Daverne v. Switzer (John) Fuels Ltd. et al., (2015) 344 O.A.C. 123 (CA)

• Judge: Hoy, A.C.J.O., MacFarland and Lauwers, JJ.A.
• Court: Court of Appeal (Ontario)
• Case Date: November 02, 2015
• Jurisdiction: Ontario
• Citations: (2015), 344 O.A.C. 123 (CA);2015 ONCA 919

Daverne v. Switzer Fuels Ltd. (2015), 344 O.A.C. 123 (CA)

MLB headnote and full text

Temp. Cite: [2015] O.A.C. TBEd. DE.045

Gerald Daverne and Jutta Daverne (plaintiffs) v. John Switzer Fuels Ltd. , Brian Lasher, Glenn Lasher Home Comfort Service, McKeown & Wood Limited and Parrsboro Metal Fabricators Ltd. (defendants/ respondent ) and AON Reed Stenhouse Inc., Federated Insurance Company of Canada , GCAN Insurance Company, Aviva Insurance Company of Canada and Chartis Insurance Company of Canada (formerly American Home Assurance Company) (third parties/ appellant )

(C60365; 2015 ONCA 919)

Indexed As: Daverne v. Switzer (John) Fuels Ltd. et al.

Ontario Court of Appeal

Hoy, A.C.J.O., MacFarland and Lauwers, JJ.A.

December 24, 2015.

Summary:

Sometime after their last fuel delivery on January 9, 2008, the Davernes' fuel tank began to leak. The Davernes discovered the leak and resulting damage to their property when they returned home from vacation in late January. On December 31, 2009, they sued the tank's vendor and others, seeking compensation for damage to their home and the additional living expenses that they incurred as a result of the leak. The vendor's insurance expired on October 24, 2007, a few months before the leak. On April 9, 2010, the vendor's insurer advised the vendor that it was denying coverage. The vendor defended the main action, bearing its own legal costs and, on March 15, 2012, brought a third party action against the insurer. The vendor moved for summary judgment against the insurer. The insurer moved for summary judgment to dismiss the third party action on the basis of the one year limitation period set out in the insurance policy.

The Ontario Superior Court, in a decision with neutral citation 2015 ONSC 1803, granted the vendor partial summary judgment and declared that the insurer had a duty to defend the vendor in the main action. The court dismissed the insurer's cross-motion for summary judgment. The insurer appealed.

The Ontario Court of Appeal allowed the appeal on the narrow basis that the motion judge erred in finding that the one year limitation period found in the policy did not apply. Accordingly, the insurer was relieved of its duty to defend the vendor in the main action.

Insurance - Topic 725

Insurers - Duties - Duty to defend - The Davernes' fuel tank leaked in January 2008, causing damage to their property - On December 31, 2009, they sued the tank's vendor - The vendor's insurance expired a few months before the leak - On April 9, 2010, the vendor's insurer advised the vendor that it was denying coverage - The vendor defended the main action and, on March 15, 2012, third partied the insurer - A motions judge, inter alia, declared that the insurer had a duty to defend the vendor in the main action - The Ontario Court of Appeal allowed the insurer's appeal - Statutory condition 14 of the policy provided for a one year limitation period to commence an action against an insurer for the recovery of any claim under the policy - Clause 8 of the "Additional Conditions" applied statutory condition 14 to the liability coverage under the policy - The policy was a "business agreement" within the definition in s. 22(6) of the Limitations Act, and overrode the otherwise applicable two year limitation period provided for in the Act - The one year contractual limitation period began to run when the insurer refused to provide the vendor with a defence in the main action, as was its obligation under the policy - The third party claim was issued nearly two years after the insurer's letter denying coverage and effectively refusing to perform any duty to defend - The vendor's claim that the insurer had a duty to defend it was barred by the contractual limitation period.

Insurance - Topic 1873

The Insurance contract - Interpretation of contract - Judicial review or appeal (incl. standard of review) - The Ontario Court of Appeal held that the review standard of correctness applied to the interpretation and application of standard form insurance contracts - See paragraphs 11 to 14.

Insurance - Topic 3357

Payment of insurance proceeds - Limitation of actions - When limitation period commences - [See Insurance - Topic 725 ].

Limitation of Actions - Topic 2324

Actions in contract - Insurance contracts - When time begins to run - [See Insurance - Topic 725 ].

Cases Noticed:

Creston Moly Corp. v. Sattva Capital Corp., [2014] 2 S.C.R. 633; 461 N.R. 335; 358 B.C.A.C. 1; 614 W.A.C. 1; 2014 SCC 53, refd to. [para. 11].

MacDonald v. Chicago Title Insurance Co. of Canada (2015), 341 O.A.C. 299; 2015 ONCA 842, refd to. [para. 12].

Boyce v. Co-Operators General Insurance Co. (2013), 307 O.A.C. 28; 116 O.R.(3d) 56; 2013 ONCA 298, leave to appeal refused (2013), 467 N.R. 393 (S.C.C.), refd to. [para. 22].

International Movie Conversions Ltd. v. ITT Hartford Canada (2002), 154 O.A.C. 189; 57 O.R.(3d) 652 (C.A.), refd to. [para. 24].

Berardinelli v. Ontario Housing Corp. et al., [1979] 1 S.C.R. 275; 23 N.R. 298, refd to. [para. 25].

Walker v. Sovereign General Insurance Co. (2011), 283 O.A.C. 192; 2011 ONCA 597, refd to. [para. 27].

KP Pacific Holdings Ltd. v. Guardian Insurance Co. of Canada et al., [2003] 1 S.C.R. 433; 303 N.R. 235; 181 B.C.A.C. 179; 298 W.A.C. 179; 2003 SCC 25, refd to. [para. 30].

Schmitz et al. v. Lombard General Insurance Co. of Canada (2014), 315 O.A.C. 187; 2014 ONCA 88, refd to. [para. 33].

Markel Insurance Co. of Canada v. ING Insurance Co. of Canada - see Federation Insurance Co. of Canada v. Markel Insurance Co. of Canada.

Federation Insurance Co. of Canada v. Markel Insurance Co. of Canada (2012), 290 O.A.C. 75; 109 O.R.(3d) 652; 2012 ONCA 218, refd to. [para. 33].

Counsel:

Andrew A. Evangelista and Avi Cole, for the appellant;

John A. Ryder-Burbidge, for the respondent.

This appeal was heard on November 2, 2015, by Hoy, A.C.J.O., MacFarland and Lauwers, JJ.A., of the Ontario Court of Appeal. Lauwers, J.A., released the following judgment for the court on December 24, 2015.