Van Huizen et al. v. Trisura Guarantee Insurance Company

[Indexed as: Van Huizen v. Trisura Guarantee Insurance Co.]

Ontario Reports Court of Appeal for Ontario Hoy A.C.J.O., van Rensburg and Roberts JJ.A. March 18, 2020 149 O.R. (3d) 589 | 2020 ONCA 222

Case Summary

Insurance — Insurance contracts — Professional appraiser being sued for negligent appraisal — Respondent alleged to be liable as employer — Respondent claiming under his own liability insurance with appellant — Appellant denying duty to defend and indemnify as claim ought to have been brought under other appraiser's insurance — Motion judge ruling that appellant entitled to defence and indemnity under master policy issued to Appraisal Institute of Canada — Motion judge confusing insurance policy and insurance contract and conflating contracts issued to two different individuals — Appellant had no duty to defend and indemnify under respondent's insurance as no allegation of wrongdoing advanced against respondent.

Appeal by the defendant insurer from an order dismissing its motion for summary judgment and granting judgment to the respondents. The motion judge found that the appellant had a duty to defend the respondents under the policy of professional liability insurance issued by the appellant. The appellant issued a professional liability master policy to the Appraisal Institute of Canada ("AIC") which related to claims made against AIC members and their personal corporations and employers for the negligent provision of professional appraisal services by members. The respondent H was a professional appraiser and member of the AIC. H and his company were insured under the master policy and an individual certificate issued by the appellant. B, an appraiser also insured under the master policy and his own individual insurance certificate, was sued for negligently appraising a residential property while working for H. B brought a third party claim against H, who made a claim under his policy with the appellant. When the appellant denied coverage, H commenced the underlying action against the appellant for a declaration that the appellant had a duty to defend and indemnify them under the H's insurance contract in response to the proceedings against B. The motion judge reviewed the pleadings, interpreted the definitions under the master policy, but did not consider the significance of the separately issued certificates and concluded that the appellant had a duty to defend.

Held, the appeal should be allowed.

The duty to defend was a contractual obligation. The motion judge erred in his interpretation of the insurance contract with H by effectively treating a master policy as the entire insurance contract for all members of the AIC. This misconstruction caused the motion judge to conflate the H and B insurance contracts that shared standard terms set out in a master policy. In this case it was necessary to distinguish between the insurance contracts and the documents evidencing their terms. The master policy merely set out the terms of professional liability insurance being offered to the members of the AIC. The certificates issued to the appraisers evidenced a separate insurance contract on terms including those set out in the master policy. According to the terms of the H insurance contract, there was no duty to defend in this case as the contract only covered H's professional negligence. Only H was identified as an insured. However, whether the appellant had a duty to defend H under B's policy was not decided by the motion judge and required determination on a complete record after full argument.

Cases Referred To

• Coast Capital Equipment Finance Ltd. v. Old Republic Insurance Co. of Canada, 2018 ONCA 540
• Ledcor Construction Ltd. v. Northbridge Indemnity Insurance Co., 2016 SCC 37
• McCunn Estate v. Canadian Imperial Bank of Commerce (2001), 53 O.R. (3d) 304, [2001] O.J. No. 486
• Monenco Ltd. v. Commonwealth Insurance Co., 2001 SCC 49
• Nichols v. American Home Assurance Co., [1990] 1 S.C.R. 801, [1990] S.C.J. No. 33 (S.C.C.)
• Progressive Homes Ltd. v. Lombard General Insurance Co. of Canada, 2010 SCC 33
• Rayner v. Preston (1881), 18 Ch. D. 1 (Eng. C.A.)
• Re Lawton, [1945] M.J. No. 28, [1945] 4 D.L.R. 8

Statutes Referred To

• Insurance Act, R.S.O. 1990, c. I.8, s. 1 [as am.]

Authorities Referred To

• Billingsley, Barbara, General Principles of Canadian Insurance Law, 2nd ed. (Markham, Ont.: LexisNexis, 2014)
• Boivin, Denis, Insurance Law, 2nd ed. (Toronto: Irwin Law, 2015)
• Brown, Craig, and Andrew Mercer, Introduction to Canadian Insurance Law, 3rd ed. (Markham, Ont.: LexisNexis, 2013)

APPEAL by the defendant from the order of Hurley J., [2018] O.J. No. 4188, 2018 ONSC 4828, [2019] I.L.R. I-6088.

Heather Gray, for appellant. R. Steven Baldwin, for respondents.

The judgment of the court was delivered by

ROBERTS J.A. :

A. Overview

[1] The appellant insurer appeals from the order of the motion judge dismissing its motion for summary judgment and granting judgment to the respondents. The motion judge found that the appellant had a duty to defend the respondents under the policy of professional liability insurance issued by the appellant.

[2] I would allow the appeal. In my view, the motion judge erred in his interpretation of the insurance contract between the appellant and the respondent, Mr. Van Huizen. Specifically, the motion judge erred by effectively treating a master policy as the entire insurance contract for all members of the Appraisal Institute of Canada (the "AIC"). This misconstruction caused the motion judge to conflate two insurance contracts that shared standard terms set out in a master policy.

[3] According to the terms of the insurance contract between the appellant and Mr. Van Huizen, there was no duty to defend in the circumstances of this case. However, I would not grant summary judgment to the appellant. The issue of whether the appellant had a duty to defend the respondents under another insurance contract between the appellant and the allegedly negligent appraiser was not decided by the motion judge nor raised as an issue on this appeal. It requires determination on a complete record after full argument.

B. Background

[4] The appellant issued the professional liability insurance policy number TPL1003399 (the "master policy") to the AIC for the relevant period. The master policy relates to claims made against AIC members, as well as their personal corporations, employers, [page592] and the AIC, for the negligent provision of professional appraisal services by members.

[5] The defence and settlement section of the master policy reads, in part:

The Insurer shall have the right and the duty to defend, with respect to such insurance as is afforded by this Policy, any Claim made against an Insured[.]

[6] Coverage under the master policy is extended to individual members of the AIC by way of individual application. On assessment of the individual member's risk, acceptance of the individual's application, and payment of the premium, an individual certificate of insurance is issued to that member.

[7] Mr. Van Huizen is a professional appraiser and member of the AIC. He carries on business through a corporation, Inpho Limited, operating under the business style of the other respondent, Hastings Appraisal Services. The respondents were insured under the master policy and an individual certificate of insurance, number AIC 02408, issued by the appellant to Mr. Van Huizen (the "Van Huizen insurance contract").

[8] David Barkley was a professional appraiser and a member of AIC. He was also insured under the master policy and his own individual certificate of insurance, number AIC 03188, issued by the appellant (the "Barkley insurance contract"). Mr. Barkley passed away in October 2016.

[9] In March 2008, under the auspices of Hastings Appraisal Services, Mr. Barkley appraised a residential property at the request of Sandra Behlok Insurance Agency Ltd.

[10] Three claims were brought in relation to this appraisal (collectively the "Behlok proceedings"). Two actions commenced by Behlok alleged that the respondents, as the employers or principals of Mr. Barkley, were vicariously liable for his negligently performed appraisal of the residential property. In his third party claim, Mr. Barkley claimed contribution and in-demnity from the respondents as his employers or principals for any damages payable to the client.

[11] Mr. Van Huizen made a claim under the Van Huizen insurance contract in relation to the Behlok proceedings. The appellant denied coverage, partly because the respondents sought coverage under the Van Huizen insurance contract and not the Barkley insurance contract. While acknowledging that Mr. Van Huizen was an insured as defined in the master policy under the Van Huizen insurance contract, the appellant took the position that the Van Huizen insurance contract did not provide coverage for the alleged professional negligence of Mr. Barkley. With respect to the Van Huizen and Barkley insurance contracts, [page593] the appellant maintained that the respondents were not Mr. Barkley's employer and therefore were not covered.

[12] The respondents commenced the underlying action against the appellant for a declaration that the appellant had a duty to defend and indemnify them under the Van Huizen insurance contract in response to the Behlok proceedings.

[13] The appellant brought a motion for summary judgment to dismiss the respondents' action against it on the ground that it had no duty to defend them under that contract in response to a claim involving Mr. Barkley's appraisal.

C. Decision Below

[14] By the time the appellant's motion was heard, the Behlok proceedings were settled, save for the disposition of costs. As a result, the motion judge had to consider only whether the appellant had a duty to defend the respondents and indemnify them for their defence costs.

[15] The motion judge reviewed the pleadings, interpreted the definitions under the master policy, but did not consider the significance of the separately issued certificate. He determined that the terms, "Member" and "Insured", were broad enough to include both Mr. Van Huizen and Mr. Barkley who were insured under the same master policy but different certificates. As a result, he concluded that "Mr. Van Huizen has coverage for a legal claim arising from his own actions and also when it flows from his legal status as an employer of the alleged wrongdoer." He was not asked to consider and therefore did not decide whether the respondents were covered as Mr. Barkley's employer under the Barkley insurance contract.

[16] The motion judge also determined that the appellant had a duty to defend Mr. Van Huizen in the Behlok proceedings. He explained that, in his view, this interpretation was necessary if the vicarious liability provision was to have any practical effect [at para. 22]:

If this was not the case, there would be no need for the vicarious liability provision in the contract. Such liability attaches in the absence of any negligence or other fault on the part of the employer. If it was the intent of the parties that an insured would only have coverage when he or she personally committed the negligent act or omission, the vicarious liability protection would be superfluous.

[17] In a subsequent endorsement dated September 20, 2018, the motion judge clarified that the duty to defend included both Mr. Van Huizen and Hastings Appraisal Services.

[18] In his further reasons dated February 15, 2019, the motion judge ordered that the respondents were entitled to [page594] reimbursement of their defence costs in the amount of $42,000 plus interest. He declined to apply and reduce those costs by the $7,500 deductible under the policy. He concluded it was premature to do so because the underlying litigation had not been resolved and the appellant would recover costs in the litigation that could eliminate the deductible.

D. Issues

[19] The appellant raises several grounds of appeal. [1] In my view, the appeal turns on the following issues:

(i) Did the motion judge err in finding that the appellant's duty to defend the respondents in the Behlok proceedings was engaged under the Van Huizen insurance contract?

(ii) If the appeal is allowed, should summary judgment be granted to the appellant?

[20] I agree that the motion judge erred in his interpretation of the Van Huizen insurance contract and in finding that the appellant had a duty to defend the respondents on this basis. However, as I will explain, I do not agree that summary judgment should be granted to the appellant.

E. Applicable Legal Principles

[21] The motion judge had to consider the question of whether the appellant had a duty to defend the respondents in response to the Behlok proceedings, as he acknowledged, under the Van Huizen insurance contract. The motion judge erred by effectively treating the master policy as the entire insurance contract for all AIC members. This led him to conflate the Van Huizen and Barkley insurance contracts.

[22] It is therefore important for the purpose of this appeal to clarify the distinction between an insurance policy and an insurance contract. These words are often used interchangeably. This conflation can give rise to considerable confusion, as it did here.

[23] An insurance policy is an instrument. Without parties entering into an agreement to be bound by its terms and con-ditions, it is not an insurance contract. By itself, it is "merely [page595] a recitation of terms and conditions which do not attach to a particular person, item or interest": Barbara Billingsley, General Principles of Canadian Insurance Law, 2nd ed. (Markham, Ont.: LexisNexis, 2014), at p. 58. No legal obligations are created by the mere existence of a written insurance policy. Absent a contractual relationship incorporating its terms, the words of a policy "are worth less than the paper on which they are printed": Denis Boivin, Insurance Law, 2nd ed. (Toronto: Irwin Law, 2015), at p. 242.

[24] An insurance contract, by contrast, creates contractual obligations between parties: Rayner v. Preston (1881), 18 Ch. D. 1 (Eng. C.A.), at p. 10. The formation of insurance contracts is governed by the law of contracts. There must be offer and acceptance, and agreement on all material terms, including the premium, the nature and duration of the risk to be covered, and the extent of liability: McCunn Estate v. Canadian Imperial Bank of Commerce (2001), 53 O.R. (3d) 304 (C.A.), at paras. 18-19, leave to appeal granted but appeal discontinued, [2001] S.C.C.A. No. 203. In determining whether to enter into a particular insurance contract, the insurer assesses the risk and determines an acceptable premium based on the representations made by the applicant for insurance: Craig Brown and Andrew Mercer, Introduction to Canadian Insurance Law, 3rd ed. (Markham, Ont.: LexisNexis, 2013), at p. 23.

[25] An insurance policy may evidence the existence of an insurance contract because often parties will agree, as part of their contract, to be bound by terms and conditions as set out in an appropriate policy: Billingsley, at p. 59; Brown and Mercer, at p. 23. When an insurer uses a standard policy, it may issue a certificate of insurance as proof of the underlying contract on the terms set out in an applicable policy: Boivin, at p. 258. But an insurance policy or certificate of insurance is only the instrument; it evidences the existence of the insurance contract by which the parties have agreed to be bound.

[26] This relationship between an insurance contract and an insurance policy is recognized by the statutory definitions of "contract" and "policy": Insurance Act, R.S.O. 1990, c. I.8, s. 1. Under s. 1 of the Insurance Act, "contract" means an insurance contract, and includes a policy and certificate of insurance evidencing the contract. By contrast, "policy" means the instrument evidencing a contract.

[27] Therefore, while an insurance policy sets out terms that may govern the relationship between the parties to an insurance contract, it is the contract that gives rise to legal consequences [page596] and must be the subject of interpretation for the purposes of determining the parties' rights and obligations.

F. Analysis

(i) There is no duty to defend the Behlok proceedings under the Van Huizen insurance contract

(a) The motion judge erred by interpreting the insurance policy rather than the insurance contract

[28] The motion judge correctly recognized that the duty to defend arises if there is the "mere possibility that a claim falls within the insurance policy": Progressive Homes Ltd. v. Lombard General Insurance Co., 2010 SCC 33, at para. 19. The motion judge also recognized that it was necessary to "search for an interpretation from the whole of the contract which promotes the true intent of the parties at the time of entry into the contract": Coast Capital Equipment Finance Ltd. v. Old Republic Insurance Company of Canada, 2018 ONCA 540, 81 C.C.L.I. (5th) 220, at para. 19.

[29] While the motion judge correctly set out the relevant interpretative principles in determining whether the pleadings and the master policy created a duty to defend, he erred in his application of them. The duty to defend is a contractual obligation. The motion judge erred by narrowing his inquiry to the language of the pleadings and the master policy and effectively considering the master policy as the insurance contract between Mr. Van Huizen and the appellant. This led him to conflate the Van Huizen and Barkley insurance contracts.

[30] To be fair to the motion judge, it is easy to see why he fell into error. As I earlier observed, the terms "insurance policy" and "insurance contract" are often treated synonymously. Nevertheless, in this case it was necessary to distinguish between the Van Huizen and Barkley insurance contracts and the documents evidencing their terms.

[31] The motion judge interpreted the master policy as if it constituted a binding contract between the insurer and all members who had been issued a certificate. Given that both Mr. Van Huizen and Mr. Barkley held certificates, the motion judge concluded that they were both "Insured", and that Mr. Van Huizen was therefore covered under the master policy for liability arising out of Mr. Barkley's alleged negligent appraisal.

[32] For the reasons I have already stated, the master policy does not, however, constitute such a binding agreement on its [page597] own. It cannot. The master policy merely sets out the terms of professional liability insurance being offered to the members of the AIC. It is missing key terms on which agreement is necessary to form an insurance contract, including the assessed risk, the premium to be paid and the term of insurance: McCunn Estate, at para. 19.

[33] Each member who desires coverage must apply for the coverage on terms set out in the master policy. The insurer can then assess the individual risk of the applicant in determining the premium and in deciding whether to enter into a contract with the applicant. Provided the member and insurer come to an agreement on the remaining essential terms of the contract and agree to be bound by the master policy, the insurer will issue a certificate to the member, evidencing the existence of that contract.

[34] It follows that while each member who holds a certificate will be bound by identical terms as set out in the master policy, they are also bound by the unique terms as set out in their certificates and are therefore necessarily party to separate contracts with the insurer. In Re Lawton, [1945] M.J. No. 28, [1945] 4 D.L.R. 8 (Man. C.A.), at p. 37, Bergman J.A., concurring, noted a similar phenomenon in the context of a group life insurance policy for employees of a certain employer:

The master policy is, in effect, merely an agreement by the [insurer] with the [employer] to insure the individual employees who are eligible, on the terms specified in the master policy. In my opinion the certificates issued to the individual employees pursuant to, and in performance of, that agreement, constitute the real and effective insurance. I am further of the opinion that these certificates are not incorporated in, and made part of, the master policy. It is the other way about; the master policy is incorporated in, and made part of, each individual certificate of insurance.

[35] Similarly, the certificates issued to Mr. Van Huizen and Mr. Barkley each evidence a separate insurance contract on terms including those set out in the master policy. The declarations specify exactly what constitutes these contracts of insurance: "These Declarations along with any completed and signed Application and the Policy, each Member Certificate of Insurance, and endorsements, if any, shall constitute the entire contract between the Insured and [the appellant]" (emphasis added).

[36] The individual nature of the insurance contract is also reflected in the declarations, which say that the name of the insured is "[a]s per individual certificate", as well as that the policy period is "[a]s per individual certificate", and that the premium is "[a]s per individual certificate". Further, the master policy summarizes the bargain that underlies the insurance contract, namely, that it is "in consideration of the payment of the premium and in [page598] reliance upon all statements made and information furnished" to the appellant, "including the statements made in the Application", that insurance is agreed to be provided.

[37] The appellant's duty to defend must be ascertained within the entirety of the relevant insurance contract, properly interpreted, and cannot be determined solely in reference to the master policy, which is not an insurance contract and does not on its own bind the parties.

[38] In my view, the motion judge fell into error by deciding the question of the duty to defend on the basis of the terms of the master policy untethered to the particular contractual relationship between the appellant and Mr. Van Huizen. As a result, his conclusion that the appellant owed a duty to defend the respondents under Mr. Van Huizen's standard form insurance contract is not owed deference: Ledcor Construction Ltd. v. Northbridge Indemnity Insurance Co., 2016 SCC 37, at para. 24. The question must therefore be considered afresh.

(b) The meaning of "employer" under the master policy

[39] While not strictly necessary given my proposed disposition of this appeal, I deal with this issue for the purpose of providing some guidance concerning the preferred analytical approach. The appellant submits that there is no duty to defend under the Van Huizen insurance contract because in their statement of defence in the Behlok proceedings, the respondents deny that they were Mr. Barkley's "Employer" as defined in the master policy and therefore cannot be insured under the Van Huizen insurance contract.

[40] The motion judge properly rejected this submission.

[41] When determining whether there is a duty to defend, the court interprets the pleadings and the insurance contract to determine if there is the mere possibility that the claim, as pleaded, falls within the scope of coverage under the insurance contract. The duty to defend is not dependent on the insured actually being liable and the insurer actually being required to indemnify. It is irrelevant whether the allegations in the pleadings can be proven in evidence; for this interpretative purpose, the allegations in the statement of claim are to be taken as true: see Progressive Homes, at paras. 19-20. An insurer is obliged to provide a defence if the pleadings allege facts which, if true, could potentially require the insurer to indemnify the insured for the claim: Nichols v. American Home Assurance Co., [1990] 1 S.C.R. 801, [1990] S.C.J. No. 33 (S.C.C.), at p. 810-11; Monenco Ltd. v. Commonwealth [page599] Insurance Co., 2001 SCC 49, at para. 28.

[42] It is clearly alleged in the statements of claim in the Behlok proceedings that the respondents are the employer of Mr. Barkley. This allegation is accepted as true for the purpose of determining the duty to defend. The respondents' denial does not affect this presumption nor the possibility that the allegation could prevail at trial.

[43] As discussed more fully below, the master policy provides for a duty to defend claims made against any "Insured" (defined to include a "Member" and, in certain cases, an "Employer") for a "Wrongful Act". Under the master policy, "Employer" means "any partnership, corporation, or sole proprietorship in which a Member was or is now an employee" (emphasis added).

[44] That, however, is not the end of the analysis to determine whether the appellant has a duty to defend the respondents under the Van Huizen insurance contract. As I will now explain, when the Van Huizen insurance contract is considered as a whole, the appellant has no duty to defend the respondents under that insurance contract.

(c) The Van Huizen insurance contract covers only Mr. Van Huizen's professional negligence

[45] I am of the view that the Van Huizen insurance contract, properly interpreted, does not impose a duty to defend on the appellant in relation to the Behlok proceedings.

[46] There is no question that the Behlok proceedings assert a civil claim for monetary damages arising from Mr. Barkley's allegedly negligent provision of professional appraisal services. The pleadings, however, do not allege a claim against Mr. Van Huizen or Hastings Appraisal Services as his employer for his allegedly negligent provision of professional appraisal services. Rather, the claim is framed against the respondents on the basis of their vicarious liability for Mr. Barkley's alleged negligent provision of professional appraisal services.

[47] As a result, the interpretative issue is whether Mr. Van Huizen's insurance contract requires the appellant to defend the respondents in relation to the claim that they are vicariously liable for the alleged wrongful act of another insured AIC member, Mr. Barkley, in his provision of professional appraisal services.

[48] The determination of this question requires consideration of the master policy definitions in the context of the specific insurance contract between the appellant and Mr. Van Huizen.

[49] For the purposes of this appeal, the relevant provisions of the definitions are as follows: [page600]

Claim means:

(ii) a civil proceeding commenced by the issuance of a notice of action, statement of claim, writ of summons, complaint or similar proceeding;

. . . . . against any Insured for a Wrongful Act . . .

Employer means any partnership, corporation, or sole proprietorship in which a Member was or is now an employee.

Insured means:

(i) any Member

. . . . . (iii) an Employer, but solely for its for [sic] vicarious liability arising out of Professional Services rendered, or alleged to have been rendered, by a Member, but only if a Claim is initially made and continuously maintained against such Employer and the Member . . .

. . . . . Member means any natural person named in Item 3 of the Declarations [item 3 of the Declarations states: "Name and Address of the Insured: As per individual certificate"] ... who is in good standing with the [AIC].

. . . . . Wrongful Act means any actual or alleged negligent act, error or omission, misstatement or misleading statement committed solely by the Member in the performance of Professional Services while a Member is in good standing with the [AIC].

[50] There is no doubt that Mr. Van Huizen is an "Insured", as defined in his insurance contract. He meets all the criteria to be a "Member". He is a natural person named in item 3 of the declarations because the individual certificate, referenced in that item, provides that the "Insured" is John Van Huizen. There is no dispute that Mr. Van Huizen fulfills the other criteria required to fall within the definition of a "Member".

[51] Similarly, Hastings Appraisal Services, as the alleged employer of Mr. Van Huizen, is also an "Insured". As already noted, under clause (iii) of the definition an Insured can be an Employer (subject to certain qualifications). The use of the qualifier "any" before "Insured" in the definition of "Claim" makes clear that the appellant has a duty to defend any Insured as defined under Mr. Van Huizen's insurance contract and not just Mr. Van Huizen who is a Member.

[52] However, the definition of "Claim" is limited to claims against any "Insured" for a "Wrongful Act". For ease of reference, I repeat the definition of "Wrongful Act":

Wrongful Act means any actual or alleged negligent act, error or omission, misstatement or misleading statement committed solely by the Member in the performance of professional services while a Member in good standing with the [AIC].

(Emphasis added) [page601]

[53] In this case, the alleged negligent act was committed by Mr. Barkley and not Mr. Van Huizen. It appears undisputed that Mr. Barkley was an AIC member and that the alleged negligent act was committed by him in the performance of professional services while in good standing.

[54] However, Mr. Van Huizen relies on his insurance contract, and not Mr. Barkley's insurance contract, in asking the appellant to defend him. The key question then becomes who is the "Member" under the Van Huizen insurance contract, as that term is incorporated by reference in the definitions of "Insured" and "Wrongful Act". Its definition refers the reader to item 3 of the declarations, which, as noted above, states that the name and address of the insured is "[a]s per individual certificate".

[55] At para. 23 of his reasons, the motion judge concluded:

While the definition of "wrongful act" uses the definite article "the" referring to "member", it must be interpreted in a manner consistent with the definitions of "claim" and "insured". Under the policy, an insured does not have to be an appraiser; but he or she has to be an employer of someone who is and, if they are, the policy grants them coverage if they are alleged to be vicariously liable for the negligent acts or omissions of that member. As a result, [the appellant] has a duty to defend Mr. Van Huizen.

[56] In my view, the motion judge erred by seizing on the fact that Mr. Van Huizen meets the definitions of an "Insured" and a "Member" under the master policy without giving effect to the language in the Van Huizen insurance contract that limited the nature of a claim against the respondents that the appellant is required to defend. As a result, the motion judge effectively conflated the Van Huizen and Barkley insurance contracts.

[57] The only certificate of insurance that forms part of the relevant insurance contract is Mr. Van Huizen's certificate. In that certificate, only Mr. Van Huizen is identified as an insured. Only his insurable risk is the subject of the contract. It is on that basis that the appellant determined the risk to be insured, set the premium to be paid, and entered into the insurance contract with Mr. Van Huizen.

[58] Mr. Barkley's certificate does not form part of the Van Huizen insurance contract. It is different from the one issued to Mr. Van Huizen. While issued under the same master policy, the certificate is particular to the individual to whom it is issued and evidences only the individual insurance contract between the insurer and that member.

[59] Since Mr. Van Huizen alone is named as an insured in the relevant certificate, he alone is the "Member" for the purposes of the Van Huizen insurance contract as that term is defined in the master policy. As a result, clause (i) of the definition of [page602] "Insured" captures Mr. Van Huizen and not Mr. Barkley. Further, vicarious liability under clause (iii) is limited to professional services rendered by a "Member", which again, means only Mr. Van Huizen. The definition of "Wrongful Act" is similarly limited to professional services provided solely by the "Member", Mr. Van Huizen.

[60] According to the plain language of the master policy, the certificate of insurance and their definitions, then, coverage is provided for any claims against Mr. Van Huizen or his employer respecting Mr. Van Huizen's provision of professional services. The Behlok proceedings did not allege that Mr. Van Huizen had committed a wrongful act in rendering or failing to render professional services. There is no coverage under the Van Huizen insurance contract for any claim related to an act of professional negligence committed by anyone other than Mr. Van Huizen.

[61] I respectfully disagree with the suggestion of the motion judge that this interpretation renders the provision for vicarious liability on the part of the employer superfluous or a commercial absurdity. Rather, it acknowledges the privity of contract between the member and the insurer and provides for the possibility that the member named in the individual certificate may offer professional services not merely as an individual but through or on behalf of "any partnership, corporation, or sole proprietorship in which a Member was or is now an employee". Each member's insurance contract provides for coverage for their employers in any claim for the wrongful acts of that member. This makes practical, commercial sense.

[62] Therefore, I conclude that this insurance contract does not give rise to a duty to defend the respondents for the alleged wrongful act of Mr. Barkley.

(ii) Summary judgment should not be granted to the appellant

[63] I would not grant summary judgment to the appellant. The issue as to whether the appellant has a duty to defend the respondents as Mr. Barkley's alleged "Employer" under the Barkley insurance contract with the appellant has not yet been decided.

[64] In its statement of defence, the appellant expressly addresses the question as to whether the respondents are entitled to coverage under the Barkley insurance contract. The appellant pleads they are not "Insureds" because they are not Mr. Barkley's "employer". However, the parties did not bring forward this issue for determination on the motion for summary judgment. Rather, they limited the question to whether the appellant owed them a duty to defend under the Van Huizen insurance contract. As a result, the motion [page603] judge only dealt with the issue of whether the appellant owed the respondents a duty to defend the Behlok proceedings under the Van Huizen insurance contract. Similarly, the issue of coverage under the Barkley insurance contract was not raised or argued on appeal.

[65] Given the way the motion for summary judgment was argued and disposed of before the motion judge and on appeal, the question of coverage under the Barkley insurance contract for the respondents as Mr. Barkley's alleged "Employer" remains to be determined.

[66] My proposed disposition of this appeal renders it neither necessary nor desirable to determine this issue. The record and submissions are incomplete because they focussed on the issue of coverage under the Van Huizen insurance contract.

[67] Accordingly, in my opinion, there remains a live issue to be determined as to whether the appellant owes the respondents a duty to defend under the Barkley insurance contract. I would therefore dismiss the appellant's motion for summary judgment.

G. Disposition

[68] Accordingly, it was an error for the motion judge to grant summary judgment to the respondents. The motion judge's order should be set aside.

[69] I would not allow the appellant's motion for summary judgment nor dismiss the respondents' action because there is a live issue requiring determination as to whether the appellant owes the respondents a duty to defend under Mr. Barkley's insurance contract with the appellant.

[70] The appellant should be entitled to its partial indemnity costs of the appeal in the amount of $9,460.64 and, because of its success in overturning the judgment granted to the respondents, of the motion below in the amount of $6,343.50, both inclusive of all disbursements and applicable taxes.

Appeal allowed.

Notes

[1] The appellant raises the alternate issue of whether the motion judge erred in failing to apply the $7,500 deductible under the Van Huizen insurance contract to the award of defence costs to the respondents. This issue only arises in the context of the Van Huizen insurance contract if the motion judge's conclusion that there is a duty to defend is upheld. Given my proposed disposition of the appeal, it is unnecessary to determine this issue.

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