Aitken v. Unifund Assurance Co., (2012) 298 O.A.C. 139 (CA)

• Judge: Lang, Epstein and Hoy, JJ.A.
• Court: Court of Appeal (Ontario)
• Case Date: April 05, 2012
• Jurisdiction: Ontario
• Citations: (2012), 298 O.A.C. 139 (CA);2012 ONCA 641

Aitken v. Unifund Assurance Co. (2012), 298 O.A.C. 139 (CA)

MLB headnote and full text

Temp. Cite: [2012] O.A.C. TBEd. SE.033

James Leo John Aitken and Carole Mary-Lyn Aitken (applicants/respondents) v. Unifund Assurance Company (respondent/appellant)

(C54517; 2012 ONCA 641)

Indexed As: Aitken v. Unifund Assurance Co.

Ontario Court of Appeal

Lang, Epstein and Hoy, JJ.A.

September 25, 2012.

Summary:

The Aitkens sold their home. The purchaser sued the Aitkens, asserting that they not only intentionally failed to disclose a series of problems with the house, but also took steps to disguise the problems prior to the sale. The purchaser also claimed that they knowingly misrepresented that they had obtained building permits for renovations that they had performed on the house. The Aitkens notified their insurer under a homeowners' insurance policy about the action and sought defence costs and indemnity. The policy did not provide coverage for intentional misconduct. The insurer denied coverage. The Aitkens applied for a declaration that the insurer had a duty to defend them and indemnify them for any damages that they were found to owe. Before the application was heard, the purchaser amended the statement of claim by re-labelling most of the alleged misconduct as being negligent rather than intentional.

The Ontario Superior Court, in a decision reported at [2011] O.T.C. Uned. 1809, declared that the insurer had a duty to defend and ordered that the issue of the duty to indemnify be left until trial. The insurer appealed.

The Ontario Court of Appeal dismissed the appeal.

Insurance - Topic 725

Insurers - Duties - Duty to defend - The Aitkens sold their home - The purchaser sued the Aitkens, claiming damages for intentional misrepresentation - The Aitkens notified their insurer under a homeowners' policy about the action and sought defence costs and indemnity - The policy did not provide coverage for intentional misconduct - The insurer denied coverage - The Aitkens applied for, inter alia, a declaration that the insurer had a duty to defend them - Before the application was heard, the purchaser amended the statement of claim by re-labelling most of the alleged misconduct as being negligent rather than intentional - The applications judge declared that the insurer had a duty to defend - The insurer appealed, asserting that the judge erred by not finding that the claim for negligent misrepresentation was derivative of the claim for intentional misrepresentation - The Ontario Court of Appeal dismissed the appeal - The focus of the court's inquiry was not the labels attached to the claims but whether the facts as pleaded, if proven true, would require the insurer to indemnify the Aitkens - The plaintiff, in the amended claim, advanced various possibilities relating to the Aitkens' state of mind when making the alleged misrepresentations - The facts, if proven, could support a finding either of negligent or intentional misconduct - Since the concern was not with whether the pleadings were designed to generate insurance coverage, but with the facts as pleaded, the claim for negligent misrepresentation was not derivative - See paragraphs 24 to 31.

Insurance - Topic 725

Insurers - Duties - Duty to defend - The Aitkens sold their home - The purchaser sued the Aitkens, claiming damages for intentional and negligent misrepresentation - The Aitkens' insurer under a homeowners' policy denied coverage - The Aitkens obtained a declaration that the insurer had a duty to defend them - The insurer appealed, asserting that the judge erred in not finding that the claims were excluded as the property was owned by the Aitkens in the past - The policy excluded coverage for claims based on damage to "property owned" by the Aitkens - The Ontario Court of Appeal dismissed the appeal - "Owned" could be interpreted in both the past and present tense - In light of the two acceptable interpretations, the policy could not be said to unambiguously exclude coverage - See paragraphs 32 to 39.

Insurance - Topic 725

Insurers - Duties - Duty to defend - The Aitkens sold their home - On September 10, 2009, the purchaser sued the Aitkens, claiming damages for intentional misrepresentation - On March 30, 2010, the Aitkens notified their insurer under a homeowners' policy about the action and sought defence costs and indemnity - The policy did not provide coverage for intentional misconduct - The insurer denied coverage - On August 2010, the Aitkens applied for, inter alia, a declaration that the insurer had a duty to defend them - On January 6, 2011, before the application was heard, the purchaser amended the statement of claim by re-labelling most of the alleged misconduct as being negligent rather than intentional - The applications judge declared that the insurer had a duty to defend the Aitkens - The insurer appealed, asserting that the judge erred in not finding that the Aitkens lost their coverage by their delay in notifying it of the action - The policy provided that "[w]hen an accident or occurrence takes place you must promptly give us notice ..." - The Ontario Court of Appeal dismissed the appeal - Initially the claim advanced in the action did not trigger insurance coverage - As soon as the Aitkens became aware that the purchaser was planning on amending the claim in a way that would attract coverage, they promptly notified the insurer - In those circumstances, there was no breach of the policy - See paragraphs 40 to 42.

Insurance - Topic 725.2

Insurers - Duties - Costs of proceedings re duty to defend - Two insured obtained a declaration that their insurer was obligated to defend them - The insurer appealed - The Ontario Court of Appeal dismissed the appeal and held that since the insured were entitled to a defence from the insurer at no cost to them, they were also entitled to costs of the appeal on a full indemnity basis until the insurer took over the defence of the action - See paragraphs 44 and 45.

Insurance - Topic 6818

Liability insurance - Homeowner's comprehensive policy - Duty of insurer to defend - [See all Insurance - Topic 725 ].

Insurance - Topic 6824

Liability insurance - Homeowner's comprehensive policy - Exclusions - Intentional or criminal acts - [See second Insurance - Topic 725 ].

Insurance - Topic 6945

Liability insurance - Defences - Notice of possible claim - Lack of - [See third Insurance - Topic 725 ].

Insurance - Topic 6950

Liability insurance - Defences - Intentional act by insured - [See second Insurance - Topic 725 ].

Words and Phrases

Owned - The Ontario Court of Appeal considered the meaning of "owned" as found in a homeowners' insurance policy - See paragraphs 32 to 39.

Words and Phrases

Property owned - The Ontario Court of Appeal considered the meaning of this phrase as found in a homeowners' insurance policy - See paragraphs 32 to 39.

Cases Noticed:

Monenco Ltd. et al. v. Commonwealth Insurance Co. et al., [2001] 2 S.C.R. 699; 274 N.R. 84; 155 B.C.A.C. 161; 254 W.A.C. 161; 2001 SCC 49, refd to. [para. 24].

Nichols v. American Home Assurance Co. et al., [1990] 1 S.C.R. 801; 107 N.R. 321; 39 O.A.C. 63, refd to. [para. 24].

Cooper v. Farmer's Mutual Insurance Co. (2002), 159 O.A.C. 111; 59 O.R.(3d) 417 (C.A.), refd to. [para. 28].

Krawchuk v. Scherbak et al. (2011), 279 O.A.C. 109; 2011 ONCA 352, refd to. [para. 29].

Progressive Homes Ltd. v. Lombard General Insurance Co. of Canada, [2010] 2 S.C.R. 245; 406 N.R. 182; 293 B.C.A.C. 1; 496 W.A.C. 1; 2010 SCC 33, refd to. [para. 32].

Poplawski et al. v. McGrimmon et al., [2010] O.T.C. Uned. 108; 100 O.R.(3d) 458; 2010 ONSC 108, affd. [2010] O.A.C. Uned. 512; [2010] I.L.R. 1-5057; 2010 ONCA 655, refd to. [para. 34].

Hector v. Piazza et al. (2012), 287 O.A.C. 298; 108 O.R.(3d) 716; 2012 ONCA 26, agreed with [para. 36].

Godonoaga v. Khatambakhsh et al., [2000] O.A.C. Uned. 356; 50 O.R.(3d) 417 (C.A.), refd to. [para. 44].

Counsel:

John F. Graham, for the appellant;

Laird S.S. Scrimshaw, for the respondents.

This appeal was heard on April 5, 2012, by Lang, Epstein and Hoy, JJ.A., of the Ontario Court of Appeal. Epstein, J.A., released the following judgment for the court on September 25, 2012.