Hants Realty Ltd. v. Travelers Guarantee Co. of Canada, 2014 NSCA 69

Judge:Oland, Farrar and Bryson, JJ.A.
Court:Nova Scotia Court of Appeal
Case Date:June 25, 2014
Jurisdiction:Nova Scotia
Citations:2014 NSCA 69;(2014), 347 N.S.R.(2d) 184 (CA)
 
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Hants Realty v. Travelers Guarantee (2014), 347 N.S.R.(2d) 184 (CA);

    1098 A.P.R. 184

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Temp. Cite: [2014] N.S.R.(2d) TBEd. JN.062

Travelers Guarantee Company of Canada (appellant) v. Hants Realty Limited (respondent)

(CA 422112)

Travelers Guarantee Company of Canada (appellant) v. Hermiena Murphy (respondent)

(CA 422113; 2014 NSCA 69)

Indexed As: Hants Realty Ltd. v. Travelers Guarantee Co. of Canada

Nova Scotia Court of Appeal

Oland, Farrar and Bryson, JJ.A.

June 25, 2014.

Summary:

In 2005, the Pattens purchased residential property that experienced well problems. They filed a complaint against the realtor with the Nova Scotia Real Estate Commission. A discipline panel found the realtor guilty of two counts of professional misconduct (acting for both the vendor and the purchaser, and failure to disclose problems with the well water quantity and failure to draft, in the purchaser's offer, an adequate conditional clause respecting well water testing). The realtor's appeals under the Real Estate Trading Act to both the Supreme Court and the Court of Appeal were dismissed (See (2007), 259 N.S.R.(2d) 178; 828 A.P.R. 178, and (2008), 269 N.S.R.(2d) 81; 860 A.P.R. 81). Since there was no potential tort liability before the Commission (disciplinary authority only), the realtor's position was that there was no "claim" requiring her then insurer (AXA) to be advised of. After Travelers became the insurer, Travelers was advised of a "claim" by the Pattens against the realtor. Travelers denied coverage and, accordingly, its duty to defend, on two grounds: (1) a "claim" was made when the complaint was filed with the Commission, so the "claim" was not "first made" during the policy period; and (2) exclusion (g) of the policy which excluded liability for possible claims already known to the insured prior to the effective date of the policy. The realtor and her realty company applied for an order that Travelers had a duty to defend the Pattens' claim against them.

The Nova Scotia Supreme Court, in a judgment reported (2013), 331 N.S.R.(2d) 334; 1051 A.P.R. 334, held that Travelers had a duty to defend. This was a "claims-made" policy. A claim was not made by the Pattens prior to Travelers insuring the realtor. Exclusion (g) did not apply. It was not until 2009, after Travelers became the insurer, that the Pattens advised the realtor that they were making a "claim" for damages. That claim was promptly reported to Travelers. The realtor became aware of liability, or potential liability, only in 2009, after the Travelers policy came into effect. Travelers appealed.

The Nova Scotia Court of Appeal allowed the appeal. The trial judge erred in not finding that the 2005 complaint was a "claim" made prior to the Travelers policy coming into effect, where the Pattens communicated their intention to hold the realtor responsible for their alleged losses. A "claim" was not restricted to the threatening of the commencement of a lawsuit. Accordingly, there was no duty to defend.

Insurance - Topic 725

Insurers - Duties - Duty to defend - [See Insurance - Topic 7628 ].

Insurance - Topic 7628

Professional liability insurance - Scope of coverage - Policy period - Claims made - Meaning of - In 2005, the Pattens purchased residential property that experienced well problems - They filed a complaint against the realtor with the Nova Scotia Real Estate Commission - A discipline panel found the realtor guilty of two counts of professional misconduct (acting for both the vendor and the purchaser, and failure to disclose problems with the well water quantity and failure to draft, in the purchaser's offer, an adequate conditional clause respecting well water testing) - The realtor's appeals under the Real Estate Trading Act to both the Supreme Court and the Court of Appeal were dismissed (2007 and 2009) - Since there was no potential tort liability before the Commission (disciplinary authority only), the realtor's position was that there was no "claim" requiring her then insurer (AXA) to be advised of - After Travelers became the insurer, Travelers was advised of a "claim" by the Pattens against the realtor and her realty company - Travelers denied coverage and, accordingly, its duty to defend, on two grounds: (1) a "claim" was made when the complaint was filed with the Commission, so the "claim" was not "first made" during the policy period; and (2) exclusion (g) of the policy which excluded liability for possible claims already known to the insured prior to the effective date of the policy - The trial judge held that Travelers had a duty to defend - This was a "claims-made" policy - A claim was not made by the Pattens prior to Travelers insuring the realtor - Exclusion (g) did not apply - It was not until 2009, after Travelers became the insurer, that the Pattens advised the realtor that they were making a "claim" for damages - That claim was promptly reported to Travelers - The realtor became aware of liability, or potential liability, only in 2009, after the Travelers policy came into effect - The Nova Scotia Court of Appeal allowed Travelers' appeal - The trial judge erred in not finding that the 2005 complaint was a "claim" made prior to the Travelers policy coming into effect, where the Pattens communicated their intention to hold the realtor responsible for their alleged losses - A "claim" was not restricted to the threatening of the commencement of a lawsuit - Accordingly, there was no duty to defend.

Cases Noticed:

Murphy v. Nova Scotia Real Estate Commission (2007), 259 N.S.R.(2d) 178; 828 A.P.R. 178; 2007 NSSC 318, affd. (2008), 269 N.S.R.(2d) 81; 860 A.P.R. 81; 2008 NSCA 85, refd to. [para. 9].

Belmont Financial Group Inc. v. Trisura Guarantee Insurance Co. (2008), 269 N.S.R.(2d) 143; 860 A.P.R. 143; 2008 NSCA 87, refd to. [para. 19].

SREIT (Park West Centre) Ltd. et al. v. ING Insurance Co. of Canada (2009), 276 N.S.R.(2d) 308; 880 A.P.R. 308; 2009 NSCA 38, refd to. [para. 20].

Reid Crowther & Partners Ltd. v. Simcoe & Erie General Insurance Co. (1993), 147 N.R. 44; 83 Man.R.(2d) 81; 36 W.A.C. 81 (S.C.C.), refd to. [para. 21].

Jesuit Fathers of Upper Canada v. Guardian Insurance Co. of Canada et al. (2006), 348 N.R. 307; 211 O.A.C. 363; 2006 SCC 21, refd to. [para. 27].

Counsel:

Ian Dunbar and Ross Haynes, Q.C., for the appellants;

Michael Scott, for the respondent, Hants Realty;

John T. Rafferty, Q.C., and Daniel F. Roper, for the respondent, Hermiena Murphy.

This appeal was heard on June 6, 2014, at Halifax, N.S., before Oland, Farrar and Bryson, JJ.A., of the Nova Scotia Court of Appeal.

On June 25, 2014, Oland, J.A., delivered the following judgment for the Court of Appeal.

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