British Columbia Insurance Blog : Canada Insurance Lawyer & Attorney : Michael Thomas of Harper Grey Law Firm : British Columbia, Vancouver

The Respondent had unprotected sex with three women and contracted genital herpes and a rare complication of that condition called transverse myelitis which resulted in total paralysis from his mid abdomen down. The Respondent was not aware that any of the women that he had intercourse with had herpes. However, he did know that contracting a sexually transmitted disease was a potential risk of having intercourse. He claimed for compensation under a group insurance policy on the basis that the paralysis resulted “directly and independently of all other causes from bodily injuries occasioned solely through external, violent, and accidental means, without negligence” on his part. The policy did not contain a definition of the word “accident”.

The trial judge found in the Insured’s favor and held that the paralysis was accidental as the Insured did not expect to become a paraplegic as a result of engaging in unprotected sexual intercourse. The Court of Appeal upheld the trial judge’s decision and found that the Respondent’s condition did not arise “naturally”, but rather it was a result of an external factor or “unlooked-for mishap”.

The Supreme Court of Canada allowed the appeal and held that the loss was not covered by the policy. The Court considered the meaning of the term “accident” and held that it should be given its ordinary meaning as it would have been understood by the average person applying for insurance. In ordinary speech the term “accident” does not include ailments which flow from natural causes. The causal chain which led to the injury was the sexual transmission of herpes which led to the development of transverse myelitis. Transverse myelitis is a rare complication, but is a normal incident of herpes. To conclude that the acquisition of herpes was an “accident” despite the absence of any mishap or trauma would be contrary to the intent of the policy which was not intended to be a comprehensive health insurance policy for infectious diseases.

This case was originally summarized by Kim Yee and originally edited by David W. Pilley.

Sakinofsky, a lawyer, was sued for professional negligence after an action commenced by one of his clients was dismissed for delay. Sakinofsky took the position that his former law clerk, Rosso, was responsible for the loss because Rosso failed to meet the necessary deadlines to keep the action active.   Sakinofsky commenced third party proceedings against Rosso on this basis. Rosso commenced a fourth party claim against LawPro claiming contribution and indemnity for any liability found against him in the claim commenced by Sakinofsky. LawPro brought a motion seeking an order striking Rosso's fourth party claim on the basis that it disclosed no cause of action against it.

The Court held that there was no genuine issue for trial arising from either Rosso's claim for contribution and indemnity from LawPro under Sakinofsky's policy of insurance or from his allegations of misrepresentation.  Rosso conceded he was not a named insured under the policy issued to Sakinofsky and that he never understood LawPro would be liable to him directly as there was no contractual relationship between them. The policy specifically excluded coverage for law clerks. Any right of coverage for the errors of Sakinofsky's staff belonged to Sakinofsky who was the sole insured under the policy. Rosso did not establish that he relied on representations by either Sakinofsky or LawPro to the effect that he would be covered under the policy.

The Court held that there was no genuine issue with respect to Rosso's direct claim of negligence against LawPro as LawPro did not owe Rosso a duty of care. The Court noted that an insurer is not obliged to minimize the liability of a party adverse in interest or to protect his interest, relying upon Overload Tractor Services Ltd. v. British Columbia (Insurance Corp. of British Columbia, [1988] B.C.J. No. 94 (BCSC). In this case, LawPro owed Rosso no duty of care and, consequently was not obligated to take into account his interest.

In the result, LawPro was granted summary judgment dismissing Rosso's claim against it.

This case was originally summarized by Jonathan D. Meadows and originally edited by David W. Pilley.

Cirillo's home was extensively damaged in a fire. TGA General Contracting ("TGA") was  retained to repair the damage. TGA was not fully paid for its work and commenced a lien claim against Cirillo for $153,000. Cirillo took the position that Wawanesa was responsible for all outstanding amounts owed to TGA and sued Wawanesa for payment of those amounts. Wawanesa contended that it had fully indemnified Cirillo under the Policy. Wawanesa further contended that it had no connection with TGA who had been retained by Cirillo and was Cirillo's contractor.

Cirillo's action against Wawanesa was dismissed. The court found that it was readily apparent that the sole reason Cirillo commenced an action against Wawanesa was to force Wawanesa to satisfy TGA's account. The court held that TGA was not entitled to any payment from Wawanesa directly as there was no contract between Wawanesa and TGA. Similarly, there was no agreement between Cirillo and Wawanesa that Wawanesa would pay TGA's account. The guaranteed replacement cost endorsement in the Policy merely provided coverage up to the lowest estimate of repair with materials of like kind and quality. Cirillo was advised of this limit and provided with the lowest cost estimate. Cirillo did not take issue with the scope or cost of repairs based on that estimate. Cirillo did not take issue when Wawanesa made final payment pursuant to that lowest cost estimate. Following the final payment, Wawanesa had no further obligation to Cirillo. Any further dealings with TGA were solely the responsibility of Cirillo.

This case was originally summarized by Jonathan D. Meadows and originally edited by David W. Pilley.

A seven and half month old infant (the “Infant”) was cared for at a day nursery operated by the insured caregiver (the “Caregiver”) in her home. The Caregiver dropped the Infant, who suffered serious injuries which resulted directly in her death. The Caregiver was charged and convicted of the offence of criminal negligence causing death. The Infant’s parents (the “Parents”) subsequently brought an action against the Caregiver and obtained a consent judgment against her. The Caregiver filed a proposal in bankruptcy. At the relevant time, the Caregiver was insured by the Defendant insurers under a Homeowners Insurance Policy which included coverage for the day nursery. The Defendants denied coverage to the Caregiver on the basis of an exclusion in the policy which excluded coverage for claims arising from bodily injury caused by any criminal act or wilful negligence by an insured. The judgment remained unsatisfied and the Parents brought this action to recover the judgment from the Defendants. The sole issue was whether the Defendants could rely on the exclusion clause.

The Parents argued that the term “criminal act” was not defined in the policy and was ambiguous as written and in the face of s. 529(2) of the Insurance Act, R.S.A. 2000, c.I-3 which allows an insurer to specifically exclude coverage for unintentional criminal acts and otherwise provides that coverage may only be denied in relation to criminal acts committed with the intent to bring about loss or damage.

The Court reviewed a number of decisions from other provinces interpreting similar exclusion clauses and cited with approval the judgment of the Ontario Court of Appeal in R.E. v. Wawanesa Mutual Insurance Co., 2007 ONCA 92, citing Buttar v. Safeco Insurance Co. of America 1986 CanLII 1260 (B.C. S.C.), wherein the Court stated:

In any event there is no authority for the proposition that the exclusionary clause in the policy is to be read as if “criminal act” applies only to criminal offences carried out with the intent of causing the loss. The exclusionary clause is not so worded. It does exclude criminal acts causing the loss. There is no ambiguity or uncertainty in the language used. Criminal acts causing the loss are excluded. In addition wilful acts causing the loss are excluded.

In the result, the Court found that the words “any criminal act” in the policy exclusion were clear and unambiguous and did not require a modifier for clarity. Section 529(2) of the Insurance Act did not apply because the “any criminal act” exclusion “otherwise provided”. Therefore, the “criminal act” exclusion applied and the Parents could not recover their judgment against the Defendants.

The Court further found that the Defendants were not entitled to rely on the “wilful act” exclusion as the incident had been characterized as an “unintentional act committed with no degree deliberation” in the reasons for judgment convicting the Caregiver.

This case was originally summarized by Emily M. Williamson and originally edited by David W. Pilley.

The appellant leased a single unit in a commercial mall owned by the respondent.  A fire occurred in the appellant’s unit, causing damage to the building and its contents, and interrupting the appellant’s business.  The parties brought a motion seeking a determination regarding whether the respondent or its insurer was entitled to claim damages against the appellant.  This question was itself dependant on whether the terms of the Offer to Lease had passed risk of loss caused by the fire on to the appellant or the respondent.  For the purposes of the motion, it was assumed that the appellant’s negligence occasioned the loss.  The Superior Court ruled that the appellant had assumed the risk of loss, and that the respondent was therefore entitled to pursue its claim.

The Court of Appeal disagreed, holding that the respondent had assumed risk of loss.  In so ruling, the Court of Appeal turned to the terms of the Offer to Lease and the Supreme Court of Canada’s decision in Ross Southward Tire Ltd. v. Pyrotech Products Ltd., [1976] 2 S.C.R. 35.  In Ross, the lease contained a condition requiring the tenant to pay for insurance, but did not contain a covenant requiring the landlord to obtain such insurance. The lease did not specifically mention insurance for losses occasioned by fire.  The Supreme Court of Canada ruled that given the terms of the lease, the risk of losses caused by fire passed to the landlord and precluded a subrogated claim against the tenant for damages.  The Court of Appeal found that the Offer to Lease in the case at bar was in substance identical to the lease in Ross, insofar as it required the appellant to contribute to the cost of insurance, but imposed no reciprocal obligation on the respondent.  The Court of Appeal held that if a tenant is required to pay for insurance, it is entitled to the benefit of that insurance.  As a result, in order for the appellant to be deprived of such a benefit, the Offer to Lease must contain a specific term to that effect.

This case was originally summarized by Kim Yee and edited by David W. Pilley.

The Defendant Insurer applied for a dismissal of the Plaintiff Insured's claim.  The Insured was employed by the Royal Bank of Canada as a customer service representative.  The Insurer provided insurance coverage, including long term disability coverage for the bank's employees, including the Insured.

The Insured developed laryngitis and, as a result, was told to rest her voice.  She attempted to return to work but was unable to do so.  On the advice of her employer, she accepted short-term disability benefits for eight weeks.  After the Insured's short-term disability benefits were exhausted, she applied to the Insurer for long-term benefits based on her doctor's then diagnosis of "muscular tension dysphonia".  The Insurer approved her application for long-term disability benefits.  The Insured was advised that if her medical condition prevented her from performing the duties of her own occupation, she would, in approximately 18 months, be eligible for disability payments only if she was unable to work at any occupation for which she was qualified, or might reasonably become qualified by training, education or experience.

The Insured was eventually advised that her claim would be closed at the expiration of the 18 month period as she was no longer entitled to disability benefits.  Approximately six months after the Insured's benefits were cut off, she received a new diagnosis of conversion disorder and advised the Insurer. The Insurer rejected the Insured's claim for benefits based on the new diagnosis and the Insurer issued a Writ of Summons.

The Insurer brought this application to have the Insured's claim dismissed on the basis that section 22(1) of the Insurance Act of British Columbia requires that "every action on a contract must be commenced within one year after the furnishing of reasonably sufficient proof of a loss or claim under the contract and not after".

In this case, the policy provisions that applied to the Insured's claim, on a literal rating, permitted the Insured to commence legal action two years after the last day on which a proof of claim would be accepted under the terms of the policy.  Thus, the issue before the Court was which limitation period applied.  If section 22(1) of the Insurance Act applied, the Insured had not brought her claim within time whereas, if the limitation period in the policy applied, the Insured had brought her claim within time.

The Court found that while section 3 of the Insurance Act prevents an Insurer from contracting for a limitation period shorter than that provided for in the Insurance Act, there is nothing in section 3 that prevents an insurer from contracting for a period greater than that in the Act.  The Court also granted the Insured relief from forfeiture as she had failed to formally file a proof of loss, which the Court viewed as imperfect compliance given the circumstances of the case.  In the result, the Insurer's application was dismissed.

This case was digested by Cameron B. Elder and edited by David W. Pilley.

The Applicants, the Insureds, sought a Declaration that the Insurer had a duty to defend them in relation to a Third Party Notice.

The Statement of Claim alleged that the Plaintiff was a passenger in a BMW which was involved in a road race. The driver of the BMW lost control of the car leading to a collision with a light pole and serious injury to the Plaintiff. The Plaintiff sued the owner and driver of the BMW as well as Ericksen Nissan Ltd. ("Ericksen") which owned the other car involved in the road race, a Nissan, and also the driver of the Nissan. Ericksen defended the claim on the basis that the driver did not have Ericksen's consent to drive the Nissan. Ericksen issued a Third Party Notice to the Insureds, the father and brother of the driver of the Nissan.

It was alleged in the Third Party Notice that the brother of the driver of the Nissan owned an Infinity which was brought into Ericksen for service. A Service Loaner Agreement was signed by the owner of the Infinity. The Service Loaner Agreement provided that any loss or damage to the loaner vehicle was the responsibility of the Insureds.

The Insureds sought coverage from their Insurer, who insured the Infinity.

The issue before the Court was which documents ought to be considered in determining whether the Insurer had a duty to defend the Insureds. The Insureds argued that the Court should consider the pleadings as a whole including the Insureds' policy and the Service Loaner Agreement. The Insurer argued that the Court ought only to consider the Third Party Notice since the Third Party Notice sounded in contract and provided no basis for indemnity other than in contract and made no allegations regarding the involvement of an at-fault motorist.

The Court concluded that the relevant pleadings should be considered as a whole together with the terms of the policy and the Service Loan Agreement. In the result, the Court found that the Insurer had a duty to defend the Insureds in relation to the Third Party Notice. The key issue was whether the Insurer had a duty to defend the Insureds if their obligation to pay arose in contract. The Court held that while the Service Loaner Agreement was the basis on which the Insureds might be required to pay, that Agreement effectively transferred a potential tort liability from Ericksen to the driver of the Nissan and therefore the Insureds, which would trigger the policy. It was only upon examining the Statement of Claim, the policy and the Service Loaner Agreement together that this became apparent.

This case was originally summarized by Cameron B. Elder and edited by David W. Pilley.

In 1977 the Plaintiff, Minox, constructed a complex of condominiums which were rented out to tenants. Within two years of completing construction the building experienced humidity problems and mould began to occur in some of the units. In 2001 it was determined that some of the mould was toxigenic.

In 1993 Sovereign General Insurance Company issued a policy of insurance which was maintained by Minox up to and including 2003. In 2002 Minox filed two proofs of loss relating to damage caused by toxigenic and other mould in the complex. Sovereign denied the policy on the basis that mould was not a risk covered by the policy, as it was not fortuitous. It also claimed that the loss was excluded under the policy and that the loss did not occur during the policy period.

The court found that the damage caused by mould is a risk covered under the policy. It rejected Sovereign's argument that mould is a condition resulting from the normal use and occupation of the property, and therefore not a risk or peril. It found that although it is highly likely that mould will develop due to moisture problems, it is not certain or inevitable. The court pointed to the fact that less than half of the units in the complex had occurrences of mould. Therefore, it found that the growth of mould, either toxigenic or non-toxigenic, was a fortuitous event and therefore a risk covered under the policy.

The court then went on to consider whether mould was excluded under the policy. It found that the exclusions relating to "seepage, leaking or influx of water etc.", "entrance of rain, sleet snow through windows, skylights or other similar wall or roof openings etc.", "dampness, dryness or atmosphere, changes of temperature etc." and "wear and tear, gradual deterioration, latent defect, inherent vice, faulty or improper workmanship etc." all did not apply to exclude coverage. It pointed out that the policy contained no exclusion specifically relating to loss or damage caused directly or indirectly by mould and that such exclusion clauses are not uncommon in the industry. Therefore, coverage for mould damage was found not to be excluded under the policy.

The court also looked at whether the loss or damage occurred within the policy period. Sovereign argued that the date of occurrence of the alleged loss was the date on which moisture first resulted in mould. Therefore, damage was present long before Sovereign became the insurer on risk. Minox argued that damage arose with the discovery and identification of the toxigenic mould which, they state, was in 2001. The court agreed that there was no evidence of serious health complaints relating to mould prior to 2001. Therefore, a reasonable inference to be drawn was that, absent any serious health complaints which are generally associated with the presence of toxigenic mould, mould did not exist prior to 2001. The court therefore found that the damage occurred during the policy period.

The court also dealt with the issue of whether Sovereign had waived its right to rely on the exclusions by its failure to make inquiries as to the condition of the building. It stated that the principle enunciated in Canadian Indemnity Co. v. Johns-Manville Co., [1990] 2 S.C.R. 549, does not go so far as to create a duty on the insurer to require an application or do conduct an inspection. Therefore, the most that could be said is that Sovereign deprived itself of the opportunity to deny coverage initially or to include a mould exclusion by its failure to conduct a visual inspection either prior to extending insurance to Minox or during any of the renewal years.

The court therefore held that the damages suffered by Minox were recoverable under the policy.

This case was originally summarized by Natasha D. Morley and edited by David W. Pilley.

The underlying action arose out of a motor vehicle accident. The vehicle operated by the plaintiff was allegedly struck by the car operated by Ms. Noonan. Ms. Noonan was driving a car rented from Choice Cars. Choice Cars had, in turn, leased the car from Tracamount, the car’s owner.

Choice Cars had an insurance policy with Zurich. Tracamount had a contingent lessor’s liability policy with Lombard. Lombard brought an application for an order compelling Zurich to defend and indemnify Tracamount and Noonan. Zurich took the position that the car was not covered by its policy because it was not listed in Choice Car’s monthly fleet report. In the result, the car would be covered by Tracamount’s contingent liability policy with Lombard.

The policy delivered by Zurich was a standard Ontario Automobile Policy which required all insured cars to be “described”, that is, listed on the Certificate of Automobile Insurance. There was also an Endorsement to allow coverage for non-owned cars. The Endorsement provided that Zurich was required to submit a monthly fleet report, a statement of the actual number of vehicles being leased each month. The fleet report for the relevant period did not list the car that was involved in the accident.

Lombard’s position was that Choice Cars was only required to report the “amount” of vehicles to be insured each month, but that it was not required to identify particular vehicles as a condition for coverage. Zurich’s position was that Choice Cars was required to identify the specific vehicles from the previous month. If a vehicle was not identified, it was not covered by Zurich’s policy.

The court accepted Zurich’s position, finding that nothing in the Endorsement indicated that it was exempt from the requirements in the standard policy. The standard policy included a requirement that the vehicle be “described” in order to be insured. This meant that Choice Cars, under the standard policy, was required to identify individual vehicles, not just the amount of vehicles. The court stated that it makes sense that an insurance company would need to know which particular vehicles it was insuring, otherwise there would be a concern that an insured could claim insurance for an non-insured car.

This case was originally summarized by Natasha D. Morley and edited by David Pilley

The Plaintiff was in her kitchen when an uninsured motor vehicle driven by the Defendant Pugliese ran into a wall of her house. The collision caused a sudden, loud bang and violent shaking of the house, which caused tremendous shock to the Plaintiff and inflicted damage to the dwelling estimated at between $85,000 and $100,000. The Plaintiff was hospitalized for eight days with pain in her right shoulder and arm, some of it emanating from her neck, and the Plaintiff was significantly distressed. The Plaintiff made a claim against the Insurer based on a policy of auto insurance issued to her husband on an automobile. The Plaintiff made no allegations that she was struck, directly or indirectly, by the motor vehicle or anything that the motor vehicle had struck. The husband's policy contained a OPCF 44R endorsement for "Family Protection Coverage". Under this endorsement, coverage was available for an individual as a spouse of the named insured provided that individual was "not an occupant of an automobile who is struck by an automobile". The Insurer argued that coverage was not available to the Plaintiff as she was not struck by the automobile.

The Court held that the Plaintiff had an arguable case as to whether she met the definition of an "insured person" under the endorsement. The meaning of the words "hit" or "strike" in the Family Protection Coverage Endorsement included situations of notional striking where there was a significant degree of proximity between the automobile and a non-occupant of a motor vehicle and a real apprehension by the non-occupant of imminent peril due to the actions of the motorist. In this case, the Court found that there was the requisite degree of proximity. Although the Plaintiff's injuries did not result from an attempt to take evasive action due to the collision, her injuries arguably resulted from the proximate, sensory invasion, or notional equivalent of being struck. Therefore, the Court concluded that the Plaintiff had an arguable case to meet the definition of "insured person" and dismissed the Insurer's application for summary judgement.

This case was originally summarized by Jonathan D. Meadows and originally edited by David W. Pilley.