Court Of Appeal Summaries (June 8-12, 2015)

Hello everyone. Below are the summaries of this week's Ontario Court of Appeal decisions. Topics covered include the duty to defend in insurance law; custody; summary judgment; section 7 of the Charter and the Building Code Act; and contractor fraud/theft charges in a home renovation case.

Unifund Assurance Company v. D.E., 2015 ONCA 423

[MacPherson, Cronk and Gillese JJ.A.]

Counsel:

M. O'Donnell and M. Barrett, for the appellant.

V. Msi, for the respondents.

Keywords: Insurance Law, Insurance Policy Interpretation, Duty to Defend, Duty to Indemnify, Exclusion Clauses, Contra Proferentem

Facts:

The respondents, D.E. and L.E., have a homeowners' insurance policy with Unifund Assurance Company ("Unifund"), which includes liability coverage if their personal actions cause unintentional bodily injury or property damage. D.E. and L.E. are defendants in a lawsuit where the anchor claim is that their daughter bullied a fellow student, resulting in physical and psychological injuries. The claim against D.E. and L.E. sounds in negligence: failure to control their daughter.

Unifund refused to defend and indemnify them in the underlying lawsuit, relying on two exclusion clauses in the insurance policy. D.E. and L.E. brought a successful application for a declaration that Unifund had a duty to defend and duty to indemnify. Unifund appeals the application judge's decision.

Issues: Can Unifund rely on the exclusion clauses in the insurance policy to preclude their duty to defend and indemnify D.E. and L.E. in the underlying action?

Held: Appeal allowed. The exclusion clauses preclude the duty to defend and duty to indemnify. Unifund is entitled to costs of the appeal.

Reasoning:

The Court applied the three-part test for interpreting insurance policies in the context of the duty to defend and duty to indemnify, as established in Non-Marine Underwriter, Lloyd's of London v Scalera, 2000 SCC 24. First, a court should determine which of the plaintiff's legal allegations are properly pleaded. Second, the court should determine if any claims are entirely derivative. Finally, the court must decide whether any of the properly pleaded, non-derivative claims could potentially trigger the insurer's duty to defend. At the first and second steps, the plaintiff's claims are properly pleaded, and are not derivative of the intentional tort claim against the respondents' daughter. Finally, the non-derivative claims do not trigger the duty to defend, as a result of the exclusion clauses. Contrary to the application judge, the Court of Appeal found that the exclusion clauses were clearly worded, and rejected the application judge's reliance on the contra proferentem The negligence alleged against the respondents in the Statement of Claim falls within the wording of the exclusion clauses. C.S. v. TD Home and Auto Insurance Company, 2015 ONCA 424

[MacPherson, Cronk and Gillese JJ.A.]

Counsel: M. D. Isaacs and C. A. Grant for the appellants E. Mehrabi for the respondents

Keywords: Civil litigation; Insurance defence and indemnification; Minors; Verbal threats; Physical abuse

Facts: This is a companion appeal to Unifund Assurance Company v D.E. and L.E., also released today, in which the Court of Appeal set aside the order of the application judge and held that the appellant insurance company did not have a duty to defend and indemnify the respondent parents in the underlying action which related to alleged bullying and harassment by several defendants' minor daughters. The principal parties (parents), underlying actions and relevant insurance policies in both cases are identical. In the case at bar, the application judge adopted the reasons at first instance in Unifund and held that TD Home and Auto Insurance Company ("TD Home") had a duty to defend and indemnify the parents, C.S. and J.G., in the underlying action.

Issues:

(1) Can TD Home rely on the exclusion clauses in the insurance policy to preclude their duty to defend and indemnify C.S. and J.G. in the underlying action?

(2) If yes, what happens to the respondents' minor daughter, M.G., who is a party to the underlying action?

(3) What is the correct award of costs?

Holding: TD does not have a duty to defend or indemnify C.S., J.G. and M.G. in the underlying action. On consent of the parties, application costs are fixed at $11,300 and appeal costs at $10,500, both payable to the appellant.

Reasoning:

(1) The application judge erred in his interpretation of the exclusion clause in the insurance policy. The appellant does not have a duty to defend and indemnify the respondent parents in the underlying action.

(2) The style of cause before this Court and in the underlying action includes M.G. as a party. The application judge gave no consideration to the position of M.G. The minor daughter in Unifund was not a party. The underlying action claims that the three minor defendants, including M.G., verbally threatened and physically assaulted K.S. at school, in the community, and also verbally threatened her via telecommunications. By parity of reasoning, exclusion 6(a) in the TD Home policy applies just as it did in Meadows v Meloche Monnex Insurance Brokers Inc., 2010 ONCA 394, and there is no duty to defend or indemnify M.G. in the underlying action.

(3)The application judge awarded the respondents costs of $13,000 "on consent". The parties all state that they agreed on $11,300 to the successful party. The appellant is also entitled to its costs of the appeal, fixed on consent at $10,500.

D.D. v. H.D., 2015 ONCA 409

[Cronk, Gillese and Brown JJ.A.]

Counsel:

C. Murray and S. Wozny, for the appellant.

A. Fazari and A. Iler, for the respondent.

Keywords: Family Law, Custody, Interaction between Child Protection Proceedings and Custody Proceedings, Divorce Act, Children's Best Interests, Domestic Violence, Child Support, Spousal Support, Evidence for Custody

Facts: The mother, H.D. (the "appellant") and the father, D.D. (the "respondent) have two children. In June 2009, the Children's Aid Society ("CAS") became involved with the family due to concerns about domestic violence. Various incidents of violence occurred, resulting in multiple criminal charges against D.D. He later pled guilty to criminal harassment.

H.D. and D.D. reached an agreement on custody, access, and child and spousal support (the "Consent Order"). Subsequent incidents of domestic violence resulted in further criminal charges against D.D. The CAS recommended that D.D. exercise only supervised access, and later apprehended the children from H.D. because she was transient, appeared unstable, and was overwhelmed and homeless. The children were returned to H.D. after 4 days in CAS care.

After H.D. and the children were involved in a car accident en route to Alberta, D.D. brought a motion to vary the Consent Order, gain custody of the children, and end his child and spousal support obligations (the "Motion to Vary"). A hearing was held, where H.D. was ordered to return the children to Ontario and provide the children's address. H.D. did not comply, and was later held in contempt of court.

When the Motion to Vary was returned, H.D. and her counsel were prohibited from participating or filing any materials. By orders dated July 31, 2013 and August 2, 2013 (the "Orders"), D.D. was given custody of the children; H.D. was given supervised access, subject to her providing D.D. with a satisfactory psychiatric report; D.D.'s child and spousal support obligations were terminated; and H.D. was ordered to pay D.D. child support based on imputed annual income of $20,000.

H.D. appealed to the Court of Appeal, and asked that the Orders be set aside and the Motion to Vary remitted for a new hearing before a different judge.

Issues:

(1) Did the motion judge err in giving the respondent custody without considering the children's best interests and without affording the appellant procedural fairness?

(2) Did the motion judge err in making the appellant's access to the children conditional on the respondent's approval?

(3) Did the motions judge err in her determination of the child and spousal support issues?

Holding: Appeal allowed. The motion judge erred on all three determinations. Orders set aside. Motion to Vary to be heard anew before a different judge.

Reasoning: Custody is to be decided based only on the best interests of the children.

(1) A full evidentiary record, including evidence from both parents, is generally required in order to determine the child's best interests (King v. Mongrain, 2009 ONCA 486). The motion judge awarded custody on an inadequate evidentiary basis. The evidence was solely that of the...