Rocky Mountain House (Town) v. Alberta Municipal Insurance Exchange et al., 2007 ABQB 548

• Judge: Verville, J.
• Court: Court of Queen''s Bench of Alberta (Canada)
• Case Date: Friday July 20, 2007
• Citations: 2007 ABQB 548;(2007), 428 A.R. 169 (QB)

Rocky Mountain House v. Alta. Municipal Ins. (2007), 428 A.R. 169 (QB)

MLB headnote and full text

Temp. Cite: [2007] A.R. TBEd. SE.060

In The Matter Of a Commercial General Insurance Policy issued to the Town of Rocky Mountain House by Alberta Municipal Insurance Exchange for the period following January 30, 2002

The Town of Rocky Mountain House (applicant) v. Alberta Municipal Insurance Exchange and Zurich Insurance Company of Canada (respondents)

(0603 12891; 2007 ABQB 548)

Indexed As: Rocky Mountain House (Town) v. Alberta Municipal Insurance Exchange et al.

Alberta Court of Queen's Bench

Judicial District of Edmonton

Verville, J.

September 6, 2007.

Summary:

Diamond J. Industries sued the Town of Rocky Mountain House for damages associated with loss of possession of a parcel of land owned by the Town. The Town was insured under a commercial general liability policy issued by Alberta Municipal Insurance Exchange and under an excess commercial general liability policy issued by Zurich Insurance Co. of Canada. Both insurers denied a duty to defend the Town in the action. The insurers maintained that the claims sounded in breach of contract, for which coverage was not provided in the policies. The Town sought an order declaring that the insurers had an obligation to defend the Town in the action and that the insurers had to pay all expenses incurred by the Town in defence of the action.

The Alberta Court of Queen's Bench held that the insurers did not have a duty to defend the Town in the action.

Insurance - Topic 1852

The insurance contract - Interpretation of contract - Intent of the parties - [See Insurance - Topic 1864 ].

Insurance - Topic 1864

The insurance contract - Interpretation of contract - By context - A commercial general liability policy provided that "The insurers agree to pay ... all sums that the Insured shall become legally obligated to pay or assumed by the Insured under any Contract" - At issue was whether the insuring agreement covered contractual liability - In determining the issue, the Alberta Court of Queen's Bench referred to cases in which the courts had determined the meaning of the phrases "legally obligated to pay" or "liability imposed by law" in other insurance policies - The court stated that "while the reasoning and outcome of the cases discussed above can assist a court in determining whether the phrases 'legally obligated to pay' or 'imposed by law' include contractual liability, one must still employ general principles of contractual interpretation and construe the wording of the insuring clause in the context of the policy as a whole. This is the only way to definitely determine the intention of the parties" - See paragraph 55.

Insurance - Topic 1872

The insurance contract - Interpretation of contract - Ejusdem generis rule - "Contract" or "agreement" was defined in s. 5(f) of a commercial general liability insurance policy as "(i) any agreement which is a lease of premises, easement, agreement required by municipal ordinance, railway sidetrack agreement, elevator maintenance agreement; and (ii) any other agreement assuming the liability of others" - The Alberta Court of Queen's Bench stated that "The list of agreements set out in 5(f)(i) are of a type commonly referred to as 'insured contracts' in other CGL policies and the common factor among all of them is that in such an agreement it would be customary for the insured to assume the tortious liability of others ... In my view it is appropriate in this case to invoke the ejusdem generis rule and hence, the phrase 'any other agreement assuming the liability of others' [in s. 5(f)(ii)] should refer to the assumption of tortious liability on behalf of another" - See paragraphs 60 to 62.

Insurance - Topic 6863

Liability insurance - Business - Comprehensive policy - Extent of coverage - Diamond J. Industries (Diamond) sued the Town of Rocky Mountain House for damages associated with loss of possession of a parcel of land owned by the Town - The Town was insured under a commercial general liability policy issued by Alberta Municipal Insurance Exchange and under an excess commercial general liability policy issued by Zurich Insurance Co. of Canada - Both insurers denied a duty to defend the Town in the action - The insurers maintained that the claims sounded in breach of contract, for which coverage was not provided in the policies - The Alberta Court of Queen's Bench held that: claims in breach of contract, negligent misrepresentation and proprietary estoppel were properly pled in Diamond's Amended Statement of Claim; the claims for breach of contract were not covered by the insuring agreements; the claims for negligent misrepresentation and proprietary estoppel were both derivative of the breach of contract claim; and there were no properly pled non-derivative claims which were covered by the policies - Accordingly, the insurers did not have a duty to defend the Town in the action.

Insurance - Topic 6863

Liability insurance - Business - Comprehensive policy - Extent of coverage - [See Insurance - Topic 6925 ].

Insurance - Topic 6925

Liability insurance - Municipalities - "Legally obligated to pay" defined - A commercial general liability policy provided that "The insurers agree to pay ... all sums that the Insured shall become legally obligated to pay or assumed by the Insured under any Contract" - At issue was whether the insuring agreement covered contractual liability and if so, what type of contractual liability was covered - "Contract" or "agreement" was defined in s. 5(f) of the policy as "(i) any agreement which is a lease of premises, easement, agreement required by municipal ordinance, railway sidetrack agreement, elevator maintenance agreement; and (ii) any other agreement assuming the liability of others" - The Alberta Court of Queen's Bench held that the phrase "any other agreement assuming the liability of others" in s. 5(f)(ii) referred to the assumption of tortious liability on behalf of another - The court stated that "As such, when this is taken in light of the phrase 'assumed by the Insured under any Contract' I find that this refers to tortious liability imposed upon some other party, the responsibility for which had been assumed by the insured under a contract or agreement" - That was different than direct contractual liability of an insured - The court therefore concluded that the phrase "legally obligated to pay" did not include contractual liability and that the contractual liability which was covered in the Policy involved contracts assuming the tortious liability of other parties - See paragraphs 59 to 67.

Words and Phrases

Any other agreement assuming the liability of others - The Alberta Court of Queen's Bench considered the meaning of this phrase in a commercial general liability insurance policy - See paragraphs 61 to 63.

Words and Phrases

Assumed by the insured under any contract - The Alberta Court of Queen's Bench considered the meaning of this phrase in a commercial general liability insurance policy - See paragraphs 60 to 63.

Words and Phrases

Legally obligated to pay - The Alberta Court of Queen's Bench considered the meaning of this phrase in a commercial general liability insurance policy - See paragraphs 64 to 66.

Cases Noticed:

Scurry-Rainbow Oil Ltd. v. Kasha (1996), 184 A.R. 177; 122 W.A.C. 177; 1 D.L.R.(4th) (C.A.), refd to. [para. 12].

Western Irrigation District v. Alberta et al. (2002), 312 A.R. 358; 281 W.A.C. 358; 2002 ABCA 200, refd to. [para. 12].

Jesuit Fathers of Upper Canada v. Guardian Insurance Co. of Canada et al., [2006] 1 S.C.R. 744; 348 N.R. 307; 211 O.A.C. 363; 2006 SCC 21, refd to. [para. 13].

Non-Marine Underwriters v. Scalera - see Scalera v. Lloyd's of London.

Scalera v. Lloyd's of London, [2000] 1 S.C.R. 551; 253 N.R. 1; 135 B.C.A.C. 161; 221 W.A.C. 161; 2000 SCC 24, refd to. [para. 13].

Monenco Ltd. et al. v. Commonwealth Insurance Co. et al., [2001] 2 S.C.R. 699; 274 N.R. 84; 2001 SCC 49, refd to. [para. 14].

Wi-Lan Inc. et al. v. St. Paul Guarantee Insurance Co. (2005), 380 A.R. 256; 363 W.A.C. 256; 2005 ABCA 352, refd to. [para. 14].

Bacon v. McBride (1984), 51 B.C.L.R. 228; 6 D.L.R.(4th) 96 (S.C.), refd to. [para. 15].

Queen (D.J.) v. Cognos Inc., [1993] 1 S.C.R. 87; 147 N.R. 169; 60 O.A.C. 1; 99 D.L.R.(4th) 626, refd to. [para. 19].

Eberts v. Carleton Condominium Corp. No. 396 et al. (2000), 136 O.A.C. 317 (C.A.), refd to. [para. 22].

Williston v. Canada (Minister of Indian Affairs and Northern Development) et al. (2005), 274 F.T.R. 260; 2005 FC 829, affd. (2006), 354 N.R. 180; 2006 FCA 316, refd to. [para. 22].

Lim v. Titov (1997), 208 A.R. 338 (Q.B.), refd to. [para. 25].

Canadian Indemnity Insurance Co. v. Andrews & George Co., [1953] 1 S.C.R. 19; [1952] 4 D.L.R. 690, consd. [para. 30].

Dominion Bridge Co. v. Toronto General Insurance Co., [1962] 32 D.L.R.(2d) 374; 37 W.W.R.(N.S.) 673 (B.C.C.A.), affd. [1963] S.C.R. 362; 40 D.L.R.(2d) 840, consd. [para. 34].

Moffat Tank Co. v. Canadian Indemnity Co., [1974] 1 W.W.R. 688 (Alta. C.A.), consd. [para. 41].

Acklands Ltd. v. Canadian Indemnity Co., [1985] 4 W.W.R. 71; 64 Man.R.(2d) 315; 16 D.L.R.(4th) 637 (C.A.), consd. [para. 46].

Capital Regional District v. General Accident Assurance Co. of Canada (1987), 39 D.L.R.(4th) 619; 15 B.C.L.R.(2d) 224 (C.A.), refd to. [para. 50].

Kentville (Town) v. Gestas Inc. et al. (1990), 96 N.S.R.(2d) 339; 253 A.P.R. 339 (T.D.), affd. (1990), 96 N.S.R.(2d) 338; 253 A.P.R. 338 (C.A.), refd to. [para. 50].

Cultus Lake Park Board v. Gestas Inc. et al. (1995), 67 B.C.A.C. 107; 111 W.A.C. 107; 15 B.C.L.R.(3d) 89 (C.A.), refd to. [para. 51].

Bridgewood Building Corp. (Riverfield) v. Lombard General Insurance Co. of Canada, [2005] O.J. No. 2083 (Sup. Ct.), affd. (2006) 211 O.A.C. 4; 266 D.L.R.(4th) 182; 79 O.R.(3d) 494 (C.A.), refd to. [para. 56].

Alie et al. v. Bertrand & Frère Construction Co. et al. (2002), 167 O.A.C. 20; 62 O.R.(3d) 345; 222 D.L.R.(4th) 687 (C.A.), refd to. [para. 56].

Westridge Construction Ltd. v. Zurich Insurance Co. et al. (2005), 269 Sask.R. 1; 357 W.A.C. 1; 2005 SKCA 81, refd to. [para. 56].

J.A.S. v. Gross et al. (2002), 299 A.R. 111; 266 W.A.C. 111; 2002 ABCA 36, refd to. [para. 56].

Vancouver General Hospital v. Scottish & York Insurance Co. (1987), 15 B.C.L.R.(2d) 178; 41 D.L.R.(4th) 657 (S.C.), consd. [para. 57].

Alberta (Treasury Branches) v. SevenWay Capital Corp. (2000), 261 A.R. 278; 225 W.A.C. 278; 2000 ABCA 194, refd to. [para. 61].

Unrau v. Canadian Northern Shield Insurance Co. (2004), 205 B.C.A.C. 91; 337 W.A.C. 91; 262 D.L.R.(4th) 186; 2004 BCCA 585, refd to. [para. 69].

Fermes Dionne ltée/Dionne Farms Ltd. v. Fermes Gervais ltée et al. (2002), 255 N.B.R.(2d) 6; 668 A.P.R. 6; 2002 NBCA 98, refd to. [para. 71].

Authors and Works Noticed:

Brown, Craig, and Menezes, Julio, Insurance Law In Canada (1st Ed. 1982), generally [para. 48].

Hilliker, Gordon, Liability Insurance Law in Canada (4th Ed. 2006), p. 212, fn. 8 [para. 60].

McCamus, John D., The Law of Contracts (2005), pp. 724, 725 [para. 61].

Counsel:

Sydney A. Sabine (Duncan & Craig LLP), for the applicant;

Shawn R. Sipma (Parlee McLaws LLP), for the respondents.

This application was heard on July 20, 2007, before Verville, J., of the Alberta Court of Queen's Bench, Judicial Centre of Edmonton, who delivered the following reasons for judgment on September 6, 2007.