MacDonald et al. v. Chicago Title Insurance Company of Canada

[Indexed as: MacDonald v. Chicago Title Insurance Co. of Canada]

Ontario Reports

Ontario Superior Court of Justice,

J. Macdonald J.

December 29, 2014

123 O.R. (3d) 789 | 2014 ONSC 7457

Case Summary

Civil procedure — Summary judgment — Applicants moving for summary judgment — Respondent seeking only order dismissing motion and allowing action to proceed to trial — Respondent not permitted to choose not to have summary judgment granted in its favour where there was no genuine issue requiring trial — Claim dismissed. [page790]

Insurance — Title insurance — Insured discovering after purchasing house that load-bearing wall had been removed — City issuing order requiring that shoring be installed to temporarily support floor structure — Insured complying and no permanent remediation order issued — No order registered on title — Cost of remediation not covered under title insurance policy as remediation order did not affect title.

The applicants discovered after purchasing a house that load-bearing walls had been removed from the first floor. The city issued an order requiring the applicants to install shoring to temporarily support the floor structure. The applicants complied. No permanent remediation order was issued, and no order was registered on title. The applicants sought to recover the cost of the remediation from the respondent, which had issued a policy of title insurance to the applicants. They moved for summary judgment. The respondent sought only an order dismissing the motion, thus allowing the action to proceed to trial.

Held, the motion and the action should be dismissed.

The respondent could not choose not to have summary judgment granted in its favour where there was no genuine issue requiring a trial.

The terms of the policy were clear and unambiguous, and there was no genuine issue requiring a trial. The cost of remediation was not covered under the policy as the remediation order did not affect the applicants' title.

Cases referred to

Amos v. Insurance Corp. of British Columbia, [1995] 3 S.C.R. 405, [1995] S.C.J. No. 74, 127 D.L.R. (4th) 618, 186 N.R. 150, [1995] 9 W.W.R. 305, 63 B.C.A.C. 1, 10 B.C.L.R. (3d) 1, 31 C.C.L.I. (2d) 1, [1995] I.L.R. 1-3232, 13 M.V.R. (3d) 302, 57 A.C.W.S. (3d) 640; Hryniak v. Mauldin, [2014] 1 S.C.R. 87, [2014] S.C.J. No. 7, 2014 SCC 7, 314 O.A.C. 1, 453 N.R. 51, 2014EXP-319, J.E. 2014-162, EYB 2014-231951, 95 E.T.R. (3d) 1, 12 C.C.E.L. (4th) 1, 27 C.L.R. (4th) 1, 21 B.L.R. (5th) 248, 46 C.P.C. (7th) 217, 37 R.P.R. (5th) 1, 366 D.L.R. (4th) 641; Progressive Homes Ltd. v. Lombard General Insurance Co. of Canada, [2010] 2 S.C.R. 245, [2010] S.C.J. No. 33, 2010 SCC 33, 293 B.C.A.C. 1, [2010] I.L.R. I-5051, 406 N.R. 182, 323 D.L.R. (4th) 513, 9 B.C.L.R. (5th) 1, EYB 2010-179515, 93 C.L.R. (3d) 1, 2010EXP-3049, J.E. 2010-1683, [2010] 10 W.W.R. 573, 73 B.L.R. (4th) 163, 89 C.C.L.I. (4th) 161; Sam's Auto Wrecking Co. v. Lombard General Insurance Co. of Canada (2013), 114 O.R. (3d) 730, [2013] O.J. No. 1413, 2013 ONCA 186, 305 O.A.C. 68, 361 D.L.R. (4th) 336, 20 C.C.L.I. (5th) 173, 225 A.C.W.S. (3d) 1111; Scalera v. Non-Marine Underwriters, Lloyd's of London, [2000] 1 S.C.R. 551, [2000] S.C.J. No. 26, 2000 SCC 24, 185 D.L.R. (4th) 1, 253 N.R. 1, [2000] 5 W.W.R. 465, J.E. 2000-935, 135 B.C.A.C. 161, 75 B.C.L.R. (3d) 1, 18 C.C.L.I. (3d) 1, 50 C.C.L.T. (2d) 1, [2000] I.L.R. I-3810, 96 A.C.W.S. (3d) 479; Whalen v. Hillier (2001), 2001 24070 (ON CA), 53 O.R. (3d) 550, [2001] O.J. No. 926, 143 O.A.C. 320, 27 C.C.L.I. (3d) 166, 5 C.P.C. (5th) 58, 10 M.V.R. (4th) 243, 103 A.C.W.S. (3d) 1125 (C.A.)

Statutes referred to

Building Code Act, 1992, S.O. 1992, c. 23, s. 15.9(4)

Rules and regulations referred to

Rules of Civil Procedure, R.R.O. 1990, Reg. 194, rules 20, 20.04(2)(a) [page791]

MOTION by the applicants for summary judgment.

Gavin J. Tighe, for applicants.

Robert Dowhan, for resondent.

J. MACDONALD J.: —

Introduction

[1] The applicants move for summary judgment in their claims for breach of their contract of title insurance and for breach of the respondent's duty of good faith in the handling of their contractual claim. The applicants are homeowners and the respondent issued a policy of title insurance on their home.

[2] The applicants seek summary judgment for declarations in respect of both coverage and the respondent's obligation to indemnify them. In addition, the applicants seek summary judgment for damages for breach of both the contract of insurance and the respondent's duty of good faith. The respondent has not delivered a notice of motion seeking relief. In response to my question about the order which it seeks, the respondent's counsel advised that it does not seek summary judgment in favour of the respondent. The respondent seeks only an order dismissing the applicants' motion, thus allowing the action to proceed to trial.

(i) The facts relevant to the insurance coverage issue

[3] There is no dispute about the facts which give rise to either the applicants' claim that it is entitled to coverage or to the respondent's denial thereof. In addition, the contract of insurance is written in plain and clear language. No issue of ambiguity arises. The parties agree that there is one grammatical error in the contract. They have agreed on what the contract was intended to state. They have agreed that the court should read the contract in that way. Clause 13(e) of the Covered Title Risks states:

(e) any outstanding notice or violation of deficiency notice.

The parties agree that the "or" and the "of" are transposed and that this clause should be taken as stating:

(e) any outstanding notice of violation or deficiency notice.

[4] The motion materials contain a number of differing opinions about what the contract in issue means. Initially, that gave rise to the question of whether such opinions are admissible in respect of contractual interpretation and, if so, whether [page792] the conflicting nature of these opinions gave rise to factual disputes which are incapable of resolution in this motion. Those questions were resolved at the opening of the hearing. The parties agreed that all coverage opinions expressed in the affidavits of Mr. MacDonald (the applicant), Mr. Clarke (the applicants' witness) and Mr. Mineo (the respondent's witness) shall play no role in determining the meaning of the contract, for the purposes of this motion. None of these affidavits is struck out and, subject to the aforesaid agreement which limits the role of the opinion evidence, the relevance, meaning and weight of the affidavits are left for the court to determine.

(ii) The facts relevant to the claim for breach of the duty of good faith

[5] Again, there is no dispute about the facts which give rise to the applicants' claim that the respondent failed to act in good faith.

Rule 20

[6] Rule 20.04(2)(a) [of the Rules of Civil Procedure, R.R.O. 1990, Reg. 194] states:

20.04(2) The court shall grant summary judgment if,

(a) the court is satisfied that there is no genuine issue requiring a trial with respect to a claim or defence[.]

[7] As noted above, there is no genuine of issue of fact requiring a trial. In accordance with Hryniak v. Mauldin, 2014 SCC 7, [2014] 1 S.C.R. 87, [2014] S.C.J. No. 7, the absence of factual disputes means that the court is in a position to make the necessary findings of fact in a fair and just manner, as part of this motion. In turn, that allows the court at this time to apply the law to the facts and thereby achieve an expeditious and less expensive final determination of the claims for breach of both contractual terms and the duty of good faith.

[8] The respondent's position that it chooses not to have a summary judgment in its favour is not a tenable position, in my opinion. When a party's motion leads to the conclusion that there is no genuine issue requiring a trial, an adverse party cannot choose to ignore the benefits to society, to other litigants awaiting their day in court and to the court of the more proportional, more expeditious and less expensive final determination of the issue made fairly and justly in the summary judgment motion. That is because the wording of rule 20.04(2)(a) is mandatory. As Karakatsanis J. said in Hryniak, at para. 47, "Summary judgment motions must be granted whenever there is no [page793] genuine issue requiring a trial . . . ." The reason for this is because, as Karakatsanis J. explained at para. 45, the recent amendments to Rule 20 are designed to transform it from a means of weeding out unmeritorious claims . . . "to a significant alternative model of adjudication". In addition, this was the law before the recent amendments which added to Rule 20's dispositive potential: see Whalen v. Hillier (2001), 2001 24070 (ON CA), 53 O.R. (3d) 550, [2001] O.J. No. 926 (C.A.).

The Facts

Facts relevant to the insurance coverage issues

[9] The applicants purchased both a multi-storey family home and a contract of title insurance in respect of it which is dated April 28, 2006. The home had been renovated before they purchased it.

[10] In 2013, the applicants became aware that, in the renovation, load-bearing walls had been removed from the first floor of their home, and that it, particularly the second floor, was unsafe.

[11] Engineering evidence was obtained to this effect and is not in dispute.

[12] In November 2013, the City of Toronto issued an order to remedy this, pursuant to s. 15.9(4) of the Building Code Act, 1992, S.O. 1992, c. 23. The order required that shoring be installed to "temporarily support the floor structure". That work was done in accordance with the order.

[13] There is no order requiring permanent remediation. Permanent remediation has not taken place.

[14] No building permit was issued for the renovation work which preceded the applicants' purchase of the home and which caused it to be unsafe.

[15] The applicants made claim against the respondent in accordance with the requirements of the contract of insurance.

Facts relevant to the claim for breach of the duty of good faith

[16] The respondent admits that, as the applicants' first party insurer, it owes them a duty to act in the utmost good faith in respect of its handling and/or settling of their claim.

[17] There is no dispute between the parties that the applicants made a claim and that the respondent denied it on the basis that it was not covered by the policy.

[18] There is also no dispute that the respondent's consideration of the applicants' claim was in accordance with its duty [page794] to act in good faith. The applicants say nothing about this issue except to state the details of their claim and its denial. Mr. Mineo, the respondent's vice president of claims who was involved in the respondent's handling of this claim states that the respondent processed and considered the claim in an unbiased and fair manner and regarded the information in respect of the claim in its best light. The denial was based on lack of coverage. Mr. Clarke, the applicants' expert witness who expressed his opinion about this claim and about coverage states that the respondent took the usual steps of a prudent title insurer in investigating the claim, it contacted the applicants and secured expert advice without delay and it rendered its coverage decision within one month of receiving the claim. He finds no fault with the respondent's claims handling. His only disagreement with the respondent is in respect of coverage.

The Contract of Insurance

[19] The relevant portions of the contract are as follows. The contract is entitled "Home Owner's Gold Policy of Title Insurance". Immediately following the title is the "Owner's Coverage Statement", which states in part:

This policy insures your Title to the Land as described in Schedule A . . .

Your insurance is limited by the following:

-- Exclusions and Conditions contained in this policy . . .

We insure you against actual loss from:

-- Any title risks covered by this policy -- up to the Policy Amount

-- Any costs . . . and expenses we have to pay under this Policy.

[20] Schedule A states in part, "the land referred to in this Policy is:" and the applicants' property is then described by means of its municipal address and its land titles registration number.

[21] Following the schedules are two pages entitled "Owner's Policy (Canada)". The relevant portions are under the headings entitled Covered Title Risks, Exclusions, Conditions and Limitation of the Company's Liability. Under Covered Title Risks, the applicants rely on clauses 11, 13(e), 15, 16 and 23. Under Exclusions, the respondent relies on clause 3(d). Under Conditions, definition clause 1(f) is relevant. Under Limitations of the Company's Liability, clause (a) is relevant. These clauses are as follows: [page795]

Covered Title Risks

This Policy insures against actual loss resulting from the following covered risks, if they affect your Title on the Policy Date, or to the extent expressly stated below, if they affect your title after the Policy Date.

11. Your Title is unmarketable, which allows another person to refuse to perform a contract to purchase, to lease, or to make a mortgage loan.

12. You are forced to remove or remedy your existing structure, or any part of it, other than a boundary wall or fence, or you cannot use it for a one to six family residential property or condominium unit because:

e) of any outstanding notice of violation or deficiency notice.

15. Work orders, unless you agreed to be responsible for them.

16. You are forced to remove your existing structure -- other than a boundary wall or fence -- because any portion of it was built without obtaining a building permit from the proper government office or agency.

17. Other defects, liens, hypothecs, rights of priority or encumbrances.

Exclusions

In addition to the Exceptions in Schedule B. you are not insured against loss, costs, legal and/or notarial fees, and expenses resulting from:

3. Title risks:

d) that first affect your Title after the Policy Date -- this does not limit the coverage in items 3, 20 and 21 of the Covered Title Risks.

Conditions

1. Definitions

f) Title -- the ownership of your interest in the Land, as shown in Schedule A.

Limitation of the Company's Liability

a) We will pay up to (i) your actual loss or, (ii) the Policy Amount in force when the claim is made -- whichever is less.

Principles of Contractual Interpretation

[22] There is little disagreement between counsel as to the relevant principles.

[23] For the applicants, Mr. Tighe relies on Amos v. Insurance Corp. of British Columbia, 1995 66 (SCC), [1995] 3 S.C.R. 405, [1995] S.C.J. No. 74, at para. 16, for the proposition that the coverage provisions in a contract of insurance should be interpreted broadly in [page796] favour of the insured and the exclusions should be interpreted strictly and narrowly against the insurer. Mr. Dowhan, for the respondent, accepts this.

[24] Mr. Dowhan argues that a contract of insurance should be interpreted to promote a reasonable commercial result and that a clause should not be given effect if to do so would nullify the coverage provided by the policy, relying on Sam's Auto Wrecking Co. v. Lombard General Insurance Co. of Canada (2013), 2013 ONCA 186, 114 O.R. (3d) 730, [2013] O.J. No. 1413 (C.A.), at para. 37. Mr. Tighe does not disagree.

[25] Both counsel have cited authority governing interpretation of policies containing ambiguities.

[26] I accept these principles as applicable except that there are no ambiguities to interpret here. In addition, I proceed on the basis that the primary interpretive principle is that when the language of a policy is unambiguous, the court should give effect to clear language, reading the contract as a whole. See Scalera v. Non-Marine Underwriters, Lloyd's of London, 2000 SCC 24, [2000] 1 S.C.R. 551, [2000] S.C.J. No. 26, at para. 71; and Progressive Homes Ltd. v. Lombard General Insurance Co. of Canada, 2010 SCC 33, [2010] 2 S.C.R. 245, [2010] S.C.J. No. 33, at para. 22.

Conclusions

Coverage issues

[27] This contract or policy of title insurance is succinct and clear in its meaning. It insures "title to the land" in issue against "title risks covered" by the policy in the amount of an actual loss up to the policy amount or limit. Definition clause 1(f) defines "title". It means the ownership of the applicants' interest in the land in issue. The phrase "title risks" therefore means risks that affect the applicants' ownership of the land.

[28] The respondent does not assert that "land" excludes the applicants' home thereon. That interpretation would be inconsistent with the purpose for which the policy was sold, which is to insure both the described land and the residential premises thereon against specified risks which affect the applicants' ownership thereof. Clause 13 of the Covered Title Risks makes this clear.

[29] Clause 11 of the Covered Title Risks provides coverage if the applicants' title is unmarketable, in the sense described therein. Given definition clause 1(f), it is the applicants' ownership interest in the lands and premises which must be unmarketable, in the sense described. The applicants submit that the policy relates directly to the property's marketability and [page797] market value, relying on the fact that it insures for money, the policy amount or limit is the amount for which the applicants purchased the property and the policy has a clause which protects the applicants in respect of increases in the value of their property after the inception of the policy. Thus, it is submitted that the applicants are insured for diminution in the market value of their home by reason of its now known deficient and dangerous condition, which was unknown to them when they purchased for a greater amount.

[30] In my opinion, clause 11 does not provide coverage. There is a clear conceptual distinction in the policy wording between the amount or limit of coverage, being the purchase price of the property subject to the inflation clause, and the risks for which coverage is provided. The risks are those listed in Covered Title Risks. There is also a clear distinction in the policy wording between the applicants' ownership of the lands and premises and the market value of what they own. Their ownership is what the policy defines as "title". Insurance is provided for the covered risks as described, but only if they affect the applicants' title. The applicants own the entire right, title and interest in the lands and premises just as they did before they knew of the deficient and dangerous nature of what they purchased. Their title is as marketable now as it always was, although it is marketable now subject to any duty to disclose the nature of the home, and thus for an amount less than they paid for it. Nothing in the language of the policy gives the applicants coverage for diminution in value of the property unless it comes within one of the covered risks and affects their ownership of the property.

[31] Clause 13(e) of the Covered Title Risks clearly does not provide coverage for the full cost of remediation of the applicants' home. That is because the city's order did not force the applicants either to remove or to fully repair their home. All that the order forced them to do was to temporarily support the floor structure, meaning the second floor from which subjacent support had been removed.

[32] In any event, the applicants have not made permanent repairs. Under clause (a) of Limitation of the Company's Liability, the applicants are entitled only to their actual loss. Having made no permanent repairs, their actual loss does not include unincurred expenditures.

[33] As noted, the applicants were forced to effect temporary remediation by the city's order. I reject the respondent's submission that the order having been complied with it is not "outstanding" within clause 13(e) and, thus, there is no coverage. [page798] That interpretation would defeat what clause 13 says because it is only if an order is outstanding that it can force a property owner to comply with it. Having regard for all of clause 13, the word "outstanding" in clause 13(e) is satisfied if a notice of violation or deficiency notice has the effect of forcing a property owner to do any of the things stipulated in the opening words of clause 13.

[34] Even though the applicants have incurred an actual loss, being the cost of temporary remediation, they are entitled to coverage under clause 13 only if the events described therein "affect" their "title", given the opening words under Covered Title Risks which precede the enumerated risks themselves. There is no evidence capable of supporting an assertion that the applicants' ownership of the lands and premises (the definition of "title") was affected by the order, or by the compulsion thereby created. There is no evidence that the order was registered against the applicants' title. They complied with it, which probably is why the city did not register it against title. In the absence of evidence that the order was registered against title, it did not affect the applicants' title.

[35] For the same reason, clause 15 of the Covered Title Risks is inapplicable. The city order, if taken to be a work order, did not affect the applicants' title.

[36] Clause 16 of the Covered Title Risks on its plain meaning does not apply to the uncontested facts herein. While a portion of the applicants' home, being that part deficiently renovated, was "built without obtaining a building permit" from the city, nothing has forced the applicants to "remove" their existing structure.

[37] Clause 23, the last of the Covered Title Risks, is a basket clause. The applicants submit that the dangerous condition of their home due to the deficient and unpermitted renovation is a "defect" which entitles them to coverage. Even if this is taken to be an "other" defect as clause 23 requires, meaning a defect other than one described in one of the 22 preceding Covered Title Risks, there is no basis for concluding that that defect affects the applicants' ownership of the lands and premises, as the opening words of the Covered Title Risks provisions require.

[38] Turning to Exclusion 3(d), since none of the aforesaid may be described as a "title risk" for the reasons given, Exclusion 3(d) has no effect.

[39] I conclude this part of my reasons by addressing the applicants' assertion that Mr. Mineo conceded coverage in his cross-examination. I conclude that he did not do that. In [page799] his affidavits, Mr. Mineo deposes that he is the respondent's vice president of claims. However, he states that the contents of his affidavits are based upon his personal information and belief. He was cross-examined on that basis and I see nothing in either his affidavits or cross-examination which indicates that his personal information and belief bind the respondent. In essence, the applicants' submission is that Mr. Mineo's personal information and belief vary the contractual terms. The purpose of this plain language policy is to speak for itself about the insurance coverage it provides.

[40] The applicants rely in particular on Mr. Mineo's statement in cross-examination that an order for temporary remediation could be a title defect. It can be, if registered on title. However, that didn't happen here. Mr. Mineo did not concede that an unregistered order of the type in issue came within the language of the policy which provides coverage.

[41] There is no genuine issue requiring a trial with respect to this claim.

The Claim for Breach of the Duty of Good Faith

[42] The respondent concedes that it owed this duty. However, all evidence is to the effect that it complied. Consequently, there is no genuine issue requiring a trial with respect to this claim.

Order

[43] The statement of claim includes a claim for aggravated, punitive or exemplary damages. This claim was not made the subject of this motion. This cannot be a free-standing claim. Given the aforesaid conclusions, no claim can succeed for such damages arising out of the respondent's denial of coverage which was made in accordance with the terms of the policy. I grant summary judgment dismissing the applicants' action in its entirety.

[44] If the respondent seeks costs from these applicants given their unfortunate circumstances, its written submissions not exceeding five pages in factum format plus copies of its dockets and disbursement invoices shall be delivered within 15 days of the release of these reasons. The applicants' written submissions, similarly limited, shall be delivered within 25 days of release of these reasons.

Motion and action dismissed.

End of Document