Court of Appeal for Ontario

Date: 2019-10-30 Docket: C65846

Judges: Strathy C.J.O., Sharpe and Roberts JJ.A.

Parties

Between

Sharon Byrd and David Byrd Plaintiffs (Respondents)

and

Allianz Global Risks US Insurance Company, McDougall Insurance Brokers Ltd., Bay of Quinte Mutual Insurance Co., and Doug Whitley Insurance Brokers Limited c.o.b. Whitley Insurance & Financial Services Defendants (Appellant)

Counsel

Clay Hunter, for the appellant

Robert J. Reynolds, for the respondents

Hearing and Lower Court

Heard: October 28, 2019

On appeal from: the order of Justice Stanley J. Kershman of the Superior Court of Justice, dated July 31, 2018.

Reasons for Decision

[1] The appellant appeals from the order declaring that it has a duty to defend claims against the respondents.

[2] The appellant submits that the motion judge erred in his application of the correct approach to be taken in the consideration of whether an insurer has a duty to defend claims against its insured. In this case, the respondents are defendants in two actions arising from an accidental death caused by an all-terrain vehicle operated on the respondents' property, which contains a private airstrip. The appellant insured the respondents against their liabilities under a general liability policy.

[3] We do not accept the appellant's submissions. The motion judge correctly followed the "pleadings rule" approach prescribed by the Supreme Court of Canada. He analyzed the insurance policy and the pleadings to determine whether the pleadings allege facts which, if true, raise claims that arguably fall under the coverage of the policy and would require the appellant to indemnify the respondents for the claims: Monenco Ltd. v. Commonwealth Insurance Co., 2001 SCC 49, at paras. 28-30, 33; Progressive Homes Ltd. v. Lombard General Insurance Co. of Canada, 2010 SCC 33, at para. 19.

[4] The appellant submits that the motion judge erred by going beyond the pleadings and speculating that the use of an all-terrain vehicle on the respondents' private airstrip could constitute ancillary services that would be covered under the policy. The pleadings were silent as to the nature of the respondents' use of the all-terrain vehicle when the accident occurred and there was no evidence supporting the motion judge's conclusion.

[5] We are not persuaded by these submissions. Without engaging in a "fanciful reading", the motion judge was required to give "the widest latitude" to the allegations in the pleadings in determining whether they raise a claim within the policy: Monenco, at paras. 31-32. The duty to defend is broader than the duty to indemnify; an insurer will have a duty to defend when there is "the mere possibility that a claim falls within the insurance policy", regardless if it is ultimately liable to indemnify the insured: Progressive Homes, at para. 19. In our view, that is the case here. We see no error in the motion judge's interpretation of the policy or the pleadings.

[6] The respondents are entitled to their partial indemnity costs in the amount of $9,500.00, inclusive of disbursements and all applicable taxes.

"G.R. Strathy C.J.O."

"Robert J. Sharpe J.A."

"L.B. Roberts J.A."