COURT FILE NO.: 28048/19
DATE: 2019-08-29
ONTARIO
SUPERIOR COURT OF JUSTICE
BETWEEN:
THE CORPORATION OF THE TOWNSHIP OF ST. JOSEPH, JOSEPH DAVID WILDMAN, JOSEPH WIEDERKEHR, LORRAINE FLORENCE AELICK and JOSEPH FREDERICK CARDINAL
Applicants
– and –
LLOYD’S UNDERWRITERS
Respondent
Ashley P. Richards, Counsel for the Applicants
Nolan R. Downer, Counsel for the Respondent
HEARD: July 4, 2019
MCMILLAN J.
ENDORSEMENT ON APPLICATION
PARTIES
[1] This application involves applicants comprised of a municipal township corporation (Township of St. Joseph) and its Mayor (Wildman) and its four elected municipal councillors, three of which are the defendants, Wiederkehr, Aelick and Cardinal. The respondent, Lloyd’s Underwriters, is the liability insurer of the corporation of the Township of St. Joseph in accordance with the provisions of Policy No. JLTPS-299, which provided initial coverages from June 22, 2016 to June 22, 2017, as set out in the Schedule of Insured coverages.
[2] Pursuant to a statement of claim issued June 6, 2018, the plaintiff Andrew Frederick Clark (“Clark”) is claiming declaratory relief and compensatory damages against the defendants, the applicants in this matter. The plaintiff Clark grounds his claims for general and special damages on the tort of misfeasance in public office and breach of his Charter rights against the individual defendants, and vicariously against the Township based on the intentional tortious conduct of the defendant Mayor and councillors.
Background Context
[3] Clark is a resident and municipal taxpayer in the Township of St. Joseph which is governed by a municipally elected council consisting of a mayor and four councillors. Since 2014, the Mayor, Wildman, has allegedly demonstrated acts of animosity and harassment in public office towards Clark which has been endorsed by the other individual defendants.
[4] On February 8, 2017, the municipal council held a special closed session meeting. Council resolved to have its solicitor issue a letter of notice, pursuant to the Trespass to Property Act of Ontario against Clark based on his alleged assault of Wildman, the Mayor. Clark was thereby banned entry to or upon any municipal owned or operated premises save and except the landfill site.
[5] The alleged assault of Wildman by Clark resulted in the conviction of Clark and is under appeal. The incident did not occur on any municipal premises or property but rather at the local Legion Hall at a volunteer function. Clark’s claim alleges that the Mayor and councillors knew or ought to have known that the letter of notice was unlawful and lacking in statutory or common law authority. Clark maintains that it arose through malice and was intended to cause harm to Clark and resulted in injury to him.
[6] In his statement of claim, Clark claims, inter alia:
[31] The plaintiff claims general and special damages for misfeasance in public office, including damages at large relating to harm to reputation, hurt feelings, damage to self-esteem and damage to emotional well-being. The full particulars of those general damages and the special damages incurred will be provided prior to the trial of the within action.
[32] The plaintiff pleads that, as a result of the infringement of the rights afforded to him pursuant to sections 2(b), 2(c) and 2(d) of the Charter as set out above, he is entitled to a remedy pursuant to section 24(1) of the Charter by way of damages.
[33] By reason of the facts set out herein, and in particular the high-handed, abusive and contemptuous conduct of the defendants who showed a total disregard for his rights, the plaintiff claims exemplary, aggravated, and punitive damages.
[7] Subsequent to the issuance and service of Clark’s statement of claim, the Township of St. Joseph’s council passed a resolution on September 5, 2018, rescinding the notice of trespass against Clark.
[8] By letter dated June 8, 2018, the respondents’ third party administrators, I.P.G., provided notice that it had retained defence counsel Weaver Simmons LLP to defend Clark’s action with the disclaimer that its actions were not to be deemed an admission of coverage under the Township’s liability policy. Simply stated, all rights of the insurer were reserved.
[9] In a letter dated June 19, 2018, defence counsel Diavolitis advised the Township that his firm was retained; requested all documentation relating to the matter; and, expressed concern over, “Establishing the reasonableness of the scope of the trespass notice”. By letter dated July 3, 2018, defence counsel forwarded individual but identical draft statements of defence based on the insurer’s reservation over a potential coverage issue. By further letter dated July 4, 2018, defence counsel requested further related information, protocols and materials.
[10] By letter dated July 5, 2018, the third party administrator’s representative, Ms. M. Hill, advised that coverage was being completely denied. She determined that there wasn’t a duty to defend under the coverage grant nor under the E & O Endorsement, nor to indemnify. To avoid default, a singular statement of defence, dated July 12, 2018, was delivered on behalf of all the defendants by the Township’s solicitor.
[11] By further letter dated August 7, 2018, Ms. Hill advised that the previous denial of coverage was to apply only to the individual defendants and not the Township considering that Clark’s claim against the Township is solely based on its vicarious liability for the actions of the individual defendants. However, she maintained that there continued to be no duty to defend the individually named defendants, namely, the Mayor and councillors. Lloyd’s would pay one-half of the defence costs of the Township and indemnification would await the outcome at trial.
[12] By letter dated January 15, 2019, Ms. Hill advised the Township that Lloyd’s would provide the Township with a full defence; indemnification was to be deferred pending the findings of the trial judge. Further, Lloyd’s would pay full defence costs of the Township if it retains separate counsel but only 50 percent should the defendants proceed with joint counsel.
[13] There is no dispute that the Council Liability Policy was in full force and effect at the time of the Township’s issuance of the letter of notice respecting trespass on February 8, 2018. Further, there is no dispute that the applicants were insured thereunder.
[14] The issue before me is whether the respondent has a duty to provide the applicants with a defence to the Clark action commenced by a statement of claim bearing Court File No. 27819/18. The issue of indemnity would await the determination of the claim after trial.
ANALYSIS
a) Relevant Policy Provisions
[15] The coverage is for all sums that the insured becomes legally obligated to pay as damages because of:
(a) Bodily injury sustained by any person or persons;
(b) Personal injury caused by an occurrence during the policy period subject to limits, exclusions, conditions, and any other terms contained herein.
caused by an Occurrence during the Policy Period.
[16] The insurer shall:
(a) Defend in the name of and on behalf of the Insured and at the cost of the Insurer any civil action which may at any time be brought against the insured on account of such Bodily Injury, Personal Injury, Property Damage or Wrongful Act but the Insurer shall have the right to make such investigation, negotiation and settlement of any claim as may be deemed expedient by the insurer;
(b)
(c) Pay all costs taxed against the insured in any civil action defended by the insurer and any interest accruing before or after entry of judgment or from the date of action, where required by law, upon that part of the judgment which is within the Limits of Liability;
[17] There are not any enumerated exclusions applying to the entire policy that would operate to effectively excuse, remove or insulate the plaintiff’s claim from the policy coverage.
[18] The Definitions section of the policy address the paramount terms of the general coverage grant as follows:
(1) “Bodily Injury” means injury to the body of the person, sickness, disease, disability, shock, assault and battery, mental injury, mental anguish, mental suffering or death sustained by any person, and damages for care and loss of services.
(12) “Occurrence” includes a continued or repeated exposure to conditions during the Policy Period, which results in Bodily Injury, Personal Injury or Property Damage. All Bodily Injury, Personal Injury or Property Damage arising out of continuous or repeated exposure to substantially the same general conditions shall be considered as arising out of one Occurrence.
(13) “Personal Injury” means false arrest, malicious prosecution, wrongful detention, false imprisonment, libel, slander, defamation of character, humiliation, invasion of privacy, wrongful eviction, wrongful entry, invasion of copyright and discrimination (except where insurance is prohibited by law) and such other causes of injury to a person other than Bodily Injury.
(14)
(15)
(16)
(17)
(18)
(19)
(20) “Wrongful act” means any actual or alleged error or misstatement or misleading statement or act or omission or neglect or breach of duty by the Insured in the discharge of their duties individually or collectively.
Although the term “all sums” that the insured shall become legally obligated to pay for damages is not defined, it is self-explanatory in terms of a monetary award of damages.
[19] Endorsement 3 bears the heading of Molestation and Abuse and provides that the insurer “agrees to pay on behalf of the insured all sums” that its insured shall become legally obligated to pay as damages, including the claimant’s costs and expenses, because of “Bodily Injury” to any person resulting from “Loss” because of molestation and “Abuse” during the policy period.
[20] Endorsement 3 sets forth additional Definitions and Exclusions. The following additional Definitions have relevance to this claim:
(1) Abuse shall mean
(a) Acts of hurting or injuring mentally or physically by maltreatment or ill-use of any Person, or
(b)
(c) repeated or continuing contemptuous coarse or insulting words or behaviour towards any Person
(2) Loss shall mean any claim or claims of a series casually connected and arising out of an isolated repeated or continuing incidence of Abuse committed by one or more persons.
(3) Person shall mean
(a) An individual (a natural person) whether operating in the individuals own name or under a trade name or
[21] The following additional Exclusion of Endorsement 3 is relevant to this claim:
This Policy does not apply to legal liability for damages because of Loss for:
(1) ...
(c) Aggravated exemplary or punitive damages awarded by any court.
b) Respondent’s Basis for Denial of Coverage
[22] Initially, the respondent’s third party administrator, Ms. M. Hill, Municipal Account Manager, notified the Township Clerk by letter dated July 5, 2018 that the insurer would not be responding to Mr. Clark’s claim and provided particulars of the basis for the denial of coverage.
[23] The first item addressed concerns the declaratory relief sought by the plaintiff Clark respecting “quashing the February 9, 2017 Letter of Notice” as set out in paragraph 1(a) of the statement of claim. Given that the Township has voluntarily rescinded that letter of notice or trespass ban, that aspect of relief is redundant.
[24] With respect to the allegations of misfeasance in public office, the administrator advised:
With respect to the claim for misfeasance in public office, it is largely centered in deliberate, targeted misconduct on the part of the Township. The Courts have determined that such a claim requires deliberate unlawful conduct in the exercise of public functions and awareness that the conduct is unlawful and likely to injure the Plaintiff. The Courts have further held that misfeasance in public office requires dishonesty and bad faith. From that perspective, it is akin to a claim for punitive damages, and is therefore not subject to coverage for the same reasons.
With respect to the claim relating to a Charter breach, it is rooted in the same underlying targeted, deliberate, unlawful, bad faith misconduct that forms the basis for the claim for misfeasance in public office.
In light of the foregoing, there is no duty to defend under the coverage grant.
[25] The administrator went on to particularize why coverage would not respond under Endorsement 1 Municipal Errors and Omissions Liability which would require the Insurer to pay lawfully imposed damages as found against the Insured Applicants and resulting from a Wrongful Act.
[26] There are additional Exclusions that apply to Endorsement 1 coverage and which include:
This Policy does not apply to any claim for a Wrongful Act that directly or indirectly causes, results in or arises out of:
(1) Bodily Injury at any time or any claim for Property Damages;
(2) any dishonest, fraudulent or criminal act committed by any Insured but this exclusion does not apply to any Insured who did not participate in such act or who did not have personal knowledge thereof;
(3) Personal Injury;
(4)
(5)
(6)
(7)
(8) any fines or penalties or punitive, penal, exemplary or vindictive damages;
[27] The administrator concluded that Mr. Clark’s claim sought punitive damages and damages for Personal Injury and Bodily Injury arising from misfeasance in public office and Charter breach, which are expressly excluded and therefore no duty to defend arose under the provisions of Endorsement 1. Ms. Hill concluded that neither the coverage grant nor Endorsement 1 placed the Insurer under any duty to defend or indemnify having regard to the plaintiff’s allegation advanced in the statement of claim. As there would not be any coverage for the allegations if proven at trial, there is no duty to defend.
[28] By letter dated August 7, 2018, the respondent’s administrator resiled from her previous position respecting the Township and informed the Clerk of the Township that there was coverage respecting the Township “based entirely on vicarious liability for the actions of the individually named defendants”. Further, Lloyds had now agreed to “fund half of the defence costs in this action”. Indemnification would await the findings of the trial judge. By letter dated January 15, 2019, the administrator further advised that the foregoing would continue to be Lloyd’s position if the defendants retained joint counsel but that if the Township retained separate counsel, its full costs would be covered.
c) Decision
[29] The singular issue to be determined on this application concern whether or not the respondent insurer owes the individual Applicants a duty to defend them in the action commenced by the plaintiff Andrew Frederick Clark. I have concluded that such duty does extend to the individual defendants named in the proceeding having regard to the materials before me and the submissions of counsel.
[30] The named defendants are all insured under the subject liability policy and the grant of coverage requires the respondent to defend the civil action brought against them for damages for bodily injury, personal injury or wrongful act attributable to an occurrence during the policy period.
[31] The stated exclusions do not contain a specific exclusion that would exculpate the respondent from defending the claim as framed in the statement of claim.
[32] The nature of the damages alleged to have been sustained by the plaintiff Clark fall within the definition of bodily injury and personal injury and which resulted from his exposure to unsavory conditions of which the defendants’ penultimate “occurrence” was the issuance of the letter of notice in furtherance of their alleged misfeasance in public office. The respondent equates the misfeasance to punitive damages which it maintains are “not insurable as a matter of public policy” and therefore neither are subject to coverage.
[33] In Odhavji Estate v. Woodhouse, 2003 SCC 69, 2003 S.C.C. 69 at para. 32, Iacobucci J. held:
32 To summarize, I am of the opinion that the tort of misfeasance in a public office is an intentional tort whose distinguishing elements are twofold: (i) deliberate unlawful conduct in the exercise of public functions and (ii) awareness that the conduct is unlawful and likely to injure the plaintiff. Alongside deliberate unlawful conduct and the requisite knowledge, a plaintiff must also prove the other requirements common to all torts. More specifically, the plaintiff must prove that the tortious conduct was the legal cause of his or her injuries and that the injuries suffered are compensable in tort law. [Emphasis added.]
Here, the statement of claim pleads the constituent elements of the tort of misfeasance in public office.
[34] Of significance in the definition of “Occurrence” is the continuity element of “continued or repeated exposure to conditions during the Policy Period, which results in Bodily Injury, Personal Injury...” are considered to arise out of one occurrence. The pleadings set out several events that resulted in “bodily injury” or “personal injury” which constitute an occurrence. There is no issue that the occurrence took place within the policy period.
[35] There are not any exclusions in the policy that would operate to exempt this claim from coverage under the general coverage grant respecting any of the applicants on any of the issues.
[36] Endorsement 3 Molestation and Abuse provides further coverage to the applicants. The coverage is limited to “bodily injury”, without reference to “personal injury”. It is triggered by a damage award resulting from “loss” due to molestation and abuse.
[37] Loss is defined as a claim(s) arising from “an isolated repeated or continuing incidence of abuse committed by one or more persons”. The plaintiff’s claim alleges that the Mayor has a history of maltreatment of the plaintiff and contemptuous behaviour towards him. The plaintiff alleges that the approval and adoption of the trespass ban against him had the effect of continuing to prevent him from accessing municipal properties and facilities and any interaction with municipal employees.
[38] Abuse as defined in paragraph 1(a)(c) of Endorsement 3 is quite broad and the plaintiff’s pleading alleges malice intended to cause harm, hurt feelings, damage to self-esteem and emotional well-being. The repetitive contemptuous course of maltreatment is alleged to have continued over some period of time. There is not any exclusion that would serve to remove this claim from coverage.
[39] The general coverage grant and Endorsement 3 set forth express coverage for stated intentional torts as delineated in the definitions of “bodily injury” and “personal injury”. Endorsement 3 is limited, however, to damages for “bodily injury” and does not reference damages for “personal injury”.
[40] Endorsement 3 sets out additional applicable exclusions “notwithstanding the exclusions of this policy” as follows:
This Policy does not apply to legal liability for damages because of Loss for:
(1) (a) fines or penalties
(b) Compensation ordered or awarded by a Court of Criminal Jurisdiction
(c) Aggravated exemplary or punitive damages awarded by any court.
(2) the failure to comply with procedural guidelines established by the Insured concerning Abuse.
[41] Based on the allegations of maltreatment in his statement of claim, the plaintiff claims in paragraph 33 thereof “exemplary, aggravated and punitive damages” having regard to the defendants “abusive and contemptuous conduct”.
CONCLUSION
[42] Considering the foregoing, I find that the respondent has a duty to defend all of the applicants on all of the issues as required by the general coverage grant and Endorsement 3 of the Canadian Councils Liability Policy. In accord with the insurance provided therein, the Insurer “shall defend” its insured and at its cost, against “any civil action”.
[43] Context is a paramount consideration in assessing this application when considering that the respondent will be defending the defendant Township on the principle of vicarious liability for the actions of the individually named defendants. A successful defence of the Township will be predicated and derive from a successful defence of the defendant Mayor and defendant councillors. Their alleged wrongful acts are intertwined with their relationship to the Township. Here the defence of the individual defendants is so conjoined with that of the Township as to be indistinguishable at this stage for defence purposes.
[44] In the result, the respondent is to defend all of the plaintiff’s claims against all of the defendants at its expense.
[45] On the issue of costs, I indicated to counsel at the conclusion of the hearing of this application that costs, when determined, were to be agreed upon, and failing which, I would entertain written submissions limited to two pages each. Considering the respondent’s conduct to date and the result in this application, the applicants are to be reimbursed by the respondent for all legal costs incurred by them to date in the defence of this claim and are to have their costs of this application on a full indemnity scale.
McMillan J.
Released: August 29, 2019
ONTARIO
SUPERIOR COURT OF JUSTICE
BETWEEN:
THE CORPORATION OF THE TOWNSHIP OF ST. JOSEPH, JOSEPH DAVID WILDMAN, JOSEPH WIEDERKEHR, LORRAINE FLORENCE AELICK and JOSEPH FREDERICK CARDINAL
- and –
LLOYD’S UNDERWRITERS
ENDORSEMENT ON APPLICATION
McMillan J.
Released: August 29, 2019