CITATION: Gostick v. Squance, 2007 ONCA 674
DATE: 20071004
DOCKET: C46027
COURT OF APPEAL FOR ONTARIO
DOHERTY, MACPHERSON and CRONK JJ.A.
BETWEEN:
EVAN TYLOR GOSTICK AND TRAVIS KEON GOSTICK, minors by their Litigation Guardian, ALLAN PAUL INGELSON, ALLAN PAUL INGLESON, personally, EVAN GOSTICK, Sr., BRUCE MORRISON and BEVERLEY MORRISON
Respondents/Plaintiffs
and
TREVOR SQUANCE, Deceased, by his Litigation Administrator, DOUGLAS STRELSHIK, COLLEEN MORRISON, and ROYAL & SUNALLIANCE INSURANCE COMPANY OF CANADA
Appellant/Defendants
AND BETWEEN:
COLLEEN MORRISON
Respondent/Plaintiff
and
LEONARD HOCHBERG, LITIGATION ADMINISTRATOR FOR THE ESTATE OF TREVOR SQUANCE, DECEASED and ROYAL & SUNALLIANCE
Appellant/Defendants
John M. Burnes for the appellant, Royal & SunAlliance Insurance Company of Canada
Hillel David and Adam Wagman for the respondents, Evan Tylor Gostick and Allan Paul Ingleson
Greg Neinstein for the respondent, Colleen Morrison
Heard: June 15, 2007
On appeal from the orders of Justice Eva Frank of the Superior Court of Justice dated August 10, 2006, with reasons reported at 2006 31019 (ON SC), 82 O.R. (3d) 551.
DOHERTY J.A.:
I
Overview
[1] On October 20, 2003, a van driven by the appellant, Colleen Morrison (“Morrison”), collided with a vehicle driven by Trevor Squance (“Squance”). Mr. Squance was killed. Ms. Morrison, her two sons, Tylor Gostick (“Tylor”) and Travis Gostick (“Travis”) as well as her husband, Allan Ingleson (“Ingleson”) were seriously injured.
[2] The vehicle driven by Ms. Morrison was insured under an automobile policy issued by the appellant, Royal & SunAlliance Insurance Company of Canada (“Royal”). Mr. Squance was uninsured.
[3] There are two law suits arising out of the accident. In one, Mr. Ingleson, as litigation guardian for Travis and Tylor, and in his personal capacity, sued Mr. Squance, Ms. Morrison, and Royal.[^1] In the other action, Ms. Morrison sued Mr. Squance and Royal.
[4] For the purpose of this proceeding, it is agreed that Mr. Squance was entirely responsible for the accident, and that Ms. Morrison was negligent in not ensuring that her son, Travis, was wearing his seatbelt at the time of the accident. Ms. Morrison’s negligence contributed to Travis’s injuries.
[5] Royal accepts that by virtue of Ms. Morrison’s negligence, it is responsible under the liability coverage provisions in its policy for Travis’s damages up to the $1,000,000 limit in the policy. Travis was very badly injured and it is assumed his damages will exceed $1,000,000. He does not claim any entitlement to further recovery from Royal under any other part of the policy.
[6] Travis has no stake in this appeal. The dispute is between Royal on one side and Ms. Morrison and Mr. Ingleson and Tylor on the other. For ease of reference, I will refer to these three individuals collectively as the respondents.
[7] The respondents all suffered serious injuries in the car accident. Mr. Squance is the only person who has any liability to the respondents for the damages arising out of the accident. As Mr. Squance is uninsured, the respondents have looked to their policy, the Royal policy, for coverage. Specifically, the respondents claimed that they are entitled to recover under the terms of the Family Protection Coverage Endorsement (“FPC Endorsement”) attached to the Royal policy. The FPC Endorsement has a $1,000,000 limit. This amount will not cover in full the damages suffered by the respondents.
[8] Motions were brought in both actions to determine whether the respondents were covered under the terms of the FPC Endorsement. Royal argued that as it was obliged to pay Travis $1,000,000 under the liability coverage in its policy, it was not obliged under the terms of the FPC Endorsement to make any further payment to any of the other family members who suffered damage as the result of the negligence of the uninsured driver, Mr. Squance.
[9] Royal further submitted that any entitlement the respondents had under the policy must come under the provisions that address uninsured motorist coverage. That coverage provides for a maximum payout of $200,000.[^2]
[10] Like the motion judge, I disagree with the interpretation of the FPC Endorsement advanced by Royal. On a plain reading of that Endorsement, the respondents are eligible claimants with a claim against Mr. Squance, an inadequately insured motorist who is solely responsible for the respondents’ injuries. As Mr. Squance has no insurance, the respondents are entitled to recover from Royal up to $1,000,000, the limit of the family protection coverage provided for in the FPC Endorsement purchased from Royal by Ms. Morrison.
II
The Terms of the FPC Endorsement
[11] All automobile liability policies issued in Ontario must contain uninsured motorist coverage. That coverage requires the insured’s own insurer to provide certain minimum levels of coverage in the event that the insured is injured in an accident caused by an uninsured motorist: R.R.O. 1990, Reg. 676 as amended O. Reg. 276/03.
[12] A motorist can, for an additional premium, purchase added coverage for injuries caused by underinsured motorists. This coverage is optional and when purchased comes in the form of the FPC Endorsement. The terms of the Endorsement are standardized and approved by the Superintendent of Financial Services.[^3]
[13] The insured can purchase the level of FPC Endorsement coverage he or she deems appropriate. Where the FPC Endorsement does not set out a specific limit, the limit of the coverage provided by the FPC Endorsement is the same as the liability limit in the policy. This policy had a liability limit of $1,000,000 and an FPC Endorsement limit of $1,000,000. Ms. Morrison paid $227 for the bodily harm liability coverage in the main policy and an additional $11 for the coverage provided by the FPC Endorsement.
[14] The interpretative exercise required in this proceeding focuses on paras. 3 and 4 of the FPC Endorsement:
In consideration of a premium of $......... or as stated in the Certificate of Automobile Insurance to which this change form is attached, the insurer shall indemnify an eligible claimant for the amount that he or she is legally entitled to recover from an inadequately insured motorist as compensatory damages in respect of bodily injury to or death of an insured person arising directly or indirectly from the use or operation of an automobile.
The insurer’s maximum liability under this change form, regardless of the number of eligible claimants or insured persons injured or killed or the number of automobiles insured under the Policy, is the amount by which the limit of family protection coverage exceeds the total of all limits of motor vehicle liability insurance, or bonds, or cash deposits, or other financial guarantees as required by law in lieu of such insurance, of the inadequately insured motorist and of any person jointly liable with that motorist.
[15] Paragraph 3 describes the coverage provided by the FPC Endorsement. Paragraph 4 fixes the monetary limits of Royal’s liability under the FPC Endorsement.
[16] Paragraphs 3 and 4 contain several defined terms. I do not think there is any dispute as to the applicability of those terms in this case. It is accepted that the respondents are all “eligible claimants” and “insured persons” under the definitions in para. 1 of the FPC Endorsement. It is also accepted that Mr. Squance falls within the definition of an “inadequately insured motorist” for the purpose of the FPC coverage. Lastly, the parties accept that the “limit of family protection coverage”, another defined term, is $1,000,000, the same as the liability limit in the main policy.
[17] It would be customary at this juncture of the reasons to set out canons of construction governing insurance contracts and insurance related legislation. Those canons are well known and I see no value in rehearsing them here.
[18] The interpretative exercise engaged in this case requires that the words, particularly in para. 4 of the FPC Endorsement, be given their plain meaning bearing in mind the purpose of the FPC Endorsement. The FPC Endorsement is intended first and foremost to extend coverage beyond the coverage provided for in the main policy for bodily injuries suffered by an insured or other eligible claimant at the hands of an underinsured motorist: Taggart (Litigation Guardian of) v. Simmons (2001), 2001 24003 (ON CA), 52 O.R. (3d) 704 at para. 35 (C.A.); Craig v. Allstate Insurance Co. of Canada (2002), 2002 44956 (ON CA), 59 O.R. (3d) 590 at para. 41 (C.A.).
[19] The FPC Endorsement extends the coverage provided for in the main policy by giving the insured the same financial protection the insured would have if the at fault driver had insurance in the same amount as the limit of the FPC Endorsement purchased by the insured: Chilton v. Co-Operators General Insurance Co. (1997), 1997 765 (ON CA), 32 O.R. (3d) 161 at 165 (C.A.).
[20] Bearing the purpose in mind, I turn to the language of paras. 3 and 4. I have set out side by side below para. 3 as it actually appears in the FPC Endorsement (on the left), and as it reads stripped to its essential language and tailored to the facts of this case (on the right):
In consideration of a premium of $......... or as stated in the Certificate of Automobile Insurance to which this change form is attached, the insurer shall indemnify an eligible claimant for the amount that he or she is legally entitled to recover from an inadequately insured motorist as compensatory damages in respect of bodily injury to or death of an insured person arising directly or indirectly from the use or operation of an automobile.
In consideration of $11, Royal shall indemnify the respondents (Ms. Morrison, Mr. Ingleson, and Tylor) for the amount they are legally entitled to recover from Mr. Squance as compensatory damages in respect of bodily injuries to the respondents arising directly from the use of an automobile.
[21] The coverage described in para. 3 applies in the present circumstances. The real dispute – what is Royal’s maximum liability under the FPC Endorsement – turns on the meaning of para. 4. Royal contends that its maximum liability is zero. The respondents submit that Royal’s maximum liability is $1,000,000.
[22] Paragraph 4 as it actually reads in the FPC Endorsement and as it reads when tailored to the facts of this case, is set out side by side below.
The insurer’s maximum liability under this change form, regardless of the number of eligible claimants or insured persons injured or killed or the number of automobiles insured under the Policy, is the amount by which the limit of family protection coverage exceeds the total of all limits of motor vehicle liability insurance, or bonds, or cash deposits, or other financial guarantees as required by law in lieu of such insurance, of the inadequately insured motorist and of any person jointly liable with that motorist.
Royal’s maximum liability under this FPC Endorsement, regardless of the number of respondents injured, is the amount by which the limit of the FPC Endorsement exceeds the total of Mr. Squance’s motor vehicle liability insurance limits plus the liability limits of anyone else’s insurance who is jointly liable with Mr. Squance.
[23] On Royal’s arithmetic, the million dollars in liability insurance available to Travis under Ms. Morrison’s Royal policy must be taken into account in determining Royal’s maximum liability under the FPC Endorsement. Royal contends that Ms. Morrison is jointly liable with Mr. Squance for the injuries of Travis and that for the purpose of para. 4, Travis is an eligible claimant and insured as defined in the FPC Endorsement even though he makes no claim under that Endorsement. On Royal’s reading, its maximum liability is $1,000,000 (the limits of the FCP Endorsement) minus $1,000,000 (the amount of motor vehicle liability insurance available to Ms. Morrison, a jointly liable motorist) for a net potential liability to Royal under para. 4 of zero.
[24] The respondents’ calculation begins with the same $1,000,000, that is, the limit of the FPC Endorsement coverage. The respondents contend, however, that only the amount of Mr. Squance’s liability coverage (zero) and not Ms. Morrison’s liability coverage ($1,000,000) should be deducted from the $1,000,000. The respondents argue that Ms. Morrison is not “jointly liable” to the respondents and that any liability coverage available to her in respect of Travis’s injuries is irrelevant in assessing Royal’s maximum liability under para. 4 to the respondents. The respondents contend that Royal’s maximum liability is $1,000,000 minus zero for a net amount of $1,000,000.
[25] Royal’s approach to para. 4 requires that all insured under the policy who suffered bodily harm in the accident be treated as a group for the purpose of considering Royal’s maximum liability under para. 4 even if one or more of the insured does not seek indemnification under para. 4. Clearly, para. 4 imposes a single limit on the cumulative amount of the claims advanced by different insured who suffered injuries in the same accident. The maximum liability under para. 4 applies to the total claims made by the insured and not to individual claims. I cannot find anything, however, in the language of para. 4 that would require that joint liability to an insured who does not seek recovery under para. 4 can serve to reduce the maximum liability of Royal to those insured who do seek recovery under para. 4.
[26] The language of para. 4 reduces what would otherwise be the maximum liability under the FPC Endorsement by reference to two things: first, the liability coverage of the underinsured motorist, and second, the liability coverage of anyone “jointly liable” with the underinsured motorist. Joint liability refers to responsibility for the injuries suffered by the insured. There is no one jointly liable with Mr. Squance for the damages suffered by the respondents. I agree with the observation of the motion judge at para. 13 of her reasons:
… The insuring agreement under this endorsement speaks of the obligation to indemnify individual claimants. Consistent with that, claimants must be considered individually in determining whether the limit of coverage applies to them. On that basis, the joint liability limitation would not apply to any of the plaintiffs, other than Travis, as Ms. Morrison is not jointly liable to them.
[27] Royal’s argument essentially comes down to the contention that to the extent that the liability provisions of its policy must respond to injuries suffered in an accident, that amount must be deducted from the coverage available under the FPC Endorsement. Insurers, who ultimately determine the language of the FPC Endorsement, could have written it in that way to specifically provide that any recovery made under the liability portion of the policy must be taken into account when assessing the insurer’s maximum liability under para. 4 of the FPC Endorsement. The Endorsement is not, however, written in those terms. Instead, the insurers chose to reduce their potential maximum liability under the FPC Endorsement by reference to the liability insurance coverage available to those responsible for the injuries suffered by the insured who are advancing the claim under para. 4. On the language in para. 4, the question is not whether Royal’s policy has responded to claims under the liability provision in the policy, but whether any insured under the Royal policy is jointly liable for the damages suffered by the insureds who are seeking coverage under the FPC Endorsement. On the facts of this case, no one insured under the Royal policy is jointly liable to the respondents.
[28] Royal submits that the motion judge’s interpretation of the FPC Endorsement is inconsistent with the interpretation provided in those cases that have held that the FPC Endorsement coverage cannot be stacked on top of liability limits under the same policy or another policy: see Despotopoulos v. Jackson, [1991] O.J. No. 1472 (Gen. Div.) aff’d Romas v. Prudential Insurance Co. of Canada, [1996] O.J. No. 4185 (C.A.); Torrance v. Torrance, 1989 10412 (ON SC), [1989] O.J. No. 1412 (H.C.).
[29] As I read those cases, the same claimants sought recovery under the liability provisions of a policy and the FPC Endorsement. Those claimants were in the same position that Travis would be in were he to advance a claim under the FPC Endorsement for the difference between the $1,000,000 available under the liability provision of Royal’s policy and his total in damages. Travis does not, however, seek to “top up” the $1,000,000 liability recovery by resort to the FPC Endorsement.
[30] The respondents have no claim against any liability provision of any policy. It cannot be said, insofar as they are concerned, that there is any attempt to stack the coverage provided by the FPC Endorsement on top of liability coverage to which the respondents have access.
III
The Insured’s “Understanding” of the Coverage
[31] For the reasons set out above, I agree with the conclusion reached by the motion judge and would dismiss the appeal. I will, however, address one aspect of the interpretative exercise relied on by the respondents and, to some degree, by the motion judge.
[32] Ms. Morrison and Mr. Ingleson both filed affidavits on the motion in which they set out their understanding of the coverage provided by the FPC Endorsement. For example, Mr. Ingleson’s affidavit reads in part:
… Since Colleen and I expected to use the van to transport Travis and Tylor on a regular basis, we wanted to make sure that we had enough insurance to protect them, and ourselves, in the event of an accident with an uninsured or inadequately insured vehicle. That was the reason why we paid an additional premium for the Family Protection Coverage endorsement.
It was our understanding that the purchase of the OPCF 44R Family Protection Coverage endorsement would make available the sum of $1,000,000 to respond to claims made by all or any of the members of our family for injuries and damages caused by a motorist without insurance or with inadequate insurance. That was the whole purpose of our purchasing that additional coverage.
[33] Royal did not cross-examine on these affidavits. Counsel for the respondents submitted that the unchallenged assertions in the affidavits provided cogent evidence of the reasonable expectations of the ordinary purchaser of the FPC Endorsement coverage. Counsel contended that the understanding of Mr. Ingleson and Ms. Morrison as to the scope of the coverage should influence both the court’s interpretation of the language in the Endorsement and the court’s interpretation of the scope of the coverage, regardless of the language used in the Endorsement.
[34] I can find no evidentiary value in the stated understanding of Ms. Morrison and Mr. Ingleson. There is no suggestion that either were aware of the language in the FPC Endorsement, much less that either had examined the language. There is also no suggestion that the understanding of Ms. Morrison and Mr. Ingleson as to the scope of the coverage is predicated on any representation made to them by Royal.
[35] An insured’s stated belief that his or her claim is covered by the policy is hardly surprising and indeed goes without saying. However, where that belief is uninformed by any knowledge of the language of the policy, and unaffected by any representation made on behalf of the insurer, that belief cannot assist either in interpreting the language of the policy, or in providing a basis apart from the language of the policy for recovery from the insurer.
IV
CONCLUSION
[36] I would dismiss the appeals.
[37] Counsel agreed that if the appeals were dismissed, the respondents in the action brought by Mr. Ingleson should receive costs from Royal in the amount of $10,600 and Ms. Morrison should receive costs from Royal in the amount of $5,300. Those amounts are appropriate and I would so order.
RELEASED: “DD” OCT 04 2007”
“Doherty J.A.”
“I agree J.C. MacPherson J.A.”
“I agree E.A. Cronk J.A.”
[^1]: Ms. Morrison’s parents are also plaintiffs and advance a claim under the Family Law Act. Their claim is irrelevant to this appeal. [^2]: I do not understand Royal to have gone so far as to accept an obligation to pay up to $200,000 under the uninsured motorist coverage provisions if in fact its interpretation of the FPC Endorsement is correct. As I understand it, Royal simply acknowledges that the respondents have a potential claim under the uninsured motorist coverage provisions (see Royal’s factum at paras. 52-53). [^3]: The relevant form in this proceeding, O.P.C.F. 44 R: Family Protection Coverage, was in effect from January 1, 2001 to October 31, 2005. Earlier versions are described in L. Samis, “S.C.F. Family Protection Coverage” [1987] L.S.U.C. Special Lectures: Insurance Law 175.