MacDonald et al. v. Chicago Title Insurance Company of Canada

[Indexed as: MacDonald v. Chicago Title Insurance Co. of Canada]

Ontario Reports

Court of Appeal for Ontario,

Cronk, Hourigan and Benotto JJ.A.

December 3, 2015

127 O.R. (3d) 663 | 2015 ONCA 842

Case Summary

Civil procedure — Summary judgment — Corporation bound by admissions made by officer of corporation during his cross-examination under rule 39.02 on his affidavits filed in response to summary judgment motion — Rules of Civil Procedure, R.R.O. 1990, Reg. 194, rule 30.02.

Insurance — Interpretation and construction — Appeals — Standard of appellate review applicable to interpretation of standard form insurance contract being correctness.

Insurance — Title insurance — City issuing order to remedy unsafe building after plaintiffs discovered that load-bearing walls had been removed by previous owner without building permit — Plaintiffs performing remedial work and suing their title insurer for declarations of coverage and indemnification — Title insurance policy insuring against actual loss resulting from covered risks if they affect title — Covered risks including circumstances where title is unmarketable — Motion judge erring in finding that city order did not affect plaintiffs' title as it [page664] had not been registered on title — Motion judge erroneously assuming that title insurance only responds to defects registered against title — Motion judge erring in finding that plaintiffs' title was not unmarketable because they might be able to sell property for less than they paid for it — Plaintiffs' losses covered under policy — Coverage not negated by any exclusion or limitation of liability.

The plaintiffs purchased a house in 2006 and, as part of the purchase, acquired title insurance from the defendant. The policy insured against actual loss resulting from covered risks if they affected the plaintiffs' title. The covered risks included "11. Your Title is unmarketable, which allows another person to refuse to perform a contract to purchase, to lease, or to make a mortgage loan". In 2013, the plaintiffs discovered that a previous owner had removed load-bearing walls without a building permit, rendering the second floor unsafe. The city issued an order to remedy an unsafe building. The plaintiffs performed remedial work and made a claim under the policy for repair costs. The defendant insurer denied coverage. The plaintiffs sued the defendants for declarations of coverage and indemnification and brought a motion for summary judgment. They sought to rely on admissions made by D, the vice-president of the defendant, during his cross-examination on affidavits filed in response to the summary judgment motion. The motion judge ruled that they could not do so as M's admissions did not bind the defendant. The motion judge found that the covered title risks did not apply in the circumstances of this case. He concluded that the plaintiffs' title was unaffected by the unpermitted construction because it remained marketable, even though it was marketable for an amount that was less than what the plaintiffs had paid for the property. He also held that in order for coverage to apply, any city demand or work order had to be registered on title. He concluded that the plaintiffs had suffered no loss as that term was defined in the policy. He dismissed the plaintiffs' motion and granted summary judgment against them, dismissing their action. The plaintiffs appealed.

Held, the appeal should be allowed.

The standard of review applicable to the interpretation of a standard form insurance contract, such as the title insurance policy in this case, is correctness.

The motion judge erred in finding that the plaintiffs could not rely on the admissions that were said to have been made by M on his cross-examination. A corporation is bound by admissions made by an officer during his or her cross-examination under rule 39.02 on affidavits filed in response to a summary judgment motion. It would be inequitable for a corporate party to be permitted to rely on the evidence of one of its officers in support of its position that there is a genuine issue requiring a trial while at the same time being sheltered from admissions made by that same officer under cross-examination that could tend to undermine that position.

The motion judge erred in finding that the city order did not affect the plaintiffs' ownership of the property because it had not been registered on title. The motion judge's understanding that municipal work orders are routinely registered against title was incorrect. Municipal work orders are not registered in either the registry or land titles system in Ontario; they are a defect that can only be discovered by off-title searches. The motion judge's conclusion that title insurance only responds to defects registered against title, if accepted, would undermine one of the fundamental purposes of title insurance: coverage of off-title defects. In addition, the motion judge made numerous legal errors and failed to properly apply the governing principles of interpretation for insurance [page665] contracts. He interpreted clause 11 of the policy in a manner that was inconsistent with the actual wording of that clause. In order to understand the meaning of the term "unmarketable" in clause 11, it was unnecessary to look beyond the wording of the clause. It was entirely irrelevant and speculative to postulate, as the motion judge did, that the plaintiffs might be able to sell the property at some undetermined lower price. The fact that someone might be willing to purchase a dangerously defective building does not mean that it is marketable under the title policy. The dangerous condition of the property flowed directly from the failure of the former owner to attempt to obtain the necessary municipal approval. That failure made the plaintiffs' title unmarketable. Clause 11 provided coverage for the plaintiffs, and that coverage was not negated by any exclusion or limitation of liability.

Krawchuk v. Scherbak (2011), 106 O.R. (3d) 598, [2011] O.J. No. 2064, 2011 ONCA 352, 279 O.A.C. 109, 82 C.C.L.T. (3d) 179, 332 D.L.R. (4th) 310, 5 R.P.R. (5th) 173, 4 C.L.R. (4th) 1, 201 A.C.W.S. (3d) 848 [Leave to appeal to S.C.C. refused [2011] S.C.C.A. No. 319, 297 O.A.C. 395n]; Sattva Capital Corp. v. Creston Moly Corp., [2014] 2 S.C.R. 633, [2014] S.C.J. No. 53, 2014 SCC 53, 2014EXP-2369, J.E. 2014-1345, 373 D.L.R. (4th) 393, [2014] 9 W.W.R. 427, 59 B.C.L.R. (5th) 1, 461 N.R. 335, 25 B.L.R. (5th) 1, 358 B.C.A.C. 1, 614 W.A.C. 1, 242 A.C.W.S. (3d) 266, consd

Other cases referred to

Amos v. Insurance Corp. of British Columbia, 1995 CanLII 66 (SCC), [1995] 3 S.C.R. 405, [1995] S.C.J. No. 74, 127 D.L.R. (4th) 618, 186 N.R. 150, [1995] 9 W.W.R. 305, 63 B.C.A.C. 1, 10 B.C.L.R. (3d) 1, 31 C.C.L.I. (2d) 1, [1995] I.L.R. 1-3232, 13 M.V.R. (3d) 302, 57 A.C.W.S. (3d) 640; Bell Canada v. The Plan Group (2009), 96 O.R. (3d) 81, [2009] O.J. No. 2829, 2009 ONCA 548, 252 O.A.C. 71, 81 C.L.R. (3d) 9, 62 B.L.R. (4th) 157, 179 A.C.W.S. (3d) 40; Canada (Director of Investigation and Research, Competition Act) v. Southam Inc., 1997 CanLII 385 (SCC), [1997] 1 S.C.R. 748, [1996] S.C.J. No. 116, 144 D.L.R. (4th) 1, 209 N.R. 20, J.E. 97-632, 50 Admin. L.R. (2d) 199, 71 C.P.R. (3d) 417, REJB 1997-00386, 69 A.C.W.S. (3d) 586; Derksen v. 539938 Ontario Ltd., [2001] 3 S.C.R. 398, [2001] S.C.J. No. 27, 2001 SCC 72, 205 D.L.R. (4th) 1, 277 N.R. 82, 273 N.R. 356, 150 O.A.C. 1, 153 O.A.C. 310, 33 C.C.L.I. (3d) 1, [2002] I.L.R. I-4029, 15 M.V.R. (4th) 1, REJB 2001-26225, J.E. 2001-1941, 108 A.C.W.S. (3d) 893; Eli Lilly & Co. v. Novopharm Ltd., 1998 CanLII 791 (SCC), [1998] 2 S.C.R. 129, [1998] S.C.J. No. 59, 161 D.L.R. (4th) 1, 227 N.R. 201, J.E. 98-1562, 80 C.P.R. (3d) 321, 80 A.C.W.S. (3d) 871; Housen v. Nikolaisen, [2002] 2 S.C.R. 235, [2002] S.C.J. No. 31, 2002 SCC 33, 211 D.L.R. (4th) 577, 286 N.R. 1, [2002] 7 W.W.R. 1, J.E. 2002-617, 219 Sask. R. 1, 10 C.C.L.T. (3d) 157, 30 M.P.L.R. (3d) 1, 112 A.C.W.S. (3d) 991; Hryniak v. Mauldin, [2014] 1 S.C.R. 87, [2014] S.C.J. No. 7, 2014 SCC 7, 314 O.A.C. 1, 453 N.R. 51, 2014EXP-319, J.E. 2014-162, EYB 2014-231951, 95 E.T.R. (3d) 1, 12 C.C.E.L. (4th) 1, 27 C.L.R. (4th) 1, 21 B.L.R. (5th) 248, 46 C.P.C. (7th) 217, 37 R.P.R. (5th) 1, 366 D.L.R. (4th) 641, 2014EXP-319, J.E. 2014-162; Investors Compensation Scheme Ltd. v. West Bromwich Building Society, [1998] 1 All E.R. 98, [1998] 1 W.L.R. 896, [1998] 1 B.C.L.C. 493 (H.L.); Ledcor Construction Ltd. v. Northbridge Indemnity Insurance Co., [2015] A.J. No. 338, 2015 ABCA 121, [2015] 8 W.W.R. 466, [2015] I.L.R. I-5714, 16 Alta. L.R. (6th) 397, 386 D.L.R. (4th) 482, 251 A.C.W.S. (3d) 490 [Leave to appeal to S.C.C. granted [2015] S.C.C.A. No. 188, 2015 CarswellAlta 1769, 2015 CarswellAlta 1770]; Non-Marine Underwriters, Lloyd's of London v. Scalera, [2000] 1 S.C.R. 551, [2000] S.C.J. No. 26, 2000 SCC 24, 185 D.L.R. (4th) 1, 253 N.R. 1, [2000] 5 W.W.R. 465, J.E. 2000-935, 135 B.C.A.C. 161, 75 B.C.L.R. (3d) 1, 18 C.C.L.I. (3d) 1, 50 C.C.L.T. (2d) 1, [2000] I.L.R. I-3810, 96 A.C.W.S. (3d) 479; [page666] Northwest Territories (Attorney General) v. Association des parents ayants droit de Yellowknife, [2015] N.W.T.J. No. 4, 2015 NWTCA 2, 326 C.R.R. (2d) 139, [2015] 3 W.W.R. 490, 80 Admin. L.R. (5th) 75, 593 A.R. 180, 249 A.C.W.S. (3d) 12; Robb v. Walker, [2015] B.C.J. No. 494, 2015 BCCA 117, 69 B.C.L.R. (5th) 249, 53 R.P.R. (5th) 1, 383 D.L.R. (4th) 554, [2015] 8 W.W.R. 1, 369 B.C.A.C. 170, 251 A.C.W.S. (3d) 165 (C.A.); Royal Bank of Canada v. Paul Pogue Companies Ltd. (1972), 1972 CanLII 357 (ON CA), 11 O.R. (2d) 171, [1972] O.J. No. 2086 (C.A.); Sam's Auto Wrecking Co. v. Lombard General Insurance Co. of Canada (2013), 114 O.R. (3d) 730, [2013] O.J. No. 1413, 2013 ONCA 186, 305 O.A.C. 68, 361 D.L.R. (4th) 336, 20 C.C.L.I. (5th) 173, 225 A.C.W.S. (3d) 1111; Tannahill v. Lanark Mutual Insurance Co., [2010] O.J. No. 2736, 2010 ONSC 3623, [2010] I.L.R. I-5023, 86 C.C.L.I. (4th) 69, 191 ACWS (3d) 614 (S.C.J.); Vallieres v. Vozniak, [2014] A.J. No. 964, 2014 ABCA 290, 580 A.R. 326, 377 D.L.R. (4th) 80, 46 R.P.R. (5th) 176, 5 Alta. L.R. (6th) 28, [2015] 1 W.W.R. 662, 244 A.C.W.S. (3d) 226; Zurich Insurance Co. v. 686234 Ontario Ltd. (2002), 2002 CanLII 33365 (ON CA), 62 O.R. (3d) 447, [2002] O.J. No. 4496, 222 D.L.R. (4th) 655, 166 O.A.C. 233, 43 C.C.L.I. (3d) 174, [2003] I.L.R. I-4137, 118 A.C.W.S. (3d) 719 (C.A.) [Leave to appeal to S.C.C. refused [2003] S.C.C.A. No. 33, 189 O.A.C. 197n]

Rules and regulations referred to

Rules of Civil Procedure, R.R.O. 1990, Reg. 194, rules 20.02(2), 20.04, 39.02

Authorities referred to

Cherniak, Earl A., "Sattva Revisited" (2015), 34:2 Adv. J. 6

Hall, Geoff R., Canadian Contractual Interpretation Law, 2nd ed. (Markham, Ont.: LexisNexis, 2012)

Moore, Marguerite E., and Janet M. Globe, Title Searching and Conveyancing in Ontario, 6th ed. (Markham, Ont.: LexisNexis, 2010)

Perell, Paul M., and John W. Morden, The Law of Civil Procedure in Ontario, 2nd ed. (Markham, Ont.: LexisNexis, 2014)

APPEAL from the judgment of J.A.B. MacDonald J. (2014), 123 O.R. (3d) 789, [2014] O.J. No. 6190, 2014 ONSC 7457 (S.C.J.) dismissing the plaintiffs' motion for summary judgment and granting summary judgment dismissing the plaintiffs' action.

Gavin Tighe and Alexander Melfi, for appellants.

Robert W. Dowhan and Catharine J. Grinyer, for respondent.

R. Leigh Youd, for intervenor Lawyers' Professional Indemnity Company (LAWPRO).

The judgment of the court was delivered by

HOURIGAN J.A.: —

A. Overview

[1] The appellants brought a motion for summary judgment seeking a declaration that the title insurance policy (the "title policy") they purchased from the respondent, Chicago Title Insurance Company of Canada ("Chicago Title"), provided coverage and indemnification for a dangerous structural condition [page667] affecting their home. That condition was caused by unpermitted construction done by a previous owner. The motion judge dismissed the appellants' motion and, notwithstanding that Chicago Title did not bring a cross-motion, granted summary judgment in Chicago Title's favour, dismissing the appellants' action.

[2] The appellants submit that the motion judge fundamentally misconceived the purpose and function of title insurance, made a significant evidentiary error and misinterpreted the terms of the title policy.

[3] For the reasons that follow, I would allow the appeal, set aside the order below and grant the appellants' motion for summary judgment on the issues of coverage and indemnification under the title policy.

B. Background Facts

[4] The appellants purchased a multi-story family home in Toronto in 2006 (the "property"). As part of the purchase, they also acquired the title policy, which provides under the heading "Covered Title Risks":

This Policy insures against actual loss resulting from the following covered risks, if they affect your Title on the Policy Date, or to the extent expressly stated below, if they affect your title [sic] after the Policy Date.

[5] The term "Title" is defined under s. 1(f) of the Definitions section of the title policy as ". . . the ownership of your interest in the Land, as shown in Schedule A".

[6] In 2013, the appellants discovered that load-bearing walls at the property had been removed during renovation work undertaken by a previous owner without a building permit, rendering the second floor unsafe. The City of Toronto issued an order to remedy an unsafe building (the "city order"), requiring that work be done to temporarily support the floor. The appellants undertook the required temporary work and made a claim under the title policy for the costs of those repairs and the permanent repairs needed to make their home structurally sound.

[7] Chicago Title denied the claim based on a lack of coverage under the title policy. The appellants brought an action seeking, among other things, declarations of coverage and indemnification. During the course of that proceeding, Chicago Title amended its defence to also deny coverage on the basis that the appellants' claim was excluded under the terms of the title policy. [page668]

C. Decision of the Motion Judge

[8] In support of their claims for coverage and indemnification, the appellants relied on the following covered title risks in the title policy [at para. 21]:

11. Your Title is unmarketable, which allows another person to refuse to perform a contract to purchase, to lease, or to make a mortgage loan.

12. You are forced to remove or remedy your existing structure, or any part of it, other than a boundary wall or fence, or you cannot use it for a one to six family residential property or condominium unit because:

(e) of any outstanding notice of violation or deficiency notice.

15. Work orders, unless you agreed to be responsible for them.

16. You are forced to remove your existing structure -- other than a boundary wall or fence -- because any portion of it was built without obtaining a building permit from the proper government office or agency.

17. Other defects, liens, hypothecs, rights of priority or encumbrances.

[9] The appellants also relied upon certain admissions that they submit were made by David Mineo, the vice president of claims of Chicago Title, during his cross-examination on two affidavits filed by Chicago Title in response to the motion for summary judgment.

[10] The motion judge ruled that the title policy was unambiguous and that the covered title risks did not apply in the circumstances of the case. In so ruling, the motion judge concluded that the appellants' title was unaffected by the unpermitted construction because it remained marketable, even though it was marketable for an amount that was less than what the appellants had paid for the property. He also held that in order for coverage to apply, any demand or work order by a municipal authority to rectify a structural problem had to be registered on title. The motion judge further held that the appellants had suffered no loss, as that term is defined in the title policy. Finally, the motion judge ruled that the appellants were unable to rely on any admissions made by Mr. Mineo on his cross-examination, as those admissions did not bind Chicago Title.

[11] The motion judge dismissed the appellants' motion and granted summary judgment against them, dismissing their action, including their claim that Chicago Title acted in bad faith. [page669]

[12] The appellants appeal the dismissal of their motion for summary judgment and the dismissal of their claims for coverage and indemnification. They do not appeal the motion judge's dismissal of their bad faith claim.

D. Issues

[13] The appeal raises the following issues:

(i) What standard of review applies to the interpretation of this standard form insurance contract?

(ii) Did the motion judge err in finding that any admissions made by the representative of Chicago Title did not bind the corporation?

(iii) Did the motion judge err in his interpretation of the title policy?

(iv) What is the correct interpretation of the title policy?

E. Analysis

(i) Standard of review

[14] Chicago Title relies upon Sattva Capital Corp. v. Creston Moly Corp., [2014] 2 S.C.R. 633, [2014] S.C.J. No. 53, 2014 SCC 53 in support of its submission that the standard of review on this appeal is palpable and overriding error, absent an extricable error of law. Sattva is the latest in a series of decisions from the Supreme Court of Canada providing guidance to provincial appellate courts on the appropriate standards of appellate review.

[15] I pause here to note that we are not concerned, on this appeal, with the standard of review that applies to the motion judge's determination that there was no genuine issue requiring a trial and that he was therefore required to grant summary judgment under rule 20.04 [of the Rules of Civil Procedure, R.R.O. 1990, Reg. 194]. The motion judge found, at para. 7 of his reasons, that there were no factual disputes and that he was in a position to decide the issues in the case on the record before him. That discretionary decision is entitled to a high degree of deference: Hryniak v. Mauldin, [2014] 1 S.C.R. 87, [2014] S.C.J. No. 7, 2014 SCC 7, at para. 83.

[16] Having determined that there was no genuine issue requiring a trial, the motion judge then interpreted the title policy. The issue raised squarely on this appeal is the standard of review that applies, following Sattva, to the motion judge's interpretation of this contract. [page670]

[17] The seminal case on the issue is Housen v. Nikolaisen, [2002] 2 S.C.R. 235, [2002] S.C.J. No. 31, 2002 SCC 33, which established the standard of appellate review as palpable and overriding error for findings of fact and inferences from facts. For questions of law, including "extricable" questions of law, the standard of review is correctness. Matters of mixed fact and law lie along a spectrum. Where the error of the first-instance decision-maker can be traced to a clear error in principle, for example, it may be characterized as an error of law and subjected to a standard of correctness. Where the legal principle is not readily extricable, then the matter is subject to the more stringent standard of palpable and overriding error.

[18] In Sattva, Rothstein J., writing for a unanimous seven-member panel, recognized that the traditional view in England and Canada has been that the standard of review on an appeal from a lower court decision involving the interpretation of a contract is correctness. According to Rothstein J., this traditional view is rooted in historical concerns regarding the accuracy of English jury verdicts in contract cases at a time of widespread illiteracy.

[19] Justice Rothstein, while noting that some Canadian courts still favoured the traditional approach despite the fact that the historical rationale for it no longer exists, determined that the historical approach should be abandoned for two primary reasons.

[20] First, the general approach in the Canadian case law to contractual interpretation has changed over time. The restrictive rules of contractual interpretation have been loosened and Canadian courts now recognize that the meaning of contractual terms is often derived from contextual factors, including the purpose of the agreement, the commercial background of the agreement and the nature of the relationship created by the agreement. This modern approach directs courts to apply principles of contractual interpretation to the words of the contract, considered in light of the factual matrix or surrounding circumstances. Justice Rothstein noted that determining the facts surrounding a contract is a critical part of the analysis and that the exercise of applying the principles of contractual interpretation to these facts and the words of the agreement is closer to a question of mixed fact and law than a question of law, as those terms are defined in Canada (Director of Investigation and Research, Competition Act) v. Southam Inc., 1997 CanLII 385 (SCC), [1997] 1 S.C.R. 748, [1996] S.C.J. No. 116, at para. 35; and Housen, at paras. 26 and 36. [page671]

[21] Second, the purpose of the distinction drawn in the jurisprudence between questions of mixed fact and law and questions of law supports, as a matter of judicial economy, a limit on the ability of an appellate court to interfere with the fact-finder's interpretation of a contract, given that in most cases the interpretation will have no impact beyond the interests of the parties to the particular dispute. To hold otherwise would only serve to stir up unnecessary litigation by permitting the parties to relitigate their dispute on appeal.

[22] Notwithstanding the foregoing, Rothstein J. recognized that it might be possible to identify an extricable question of law from within what was initially characterized as a question of mixed fact and law. He cited, by way of example, the application of an incorrect principle, the failure to consider a required element of a legal test or the failure to consider a relevant factor. He also noted that there were other issues in contract law that engage substantive rules of law, including the requirements for the formation of the contract, the capacity of the parties and the requirement that certain contracts be evidenced in writing.

[23] However, immediately after recognizing the existence of these potential extricable questions of law, Rothstein J. warned that courts should be cautious in identifying them in disputes over contractual interpretation. He stated, at para. 55, that "the circumstances in which a question of law can be extricated from the interpretation process will be rare".

[24] Sattva has been the subject of a great deal of commentary by academics and provincial appellate courts across Canada. Much of this analysis has been focused on determining the intended scope of Sattva with regard to the standard of review in contract cases.

[25] Appellate judges and commentators have pointed to the unique factual circumstances of Sattva as a basis for limiting its application. The appeal concerned an arbitral decision rendered in the context of a proceeding conducted pursuant to a statute that limited appeals to questions of law alone. In Vallieres v. Vozniak, [2014] A.J. No. 964, 2014 ABCA 290, 580 A.R. 326, at para. 12, the Alberta Court of Appeal noted that

Sattva was decided under the British Columbia Arbitration Act, RSBC 1996, c. 55, which limits appeals to questions of law. The reasons in Sattva must be read having regard to the context in which it was decided. Appeals from the Court of Queen's Bench of Alberta to the Alberta Court of Appeal can be brought on any basis. While all appeals must be decided within the context of the appropriate standard of review, appeals are available on questions of law, mixed questions of fact and law, and [page672] questions of fact. Some of the restrictive language in Sattva does not apply to ordinary appeals in Alberta.

(Emphasis added)

Similar warnings about the unique factual circumstances of Sattva have been repeated in both Alberta and British Columbia: see Ledcor Construction Ltd. v. Northbridge Indemnity Insurance Co., [2015] A.J. No. 338, 2015 ABCA 121, 386 D.L.R. (4th) 482, at para. 12, leave to appeal granted [2015] S.C.C.A. No. 188, 2015 CarswellAlta 1769, 2015 CarswellAlta 1770; Robb v. Walker, [2015] B.C.J. No. 494, 2015 BCCA 117, at para. 48, Chaisson J.A., dissenting.

[26] Similarly, one commentator (Earl A. Cherniak, "Sattva Revisited" (2015), 34:2 Adv. J. 6, at p. 7) has stated that it is

. . . arguable, on a strict reading of Sattva, that the decision should be read as limited to the proper interpretation of the British Columbia Arbitration Act in a case in which the appeal did involve mixed questions of law and fact, and that subsequent general comments on the standard of review applicable to arbitral and trial decisions on contractual interpretation were obiter.

[27] While the comments of Rothstein J. may technically be obiter, as he was not dealing with an appeal from the interpretation of a contract by a judge, it would be an error to ignore the direction of the court. It is clear that, in the context of a unique fact scenario, Rothstein J. was endeavouring to provide guidance on how contractual interpretation fits into the broader standard of review jurisprudence, including Southam and Housen. As a matter of deference and respect, that guidance must be heeded.

[28] That said, the limitations of the applicability of the case, given its unique circumstances, must also be recognized. The facts of Sattva did not afford Rothstein J. an opportunity to consider the issue of the standard of review as it pertains to all contracts in all circumstances.

[29] The issue is whether the reasoning in Sattva is applicable to the title policy. In my view, considering the rationales animating the decision in Sattva in the context of the contract at issue in the present case, the standard of review to be applied to the motion judge's interpretation of the title policy is not palpable and overriding error but correctness. Below, I consider the two justifications relied upon by Rothstein J., together with the role of a provincial appellate court, to explain why the interpretation of the standard form contract in this case remains a question of law.

[30] First, Rothstein J. emphasized that determining the objective intentions of the parties to a contract, the goal of [page673] contractual interpretation, is a "fact-specific goal", informed, in part, by a consideration of "the surrounding circumstances known to the parties at the time of formation of the contract": Sattva, at paras. 47, 49.

[31] There is no question that Sattva reflects the increasing emphasis placed by appellate courts and commentators over the last several years on the factual matrix, or the surrounding circumstances of a contract, as part of the interpretive process: see, e.g., Investor's Compensation Scheme Ltd. v. West Bromwich Building Society, [1998] 1 All E.R. 98, [1998] 1 W.L.R. 896 (H.L.), at p. 114 E.R.; Eli Lilly & Co. v. Novopharm Ltd., 1998 CanLII 791 (SCC), [1998] 2 S.C.R. 129, [1998] S.C.J. No. 59, at para. 54; Bell Canada v. The Plan Group (2009), 96 O.R. (3d) 81, [2009] O.J. No. 2829, 2009 ONCA 548, at para. 37; Geoff R. Hall, Canadian Contractual Interpretation Law, 2nd ed. (Markham, Ont.: LexisNexis, 2012), at p. 22.

[32] However, the relative importance of the surrounding circumstances is largely dependent on the nature of the contract. The circumstances surrounding the formation of a contract negotiated by arm's-length parties may be very important in understanding the parties' objective intent. Similarly, the determination whether the parties are in a special relationship, such as a fiduciary relationship, may also be an important factor in determining the parties' objectively intended obligations under a contract.

[33] The importance of the factual matrix is far less significant, if at all, in the context of a standard form contract or contract of adhesion where the parties do not negotiate terms and the contract is put to the receiving party as a take-it-or-leave-it proposition. Any search for the intention of the parties in the surrounding circumstances of these contracts "is merely a legal fiction": Ledcor, at para. 14.

[34] The title policy was a pre-printed contract produced by Chicago Title and provided to the appellants on a take-it-or-leave-it basis. Chicago Title did not sit across from the appellants and hammer out the details of their bargain. The terms of the title policy were simply not negotiated in any meaningful sense and it would be illusory to suggest that anything could be inferred about the meaning of the contract from the facts surrounding its formation.

[35] Thus, one of the fundamental bases underlying the treatment of contractual interpretation as a question of mixed fact and law in Sattva, being the importance of interpreting a contract in light of the factual matrix, is wholly inapplicable to the title policy. [page674]

[36] The second significant justification for treating contractual interpretation as a question of mixed fact and law relied upon by Rothstein J. in Sattva was that the interpretation of a contract usually has no impact beyond the interest of the parties [at paras. 51-52]:

One central purpose of drawing a distinction between questions of law and those of mixed fact and law is to limit the intervention of appellate courts to cases where the results can be expected to have an impact beyond the parties to the particular dispute. It reflects the role of courts of appeal in ensuring the consistency of the law, rather than in providing a new forum for parties to continue their private litigation. For this reason, Southam identified the degree of generality (or "precedential value") as the key difference between a question of law and a question of mixed fact and law. The more narrow the rule, the less useful will be the intervention of the court of appeal[.]

Similarly, this Court in Housen found that deference to fact-finders promoted the goals of limiting the number, length, and cost of appeals, and of promoting the autonomy and integrity of trial proceedings . . . These principles also weigh in favour of deference to first instance decision-makers on points of contractual interpretation. The legal obligations arising from a contract are, in most cases, limited to the interest of the particular parties. Given that our legal system leaves broad scope to tribunals of first instance to resolve issues of limited application, this supports treating contractual interpretation as a question of mixed fact and law.

(Citations omitted)

[37] The distinguishing factor between questions of law and mixed fact and law on appeal is the precedential value of the appellate court's intervention. It is inarguable that the interpretation of many contracts would likely have very limited precedential value. However, standard form contracts are often highly specialized contracts that are sold widely to customers without negotiation of terms. The interpretation of the title policy applies equally to the appellants and to all of Chicago Title's other customers who purchased the same policy, and therefore is of general importance and has precedential value in a way that the interpretation of other contracts may not.

[38] In addition to the incompatibility of the reasoning in Sattva with the contract at issue in the current case, there is an important public policy argument that supports the adoption of a correctness standard for appeals involving the interpretation of standard form contracts such as the title policy. As Rothstein J. recognized in Sattva, at para. 51, provincial appellate courts play an important role in ensuring consistency in the law. They must be vigorous in fulfilling that mandate and must always be mindful of the line between deference to the trial court and the abdication of their statutorily imposed duties. [page675]

[39] Correction of legal errors lies at the heart of the responsibilities and the capabilities of provincial appellate courts. The standard of review analysis must respect the roles of both the trial and appellate courts in order for the civil justice system to function effectively. As Slatter J.A. wrote in Northwest Territories (Attorney General) v. Association des parents ayants droit de Yellowknife, [2015] N.W.T.J. No. 4, 2015 NWTCA 2, at paras. 22-23:

In short, the standard of review analysis should not be seen as a competition between recognizing the legitimate role of trial courts, and recognizing the legitimate role of appeal courts. The two levels of court are equally important components of one system. It is equally important to recognize that appeal courts need deference in their role as much as first instance courts need deference in theirs. Tipping the balance too far either way effectively compresses the system into a single rank of court. Doing so undermines both the capacity of the system to give individual justice and also the capacity of the system to ensure equal justice under law to everyone.

The law is ultimately an honour system in the sense that its authority depends on the integrity and credibility of the justice system, and self-discipline by each level of court in staying within its mandate. A system that effectively transfers the fact finding role of the first instance court to an appeal court could essentially reduce the first instance court to an expensive decoration. A system that effectively puts findings of fact or mixed fact and law by the first instance court beyond review has the similar potential for analogous damage to the ability of the appeal court to play its role. Appeal courts are expected to operate at a higher level of legal generality and, crucially, are to review outcomes for legality and reasonableness. If the appeal court is ineluctably confined to a structure of findings by the first instance court, there would be little or no real "review for legality" at the level of generality of appeal courts. The confidence of the enlightened public in a justice system with only one real level of judicial authority within and for each province or territory would soon wither.

[40] It is untenable for standard form insurance policy wording to be given one meaning by one trial judge and another by a different trial judge: see Ledcor, at para. 18. Unpredictable outcomes in litigation only serve to encourage litigation because the more a given result depends on the particular trial judge, the greater the chance that litigants will risk going to trial. Appellate courts have a valuable role to play in ensuring consistency in the law and greater predictability in litigation outcomes: see Northwest Territories, at para. 28.

[41] In summary, the standard of review that applies to a standard form insurance contract like the title policy is correctness. The rationales in Sattva that support adopting a deferential standard of review do not apply to contracts of this type, as the factual matrix does not meaningfully assist [page676] in interpreting them and their construction has broad application. For these reasons, adopting the correctness standard of review for these contracts best ensures that provincial appellate courts are able to fulfill their responsibility of ensuring consistency in the law.

(ii) Admissions

[42] As referenced above, in support of their motion for summary judgment the appellants relied upon certain admissions they said were made by Mr. Mineo on his cross-examination. According to the appellants, those admissions are an important part of their case and include the following concessions: that Chicago Title has no evidence that the appellants would have been able to get a retroactive building permit; that a potential purchaser of the property would be able to refuse to close a purchase on the basis of the city order; and, had the city order made clear on its face that it was being issued due to the fact that the construction was unpermitted, there may have been coverage.

[43] The motion judge held, at para. 39 of his reasons, that the appellants could not rely on Mr. Mineo's admissions:

I conclude this part of my Reasons by addressing the applicants' assertion that Mr. Mineo conceded coverage in his cross examination. I conclude that he did not do that. In his affidavits, Mr. Mineo deposes that he is the respondent's Vice President of Claims. However, he states that the contents of his affidavits are based upon his personal information and belief. He was cross examined on that basis and I see nothing in either his affidavits or cross examination which indicates that his personal information and belief bind the respondent. In essence, the applicants' submission is that Mr. Mineo's personal information and belief vary the contractual terms. The purpose of this plain language policy is to speak for itself about the insurance coverage it provides.

[44] To the extent that this paragraph can be understood to mean that Mr. Mineo's personal information and belief was not binding on the motion judge to vary clear contractual terms, it is correct. The motion judge was not obliged to accept Mr. Mineo's understanding of the contract, and indeed, to the extent that Mr. Mineo's evidence described strictly his (and, by extension, Chicago Title's) subjective view of what the terms of the title policy meant, or Chicago Title's subjective intention in drafting the title policy, it was inadmissible for the purposes of contractual interpretation: see Hall, at p. 30.

[45] What the appellants take issue with is the finding of the motion judge that Mr. Mineo's answers on cross-examination do not bind Chicago Title. They submit that the answers given by Mr. Mineo bind the corporation in the same way that they would [page677] bind Chicago Title if he were a witness produced on an examination for discovery.

[46] Counsel for Chicago Title does not argue that the motion judge's ruling is correct. He concedes that the evidence of Mr. Mineo binds his client and that the motion judge erred. However, he argues that the appellants are misinterpreting that evidence and that Mr. Mineo made no admissions on his cross-examination.

[47] Despite this concession and the fact that, in my view, the evidence in issue is not necessary to undertake the appropriate contractual analysis, I believe that it is necessary to address the motion judge's error. Summary judgment motions are taking on greater prominence in our civil justice system. It is important that there be no confusion on issues as fundamental as whether an affiant's answers on cross-examination bind a corporate party.

[48] It has long been the law of Ontario that, where a corporation is a party to an action, an officer of the corporation examined for discovery under the Rules of Civil Procedure [at para. 12] "literally speaks for the corporation and what he says by way of admission on behalf of the corporation may be used against the corporation": Royal Bank of Canada v. Paul Pogue Companies Ltd. (1972), 1972 CanLII 357 (ON CA), 11 O.R. (2d) 171, [1972] O.J. No. 2086 (C.A.).

[49] Should the situation be different where, as here, the officer was cross-examined under rule 39.02 on affidavits tendered in support of Chicago Title's position on a motion for summary judgment? In my view, it should not.

[50] Subrule 20.02(2) states that, in response to a summary judgment motion, "a responding party may not rest solely on the allegations or denials in the party's pleadings, but must set out, in affidavit material or other evidence, specific facts showing that there is a genuine issue requiring a trial". As Perell and Morden note, "[a] deponent may be cross-examined on the evidence contained in his or her affidavit and on any fact in his or her knowledge that is relevant to the determination of the motion": Paul M. Perell and John W. Morden, The Law of Civil Procedure in Ontario, 2nd ed. (Markham, Ont.: LexisNexis, 2014), at para. 8.45.

[51] In the present case, the affidavits filed by Chicago Title included Mr. Mineo's views on the scope of the title policy and the meaning of various clauses therein. It would be inequitable for a corporate party to be permitted to rely on the evidence of one of its corporate officers in support of its position that there is a genuine issue requiring a trial while at the same time [page678] being sheltered from admissions made by that same corporate officer under cross-examination that could tend to undermine that position.

[52] This view is supported by the Supreme Court's decision in Hryniak, where Karakatsanis J. held, at para. 5, that "summary judgment rules must be interpreted broadly, favouring proportionality and fair access to the affordable, timely and just adjudication of claims". None of these goals is served if the party cross-examining a corporate officer produced by a corporation cannot rely on evidence obtained on that cross-examination in support of its position on the motion.

[53] In conclusion, I am of the view that where a corporate officer is cross-examined on an affidavit filed in support of the corporation's position on a motion for summary judgment, that officer speaks for the corporation and his or her admissions on cross-examination may be used against the corporation in the same way that admissions on an examination for discovery could be. It was an error in law for the motion judge to conclude otherwise.

(iii)The motion judge's interpretation of the title policy

[54] The motion judge stated twice in his reasons that the city order did not affect the appellants' ownership of the property because it had not been registered on title. At para. 34, the motion judge commented:

There is no evidence capable of supporting an assertion that the applicants' ownership of the lands and premises (the definition of "title") was affected by the order, or by the compulsion thereby created. There is no evidence that the order was registered against the applicants' title. They complied with it, which probably is why the city did not register it against title.

[55] At para. 40, the motion judge further stated:

The applicants rely in particular on Mr. Mineo's statement in cross examination that an order for temporary remediation could be a title defect. It can be, if registered on title.

[56] This conclusion, that in order for a municipal work order to affect an owner's interest in their property under the terms of the title policy, it must be registered on title, was reached by the motion judge entirely of his own volition. It was not supported by any evidence regarding the registration of municipal work orders in the appropriate land registration systems.

[57] On appeal, both parties agree that the motion judge erred in reaching this conclusion. LAWPRO intervened in the appeal to ensure that the motion judge's error does not cause confusion in the profession regarding the purpose and scope of title insurance. [page679]

[58] I agree with the parties and the intervenor that the motion judge's understanding that municipal work orders are routinely registered against title is incorrect. Municipal work orders are not registered in either the registry or land titles systems in Ontario. They are a defect that can only be discovered by what are commonly known as "off-title searches". These searches are described by Marguerite E. Moore and Janet M. Globe in Title Searching and Conveyancing in Ontario, 6th ed. (Markham, Ont.: LexisNexis, 2010), at p. 500, as follows:

There is a multitude of potential off-title, land-related inquiries which may be completed on behalf of a purchaser, lender, or any other interested person. A law clerk /conveyancer will check for liens, work orders, restrictions on use, compliance or non-compliance with federal, provincial, and municipal (by-laws) regulations, and information on land and government regulation and programs in general.

(Emphasis added)

[59] In an affidavit filed on appeal, LAWPRO describes a 2005 agreement among the Law Society of Upper Canada and major title insurers, including Chicago Title. The agreement provides that the title insurers release, indemnify and save harmless Ontario lawyers for any claims arising under a title insurance policy. Pursuant to the agreement, LAWPRO was able to pass on the costs of defending claims and indemnifying against potential settlements or judgments in title-insured transactions to the title insurers in exchange for LAWPRO agreeing to waive the real estate transaction levy surcharge that would otherwise be payable in any transaction not covered by title insurance.

[60] According to its affidavit, LAWPRO understood that "title" meant more than just those claims/impediments/ documents that are registered against title, and also included defects that would only be discoverable through off-title searches. LAWPRO submits that unless the decision of the motion judge is overturned, the agreement with the title insurance companies would not cover any claims that arise off-title. Consequently, those claims will be the responsibility of LAWPRO, notwithstanding that it has already agreed to waive the surcharge.

[61] I accept the position advanced by the parties and the intervenor that the motion judge erred in his conclusion that title insurance only responds to defects registered against title. That conclusion, if accepted, would undermine one of the fundamental purposes of title insurance, being coverage of off-title defects. The restrictive scope of title insurance contemplated by the motion judge would cause chaos in the real estate bar as, no doubt, purchasers of title insurance throughout the province had [page680] instructed their solicitors not to conduct off-title searches on the understanding that such defects were covered by their title insurance.

[62] While Chicago Title has conceded that the motion judge erred in his conclusion regarding the requirement that work orders be registered, it maintains that the motion judge's finding that there is no coverage is correct and that his reasoning is sound.

[63] I disagree. On a review of the motion judge's reasons, it is apparent that his misapprehension of the scope of title insurance permeated his analysis of the title policy. For example, the motion judge explicitly rejected the applicability of covered title risks 13 and 15 on the basis that nothing was registered on title. More broadly, when considering his reasons as a whole, the motion judge's approach was plainly that title insurance offers very limited coverage and that the claim asserted by the appellants clearly falls outside of his understanding of the purpose of title insurance and the risks it is designed to cover. This caused the motion judge to adopt an unduly restrictive interpretation of the coverage provisions in the title policy.

[64] In my view, the decision of the motion judge is not correct. Leaving aside the impact of the evidentiary error regarding Mr. Mineo's admissions, it contains numerous legal errors. Fundamentally, as described below, the motion judge failed to properly apply the governing principles of interpretation for contracts of insurance. Further, as I will also explain, he interpreted clause 11 of the title policy in a manner that is inconsistent with the actual wording of the clause. These errors are distinct from, and compound, his factual error regarding the registration of municipal work orders.

[65] In light of these errors, it is clear that the motion judge's interpretation of the title policy cannot stand. Below, I consider the general rules of construction of insurance contracts and provide my analysis of the correct interpretive approach to, and interpretation of, the title policy.

(iv)Interpretation of the title policy

[66] The following principles of interpretation for insurance contracts cited by the appellants in their factum are well settled in Canadian law and are not disputed by Chicago Title:

the court must search for an interpretation from the whole of the contract and any relevant surrounding circumstances that promotes the true intent and reasonable expectations of the parties at the time of entry into the contract; [page681]

where words are capable of two or more meanings, the meaning that is more reasonable in promoting the intention of the parties will be selected;

ambiguities will be construed against the insurer having regard to the reasonable expectations of the parties;

an interpretation that will result in either a windfall to the insurer or an unanticipated recovery to the insured is to be avoided;

coverage provisions are to be construed broadly, while exclusion clauses are to be construed narrowly;

the contract of insurance should be interpreted to promote a reasonable commercial result; and

a clause should not be given effect if to do so would nullify the coverage provided by the policy.

See, e.g., Amos v. Insurance Corp. of British Columbia, 1995 CanLII 66 (SCC), [1995] 3 S.C.R. 405, [1995] S.C.J. No. 74, at para. 19; Non-Marine Underwriters, Lloyd's London v. Scalera, [2000] 1 S.C.R. 551, [2000] S.C.J. No. 26, 2000 SCC 24, at paras. 67-71; Derksen v. 539938 Ontario Ltd., [2001] 3 S.C.R. 398, [2001] S.C.J. No. 27, 2001 SCC 72, at para. 49; Zurich Insurance Co. v. 686234 Ontario Ltd. (2002), 2002 CanLII 33365 (ON CA), 62 O.R. (3d) 447, [2002] O.J. No. 4496 (C.A.), at paras. 23-28, leave to appeal to S.C.C. refused [2003] S.C.C.A. No. 33, 189 O.A.C. 197n; Tannahill v. Lanark Mutual Insurance Co., [2010] O.J. No. 2736, 2010 ONSC 3623, 86 C.C.L.I. (4th) 69 (S.C.J.), at para. 26; and Sam's Auto Wrecking Co. v. Lombard General Insurance Co. of Canada (2013), 114 O.R. (3d) 730, [2013] O.J. No. 1413, 2013 ONCA 186, at para. 37.

[67] Responsible consumers purchase insurance policies for indemnification. Canadian courts have developed these fundamental principles of interpretation as a means of ensuring that these consumers are treated fairly and that their reasonable expectations are protected. The principles are to be applied rigorously in the interpretation of insurance contracts. It is not sufficient, as the motion judge did in this case, to cite the principles and then move on to an interpretation of a contract of insurance that is free from any analysis of how the principles apply to the contract in issue.

[68] As mentioned above, the appellants rely upon several covered title risks under the title policy. For the purpose of this appeal, it is sufficient to focus on clause 11, which provides for coverage in circumstances where "Your Title is unmarketable, [page682] which allows another person to refuse to perform a contract to purchase, to lease, or to make a mortgage loan."

[69] Contrary to Chicago Title's submission before this court, in order to understand the meaning of the term "unmarketable" in clause 11, it is unnecessary to look beyond the wording of the clause. This is a standard form contract and Chicago Title defined within the clause those circumstances that would constitute an unmarketable title. Chicago Title is fixed with the language it chose to include in its contract. That language must be interpreted broadly as this is a coverage provision.

[70] The motion judge found that the title policy provided coverage for the specific risks as described therein, but only if they affect the appellants' title. According to the motion judge, the appellants' title has not been affected because it is as marketable now as it always was, although it is now subject to a duty to disclose the nature of the structural problems, and the property would therefore be sold for an amount that is less than what the appellants paid for it. Chicago Title adopts this analysis on this appeal.

[71] Again, I disagree. It is entirely irrelevant and speculative to postulate, as the motion judge did and Chicago Title invites us to do, that the appellants might be able to sell the property to someone else at some undetermined lower price. The fact that someone might be willing to purchase a dangerously defective building does not mean that it is marketable under the title policy. Marketability must be determined in accordance with the language of clause 11.

[72] The motion judge's interpretation of clause 11 is overly restrictive and violates the principle that coverage provisions must be construed broadly. It also imports a definition of unmarketable that is inconsistent with the wording of clause 11. The correct approach to the issue of coverage is to determine, first, whether the defect in issue has rendered the property unmarketable as that term is defined in clause 11 (i.e., can a potential purchaser refuse to close an agreement of purchase and sale on learning of the defect). The next question is whether coverage is excluded under the exclusions or limitations of liability provisions of the title policy. In my view, for the reasons that follow, clause 11 of the title policy provides coverage for the appellants and is not caught by any contractual exclusion or limitation.

[73] Chicago Title does not contest that the discovery of the dangerous condition of the property would permit a potential purchaser to refuse to close a purchase transaction. However, it submits that the structural condition of the property is a latent [page683] defect that is not subject to coverage under the title policy. It argues that the failure of the previous owner to obtain the necessary permit from the City of Toronto was not the cause of the problem; it was the improper construction that caused the problem.

[74] I would not give effect to this argument. There is no issue that the unpermitted work led to the issuance of the city order. It is clear that had the necessary approval for this dangerous construction been sought from the City of Toronto it never would have been granted. The dangerous condition of the property, therefore, flows directly from the failure of the previous owner to attempt to obtain the necessary municipal approval. That failure has made the appellants' title unmarketable within the meaning of clause 11 of the title policy.

[75] Chicago Title also contends that the title policy was never intended to cover the type of loss suffered in the present case, and, had it been so, the premium would have been much higher. There are two problems with this contention. First, as I mentioned earlier, a party's subjective intentions are not relevant to the exercise of contractual interpretation. Second, if this argument were accepted it would, in effect, reverse the business relationship between the parties such that the appellants become the insurers of Chicago Title, with the appellants bearing the loss caused by Chicago Title's failure to properly draft the coverage provisions and properly price the policy. This is a commercially absurd result.

[76] In my view, there is coverage under covered title risk 11. The analysis now shifts to whether the coverage is negated by any exclusions or limitations of liability in the title policy.

[77] Chicago Title relies upon the following language from the exclusions section of the title policy to deny coverage on the basis that coverage is excluded for defects discovered after the policy date:

In addition to the Exceptions in Schedule B, you are not insured against loss, costs, legal and/or notarial fees, and expenses resulting from:

3. Title risks:

(d) that first affect your Title after the policy date -- this does not limit the coverage in items 3, 20 and 21 of the Covered Title Risks.

[78] Chicago Title's position is that the unpermitted construction was discovered many years after the policy date and, [page684] consequently, there is no coverage. I would decline to give effect to this argument for the following reasons.

[79] This is an exclusion provision and must be restrictively interpreted. There is nothing in the title policy indicating that a defect rendering title unmarketable under clause 11 that is extant at the time of the policy date is not covered unless the insured discovers the defect as at the policy date. The introduction of this discoverability concept is a significant broadening of the exclusion provision that is not supported by the language of the title policy. The fact is that the unpermitted construction affected the appellants' title on the date of purchase; in other words, their title was unmarketable within the meaning of the title policy from the moment they acquired the property, even if they were not yet aware of that fact.

[80] This conclusion is supported by this court's decision in Krawchuk v. Scherbak (2011), 106 O.R. (3d) 598, [2011] O.J. No. 2064, 2011 ONCA 352, leave to appeal to S.C.C. refused [2011] S.C.C.A. No. 319, 297 O.A.C. 395n. In that case, the purchaser of a home discovered serious latent structural and plumbing defects after closing. She was successful in claiming under her title insurance policy and then sued the vendors, her real estate agent and the real estate brokerage. The court was focused on her ability to assert claims against these parties and not on the issue of coverage under the title policy. Nonetheless, Epstein J.A.'s comments, at para. 105, are instructive:

In my view, title insurance is a contract of indemnity, designed to compensate for actual loss: see Grunberger v. Iseson, 75 A.D. (2d) 329, 331 (N.Y. App. Div. 1980). While title insurance is different from most insurance products in that it has not traditionally insured against a future event but has been used only to insure against loss from a title defect in existence at the date of the policy, it is nonetheless designed to respond as well to a future loss. Ms. Krawchuk's loss from the existing defects in the house crystallized when it became necessary for her to spend the money to do the repairs required by the City's order to comply, an event that took place after the policy was in place.

[81] Similarly, in the present case, the unpermitted construction was an existing defect that crystalized when the appellants became aware of the defect.

[82] Chicago Title also relies upon the motion judge's finding that the appellants have not suffered any actual loss. The motion judge held that, under clause (a) of the limitation of the company's liability section of the title policy, the appellants are entitled only to their actual loss. Having made no permanent repairs, their actual loss does not include unincurred expenditures.

[83] To the extent that the motion judge held that the loss has not been incurred because the city order was restricted to [page685] temporary repairs, he is incorrect because logically an order that is explicitly marked as temporary means that other permanent work is required. It appears that the motion judge meant that the appellants would only be compensated after they went into their own pockets to pay for the repairs. This would be a remarkable interpretation that would mean that only those insureds who had the financial resources to cover their loss would receive compensation. In either case, this is a highly restrictive interpretation of this limitation of liability and it cannot stand.

[84] I conclude that clause 11 provides coverage and indemnification regarding the defect at issue in this case, being the unpermitted construction, and it is not caught by any exclusion or limitation of liability under the title policy.

F. Disposition

[85] I would allow the appeal, set aside the order below, and grant the appellants' motion for summary judgment on the issues of coverage and indemnification under the title policy.

[86] The parties agree that the successful party on appeal is entitled to costs of the appeal in the amount of $18,000 on a partial indemnity basis. Accordingly, I would award the appellants $18,000 in costs of the appeal, inclusive of all fees, disbursements and applicable taxes.

[87] On the motion below, the motion judge awarded no costs. The appellants submit that, if successful on the appeal, they are entitled to their costs of the motion on a partial indemnity basis, in the amount of $32,809.79, including fees, disbursements and applicable taxes. Chicago Title argues that, if the appellants are successful on the appeal, this court should direct the parties to make further submissions on the appropriate costs to be awarded on the motion.

[88] I would decline this request. The relief requested by the appellants in their notice of appeal includes the costs of the summary judgment motion. Parties are expected to come to this court ready to argue all issues on the appeal, including costs. I am also cognizant of the significant disparity in resources between the appellants and Chicago Title. Simply put, Chicago Title, a large insurance corporation, can easily afford to continue making submissions, whereas the appellants do not have unlimited resources to continue litigating this matter indefinitely.

[89] In my view, there is no reason to deprive the appellants, who should have been successful on their summary judgment motion, of their costs. This case involved the interpretation of [page686] Chicago Title's standard form contract. Chicago Title's interpretation of that contract was incorrect and, to the extent there was any confusion about its terms, the responsibility lies with Chicago Title as the drafter of the title policy.

[90] I am also satisfied that the quantum of costs sought, which is less than what Chicago Title claimed on the motion, is entirely reasonable, fair and proportionate. Therefore, I would order that Chicago Title pay the appellants their costs of the motion below, fixed in the amount of $32,800, inclusive of all fees, disbursements and applicable taxes.

Appeal allowed.

End of Document