Security National Insurance Company v Gore Mutual Insurance Company, 2022 ONSC 2083

COURT FILE NO.: CV-20-00004626-00

DATE: 2022 04 04

SUPERIOR COURT OF JUSTICE - ONTARIO

RE: Security National Insurance Company, Applicant

AND:

Gore Mutual Insurance Company, Respondent

BEFORE: FRAGOMENI J.

COUNSEL: Arie Odinocki, Victoria Dale, Counsel for the Applicant

Jordon M. Black, Counsel for the Respondent

HEARD: March 2, 2022

E N D O R S E M E N T

1The Applicant, Security National Insurance Company (Security National), identifies the issues in this application as follows: Whether the Respondent, Gore Mutual Insurance Company (Gore Mutual), has a duty to defend and indemnify Carlo Facchini and Daureena Monica Ann Facchini (the Facchini’s) in the Ontario Superior Court Action CV-19-4027, commenced by Lynne Dinardo (The Dinardo Action).

2Security National is seeking a declaration that Gore Mutual is obligated to defend and indemnify the Facchinis in the Dinardo Action. Security National submits in this Application that it only has an obligation to defend and indemnify the Facchinis for losses that exceed the limits of the Gore Mutual Policy.

3In the alternative, Security National takes the position that Gore Mutual and Security National have complimentary duties to defend and indemnify the Faccinis and must share equally in their obligation up to the limits of the homeowner’s policy issued by Security National.

The Dinardo Action:

4The Dinardo Action was commenced in the Ontario Superior Court in Brampton. Ms. Dinardo seeks damages for personal injuries as a result of a slip and fall on March 14, 2018 at the premises municipally known as 19688 Airport Road in the Town of Caledon (the Premises). Ms. Dinardo slipped on ice on the driveway and fell.

5The Premises are owned by the Facchinis. Security National issued a homeowner’s policy for the Premises. The Premises is also the head office of Powerworx. Daureena Facchini is employed by Powerworx and Carlo Facchini is the sole directing mind of Powerworx. Gore Mutual issued a commercial policy for the business, which operates out of the Premises.

Statement of Claim Issued by Dinardo

6The Statement of Claim was issued September 27, 2019. Paragraphs 3, 4, 5 and 6 of the Statement of Claim states:

3. The Defendants, Carlo Facchini and Daureena Monica Ann Facchini, reside in the Town of Caledon, in the Regional Municipality of Peel and at all material times were the owners of the property known municipally as 19688 Airport Road, in the Town of Caledon, in the Regional Municipality of Peel (hereinafter referred to as the "subject property").

4. On or about the 14th day of March, 2018, the Plaintiff was proceeding in a careful and prudent manner from the residence located on the subject property to her motor vehicle, which was parked in the driveway of the subject property. The area was covered with ice and as a result, the Plaintiff slipped and fell, sustaining serious personal injuries as hereinafter described.

5. The Plaintiff states that the aforementioned casualty was caused as a

result of the negligence, breach of duty, breach of contract and breach of The

Occupiers' Liability Act, R.S.O., 1990, c.322, as amended, by the Defendants, the particulars of which negligence are as follows:

(a) they failed to take reasonable or any care to ensure that the Plaintiff

would be reasonably safe while walking on subject property;

(b) they permitted or allowed snow and ice to accumulate on the driveway of

the subject property, thereby creating a danger and a trap to persons

using the area, such as the Plaintiff;

(c) they permitted or allowed the Plaintiff to use the driveway on the subject

property when they knew or ought to have known that it was unsafe and

dangerous for the Plaintiff to do so;

(d) they failed to take reasonable or any steps to remove the ice from the

driveway at the subject property;

(e) they failed to take reasonable or any steps to implement a program or

procedure for the routine removal of ice from the driveway at the subject

property;

(f) they employed incompetent servants or agents to remove the ice;

(g) they failed to instruct properly, or at all, their servants, agents or

employees in proper methods and procedures to be employed in

preventing the accumulation of ice on the driveway of subject property; (h) they failed to supervise properly, or at all, the removal of ice from the

subject property by their servants, agents or employees;

(i) they failed to give the Plaintiff reasonable or any adequate or effective

warning of the danger of walking on the driveway of the subject property;

(j) they caused or permitted the area where the Plaintiff was walking to be or

to become or to remain a danger and a trap to the Plaintiff;

(k) they failed to take reasonable or any steps to implement a program or

procedure for the routine inspection of the area where the casualty

occurred when such system or procedure was appropriate under the

circumstances and when such system or procedure would have alerted

the Defendants to the presence of the ice on the driveway of the subject

property;

(l) they failed to sand and salt the area where the casualty occurred.

6. The Plaintiff pleads and relies upon the provisions of The Occupiers'

Liability Act, R.S.O., 1990, c.322, as amended.

7The Applicant submits that the allegations made by Dinardo against the Facchinis, as set out in the Statement of Claim, fall within the coverage provided by both Security National and Gore Mutual.

8The following chart produced by the Applicant in their factum demonstrates this point:

Policies and the Gore Mutual Policy:

Allegation

Gore

Security National

The Facchinis failed to take reasonable or any care to ensure that the Plaintiff would be reasonably safe while walking on the subject property

Covered

Covered

The Facchinis permitted or allowed snow and ice to accumulate on the driveway of the subject property, thereby creating a danger and a trap to persons using the area, such as the Plaintiff

Covered

Covered

The Facchinis permitted or allowed the Plaintiff to use the driveway on the subject property when they knew or ought to have known that it was unsafe and dangerous for the Plaintiff to do so

Covered

Covered

The Facchinis failed to take reasonable or any steps to remove the ice from the driveway at the subject property

Covered

Covered

The Facchinis failed to take reasonable or any steps to implement a program or procedure for the routine removal of ice from the driveway at the subject property

Covered

Covered

The Facchinis employed incompetent servants or agents to remove the ice

Covered

Covered

The Facchinis failed to instruct properly, or at all, their servants, agents or employees in proper methods and procedures to be employed in preventing the accumulation of ice on the driveway of the subject property

Covered

Covered

The Facchinis failed to supervise properly, or at all, the removal of ice from the subject property by their servants, agents or employees

Covered

Covered

The Facchinis failed to give the Plaintiff reasonable or any adequate or effective warning of the danger of walking on the driveway of the subject property

Covered

Covered

The Facchinis caused or permitted the area where the Plaintiff was walking to be or to become or to remain a danger and a trap to the Plaintiff

Covered

Covered

The Facchinis failed to take reasonable or any steps to implement a program or procedure for the routine inspection of the area where the casualty occurred when such system or procedure would have alerted the Defendants to the presence of the ice on the driveway of the subject property

Covered

Covered

The Facchinis failed to sand and salt the area where the casualty occurred

Covered

Covered

9The determination of whether a duty is owed is governed by “the pleadings rule.” This rule was articulated by the Supreme Court of Canada in Monenco Ltd. v. Commonwealth Insurance Co., 2001 SCC 49, [2001] 2 S.C.R. 699, at para. 28 as follows:

28 The starting premise for assessing whether an insurer’s duty to defend has been triggered rests in the traditional “pleadings rule”. Whether an insurer is bound to defend a particular claim has been conventionally addressed by relying on the allegations made in the pleadings filed against the insured, usually in the form of a statement of claim. If the pleadings allege facts which, if true, would require the insurer to indemnify the insured for the claim, then the insurer is obliged to provide a defence. This remains so even though the actual facts may differ from the allegations pleaded. The “pleadings rule” was articulated by the British Columbia Supreme Court in Bacon v. McBride (1984), 1984 CanLII 692 (BC SC), 5 C.C.L.I. 146, where Wallace J. stated, at p. 151:

The pleadings govern the duty to defend - not the insurer's view of the validity or nature of the claim or by the possible outcome of the litigation. If the claim alleges a state of facts which, if proven, would fall within the coverage of the policy the insurer is obliged to defend the suit regardless of the truth or falsity of such allegations. If the allegations do not come within the policy coverage the insurer has no such obligation....

10In Nichols v. American Home Assurance Co., 1990 CanLII 144 (SCC), [1990] 1 SCR 801, the court stated that the “mere possibility” that a claim within the policy may succeed is sufficient to trigger the duty to defend.

11Gore Mutual submits that the only documents that can be considered in my analysis are the following:

• The Statement of Claim

• The Policy issued by Security National

• The Policy issued by Gore Mutual

12Gore Mutual submits that extrinsic evidence is not permitted in the determination of the issue as to whether Gore Mutual has a duty to defend.

13In that regard, Gore Mutual argues that the evidence that Ms. Dinardo was at the Premises for employment-related purposes cannot be considered by the court. At para. 12 of the Factum, Gore Mutual sets out the following:

12. Reading Ms. Dinardo’s Claim, one finds no mention of Powerworx, Gore Mutual nor any reference to the Plaintiff attending at the Facchini residence for any business purpose. As such, there is no defence obligation. Ms. Dinardo only sued the Facchini’s in their capacity as the owners of residential premises where she fell. The pleading makes no mention of the Facchini’s as the owners of a business, the relationship of any business to the premises, nor how that business could be tied to her accident. As Ms. Dinardo would arguably be in the best position to understand the capacity in which the Facchini’s had invited her to their residence, she has to be taken to have intentionally elected in her pleading not to pursue a claim against Powerworx, or against Carlo Facchini in his capacity as a director/officer of Powerworx. That decision is to be respected.

14Security National responds to this submission by arguing that the purpose of the visit is irrelevant at this stage in the proceedings. The only issue at this stage is the duty to defend allegations of whether the driveway was properly maintained.

15The Statement of Claim makes no mention of the purpose of Ms. Dinardo’s attendance at the Premises, nor does the Statement of Claim make any mention of Powerworx.

16The Facchinis are occupiers of the Premises as owners as well as occupying the premises for the business of Powerworx. The Facchinis owed a duty to keep the driveway of the Premises properly maintained both as owners of the Premises and in their capacity as employees and/or officers and directors of Powerworx.

17In Gore Mutual’s policy, the “other Insurance” terms sets out the following:

8. Other Insurance

If other valid and collectible insurance is available to the Insured for a loss we cover under Coverages A., B. or D. of this Form

our obligations are limited as follows:

(a) Primary Insurance

This insurance is primary except when (b) below applies. If this insurance is primary, our obligations are not affected

unless any of the other insurance is also primary. Then, we will share with all that other insurance by the method

described in (c) below.

(b) Excess Insurance

This insurance is excess over:

1. Any of the other insurance, whether primary, excess, contingent or on any other basis:

(i) That is Fire, Extended Coverage;

(ii) Builder's Risk, Installation Risk or similar coverage for "your work";

(iii) That is Fire insurance for premises rented to you or temporarily occupied by you with permission of the owner;

or

(iv) If the loss arises out of the maintenance or use of watercraft or “automobile” to the extent not subject to

exclusion (e) or (f) of SECTION I - COVERAGE A BODILY INJURY AND PROPERTY DAMAGE LIABILITY.

2. Any other primary insurance available to you covering liability for “compensatory damages” arising out of the

premises or operations or products-completed operations for which you have been added as an Additional Insured

by attachment of an endorsement.

When this insurance is excess, we will have no duty under Coverage A. B. or D. to defend the Insured against any

"action" if any other Insurer has a duty to defend the Insured against the “action”. If no other Insurer defends, we will

undertake to do so, but we will be entitled to all the Insured's rights against all those other Insurers.

When this insurance is excess over other insurance, we will pay only our share of the amount of the loss, if any, that

exceeds the sum of:

(i) The total amount that all such other insurance would pay for the loss in the absence of this insurance; and

(ii) The total of all deductible and self-insured amounts under all that other insurance.

We will share the remaining loss, it any, with any other insurance that is not described in this Excess Insurance provision

and was not bought specifically to apply in excess of the Limits of Insurance shown in the “Declarations” of this policy.

(c) Method of Sharing

If all of the other insurance permits contribution by equal shares, we will follow this method also. Under this approach

each Insurer contributes equal amounts until it has paid its applicable Limit of Insurance or none of the loss remains,

whichever comes first. If any of the other insurance does not permit contribution by equal shares, we will contribute by limits. Under this method, each Insurer's share is based on the ratio of its applicable limit of insurance to the total applicable Limits of Insurance of all Insurers.

18Security National points out that none of the terms in 1. (b) (i)-(iv) apply to them nor does 2. Security National submits that in those circumstances, Gore Mutual would be the primary policy and the Security National’s Policy would be excess only.

19The Security National policy, pursuant to the Exclusions Sector 11, states the following under the heading, Insurance Under More than One Policy:

If you have other insurance which applies to a loss or claim, or would have applied if this policy did not exist, this policy will be considered excess insurance and we will not pay any loss or claim until the amount of such other insurance is used up.

20In Family Insurance Corp. v. Lombard Canada Ltd., 2002 SCC 48, [2002] 2 SCR 695, the Court set out the following at para. 33:

33 However, this step is only to be taken where there is a true impasse. Where the respective wording of two “other insurance” clauses can be reconciled so as to give effect to both policies while providing coverage for the insured, then no mutual repugnancy exists, and the process is simply one of giving effect to the intent of the insurers: Rae J., Seagate Hotel Ltd. v. Simcoe & Erie General Insurance Co. (1980), 1981 CanLII 426 (BC CA), 22 B.C.L.R. 374 (S.C.) (upheld on appeal (1981), 27 B.C.L.R. 89). In resolving a conflict between a pro rata “other insurance” clause and an excess “other insurance” clause, Rae J. correctly pointed out, at p. 378, that “one first turns to the wording of the clauses referred to and the interpretation thereof”. On this basis, he concluded the two clauses could be reconciled, and held that the policy containing the pro rata clause was primary. This general method has been followed on numerous occasions: see Simcoe & Erie v. Kansa, supra, and McGeough, supra.

21With respect to Gore Mutual’s term relating to Method of Sharing, Security National, rightfully, points out that it is not applicable. In support of that position it pointed to para. 41 of the Family Insurance decision which states:

41 It is trite law, however, to say that the provisions of a contract cannot unilaterally bind a person who is not a party to it. In the absence of privity between the two insurers, there is simply no basis for allowing Family to benefit from Lombard’s provision on sharing by limits. The beneficial impact of that provision on Family does not compensate for the lack of privity between the insurers.

22Security National makes a further submission, in the alternative, that even if Gore Mutual is found not to be an overlapping policy, it would still have a duty to defend equally with Security National. In support of this position, Security National relies on the decision in Aviva Insurance Company v. Intact Insurance Company, 2018 ONSC 238, at paras. 44 and 61:

44Aviva argues that where there are multiple insurers whose duty to defend is triggered by allegations in the action, any insurer that accepts the duty to defend may compel a contribution to defence costs from any other insurer on risk: Broadhurst & Ball v. American Home Assurance Co., 1990 CanLII 6981 (ON CA), 1 OR (3d) 225 (C.A.), leave to appeal refused (SCC). Intact argues that insurers can only seek contribution if they cover the same risk, and that there is no right to claim contribution otherwise. I do not agree. The duty of equitable contribution as set out in Family Insurance only applies to overlapping policies. However, the insurer may still rely on equity to compel a contribution where an insurer owing a duty to defend wrongfully refuses to offer a defence, and another insurer assumes the duty.

61Indeed, the public policy considerations favour recovery by Aviva. In this regard, I consider the principles established by the Court of Appeal in Broadhurst & Ball v. American Home Assurance, 1990 CanLII 6981 (ON CA), [1990] O.J. No. 2317, 1 O.R. (3d) 225 (C.A.) albeit in a different situation - the scope of an excess insurer’s obligation to provide a defence for an insured and the allocation of defence costs among primary and excess insurers providing different layers of coverage. The Court of Appeal has held that where the policies do not overlap but are complementary, principles of equity apply to govern to establish the respective contribution obligations of insurers at para. 41:

On the facts of the present case, it appears to me that, as a simple matter of fairness between insurers under concurrent obligations to defend, and, as well, in fairness to the insured, Guardian should pay a proper share of the costs of defence. It follows that American Home should be able to compel such payment. Since these insurers have no agreement between themselves with respect to the defence, their respective obligations cannot be a matter of contract. Nonetheless, their obligations should be subject to and governed by principles of equity and good conscience, which, in my opinion, dictate that the costs of litigation should be equitably distributed between them.

23I am satisfied in the circumstances of this case that, considering the “pleadings rule,” the Statement of Claim as drafted triggers both policies. As such, both Security National and Gore Mutual have a duty to defend and that duty to defend is to be born equally.

24It is important to note that the duty to defend and the duty to indemnify deal with different obligations that an insurer may owe to an insured. At this application I am only dealing with the issues relating to the duty to defend. The issues relating to the duty to indemnify are left to be determined at the end of the trial, if and when the allegations made by the Plaintiff and the underlying facts to support the allegations are proven at trial. At this stage my task is to determine whether Gore Mutual has a duty to defend the action commenced by Dinardo.

25Order to issue as follows:

1. An Order that the Gore Mutual Policy and the Security National Homeowner Policy must share equally the cost of defending the Dinardo Action on behalf on the Facchinis and that the Security National Umbrella Policy will only be liable to respond when both the Gore Mutual Policy and the Security National Homeowner Policy have been exhausted; and,

2. In the event that the parties cannot resolve the issue of costs, the following timeline shall apply: The Applicant shall serve and file its written submissions on costs within 10 days. The Respondent shall serve and file its responding costs submission within 10 days. The Applicant shall serve and file any reply within 5 days.