Court File and Parties

Court of Appeal for Ontario Date: 20210614 Docket: C68084

Before: Roberts, Miller and Thorburn JJ.A.

Between: Susan Tataryn and Susan G. Tataryn Professional Corporation Plaintiffs (Respondents)

And: Axa Insurance Canada (now known as Intact Insurance Company of Canada), Charles McLeod, Irvin Hoffman and Cohen & Lord Insurance Brokers Limited Defendants (Appellant / Respondents)

Counsel: Ashlee L. Barber, for the appellant Brian C. Elkin, for the respondents, Susan Tataryn and Susan G. Tataryn Professional Corporation Pasquale Santini, for the respondents, Irvin Hoffman and Cohen & Lord Insurance Brokers Limited Kyle Dow, for the respondent, Charles McLeod, making no submissions

Heard: May 27, 2021 by video conference

On appeal from the order of Justice Pierre E. Roger of the Superior Court of Justice, dated January 20, 2020, with reasons reported at 2020 ONSC 375.

Reasons for Decision

[1] The appellant insurer appeals from the summary judgment granted in favour of Susan Tataryn and her professional corporation (the “Tataryn respondents”) and Irvin Hoffman and Cohen & Lord Insurance Brokers Limited (the “respondent brokers”).

[2] Ms. Tataryn’s property was insured under a Homeowners Comprehensive policy with the appellant (“the Policy”). Ms. Tataryn purchased an additional Business Interruption Endorsement, as her property was also the place of business for her law practice.

[3] Ms. Tataryn commenced renovations to the second and third floor of her property while she lived on the first floor. Following the commencement of these renovations, two incidents of water damage occurred on the property for which Ms. Tataryn sought coverage under the Policy. The appellant made some payments for the first loss, the renovations paused, and Ms. Tataryn moved out of the property.

[4] The appellant denied coverage for the loss arising out of the second incident of water damage relying on the following highlighted provisions of the exclusion clause in the Policy:

We do not insure loss or damages… [19.] caused by water unless loss or damage resulted from… [(b)] the sudden and accidental escape of water or steam from within a plumbing, heating, sprinkler or air conditioning system or domestic water container, which is located inside your dwelling … but we do not insure loss or damage [viii.] occurring while the building is under construction, vacant, or unoccupied, even if we have given permission. [Emphasis added.]

[5] The policy does not provide a definition of what is meant by a building “under construction”.

[6] The Tataryn respondents commenced an action against the appellant, the respondent brokers and the respondent adjuster, Charles McLeod, for damages for the losses arising out of the two occurrences of water damage. The Tataryn respondents and the respondent brokers each brought motions for a declaration that the “under construction” exclusion clause did not apply. The motion judge granted the motion: he ordered that the appellant cannot rely on the “under construction” exclusion of the Policy as a defence at trial and dismissed the defence. The motion judge also dismissed the Tataryn respondents’ action and the appellant’s crossclaim against the respondent brokers insofar as they pertain to the “under construction” exclusion.

[7] This appeal turns on the motion judge’s interpretation of the terms “under construction” in the Policy as applied to the state of the renovations that Ms. Tataryn was carrying out on her property.

[8] The appellant argues that the motion judge erred in his interpretation of these terms because he failed to construe them in the entire context of the Policy and the limited risk covered under a homeowner’s policy of insurance as opposed to the risks covered in a builders’ risk or other construction-oriented insurance policy. The appellant urges this court to provide guidance on the meaning of “under construction”. Moreover, the appellant submits, the motion judge failed to consider the entirety of the evidence and focused too narrowly on the state of renovations following the second loss.

[9] Notwithstanding Ms. Barber’s able submissions, we see no error that warrants appellate intervention. The motion judge properly instructed himself on the applicable rules of contractual interpretation, including that he was required to “give effect to the clear language of the policy, reading it as a whole”. He considered the plain meaning of the term “under construction”, which he found to be unambiguous, and applied it to the entirety of the evidence of the state of the renovations to Ms. Tataryn’s property. There was extensive evidence before the court, including from the parties’ discoveries, affidavits, and cross-examinations. The motion judge concluded, correctly in our view, that the finding as to whether a property is “under construction” is a question of fact and that in this case, “the extent of the renovations [is] not sufficient to support a finding that the house was ‘under construction’”. As the motion judge noted, the fact that a house is being renovated does not necessarily mean that it is “under construction”: Wilson v. INA Insurance Co. of Canada (1993), 80 B.C.L.R. (2d) 361 (C.A.), at para. 16. Indeed, whether a property is “under construction” or merely under renovation is a question of degree and a question of fact. The motion judge’s determination that Ms. Tataryn’s property was not “under construction” was open to him on this record.

[10] We decline the appellant’s invitation to furnish a definition of “under construction” that the appellant could have included in its standard form contract. We note that the appellant renewed the Policy after the first loss without introducing such a definition. Given the acknowledged fact-specific inquiry entailed in the determination of “under construction”, it is not possible nor desirable for us to give a definition that would apply to all cases: Dodge v. York Fire Insurance Co., 1911 CarswellOnt 41 (C.A.), at para. 12. As the motion judge observed, exclusion clauses in insurance policies are construed narrowly and the insurer bears the burden of proving the exclusion clause applies to limit coverage: Progressive Homes Ltd. v. Lombard General Insurance Co. of Canada, 2010 SCC 33, [2010] 2 S.C.R. 245, at para. 24. It is not this court’s function to rewrite the parties’ agreement, especially those terms that the motion judge found, and the parties agree, are unambiguous.

[11] For these reasons, we dismiss the appeal.

[12] In accordance with the parties’ agreement, the Tataryn respondents and the respondent brokers are each entitled to their partial indemnity costs in the amount of $7,500, plus their respective disbursements and applicable tax. Since Mr. Dow attended on a watching brief for Mr. McLeod, filed no materials and made no submissions, he sought no costs, and none are granted.

“L.B. Roberts J.A.” “B.W. Miller J.A.” “J.A. Thorburn J.A.”