ONTARIO SUPERIOR COURT OF JUSTICE

Court File and Parties

OSHAWA COURT FILE NO.: 76109/11

DATE: 2012-02-28

BETWEEN :

NORMAN VINCENT

Applicant

— and —

FARMERS’ MUTUAL INSURANCE COMPANY

Respondent

COUNSEL:

R. Donald Rollo for the Applicant

Martin P. Forget for the Respondent

HEARD: December 20, 2011

Salmers J.

ENDORSEMENT

Introduction and Nature of the Application

[ 1 ] On the evening of January 2, 2005 or the early morning of January 3, 2005, 17 year old Kyla Holburn died from an overdose of drugs that she allegedly took while in the home of the applicant, Norman Vincent. Several members of her family have brought an action (“the family action”) against four defendants, including Mr. Vincent, for claims under the Family Law Act [^1] for loss of care, guidance, and companionship. On the date of Ms. Holburn’s death, Mr. Vincent had a home insurance policy with the respondent, Farmers’ Mutual. Mr. Vincent requested that Farmers’ Mutual defend him in the family action and provide coverage for any damages. Farmers’ Mutual denied coverage based on exclusions in the policy. Accordingly, Farmers’ Mutual refused to defend Mr. Vincent in the family action. In this application, Mr. Vincent requests that the respondent be ordered to defend him in the family action and provide coverage for any damages for which he may be liable in that action.

The Applicable Law

[ 2 ] In paragraphs 50-52 of Non-Marine Underwriters, Lloyd’s of London v. Scalera [^2] , the Supreme Court of Canada set out the three step approach which must be followed when determining if a duty to defend arises in a particular case. That three step approach is as follows:

50 Determining whether or not a given claim could trigger indemnity is a three-step process. First, a court should determine which of the plaintiff's legal allegations are properly pleaded. In doing so, courts are not bound by the legal labels chosen by the plaintiff. A plaintiff cannot change an intentional tort into a negligent one simply by choice of words, or vice versa. Therefore, when ascertaining the scope of the duty to defend, a court must look beyond the choice of labels, and examine the substance of the allegations contained in the pleadings. This does not involve deciding whether the claims have any merit; all a court must do is decide, based on the pleadings, the true nature of the claims.

51 At the second stage, having determined what claims are properly pleaded, the court should determine if any claims are entirely derivative in nature. The duty to defend will not be triggered simply because a claim can be cast in terms of both negligence and intentional tort. If the alleged negligence is based on the same harm as the intentional [page582] tort, it will not allow the insured to avoid the exclusion clause for intentionally caused injuries.

52 Finally, at the third stage the court must decide whether any of the properly pleaded, non-derivative claims could potentially trigger the insurer's duty to defend.

[ 3 ] I will now apply this approach and analysis to the application that is before me.

Analysis

Step One – The True Nature of the Claims in the Family Action

[ 4 ] To ascertain the true nature of the claims in the family action, one must carefully examine the statement of claim in that action. In this case, the statement of claim was twice amended. The true nature of the plaintiffs’ claims must be ascertained from the most recent version, namely the Amended Amended Statement of Claim which I will hereafter refer to simply as the statement of claim. I will now examine the allegations made against Norman Vincent in that statement of claim. Where allegations are made against all defendants, I will refer only to such allegations as they pertain to and are allegations against Norman Vincent.

[ 5 ] In paragraph 14 of the statement of claim, the plaintiffs allege that Norman Vincent knew and acquiesced in Ms. Holburn and others taking illegal drugs at his home. Paragraph 20 repeats that allegation. Paragraph 20 also alleges that Norman Vincent knew that there was a court order that prohibited association or communication between Ms. Holburn and Shane Vincent, the son of Norman Vincent. Paragraph 20 further alleges that on January 2, 2005:

• Norman Vincent knew that both Shane Vincent and Ms. Holburn were at his home;

• Norman Vincent took no steps to remove Ms. Holburn from the property; and

• Norman Vincent failed or refused to take any steps to prevent Ms. Holburn from consuming or using illegal drugs while at the property.

[ 6 ] Paragraph 21 of the statement of claim alleges that Norman Vincent knew that Ms. Holburn was overdosing from illegal drugs and that he failed or refused to take any steps to obtain care or medical treatment for her.

[ 7 ] Paragraph 22 of the statement of claim alleges that rather than obtaining care or treatment for Ms. Holburn, Norman Vincent knew, consented, and acquiesced in the other defendants removing her from the property.

[ 8 ] In paragraph 24(b) of the statement of claim, the plaintiffs essentially repeat the allegations made in previous paragraphs. Additionally, in paragraph 24(b)(vii), the plaintiffs allege that Norman Vincent failed to notify Ms. Holburn’s family or police that she was being transported from the property by the other defendants.

[ 9 ] In paragraph 25 of the statement of claim, the plaintiffs allege that Norman Vincent’s conduct was negligent and caused or contributed to Ms. Holburn’s death. That paragraph also sets out the particulars of his negligence.

[ 10 ] Paragraph 27 of the statement of claim alleges that Norman Vincent knew and concealed the location of Ms. Holburn and misdirected her sisters and mother to other locations.

[ 11 ] Paragraph 28 of the statement of claim alleges that by misdirecting searchers, Norman Vincent knew or ought to have known that the sisters and mother of Ms. Holburn would suffer severe stress and mental anguish. Paragraph 29 alleges that this conduct of Norman Vincent demonstrated a complete and reckless disregard for the well-being of the plaintiffs. Paragraph 30 alleges that Norman Vincent’s conduct was a wilful infliction of nervous shock and amounted to an assault.

[ 12 ] In paragraphs 31 and 32 of the statement of claim, the plaintiffs allege that Norman Vincent was negligent by failing to monitor and protect Ms. Holburn when she was at his house that evening and night.

[ 13 ] Having carefully considered the pleadings, I find that the paramount complaint of the plaintiffs and the true essence of the vast majority of their claims is that Norman Vincent did not properly supervise and direct events and people in his home. In the statement of claim, apart from the claims that he concealed or misdirected searchers about the location of Ms. Holburn’s body after it was removed from his home, the vast majority of the allegations against Norman Vincent relate to omissions or failures to act on his part. Many of these claims are specifically referred to and made as claims for negligence. None of the claims for negligence are pleaded as an alternative to claims for intentional acts or criminal acts. There are no breaches of contract or any other possible bases for claims that underlie any of the claims for negligence. The claims for negligence are not merely labels. They are genuinely and primarily claims for negligence.

[ 14 ] For those reasons, I find that the true nature of the claims in the family action against Norman Vincent is in the nature of claims for negligence rather than claims based on an intentional tort or criminal act. Counsel for Farmers’ Mutual acknowledged that Norman Vincent’s policy with the company provided coverage for claims in negligence.

Step Two – Are the Claims Derivative in Nature?

[ 15 ] In the family action, many of the claims are based upon Norman Vincent allowing something to happen in his house, although he did not personally participate in what happened. In this context, his allowing something to happen may be an intentional act on his part. Other claims are based upon Norman Vincent otherwise failing to do something or deciding not to do something. Both failing to act or deciding not to act may be intentional acts on his part. Mr. Vincent’s insurance policy excluded both intentional acts and failures to act from coverage.

[ 16 ] It is theoretically possible that Norman Vincent committed a criminal act by allowing drug use in his home. Criminal acts were also excluded from coverage by his Farmers’ Mutual policy.

[ 17 ] As stated above, in the family action many of the claims are specifically referred to and made as claims for negligence and none of the claims for negligence are pleaded as an alternative to claims for intentional acts or criminal acts. The claims for negligence are not merely labels. I find that the true nature of the plaintiffs’ claims, in the family action against Norman Vincent, is in negligence. Respondent’s counsel candidly acknowledged that the policy was intended to cover negligent acts. In these circumstances, the claims for negligence are not derivative of claims based on intentional acts, failures to act, or criminal acts. To accept the respondent’s arguments and find otherwise would exclude coverage for negligence which is not the intention of the policy.

Step Three – Do the Claims Trigger Coverage?

[ 18 ] As stated above, Respondent’s counsel candidly acknowledged that the policy covers negligent acts. Section III of the policy, as contained in the record, provides coverage for negligent acts of the insured that are not otherwise excluded. Accordingly, I find that Farmers’ Mutual must provide coverage for non-derivative negligent acts of Norman Vincent.

Summary and Conclusion

[ 19 ] In the family action, negligence is the true nature of the claims against Norman Vincent. The family action’s claims for negligence include non-derivative claims for negligence of Norman Vincent. Norman Vincent’s insurance policy with Farmers’ Mutual provided coverage for his negligent acts which are not otherwise excluded. Accordingly, those claims for negligence trigger coverage by his Farmers’ Mutual insurance policy and the insurer must provide a defence for Norman Vincent in the family action.

[ 20 ] For these reasons, an order shall go as requested in paragraph 1(a) of the Notice of Application.

[ 21 ] If the parties cannot agree on costs, then they are to contact the Oshawa trial co-ordinator to arrange to make costs submissions before me.

The Honourable Mr. Justice Salmers

DATE RELEASED: February 28, 2012

[^1]: R.S.O. 1990, c. F.3 , as amended.

[^2]: 2000 SCC 24, [2000] 1 S.C.R. 551