Borthwick et al. v. Lombard Insurance et al.

[Indexed as: Borthwick v. Lombard Insurance]

Ontario Reports

Ontario Superior Court of Justice,

Grace J.

July 31, 2015

126 O.R. (3d) 623 | 2015 ONSC 4845

Case Summary

Insurance — Exclusion clauses — Insured in business of manufacturing horse bedding from wood chips — Insured and plaintiff taking on one-time job of cutting down surplus trees on farm property for profit — Plaintiff injured by falling tree and bringing negligence action against insured — Homeowner's policy excluding coverage for claims arising from business pursuits and defining "business" as including "occasional pursuit undertaken for financial gain" — No possibility existing that claim would fall within scope of coverage — Insurer having no duty to defend.

Insurance — Insurer's duty to defend — Insured in business of manufacturing horse bedding from wood chips — Insured and plaintiff taking on one-time job of cutting down surplus trees on farm property for profit — Plaintiff injured by falling tree and bringing negligence action against insured — Insured an insured person under business insurance policy which contained commercial general liability form despite fact that accident occurred while insured was cutting trees rather than manufacturing wood shavings — Policy only covering conduct of business of which insured was "sole owner" — Evidence on duty to defend motion not establishing nature of relationship between insured and plaintiff — Possibility existing that claim fell within scope of coverage — Insured having duty to defend.

The applicant was in the business of manufacturing wood shavings for the bedding of horses and other animals. He was insured under a homeowner's policy issued by Northbridge and a business insurance policy issued by Economical which contained a commercial general liability form. The applicant and the plaintiff took on a one-time job of cutting down surplus trees on a farm property for profit. The plaintiff was injured by a falling tree. He brought a negligence action against the applicant. The applicant applied for a declaration that Northbridge and/or Economical were obliged to defend that action and for an order permitting him to appoint counsel of his choice to represent him in that proceeding.

Held, the application should be allowed in part.

The Northbridge policy excluded coverage for claims arising from "business" pursuits, and defined "business" as including any "occasional pursuit undertaken for financial gain". In cutting down the trees, the applicant was engaged in an occasional pursuit undertaken for financial gain. There was no possibility that the plaintiff's claims would fall within the scope of coverage of the Northbridge policy. Northbridge had no duty to defend the action.

The applicant was an insured under the Economical policy despite the fact that the incident occurred while he was cutting trees rather than manufacturing wood shavings. On the face of the Economical policy, the applicant was an insured only with respect to a business of which he was the "sole owner". The evidence on the motion did not establish the nature of the relationship between the applicant and the plaintiff. They might have been involved in a joint venture or a partnership, [page624] or the plaintiff might have been the applicant's employee. There was a possibility that the claim would fall within the coverage afforded by the Economical policy. Economical had a duty to defend the action.

The issues raised on this application did not create a reasonable apprehension of conflict if Economical retained and instructed counsel to defend the negligence action. The applicant was not entitled to an order permitting him to retain counsel of his choice to represent him in the action.

Harvey v. Leger, [2006] O.J. No. 2203, 57 C.L.R. (3d) 212, [2006] I.L.R. 4537, 148 A.C.W.S. (3d) 792 (Div. Ct.), affg [2005] O.J. No. 174, 41 C.L.R. (3d) 131, [2005] I.L.R. I-4393, 136 A.C.W.S. (3d) 537 (S.C.J.); Intact Insurance Co. v. Virdi, [2014] O.J. No. 1748, 2014 ONSC 2322, [2014] I.L.R. I-5580 (S.C.J.), consd

Other cases referred to

1540039 Ontario Ltd. v. Farmers' Mutual Insurance Co. (Lindsay) (2012), 110 O.R. (3d) 116, [2012] O.J. No. 1380, 2012 ONCA 210, 291 O.A.C. 16, 10 C.C.L.I. (5th) 215, 213 A.C.W.S. (3d) 192; 2091533 Ontario Ltd. v. Vertigo Investments Ltd. (2013), 115 O.R. (3d) 457, [2013] O.J. No. 2698, 2013 ONSC 2731, 23 C.C.L.I. (5th) 121, [2013] I.L.R. I-5448, 229 A.C.W.S. (3d) 547 (S.C.J.); Appin Realty Corp. v. Economical Mutual Insurance Co. (2008), 89 O.R. (3d) 654, [2008] O.J. No. 436, 2008 ONCA 95, 57 C.C.L.I. (4th) 187, 233 O.A.C. 191, [2008] I.L.R. I- 4676, 164 A.C.W.S. (3d) 322; Brockton (Municipality) v. Frank Cowan Co. (2002), 2002 7392 (ON CA), 57 O.R. (3d) 447, [2002] O.J. No. 20, 154 O.A.C. 125, 34 C.C.L.I. (3d) 1, [2002] I.L.R. I-4097, 110 A.C.W.S. (3d) 914 (C.A.); Coakley v. Allstate Insurance Co. of Canada, 2009 22549 (ON SC), [2009] O.J. No. 1832, [2009] I.L.R. I-4841, 73 C.C.L.I. (4th) 113, 177 A.C.W.S. (3d) 486 (S.C.J.); Consolidated Bathurst Export Ltd. v. Mutual Boiler and Machinery Insurance Co., 1979 10 (SCC), [1980] 1 S.C.R. 888, [1979] S.C.J. No. 133, 112 D.L.R. (3d) 49, 32 N.R. 488, [1980] I.L.R. 1-1176 at 595, 1 A.C.W.S. (2d) 169; Dmytrenko (Litigation Guardian) v. Vandenbor (2007), 2007 46165 (ON SC), 88 O.R. (3d) 128, [2007] O.J. No. 4224, 55 C.C.L.I. (4th) 69 (S.C.J.); Dunn v. Chubb Insurance Co. of Canada (2009), 97 O.R. (3d) 701, [2009] O.J. No. 2726, 2009 ONCA 538, 266 O.A.C. 1, 75 C.C.L.I. (4th) 29; F. (D.J.) v. L. (B.), 2008 39786 (ON SC), [2008] O.J. No. 3094, 66 C.C.L.I (4th) 141, 2008 CarswellOnt 4791, 170 A.C.W.S. (3d) 626 (S.C.J.); Glassford v. TD Home and Auto Insurance Co. (2009), 2009 10397 (ON SC), 94 O.R. (3d) 630, [2009] O.J. No. 1011, [2009] I.L.R. 1-4823, 73 C.C.L.I. (4th) 135, 176 A.C.W.S. (3d) 221 (S.C.J.); Halifax Insurance Co. of Canada v. Innopex Ltd. (2004), 2004 33465 (ON CA), 72 O.R. (3d) 522, [2004] O.J. No. 4178, 190 O.A.C. 356, 15 C.C.L.I. (4th) 159, [2004] I.L.R. I-4338, 134 A.C.W.S. (3d) 501 (C.A.); Hector v. Piazza (2012), 108 O.R. (3d) 716, [2012] O.J. No. 111, 2012 ONCA 26, 287 O.A.C. 298, 8 C.L.R. (4th) 1, 14 R.P.R. (5th) 25, 5 C.C.L.I. (5th) 212; International Corona Resources Ltd. v. Lac Minerals Ltd., 1989 34 (SCC), [1989] 2 S.C.R. 574, [1989] S.C.J. No. 83, 61 D.L.R. (4th) 14, 101 N.R. 239, J.E. 89-1204, 36 O.A.C. 57, 44 B.L.R. 1, 26 C.P.R. (3d) 97, 35 E.T.R. 1, 6 R.P.R. (2d) 1, 16 A.C.W.S. (3d) 345, affg (1987), 1987 4308 (ON CA), 62 O.R. (2d) 1, [1987] O.J. No. 883, 44 D.L.R. (4th) 592, 23 O.A.C. 263, 18 C.P.R. (3d) 263, 28 E.T.R. 245, 46 R.P.R. 109, 6 A.C.W.S. (3d) 363 (C.A.); Martin v. Royal & Sun Alliance Co. of Canada, [2013] B.C.J. No. 2468, 2013 BCSC 2047, [2014] I.L.R. I-5515; Monenco Ltd. v. Commonwealth Insurance Co., [2001] 2 S.C.R. 699, [2001] S.C.J. No. 50, 2001 SCC 49, 204 D.L.R. (4th) 14, 274 N.R. 84, [2002] 2 W.W.R. 438, J.E. 2001-1712, 155 B.C.A.C. 161, 97 B.C.L.R. (3d) 191, 32 C.C.L.I. (3d) 165, [2001] I.L.R. I-3993, 108 A.C.W.S. (3d) 159; Nichols v. American Home Assurance Co., 1990 144 (SCC), [1990] 1 S.C.R. 801, [1990] S.C.J. No. 33, 68 D.L.R. (4th) 321, 107 N.R. 321, J.E. 90-643, 39 O.A.C. 63, 45 C.C.L.I. 153, [1990] I.L.R. 1-2583 at 10058, 20 A.C.W.S. (3d) 699; Non-Marine Underwriters, Lloyd's of London v. Scalera, [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; [page625] PCL Constructors Canada Inc. v. Encon Group, [2010] O.J. No. 4566, 2010 ONSC 5911, [2011] I.L.R. I-5064 (S.C.J.); PCL Constructors Canada v. Lumbermens Casualty Co. Kemper Canada, 2009 32915 (ON SC), [2009] O.J. No. 2664, 76 C.C.L.I. (4th) 259, [2009] I.L.R. I-4860, 81 C.L.R. (3d) 186, 2009 CarswellOnt 3695, 178 A.C.W.S. (3d) 438 (S.C.J.); 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, 193 A.C.W.S. (3d) 1292; R.W. Hope Ltd. v. Dominion of Canada General Insurance Co. (2001), 2001 21205 (ON CA), 57 O.R. (3d) 425, [2001] O.J. No. 4936, 154 O.A.C. 7, 34 C.C.L.I. (3d) 192, [2002] I.L.R. I-4064, 110 A.C.W.S. (3d) 545 (C.A.); Reid Crowther & Partners Ltd. v. Simcoe & Erie General Insurance Co., 1993 150 (SCC), [1993] 1 S.C.R. 252, [1993] S.C.J. No. 10, 99 D.L.R. (4th) 741, 147 N.R. 44, [1993] 2 W.W.R. 433, J.E. 93-230, 83 Man. R. (2d) 81, 13 C.C.L.I. (2d) 161, 6 C.L.R. (2d) 161, [1993] I.L.R. 1-2914 at 2206, 37 A.C.W.S. (3d) 1267; Rocovitis v. Dominion of Canada General Insurance Co. (2004), 2004 34506 (ON CA), 73 O.R. (3d) 735, [2004] O.J. No. 4326, 16 C.C.L.I. (4th) 207, [2005] I.L.R. I-4391, 134 A.C.W.S. (3d) 690 (C.A.), affg (2003), 2003 49383 (ON SC), 63 O.R. (3d) 402, [2003] O.J. No. 297, [2003] O.T.C. 81, 46 C.C.L.I. (3d) 310, 120 A.C.W.S. (3d) 133 (S.C.J.); Rombeek v. Co-operators Insurance Association (Guelph) (1977), 1977 1147 (ON SC), 15 O.R. (2d) 568, [1977] O.J. No. 2195, 76 D.L.R. (3d) 234, [1977] I.L.R. 1-862 at 560, [1977] 1 A.C.W.S. 583 (H.C.J.); Saskatchewan Government Insurance v. Patricia Hotel (1973) Ltd., [2011] S.J. No. 361, 2011 SKCA 70, [2011] I.L.R. I-5160, 334 D.L.R. (4th) 740, 99 C.C.L.I. (4th) 175, [2011] 12 W.W.R. 517, 375 Sask. R. 50, 203 A.C.W.S. (3d) 836; Stoyka v. General Accident Assurance Co. of Canada, 2002 79694 (ON SC), [2002] O.J. No. 539, [2002] O.T.C. 121, 36 C.C.L.I. (3d) 296, 111 A.C.W.S. (3d) 1190 (S.C.J.); Tam (Litigation guardian of) v. Lee, 1998 14935 (ON SC), [1998] O.J. No. 4567, 167 D.L.R. (4th) 353, 80 O.T.C. 221, [1999] I.L.R. I-3684, 83 A.C.W.S. (3d) 842 (Gen. Div.); Thorne v. Royal & SunAlliance Insurance Co. of Canada, [2003] N.B.J. No. 322, 2003 NBCA 61, 230 D.L.R. (4th) 587, 261 N.B.R. (2d) 119, 125 A.C.W.S. (3d) 499

Statutes referred to

Business Names Act, R.S.O. 1990, c. B.17, s. 2(2)

Partnerships Act, R.S.O. 1990, c. P.5, ss. 1, 2

Authorities referred to

Sanderson, Heather A., Robert. D.G. Emblem and J. Lyle Woodley,

Commercial General Liability Insurance (Toronto: Butterworths, 2000)

APPLICATION for a declaration that one or both insurers had a duty to defend an action against the insured and for an order permitting the insured to appoint counsel of choice to represent him in an action.

M. Reid, for applicants.

W. Chalmers, for Lombard Insurance and Northbridge Personal Insurance Corporation.

M. Snowden and S. Kamayah, for Economical Insurance Company. [page626]

[1] GRACE J.: — Life took an irreversible turn for the worse for William Douglas when he was struck by a recently felled tree on May 2, 2011.

[2] Mr. Douglas is now a paraplegic. On June 5, 2012, he joined with members of his family and sued the applicants[^1] and Fox Hollow Farm for damages (the "Douglas action").

[3] Two insurance policies were in force at the time of the incident. The first was a homeowner's policy issued by Lombard Insurance Company (now Northbridge Personal Insurance Corporation) ("Northbridge"). The second was a business insurance policy issued by the Economical Mutual Insurance Company ("Economical").

[4] The primary issue on this application is whether Northbridge and/or Economical are obliged to defend the Douglas action on the applicants' behalf. If so, the applicants seek an order permitting them to appoint counsel of their choice to represent them in that proceeding.

A. Background

1. The Douglas action

[5] In the statement of claim, the plaintiffs allege that

(a) Mr. Borthwick was the owner, employee or agent of L.B. Woodshavings and Farm Equipment ("LB");[^2]

(b) L.B. was in the business of manufacturing and selling horse bedding from wood chips, "among other activities";

(c) On May 2, 2011, Mr. Douglas and Mr. Borthwick went to the Fox Hollow Farm to cut down trees;

(d) While doing so, one tree became caught in the branches of another;

(e) One of the trees fell on Mr. Douglas during Mr. Borthwick's attempt to separate them;

(f) As a result of the incident, Mr. Douglas suffered serious bodily injuries including injuries to his spine and head, rendering him a quadriplegic; [page627]

(g) Mr. Borthwick was negligent for various reasons including:

(i) Participating in a tree cutting operation knowing that he and Mr. Douglas lacked the training, qualifications and equipment to do so; and

(ii) Entering "into a joint venture with" Mr. Douglas "when he knew or ought to have known that they lacked the experience, training, and equipment to conduct the venture safely";

(h) L.B. was negligent for various reasons including failing "to ensure that the working areas of its employees/agents was safe".

2. The extrinsic evidence

[6] The applicants filed an affidavit sworn by Mr. Borthwick on January 5, 2015 (the "Borthwick affidavit"). In it, Mr. Borthwick described his relationship with Mr. Douglas, the accident and the events which preceded it.

[7] Economical filed an affidavit of Commercial Property & Casualty underwriter Jun Shao sworn May 29, 2015 (the "Shao affidavit"). The Shao affidavit addressed the underwriting process that was undertaken before the Economical policy was issued.

[8] Generally, the factual record on coverage applications is a modest one. Usually, it includes the policy and claim in issue and documents referred to and relied upon explicitly in the pleading: 1540039 Ontario Ltd. v. Farmers' Mutual Insurance Co. (Lindsay) (2012), 2012 ONCA 210, 110 O.R. (3d) 116, [2012] O.J. No. 1380 (C.A.), at para. 25 ("154").

[9] In Halifax Insurance Co. of Canada v. Innopex Ltd. (2004), 2004 33465 (ON CA), 72 O.R. (3d) 522, [2004] O.J. No. 4178 (C.A.), Borins J.A. wrote, at para. 32:

. . . an insurer's duty to defend can, and should, be decided without consideration and application of extrinsic evidence bearing upon the underlying action[.]

[10] However, at para. 37, Borins J.A. added:

This is not to say that evidence is never permissible on a duty to defend application. Indeed, as in this case, it is not uncommon that expert evidence is helpful to the court in the interpretation of the insurance coverage and, on occasion, in interpreting technical language in the underlying claim.

[11] The Court of Appeal has suggested that there may be merit to the position that extrinsic evidence should be admitted "particularly in a case where there is no dispute between the insured and the insurer as to the underlying facts and the insured, rather than the insurer, seeks to rely on" it: 154, supra, at para. 30. However, resolution of the issue was left for another day. [page628]

[12] In this case, Mr. Borthwick's affidavit was filed and referred to without objection. In fact, Northbridge specifically referenced portions of the affidavit in its factum and in its oral argument.[^3]

[13] Economical also did not object to the introduction of Mr. Borthwick's affidavit. I presume it did not do so because of its desire to rely on the Shao affidavit. Given the applicants' reliance on the Borthwick affidavit, they did not object to the Shao affidavit.

[14] In Saskatchewan Government Insurance v. Patricia Hotel (1973) Ltd., 2011 SKCA 70, [2011] S.J. No. 361, 334 D.L.R. (4th) 740 (C.A.), the usual record on a duty to defend application was supplemented by an agreed statement of facts. In Thorne v. Royal & Sunalliance Insurance Co. of Canada, 2003 NBCA 61, [2003] N.B.J. No. 322, 230 D.L.R. (4th) 587 (C.A.), an affidavit of the insured was admitted during a proceeding like this one.

[15] In light of the authorities and the position of the parties I have, albeit with some hesitation, considered all of the evidence before arriving at my decision.[^4]

[16] Mr. Borthwick deposed that L.B. was the name of a licensed business he operated from April 2008 until July 2011.[^5] He said it supplied wood shavings for the bedding of horses and other animals.

[17] Initially, the business purchased shavings from a supplier in Quebec. Later, Mr. Borthwick began to produce shavings at facilities in Brantford and near Oakland, Ontario.

[18] He described his relationship with Mr. Douglas in rather curious terms. At para. 5, Mr. Borthwick deposed:

I employed Bill Douglas to complete work for L.B. Wood Shavings in the past, but he was not an employee of L.B. Wood Shavings. Mr. Douglas would work on occasion, when work was available for him. Mr. Douglas completed duties such as running material through the hammer or shaver, delivering products, promoting the business, and product sales. Mr. Douglas was not paid hourly for his work. As the business was not very profitable, we divided the profits of the business between us. [page629]

[19] With respect to tree cutting, Mr. Borthwick added, at para. 7:

I have been cutting down trees for approximately 45 years. This was not in relation to my business at L.B. Wood Shavings, but for personal use.

[20] Mr. Borthwick said that his spouse, Debbie Borthwick, knew an individual named Bob Rapi. Mr. Rapi wanted someone to remove some trees from a property he owned called the Fox Hollow Farm. She suggested that her spouse would be able to assist.

[21] Messrs. Borthwick, Douglas and Rapi met. It was agreed that Messrs. Borthwick and Douglas would remove the surplus trees.

[22] Mr. Borthwick determined that the material would be too large for the mulching machine used to manufacture wood shavings. Consequently, Messrs. Borthwick and Douglas agreed to make beams out of the lumber and to split the net proceeds equally between them.

[23] Mr. Bothwick deposed that the tree cutting activity started "in or around April 2011" and continued on May 2, 2011. Two trees were leaning against each other. He said that one tree fell and struck Mr. Douglas as Mr. Borthwick was pulling on a rope attached to the other.

B. Analysis and Decision

1. General principles

[24] The applicants bear the burden of establishing that the Douglas action involves a claim which would, if proven, be payable under the insurance policy in issue. If that hurdle is cleared, the insurers must show that the claim is beyond the scope of the policy because of the operation of an exclusion clause: R.W. Hope Ltd. v. Dominion of Canada General Insurance Co. (2001), 2001 21205 (ON CA), 57 O.R. (3d) 425, [2001] O.J. No. 4936 (C.A.), at para. 18; 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. 51 ("Progressive").

[25] When interpreting a policy of insurance, the words used are to be given their plain and ordinary meaning: Consolidated-Bathurst Export Ltd. v. Mutual Boiler and Machinery Insurance Co., 1979 10 (SCC), [1980] 1 S.C.R. 888, [1979] S.C.J. No. 133, at pp. 899-901 S.C.R. ("Consolidated-Bathurst"). However, coverage provisions are to be read broadly: Reid Crowther & Partners Ltd. v. Simcoe & Erie General Insurance Co., 1993 150 (SCC), [1993] 1 S.C.R. 252, [1993] S.C.J. No. 10, at para. 7 ("Reid Crowther"). [page630]

[26] The provisions of the policy in issue are to be examined against the backdrop of the allegations made against the insured in the statement of claim: Monenco Ltd. v. Commonwealth Insurance Co., supra, at p. 713 S.C.R. ("Monenco"). The court's task is to determine the true nature or substance of the claim: Progressive, supra, at para. 20; Nichols v. American Home Assurance Co., 1990 144 (SCC), [1990] 1 S.C.R. 801, [1990] S.C.J. No. 33, at p. 810 S.C.R. ("Nichols"); Non-Marine Underwriters, Lloyd's of London v. Scalera, 2000 SCC 24, [2000] 1 S.C.R. 551, [2000] S.C.J. No. 26, at para. 79.

[27] If a coverage provision applies, the court must consider whether there is an exclusion clause. If an insurer relies on exclusionary language, the insurer bears the onus of establishing that it "clearly and unambiguously excludes coverage" because exclusion clauses are to be read narrowly: Progressive, supra, at para. 51; Reid Crowther, supra, at para. 7.[^6]

[28] The doctrine of contra proferentem may apply if the meaning of the policy is unclear despite the application of all other rules of construction. The Court of Appeal offered this explanation in Dunn v. Chubb Insurance Co. of Canada (2009), 97 O.R. (3d) 701, [2009] O.J. No. 2726, 2009 ONCA 538, at para. 36:

. . . if all other rules of construction are inadequate, the doctrine of contra proferentem may be applicable to resolve any ambiguity against the party who drafted the contract. Contra proferentem is a rule of last resort and will only apply "when all other rules of construction fail": Canadian National Railway Co. v. Royal and Sun Alliance Insurance Co. of Canada, [2008] 3 S.C.R. 53 at para. 33[.][^7]

2. Is Northbridge obligated to defend the Douglas action?

[29] Northbridge issued comprehensive homeowner's policy number 3566492 (the "Northbridge policy") to Deborah Borthwick. Northbridge acknowledges that Larry Borthwick is also an "insured".

[30] The Northbridge policy provides property coverage for the Borthwick residence in Mount Pleasant, Ontario. It also provides liability coverage. It is that portion of the Northbridge policy which is in issue on this application. [page631]

[31] Section II of the Northbridge policy sets forth the terms of its liability coverage. Coverage E is titled "Legal Liability". It provides that during the policy period,

We will pay all sums which you become legally liable to pay as compensatory damages because of claims made against you arising from unintentional "bodily injury". . . arising out of . . . your personal actions anywhere in the world[.]

[32] There is no dispute that Mr. Douglas claims to have suffered a bodily injury as a result of Mr. Borthwick's actions during the policy period.

[33] Northbridge's promise to pay is subject to a number of exceptions or exclusions. Northbridge relies on one of those applicable to various items including Coverage E. The portion of the Northbridge policy relating to "common exclusions" reads in part:

We do not insure claims arising from:

6. "business" pursuits or any "business" use of the "premises", except as provided under SPECIAL LIMITATIONS[.]

[34] The word "business" is defined as "any full time, part-time or occasional pursuit undertaken for financial gain including a trade, profession or occupation".

[35] Common exclusion number 6, above, refers to "Special Limitations". Item 5 refers to "business" and "business property". In part, it provides:

We insure you against claims arising out of:

a. your personal actions during the course of your trade, profession or occupation which are not related directly to your trade, profession or occupation[.]

[36] To summarize so far, the Northbridge policy includes liability coverage. The insurer promised to pay compensatory damages awarded against Mr. Borthwick if he unintentionally caused bodily injury to another.

[37] However, the policy excludes claims arising from any full-time, part-time or occasional pursuit undertaken for financial gain although personal actions during but not directly related to the insured's trade, profession or occupation are covered.

[38] Northbridge submits that the Douglas action involves claims for damages for bodily injury arising from an activity (tree cutting) that was undertaken with a view to making a profit. This, it argues, constitutes a "business" within the meaning of the Northbridge policy and triggers the exclusion outlined above.

[39] The applicants argue that the activity was a one-time event which did not fit within the definition of a "business". [page632]

[40] I have reviewed the cases to which I have been referred which interpreted "business pursuits" exclusions in a homeowner's policy. In chronological order, they are Tam (Litigation guardian) v. Lee, 1998 14935 (ON SC), [1998] O.J. No. 4567, 167 D.L.R. (4th) 353 (Gen. Div.); Stoyka v. General Accident Assurance Co. of Canada, 2002 79694 (ON SC), [2002] O.J. No. 539, [2002] O.T.C. 121 (S.C.J.); Rocovitis v. Dominion of Canada General Insurance Co. (2003), 2003 49383 (ON SC), 63 O.R. (3d) 402, [2003] O.J. No. 297 (S.C.J.) affd (2004), 2004 34506 (ON CA), 73 O.R. (3d) 735, [2004] O.J. No. 4326 (C.A.); Dmytrenko (Litigation Guardian) v. Vandenbor (2007), 2007 46165 (ON SC), 88 O.R. (3d) 128, [2007] O.J. No. 4224 (S.C.J.); F. (D.J.) v. L. (B.), 2008 39786 (ON SC), [2008] O.J. No. 3094, 2008 CarswellOnt 4791 (S.C.J.); and Martin v. Royal & Sun Alliance Co. of Canada, [2013] B.C.J. No. 2468, 2013 BCSC 2047.

[41] None of them involve the definition of "business" that appears in the Northbridge policy. For example, in cases such as Tam (Litigation guardian) v. Lee and Dmytrenko (Litigation Guardian) v. Vandenbor, "business" was defined as "any continuous or regular pursuit undertaken for financial gain including a trade, profession or occupation".

[42] The definition in the Northbridge policy is quite different and includes the words "occasional pursuit".

[43] The Oxford English Dictionary, 11th ed., defines "occasional" as:

1. Occurring infrequently or irregularly.

2. Produced or intended for particular occasions.[^8]

[44] The definition of "pursuit" in Black's Law Dictionary, 9th ed. (St. Paul, MN: West, 2009) includes "an occupation or pastime".

[45] Based on the evidentiary record, I am satisfied that there is no possibility that the claims asserted in the Douglas action will, if proven, fall within the scope of coverage of the Northbridge policy.

[46] The pleading describes a commercial activity and a business relationship. The Borthwick affidavit does too.

[47] While not a principal activity of Mr. Borthwick, it is clear from the pleading and from his affidavit that Mr. Borthwick was harvesting trees on the Fox Hollow Farm in April and May 2011 with a view to making a profit.[^9] [page633]

[48] The meaning of "business" is clear even if read restrictively. The tree cutting activity was an "occasional pursuit undertaken for financial gain". The accident occurred during the course of that endeavour and is therefore excluded by the common exclusion quoted earlier.

[49] Effect should be given to the unambiguous language appearing in the Northbridge policy: Progressive, supra, at para. 22. Northbridge does not have a duty to defend the Douglas action on Mr. Borthwick's behalf. There is no possibility that proof of the claims made in that proceeding will trigger an obligation on the part of Northbridge to indemnify Mr. Borthwick.

3. Is Economical obligated to defend the Douglas action?

[50] Economical issued business insurance policy number 004535138 (the "Economical policy"). The Economical policy contains a commercial general liability ("CGL") form.

[51] According to the Borthwick affidavit, he started to cut down trees on the Fox Hollow Farms property in April 2011. The incident occurred on the fourth day. In the context of the Northbridge policy, he argued that he was not caught by the "business" exclusion because he was involved in a one-off, casual undertaking. I have already concluded that the work done at that location was an "occasional pursuit undertaken for financial gain" and therefore a "business" for the purposes of the Northbridge policy.

[52] Economical did not dispute that Mr. Borthwick was involved in a "business" on the day in question.

[53] Coverage A deals with bodily injury and property damage liability. In that part, Economical made this promise:

We will pay those sums that the insured becomes legally obligated to pay as "compensatory damages" because of "bodily injury" . . . to which this insurance applies . . .This insurance applies only to "bodily injury" . . . which occurs during the policy period. The "bodily injury". . . must be caused by an "occurrence" . . . The "occurrence" must take place in the "coverage territory". We will have the right and duty to defend any "action" seeking those "compensatory damages"[.]

[54] Economical acknowledges that Mr. Douglas seeks compensatory damages because he claims to have suffered bodily injuries as a result of an occurrence that took place during the policy period and within the coverage territory.

[55] However, Economical submits that it has no duty to defend the Douglas action because

(a) tree cutting operations are not within the risk Economical agreed to cover; and [page634]

(b) Mr. Borthwick was involved in a joint venture or partnership which is not a form of business organization that is covered by the Economical policy in the circumstances of this case.

[56] I will deal with those arguments in turn.

i. The operations argument

[57] "L.B. Wood Shavings and Farm Supplies operated by Larry Borthwick" is the name of the insured on the declarations page. The words "wood shavings manufacturing" and a location near Brantford, Ontario appear under the words "Commercial General Liability".

[58] As mentioned, Mr. Borthwick deposed that he had been cutting down trees for about 45 years. He said that activity was unrelated to the business of L.B. He cut down trees to make firewood for his personal use.

[59] He also deposed that the material obtained from the trees being removed from Fox Hollow Farm was too large to fit in L.B.'s mulching machine. Consequently, the plan was to make beams out of the lumber.[^10]

[60] According to the Shao affidavit, Economical only agreed to insure L.B.'s wood shavings manufacturing operation and not tree cutting.

[61] Mr. Shao deposed that the cutting of trees involves higher risk. He said that Economical would have asked for additional information, required specialty underwriting and charged a higher premium if it had been asked to provide coverage for that activity.

[62] In Intact Insurance Co. v. Virdi, [2014] O.J. No. 1748, 2014 ONSC 2322 (S.C.J.) ("Virdi"), a CGL policy had been issued to Multilamps Shades Co. ("Multilamps") which was a manufacturer and importer of light shades. The principal of Multilamps also owned American Industrial Machines Inc. ("AIM"). AIM bought and sold heavy machinery. The policy issued by Intact Insurance Co. mentioned Multilamps and the light shade business but not AIM or its business.

[63] A person was injured during the delivery of a piece of heavy equipment to AIM at a property utilized by Multilamps. An action was commenced which named Multilamps and AIM as defendants. The insurer sought a declaration that it was not required to respond to the claim. [page635]

[64] Ricchetti J. concluded that Intact Insurance Co. had no obligation to defend Multilamps. He offered this explanation, at paras. 27-31:

Where the insurance policy is issued and specified to be for certain business operations of the insured, where the business operations undertaken by the insured or a third party giving rise to the claim are entirely different and unrelated to the insured or the insured operations, then the policy will not provide coverage.

This was the basis for a denial of coverage in Harvey v. Leger, [2006] O.J. No. 2203 (Div. Ct.) where at para. 2 the court stated:

The plaintiff's allegations against IBML are found in paragraphs 21 and 22 of the statement of claim. I do not accept . . . IBML's argument that these allegations are capable of applying to IBML's activities as building material wholesalers so as to invoke the policy coverage. Rather, they clearly relate to IBML's activities as a contractor/builder[.]

To suggest otherwise would be to make the insurer's evaluation of the risk meaningless if entirely different operations by the same insured or a third party at the same location would be insured.

It would also make the insured's declaration of the operations meaningless. The Declaration which includes Multilamps' stated business operations at the Property forms an integral part of the Policy and is highly relevant to whether there is coverage under the Policy.

There may be situations where there might be uncertainty as to whether the claim arises from the business operations described in the Declaration. If there is a "mere possibility" the claim relates to the described business operations in the Declaration, then the . . . insurer would have a duty to defend. That is not the situation in this case[.]

[65] If the analysis in Virdi, supra, is applied, there is no duty to defend. While Mr. Borthwick was involved in wood shaving manufacturing and tree cutting, they were unrelated activities. According to the Shao affidavit, only one of them was described to and underwritten by Economical. The Douglas action relates to tree cutting which Economical knew nothing about.

[66] The analysis must, however, include more than the declarations or cover page. As the authors of Commercial General Liability Insurance explain:

The declarations, the introductory paragraph of the Commercial GL and . . . the section of the Commercial GL policy entitled "Who is Insured," combine to define who is entitled to call upon the protection of the Commercial GL.

The declarations . . . will name the entity which has the status of the named insured. The introductory paragraph of the Commercial GL indicates that the references in the policy to "you" and "your" refer to the named insured identified in the declarations. The section of the policy entitled "Who is Insured" identifies people and entities associated with the named insured whose liabilities are within the protection of the policy, subject to the coverage agreements, exclusions, conditions, limits and endorsements. Only the [page636] named insured and those entities and people falling within the definition of "persons insured" are entitled to call upon the protection of the CGL.[^11]

[67] I return to the terms of the Economical policy.

[68] Section II bears the heading "Who is an Insured". In part, it reads:

1. If you are designated in the Declarations as:

(a) An individual, you and your spouse are insureds, but only with respect to the conduct of a business of which you are the sole owner.

(Emphasis added)

[69] Mr. Borthwick is an insured but "only with respect is to the conduct of a business of which" he is "the sole owner". As can be seen, the clause does not refer and is not limited to any particular activity. Nor does Section II refer to or limit itself to the operation described in the declarations.[^12]

[70] In fact, Section II contains a clause relating to newly acquired organizations. While an oversimplification, Commercial General Liability Insurance offers this summary:

If the insured acquires a new business, it is covered against any liabilities accruing to that business for 90 days following acquisition. However, there is no coverage if the claim is with respect to bodily injury or property damage which occurred before the insured acquired the business.

[71] With respect, the suggestion that Mr. Borthwick is not an insured because the incident occurred while he was cutting trees, rather than manufacturing wood shavings, is simply not supported by the language to which I was referred in the Economical policy.

[72] I recognize that I have reached a different conclusion than in Virdi.

[73] Virdi relied on Harvey v. Leger, [2005] O.J. No. 174, 41 C.L.R. (3d) 131 (Master), affd [2006] O.J. No. 2203, 57 C.L.R. (3d) 212 (Div. Ct.). Harvey v. Leger involved a motion for [page637] summary judgment. The principles applicable to motions for summary judgment and proceedings involving a duty to defend are quite different. Further, Section II of the CGL was not in issue in either case.

ii. The partnership/joint venture argument

[74] Economical also argued that there is no duty to defend because Mr. Borthwick and Mr. Douglas were engaged in a joint venture or partnership.

[75] As noted, the cover or declarations page names a sole proprietorship. On its face, Mr. Borthwick is an insured "but only with respect to the conduct of a business of which you are the sole owner". L.B. was the business he conducted and owned.

[76] The Douglas action names Mr. Borthwick and L.B. even though the latter has no separate legal existence. L.B. is a trade name. Nothing more.

[77] In the statement of claim in the Douglas action, the plaintiffs allege that L.B. was engaged in the business of manufacturing and selling horse bedding from wood chips, "among other activities".

[78] Paragraph 8 alleges negligence on the part of both Mr. Borthwick (subparas. (a) through (f)) and L.B. (subparas. (g) through (k)).

[79] It is in the context of the particulars of Mr. Borthwick's alleged negligence that Mr. Douglas alleges he "entered into a joint venture with" Mr. Borthwick: at para. 8(f). With respect to L.B., Mr. Douglas alleges that it "failed to ensure that the working area of its employees/agents was safe": at para. 8(k).

[80] It seems to me that paras. 8(f) and (k) of the statement of claim mention three different legal relationships: a joint venture, employer/employee and agent/principal.

[81] Only a joint venture falls outside of the language found in para. 1(a) of Section II of the Economical policy.

[82] The Economical policy does not define the phrase "joint venture".

[83] In International Corona Resources Ltd. v. Lac Minerals Ltd. (1987), 1987 4308 (ON CA), 62 O.R. (2d) 1, [1987] O.J. No. 883 (C.A.) affd 1989 34 (SCC), [1989] 2 S.C.R. 574, [1989] S.C.J. No. 83, the Court of Appeal adopted the following definition from Black's Law Dictionary, 4th revised ed. (St. Paul, MN: West, 1968):

A commercial . . . enterprise undertaken by several persons jointly; a limited partnership -- not limited in the statutory sense as to liability of the partners but as to its scope and duration . . . An association of two or more persons to carry out a single enterprise for profit, for which purpose they combine their property, money, effects, skill and knowledge. A special [page638] combination of two or more persons where, in some specific adventure, a profit is jointly sought without any actual partnership or corporate designation.

[84] Section 2 of the Partnerships Act, R.S.O. 1990, c. P.5 provides that partnership "is the relation that subsists between persons carrying on a business in common with a view to profit".

[85] "[B]usiness" is defined in s. 1 to include "every trade, occupation and profession".

[86] In describing the tree cutting activities, Mr. Borthwick deposed that,

The arrangement between Bill [Douglas] and I was to take the proceeds from the tree removal operation and evenly split the proceeds once expenses were paid.

[87] In his affidavit, Mr. Borthwick described a particular activity that was conducted for a few days at a specific location. According to the affidavit, it was the first time Mr. Borthwick cut trees for commercial gain. Mr. Borthwick outlined the terms of an informal arrangement entered with a person he knew. Effort and profit were to be shared. Mr. Borthwick does not, however, use the words "partnership" or "joint venture".

[88] At this stage, I do not know what form of business organization was involved in cutting down trees on the Fox Hollow Farm. While Messrs. Douglas and Borthwick may have been involved in a joint venture or have formed a partnership, it is equally possible no new business organization was created by Mr. Borthwick at all.

[89] The insurer has an obligation to defend the proceeding on the insured's behalf if, at the end of the analysis, there is a possibility the claim, if proven, fits within the coverage afforded by the policy: Nichols, supra, at para. 17.

[90] In my view, this case is of the kind described in Monenco, supra, at p. 714 S.C.R. Writing on behalf of the court, Iacobucci J. said:

Where pleadings are not framed with sufficient precision to determine whether the claims are covered by a policy, the insurer's obligation to defend will be triggered where, on a reasonable reading of the pleadings, a claim within coverage can be inferred.

[91] That is the conclusion I have reached notwithstanding the extensive record I reviewed. Economical has a duty to defend the Douglas action on behalf of Mr. Borthwick carrying on business as L.B.

4. The choice of counsel

[92] The applicants ask the court for permission to retain and instruct counsel of their choice at Economical's expense. They [page639] rely on Brockton (Municipality) v. Frank Cowan Co. (2002), 2002 7392 (ON CA), 57 O.R. (3d) 447, [2002] O.J. No. 20 (C.A.) ("Brockton"). At para. 43, Goudge J.A. wrote:

The issue is the degree of divergence of interest that must exist before the insurer can be required to surrender control of the defence and pay for counsel retained by the insured. The balance is between the insured's right to a full and fair defence of the civil action against it and the insurer's right to control the defence because of its potential ultimate obligation to indemnify. In my view, that balance is appropriately struck by requiring that there be, in the circumstances of the particular case, a reasonable apprehension of conflict of interest on the part of counsel appointed by the insurer before the insured is entitled to independent counsel at the insurer's expense. The question is whether counsel's mandate from the insurer can reasonably be said to conflict with his mandate to defend the insured in the civil action. Until that point is reached, the insured's right to a defence and the insurer's right to control that defence can satisfactorily co-exist.

[93] I have reviewed cases where the insured was permitted to retain counsel at the insurer's expense: Glassford v. TD Home and Auto Insurance Co. (2009), 2009 10397 (ON SC), 94 O.R. (3d) 630, [2009] O.J. No. 1011, 73 C.C.L.I. (4th) 135 (S.C.J.); Coakley v. Allstate Insurance Co. of Canada, 2009 22549 (ON SC), [2009] O.J. No. 1832, 73 C.C.L.I. (4th) 113 (S.C.J.); and Appin Realty Corp., Ltd. v. Economical Mutual Insurance Co. (2008), 89 O.R. (3d) 654, [2008] O.J. No. 436, 2008 ONCA 95 and others where permission was refused: Brockton, supra; PCL Constructors Canada v. Lumbermens Casualty Co. Kemper Canada, 2009 32915 (ON SC), [2009] O.J. No. 2664, 2009 CarswellOnt 3695 (S.C.J.); PCL Constructors Canada Inc. v. Encon Group, [2010] O.J. No. 4566, 2010 ONSC 5911 (S.C.J.); and 2091533 Ontario Ltd. v. Vertigo Investments Ltd. (2013), 2013 ONSC 2731, 115 O.R. (3d) 457, [2013] O.J. No. 2698 (S.C.J.).

[94] I am not satisfied that the issues raised on this application create a reasonable apprehension of conflict if Economical retains and instructs counsel to defend the Douglas action.

[95] The issues in the Douglas action involve the circumstances surrounding the May 2, 2011 incident and its aftermath. The allegations of negligence include two somewhat oblique and contradictory references to the nature of the business relationship. However, it is not clear to me that the determination of the tort claim requires consideration, let alone analysis, of that issue. I am not satisfied that there is any conflict at this time.

[96] In any event, Economical's material adequately addresses the applicants' concerns. It always intended to retain a different firm to defend the Douglas action. There will be no communication between counsel defending that proceeding and coverage counsel. As the Douglas action proceeds, reports will be provided concurrently to the insurer and insured. Finally, [page640] steps will be taken internally to ensure that different claims examiners deal with coverage and liability issues in isolation from one another.

[97] Those steps are appropriate and sufficient. I am satisfied that Economical will implement those measures and that an order of the court is unnecessary at this stage.

C. Disposition

[98] For the reasons given, I have concluded that Economical, but not Northbridge, has a duty to defend the Douglas action on the applicants' behalf.

[99] The applicants' request for permission to select, retain and instruct counsel to defend the Douglas action at Economical's expense is dismissed without prejudice to a further application for such relief at a subsequent stage of the proceedings.

[100] If the issue of costs cannot be resolved, written cost submissions not exceeding five pages may be submitted in the following order:

(a) by Northbridge within 15;

(b) by the applicants within 30; and

(c) by Economical within 45 days of the release of these reasons.

[101] If vacation schedules make those timeframes unworkable for one or more of the parties, counsel are free to modify the timetable. The revised schedule should be communicated to me through the trial coordinator. However, I would ask that all submissions be in hand by no later than September 30, 2015.

Application allowed in part.

[^1]: I have used the plural because of the structure of the title of proceedings. However, it appears to me that Mr. Borthwick carries on business under a trade name. If so, there is only one legal entity, not two. Nonetheless, I have used "applicants" throughout.

[^2]: I have seen two versions of the name. L.B. Woodshavings & Farm Equipment appears in the title of proceedings. However, L.B. Wood Shavings and Farm Supplies is used in the body of the Borthwick affidavit and appears in the declaration issued by Economical. I have not seen a business names registration and, therefore, do not know which version is correct. I do not believe that the different versions have any substantive effect.

[^3]: Northbridge relied on the Borthwick affidavit in paras. 39-43 of its factum. Cautionary language can be found in various cases including Monenco v. Commonwealth Insurance Co., 2001 SCC 49, [2001] 2 S.C.R. 699, [2001] S.C.J. No. 50, at p. 717 S.C.R.

[^4]: Ibid., at p. 718 S.C.R. For a discussion of the topic see 1540039 Ontario Ltd. v. Farmers' Mutual Insurance Co., supra, at paras. 23-30.

[^5]: Mr. Borthwick does not describe the licence, if there is one. It may be that Mr. Borthwick means that the name of the business was registered pursuant to the Business Names Act, R.S.O. 1990, c. B.17, s. 2(2).

[^6]: See, too, Hector v. Piazza (2012), 108 O.R. (3d) 716, [2012] O.J. No. 111, 2012 ONCA 26, at para. 12.

[^7]: See, too, Consolidated-Bathurst Export Ltd. v. Mutual Boiler and Machinery Insurance Co., supra, at pp. 900-901 S.C.R.

[^8]: See, too, Rombeek v. Co-operators Insurance Assn. (Guelph) (1977), 1977 1147 (ON SC), 15 O.R. (2d) 568, [1977] O.J. No. 2195 (H.C.J.), at para. 16.

[^9]: In a September 13, 2011 statement appended to his affidavit, Mr. Borthwick said that the accident occurred on the fourth day of the tree cutting activities.

[^10]: See paras. 7 and 9 of the Borthwick affidavit.

[^11]: H.A. Sanderson, R.D.G. Emblem and J.L. Woodley, Commercial General Liability Insurance (Toronto: Butterworths, 2000), at p. 19.

[^12]: Economical relied on the final sentence of the ["]Who is an Insured["] section of the policy. It provides:

No person or organization is an insured with respect to the conduct of any current or past partnership, limited liability partnership, joint venture or limited liability company that is not shown as a Named Insured in the Declarations. In my view, the language applies to such organizations if they are in existence when the policy is issued. That clause does not speak to the future. Other provisions address that situation.