Court of Appeal for Ontario

Date: 2018-04-05 Docket: C64340

Judges: Hourigan, Pardu and Huscroft JJ.A.

Between

Greg Ernst, Laurie Ann Stewart and Andrew Ernst Applicants (Respondents)

and

Northbridge Personal Insurance Corporation Respondent (Appellant)

Counsel

Andrew A Evangelista and Jennifer Kent, for the appellant

Gordon A. Marsden, for the respondents

Heard

April 4, 2018

On Appeal

On appeal from the order of Justice Gibson of the Superior Court of Justice, dated August 25, 2017.

Reasons for Decision

[1] The appellant insurer appeals from the order of the application judge requiring it to defend the appellants in an action arising from an accident involving an ATV on July 11, 2015. The plaintiff in the action was a passenger on an ATV driven by the respondent Andrew Ernst.

[2] The Ernst's automobile insurance policy extends coverage to an ATV if it is owned by the respondents and the respondents were not occupiers of the property on which the accident occurred. The facts involving the purchase of the ATV and other chattels by the respondents from the Hellers – whose rural property they were purchasing – are set out in the decision of the application judge and need not be repeated here. The accident occurred before the closing date for the sale of the ATV and the other chattels, which was August 19, 2015.

[3] The appellant insurer denied coverage on the basis that, at the time of the loss, the ATV was not required to be insured because it was being operated on private property, and so did not fall under the definition of "automobile" in the OAP 1, and was considered an off-road vehicle pursuant to the Off-Road Vehicles Act, R.S.O. 1990, Chapter O.4.

[4] The appellant submits that although the application judge properly articulated the pleadings rule, he erred in applying it. In particular, he explored possible outcomes rather than simply evaluating the pleadings, and wrongly assumed that the respondents could not be occupiers of the property because the Hellers were also occupiers of the property.

[5] We disagree.

[6] The law governing pleadings is not in dispute. As the Supreme Court explained in Monenco Ltd. v. Commonwealth Insurance Co., [2001] 2 S.C.R. 699, 2001 SCC 49 at para. 28:

Whether an insurer is bound to defend a particular claim has been conventionally addressed by relying on the allegations made in the pleadings filed against the insured, usually in the form of a statement of claim. If the pleadings allege facts which, if true, would require the insurer to indemnify the insured for the claim, then the insurer is obliged to provide a defence. This remains so even though the actual facts may differ from the allegations pleaded.

[7] The threshold is not high. As the court stated at para. 29:

[I]t is not necessary to prove that the obligation to indemnify will in fact arise in order to trigger the duty to defend. …The mere possibility that a claim falling within the policy may succeed will suffice.

[8] The application judge was required to give the pleadings the widest latitude, and did so. He acknowledged that the statement of claim did not specifically allege that the owner of the ATV and occupier of the property were different people at the time of the accident. It included allegations both that the respondents were owners of the ATV and occupiers of the property, and that the Hellers were the owners of the ATV and occupiers of the property at the relevant time. Although it is possible for more than one party to be the occupier of property at a time, the pleadings alleged facts that would permit a finding that the Hellers, and not the respondents, were the occupiers at the relevant time, and that was sufficient to trigger the appellant's duty to defend. There is no requirement that the allegations against the respondents be expressly pleaded in the alternative for the duty to defend to arise.

[9] The application judge did not wrongfully explore possible outcomes of the trial, as the appellant asserts. He read the pleadings widely and adopted a reading that was open to him.

[10] The appeal is dismissed.

[11] The respondent is entitled to costs in the agreed amount of $10,000, inclusive of taxes and disbursements.

C.W. Hourigan J.A.

G. Pardu J.A.

Grant Huscroft J.A.