mantini-Atkinson v. The Co-operators General Insurance Company [Indexed as: Mantini-Atkinson v. Co-operators General Insurance Co.]

75 O.R. (3d) 442

[2005] O.J. No. 1858

Docket: C40897

Court of Appeal for Ontario,

Catzman, Rosenberg and Juriansz JJ.A.

May 11, 2005

Insurance -- Liability insurance -- Duty to defend -- Psychologist insured under Commercial General Liability policy which contained professional services exclusion -- Psychologist writing report after examining child referred to her by mediator in divorce proceedings -- Child's mother using report in access dispute -- Child's father bringing action against psychologist for damages for negligence and defamation -- Professional services exclusion in policy applying -- Insurer not required to provide psychologist with defence.

The appellant, a clinical psychologist, had a Commercial General Liability policy with the respondent. The policy contained a professional services exclusion for "bodily injury" (other than "Incidental Medical Malpractice Injury") or "personal injury" due to the rendering of or failure to render any professional service, including but not limited to "medical, surgical, dental, x-ray or nursing service or treatment, or the furnishing of food or beverages in connection therewith". The appellant wrote a report after examining a child referred to her by a mediator in divorce proceedings. The mother of the child used the report in an access dispute. The father of the child brought an action against the appellant for damages for negligence and defamation. The father claimed that as a result of the appellant's negligence, breach of statutory duty and libel, he suffered damages including humiliation and ridicule, and that he also suffered anxiety, depression and the physical symptoms associated therewith. [page443]

The appellant brought an application for a declaration that the respondent had a duty to defend the action. The application was dismissed. The appellant appealed.

Held, the appeal should be dismissed.

The examination, preparation and furnishing of the psychological report constituted a medical service, and coverage was excluded under the professional services exclusion in the policy. The father's claim did not fall within the "incidental medical malpractice" exception to the professional services exclusion. The incidental exception was intended to apply to injuries that are incidental to the provision of the professional services, as where due to the negligence of the professional psychologist, the patient should slip and fall. The father's injuries as pleaded were "due to" the professional services rendered by the appellant. While exclusion clauses are to be narrowly interpreted, a phrase should not be given an unreasonable interpretation simply to effect a narrow interpretation of an exclusion from coverage. The father's injuries as alleged in the statement of claim were due to the professional services provided by the appellant even if the intervening act of the mother in using the report in an access dispute also contributed to the injuries. The injuries were caused by the appellant's alleged negligence and thus fell within the meaning of "due to". The allegations in the father's statement of claim of injuries from the allegedly libellous statements in the report fell within the definition of personal injury in the policy. "Personal injury" was defined as meaning injury, other than bodily injury, arising out of, among other things, oral or written publication of material that slanders or libels a person. The coverage provided by the personal injury part of the policy depended on the offence "arising out of" the conduct of the appellant's business. The exclusion applied to personal injury "due to" the rendering of professional services. The terms "arising out of" and "due to" are intended to have different meanings, and the former is broader than the latter. It is therefore possible that an offence might arise out of the conduct of the business although it would not be due to the rendering of professional services. For example, the insured might libel a member of his or her staff in the course of the business for some incident unrelated to the actual rendering of professional services to a patient. Such an offence would arise out of the conduct of the business, but would not be caught by the professional services exclusion. Thus, it could not be said that the professional services exclusion nullified coverage for personal injury.

APPEAL from the judgment of Rouleau J. of the Superior Court of Justice, reported at (2003), 2003 13195 (ON SC), 67 O.R. (3d) 351, [2003] O.J. No. 3858 (S.C.J.), [page444] dismissing an application for a declaration that the insurer had a duty to defend an action against the insured.

Cases referred to Canadian Indemnity Co. v. Walkem Machinery & Equipment Ltd., 1975 141 (SCC), [1976] 1 S.C.R. 309, 53 D.L.R. (3d) 1, 3 N.R. 523, [1975] 5 W.W.R. 510; Derksen v. 539938 Ontario Ltd., [2001] 3 S.C.R. 398, [2001] S.C.J. No. 27, 205 D.L.R. (4th) 1, 273 N.R. 356, [2001] I.L.R. para. I-4029, 2001 SCC 72, 15 M.V.R. (4th) 1; Gould & Ratner v. Vigilant Insurance Co., 366 Ill. App. 3d 401, 782 N.E. 2d 749 (2002) [Leave to appeal denied 203 Ill. 2d 545, 788 N.E. 2d 728 (Sup. Ct. 2003)]; Nichols v. American Home Assurance Co., 1990 144 (SCC), [1990] 1 S.C.R. 801, [1990] S.C.J. No. 33, 72 O.R. (2d) 799n, 39 O.A.C. 63, 68 D.L.R. (4th) 321, 107 N.R. 321, [1990] I.L.R. para. 1-2583; Wagner Brothers Holdings Inc. v. Laurier Life Insurance Co. (1992), 1992 7728 (ON CA), 8 O.R. (3d) 609, [1992] O.J. No. 1303, 92 D.L.R. (4th) 747, [1993] I.L.R. para. 1-2874 (C.A.) (sub nom. Wagner & Sons Auto Body Ltd. v. Laurier Life Ins.); Weston Ornamental Iron Works Ltd. v. Continental Insurance Co., [1981] O.J. No. 78, [1981] I.L.R. para. 1-1430 (C.A.)

Thomas J. Donnelly, for appellant. Justin Linden, for respondent.

The judgment of the court was delivered by

[1] ROSENBERG J.A.: -- The appellant appeals from the judgment of Rouleau J. dismissing her application for a declaration that the respondent insurer has a duty to defend a claim brought against her. The appellant is a clinical psychologist. The underlying action stems from a report that the appellant wrote after examining a child referred to her by a mediator in divorce proceedings. The mother of the child used the report in an access dispute. The father commenced an action against the appellant claiming damages for negligence and defamation.

[2] At the relevant time the appellant had a Commercial General Liability ("CGL") policy with the respondent. That policy contains a professional services exclusion. The appellant had allowed her professional liability insurance with another insurer, Lloyd's of London, to lapse. I agree with the application judge that the respondent was not required to provide the appellant with a defence. Accordingly, I would dismiss the appeal.

The Facts

(a) The claim

[3] In October 1999, the appellant conducted a comprehensive clinical psychological assessment of a three-year-old child. According to the claim brought by the father of the child, the appellant found that the child was exhibiting serious psychological symptoms. She stated that the father's behaviour exposed the child to aggressive and fearful experiences. She recommended that the child cease all visits with the father until the child and the father received treatment. The father complained to the College of Psychologists of Ontario. In 2001, the complaint was referred to the discipline committee because, inter alia, the appellant had signed a report that she knew or ought to have known was false and misleading, rendered a report that was based on inadequate and inappropriate information and made recommendations that were inappropriate.

[4] The father claims that the appellant breached a statutory duty of care owed to him and that the report was prepared in a negligent manner, recklessly and maliciously and without due [page445] regard to the truth of the contents. The claim sets out the particulars of the negligence. Included in these particulars is an allegation that the appellant produced a report that she knew or ought to have known would damage the father's reputation. In a separate paragraph, the father states that the contents of the report are libellous and that the libel was published to a number of people, including the mother and her family, the child's paediatrician and the court.

[5] The father claims that as a result of the appellant's negligence, breach of statutory duty and libel, the plaintiff suffered damages including humiliation and ridicule. He has also suffered anxiety, depression and the physical symptoms associated therewith.

(b) The policies

[6] The appellant obtained two policies from her insurance broker. She obtained a professional liability insurance policy from underwriters at Lloyd's of London. That policy lapsed in June 2001. Under the mistaken belief that the respondent had issued that policy, the appellant's former solicitor commenced a third party claim against the respondent. The appellant has discontinued that claim. Her present solicitor then brought this application based on the appellant's CGL policy. The respondent submits that this application is an abuse of process because of the events concerning the earlier third party claim.

[7] There are a number of clauses in the CGL policy that are important for resolving the merits of this appeal. The most important is the professional services exclusion. For reasons that I will explain below, the appellant submits that the exclusion is, at best, ambiguous and does not exclude liability to pay the claim alleged against the appellant based on negligence. The appellant also submits that the policy must respond to the claim based on libel. It will be more convenient to set out the applicable clauses and the relevant part of the reasons of the application judge when I come to deal with these issues.

Analysis

(a) Abuse of process

[8] In this court, the respondent repeats its submission that this application constitutes an abuse of process. The application judge did not deal with this issue. In my view, there is no basis for finding an abuse of process in the circumstances. As indicated, the third party claim was discontinued when the appellant realized her mistake as to which policy was issued by the respondent. [page446] The respondent never pleaded to the third party claim and that claim was never dealt with on the merits.

(b) Professional liability exclusion

[9] Under the CGL policy, the respondent agreed to provide the appellant with a defence against any action to which the policy applies. If the respondent would be required to indemnify the appellant under the policy, it has a duty to defend. As held in Nichols v. American Home Assurance Co., 1990 144 (SCC), [1990] 1 S.C.R. 801, [1990] S.C.J. No. 33, 68 D.L.R. (4th) 321, at p. 811 S.C.R., p. 327 D.L.R., the "mere possibility" that a claim falls within the duty to indemnify the insured will trigger the duty to defend. However"normally the duty to defend arises only with respect to claims which, if proven, would fall within the scope of coverage provided by the policy". The respondent submits that the claims fall within the professional liability exclusion and therefore are outside the coverage provided by the policy.

[10] The CGL policy insures against "bodily injury" and "personal injury". It is conceded that the father's claim against the appellant in negligence falls within the definition of bodily injury in the policy. The appellant also submits that the claim in libel falls within the definition of personal injury. The bodily injury must be caused by an occurrence. At the conclusion of his reasons, in obiter, the application judge suggested that to the extent the claim suggests the injury was wilfully done by the appellant it would not be covered by the policy as it would not be an occurrence. I did not understand the respondent to rely upon this finding by the application judge. In my view, the claim as alleged by the father constitutes an occurrence within the meaning of the policy. See Canadian Indemnity Co. v. Walkem Machinery & Equipment Ltd., 1975 141 (SCC), [1976] 1 S.C.R. 309, 53 D.L.R. (3d) 1, at p. 316 S.C.R., p. 7 D.L.R.

[11] While the policy insures against bodily injury and personal injury, it does not insure against injury due to the rendering of professional services. The term in the policy is as follows:

This insurance does not apply to:

2. Professional Liability

"Bodily injury" (other than "Incidental Medical Malpractice Injury") or ... "personal injury" due to the rendering of or failure to render any professional service which shall include but not be limited to:

(1) medical, surgical, dental, x-ray or nursing service or treatment, or the furnishing of food or beverages in connection therewith,

. . . . . [page447]

(3) the furnishing or dispensing of drugs or medical, dental or surgical supplies or appliances,

(Emphasis added)

[12] The examination, preparation and furnishing of the psychological report constitute a medical service and the respondent submits that coverage is therefore excluded. The appellant has a number of arguments as to why there should be coverage.

(c) The incidental medical malpractice exception

[13] The appellant's principal argument is that the father's claim falls within the incidental medical malpractice injury exception to the professional services exclusion. This depends on the definition of incidental medical malpractice injury and the way that those terms have been formatted on the page in the policy:

"Incidental Medical Malpractice Injury" means "bodily injury" arising out of the rendering of or failure to

render, during the policy period, the following services:

(1) medical, surgical, dental, x-ray or nursing services or treatment or the furnishing of food or beverages in connection therewith, or

(2) the furnishing or dispensing of drugs or medical, dental or surgical supplies or appliances,

by any insured or any indemnitee causing the "Incidental Medical Malpractice Injury" who is not engaged in the business or occupation of providing any of the services described in (1) and (2) above.

(Emphasis added)

[14] The appellant submits that the emphasized clause, because of the way it is set up on the page, only modifies para. (2) of the definition. Thus, since the bodily harm alleged in this case arose out of the rendering of medical services, the exception applies. The appellant submits that the definition of incidental medical malpractice injury is at best ambiguous and the ambiguity must be resolved in favour of the insured. The appellant relies upon the principle that since the insurance policy is a contract of adhesion, any ambiguity should be interpreted against the insurer. See Wagner Brothers Holdings Inc. v. Laurier Life Insurance Co. (1992), 1992 7728 (ON CA), 8 O.R. (3d) 609, [1992] O.J. No. 1303 (C.A.), at p. 622 O.R.

[15] The respondent submits that the emphasized clause modifies both paragraphs of the definition and since the services were rendered by the insured while she was engaged in the business of providing those services, the exception does not apply.

[16] The application judge held that while it would have been clearer had the emphasized clause been brought back to the [page448] lefthand margin, he was satisfied that the clause was intended to apply to both paragraphs. He relied on the fact that the clause started on a new line, was preceded by a comma and referred to both paragraphs of the definition. He noted that the interpretation urged by the appellant "would defeat the clear purpose of the exception".

[17] I agree with the application judge. In my view, this definition is not ambiguous. The emphasized clause modifies both paras. (1) and (2) of the definition. The fact that the clause was not brought back to the margin does not create an ambiguity. As the application judge pointed out, the use of the comma after the word "appliances" indicates that the clause was intended to modify both paragraphs. If it were intended only to modify paragraph (2), there would be no comma. Further, if the appellant is correct, the professional services exclusion would be all but nullified and the CGL policy would be turned into a professional liability policy. Finally, the appellant's interpretation gives no weight to the term "incidental". It is apparent that the incidental exception was intended to apply to injuries that are incidental to the provision of the professional services, as where due to the negligence of the professional psychologist, the patient should slip and fall. I would not give effect to this ground of appeal.

(d) "Due to"

[18] Before the application judge, the appellant submitted that the professional services exclusion does not apply where the professional services are not rendered to a patient. The appellant submitted that the injuries complained of by the father were therefore not excluded since the professional services were provided to his child. The application judge considered this issue at length and found against the appellant. The appellant no longer relies upon that submission. As I understand it, she concedes that if the injuries were "due to" the rendering of medical services, the exclusion would apply. The appellant does submit, however, that the injuries were not due to the rendering of professional services, but rather to the intervening act of the mother in using the report in the custody proceedings. The appellant points out that in other parts of the policy the insurer has used the phrase "arising out of" to describe the required causal connection.

[19] The application judge agreed that the use of the phrase "due to" reflects an intention that the exclusion be narrower than would be the case if the insurer had used the phrase "arising out of". He found, however, that the father's claim was "based, [page449] directly, on the alleged negligent rendering of professional services by the applicant" and was therefore covered by the professional services exclusion. He held that the appellant's suggested interpretation was unreasonable. I agree with the application judge that the father's injuries as pleaded were "due to" the professional services rendered by the appellant.

[20] The appellant relies on the principle of interpretation that clauses in an insurance contract providing coverage are to be broadly construed whereas exclusions are to be narrowly interpreted. See Derksen v. 539938 Ontario Ltd., 2001 SCC 72, [2001] 3 S.C.R. 398, [2001] S.C.J. No. 27, 205 D.L.R. (4th) 1, at para. 52. That being said, a phrase should not be given an unreasonable interpretation simply to effect a narrow interpretation of an exclusion from coverage. The father's injuries as alleged in the statement of claim were due to the professional services provided by the appellant even if the intervening act of the mother also contributed to the injuries. The injuries were caused by the appellant's alleged negligence and thus fall within the meaning of "due to". See Gould & Ratner v. Vigilant Insurance Co., 336 Ill. App. 3d 401, 782 N.E. 2d 749 (2002), at p. 409 Ill. App., leave to appeal denied 203 Ill. 2d 545, 788 N.E. 2d 728 (Sup. Ct. 2003).

(e) Nullification of the personal injury coverage

[21] The allegations in the father's statement of claim of injuries from the allegedly libellous statements in the report fall within the definition of personal injury in the policy. The appellant submits that if the professional services exclusion were to apply to personal injuries, coverage for personal injury would be nullified because coverage is provided only for personal injuries "caused by an offence: ... (2) Arising out of the conduct of your business". Thus, although the policy purports to provide coverage for personal injuries arising out of the conduct of the appellant's business, that coverage would be eliminated by the exclusion. The appellant relies upon the principle set out by this court in Weston Ornamental Iron Works Limited v. Continental Insurance Co., [1981] O.J. No. 78, [1981] I.L.R. para. 1-1430 (C.A.), at pp. 479-80 I.L.R.:

The exclusion clause should not be interpreted in a way which is repugnant to or inconsistent with the main purpose of the insurance coverage but so as to give effect to it. Thus, even if the exemption clause were found to be clear and unambiguous it should not be enforced by the courts when the result would be to defeat the main object of the contract or virtually nullify the coverage sought for protection from anticipated risks.

(Emphasis added) [page450]

[22] It is not apparent that this argument was made to the application judge. In any event, I am satisfied that it cannot succeed. The policy provides a broad definition of personal injury as follows:

"Personal injury" means injury, other than "bodily injury", arising out of one or more of the following offences:

a. False arrest, detention or imprisonment;

b. Malicious prosecution;

c. Wrongful entry into, or eviction of a person from, a room, dwelling or premises that the person occupies;

d. Oral or written publication of material that slanders or libels a person or organization or disparages a person's or organization's goods, products or services; or

e. Oral or written publication of material that violates a person's rights of privacy.

(Emphasis added)

[23] The coverage provided by the personal injury part of the policy depends on the offence "arising out of" the conduct of the appellant's business. As noted above, however, the exclusion applies to personal injury "due to" the rendering of professional services. The appellant concedes, of course, that the terms "arising out of" and "due to" are intended to have different meanings and that the former is broader than the latter. It is therefore possible that an offence might arise out of the conduct of the business although it would not be due to the rendering of professional services. For example, the insured might libel a member of his or her staff in the course of the business for some incident unrelated to the actual rendering of professional services to a patient. Such an offence would, I think, arise out of the conduct of the business but would not be caught by the professional services exclusion. Thus, it cannot be said that the professional services exclusion nullifies coverage for personal injury.

Disposition

[24] Accordingly, I would dismiss the appeal with costs. Counsel agreed that, if the appeal is dismissed, the respondent's costs should be fixed in the amount of $10,000. I would fix its costs in that amount inclusive of GST and disbursements.

Appeal dismissed. [page451]