Skip to content

Client Update: Summary of Pender vs. Squires, 2013 NLCA 37

Facts
This appeal arose from a decision which held that the Dominion of Canada General Insurance Company (“Dominion”) has a duty to defend Larry and Lona Hannam and their teenage son Jordan in an action relating to an all-terrain vehicle (“ATV”) accident.

The pleadings allege that Jordan Hannam was operating Larry Hannam’s ATV with his consent. Jordan is alleged to have loaned the ATV to his friend, Kayla Squires. Kayla is alleged to have allowed her friend, Tanya Pender, to ride as a passenger. Kayla lost control of the ATV and crashed, resulting in serious personal injuries to Tanya.

The ATV was not insured under the Hannam’s motor vehicle insurance coverage but Larry Hannam had a broad-form homeowner’s insurance policy (the “Policy”) from Dominion that covered the Hannam household.

The Policy states that it:

…does not apply to… the ownership, use or operation, by you or on your behalf, of motorized vehicles except as provided for in special conditions 3 and 4.

Dominion argued that it does not have a duty to defend based on this exclusion in the Policy.

Analysis
The Supreme Court of Canada recently summarized the law pertaining to an insurer’s duty to defend in Progressive Homes Ltd. v. Lombard General Insurance Company of Canada, [2010] SCJ No 33, which states:

An insurer is required to defend a claim where the facts alleged in   the pleadings, if proven to be true, would require the insurer to indemnify the insured for the claim.

The applications judge found that the use or operation of the ATV was not alleged in the pleadings to have been by Larry Hannam or on his behalf. The Statement of Claim alleged “negligent supervision” on the part of the Hannam’s.

The appeal judge held that the allegation of negligent supervision or entrustment of the ATV, and their son’s negligent entrustment or permission to operate to another inexperienced operator, is inextricably linked to the use or operation of the ATV.

Having found that the exclusion applies, the court turned its attention to special condition 4 of the Policy which states:

You are insured against claims arising out of your use or operation of any motorized land vehicle… which you do not own provided that it is designed for use principally off public roads…

Dominion argued that the words “you” and “your” are to be interpreted collectively to include all Hannams in the household. The Policy defined “you” as including an insured’s spouse and/or children.

The court held that there is no uncertainty with respect to the coverage issue as it pertains to Larry Hannam. As owner of the ATV, there is no possibility of coverage under the exclusion and special condition 4. However, the language of special condition 4 gives rise to the possibility of coverage for Jordan and Lona Hannam, therefore Dominion has a duty to defend both Jordan and Lona Hannam.

Costs
At the Court of Appeal, the court ordered that Dominion pay the costs of the application for all defendants at the lower court level and the Court of Appeal. Lona and Larry Hannam were represented by one counsel who, for the most part, made submissions that treat the Hannams as a unit. Accordingly, costs were awarded against Dominion regardless of the determination that it does not have a duty to defend Larry Hannam.

Implications of this Decision
This case exemplifies how low the threshold is to invoke the duty to defend. All that is required is the “mere possibility that a claim falls within the insurance policy”. Where there is any ambiguity or doubt, the duty to defend is to be resolved in favour of the insured party.

In this case, the court determined that there is a possibility that the word “you” could be defined differently in separate parts of the Policy. Therefore, this mere possibility gave rise to Dominion’s duty to defend the two Hannams who are not unequivocally excluded as owners of the ATV.

SHARE

Archive

Search Archive


 
 

Client Update: “Lien”-ing Towards Efficiency: Upcoming Amendments to the Builders’ Lien Act

June 29, 2017

By Brian Tabor, QC and Colin Piercey Bill 81 and Bill 15, receiving Royal Assent in 2013 and 2014 respectively, are due to take effect this month. On June 30, 2017, amendments to the Builders’…

Read More

Weeding Through New Brunswick’s Latest Cannabis Recommendations

June 26, 2017

New Brunswick continues to be a thought leader in the field of regulation of recreational cannabis and provides us with a first look at what the provincial regulation of recreational cannabis might look like. New…

Read More

Client Update: Elk Valley Decision – SCC Finds that Enforcement of “No Free Accident” Rule in Workplace Drug and Alcohol Policy Does Not Violate Human Rights Legislation

June 23, 2017

Rick Dunlop and Richard Jordan In Stewart v. Elk Valley Coal Corporation, 2017 SCC 30, a six-judge majority of the Supreme Court of Canada (“SCC”) confirmed a Tribunal decision which concluded that the dismissal of an…

Read More

Client Update: The Grass is Always Greener in the Other Jurisdiction – Provincial Acts and Regulations under the Cannabis Act

June 22, 2017

By Kevin Landry New Brunswick’s Working Group on the Legalization of Cannabis released an interim report on June 20, 2017. It is a huge step forward in the legalization process and the first official look at how legalization…

Read More

Client Update: Cannabis Act regulations – now we are really getting into the weeds!

June 15, 2017

Rick Dunlop and Kevin Landry As we explained in The Cannabis Act- Getting into the Weeds, the Cannabis Act introduces a regulatory regime for recreational marijuana in Canada. The regime promises to be complex. The details of legalization will be…

Read More

Client Update: Requirement to register as a lobbyist in New Brunswick

June 15, 2017

On April 1, 2017, the New Brunswick Lobbyists’ Registration Act was proclaimed into force (the “Act”), requiring active professional consultant or in-house lobbyists to register and file returns with the Office of the Integrity Commissioner of New…

Read More

How much is too much?: Disclosure in multiple accident litigation in English v House, 2017 NLTD(G) 93

June 14, 2017

Joe Thorne and Jessica Habet How far can an insurer dig into the Plaintiff’s history to defend a claim? And how much information is an insurer entitled to have in order to do so? In English v.…

Read More

Client Update: Court of Appeal confirms accounting firms may take on multiple mandates for the same company

June 14, 2017

Neil Jacobs, QC, Joe Thorne and Meaghan McCaw The Newfoundland and Labrador Court of Appeal recently confirmed that accounting/auditing firms may take on several mandates in respect of companies that may or do become insolvent in Wabush Hotel Limited…

Read More

Negligence claims in paper-only independent medical examinations: Rubens v Sansome, 2017 NLCA 32

June 13, 2017

Joe Thorne and Brandon Gillespie An independent medical examination (“IME”) is a useful tool for insurers. An IME is an objective assessment of the claimant’s condition for the purpose of evaluating coverage and compensation. Where a…

Read More

Client Update: Mental injury? Expert diagnosis not required

June 12, 2017

On June 2, 2017 the Supreme Court of Canada released its decision in Saadati v. Moorhead, 2017 SCC 28, clarifying the evidence needed to establish mental injury. Neither expert evidence nor a diagnosed psychiatric illness…

Read More

Search Archive


Scroll To Top