



COURT OF APPEAL FOR ONTARIO

CITATION: TD General Insurance Company v. Intact Insurance
    Company, 2019 ONCA 5

DATE: 20190109

DOCKET: C65282

Juriansz, Brown and
    Roberts JJ.A.

BETWEEN

TD General Insurance
    Company

Applicant (Appellant)

and

Intact Insurance Company

Respondent (Respondent)

Marc D. Isaacs and Arie Odinocki, for the appellant

Gary J. Marcuccio, for the respondent

Heard: December 5, 2018

On appeal from the judgment of Justice R. Dan Cornell of
    the Superior Court of Justice, dated March 29, 2018, with reasons reported at
    2018 ONSC 2352.

Juriansz J.A.:

[1]

The passenger of a boat, specifically a 17½ foot Aluma with a 135
    horsepower outboard motor, claims she was injured when the boat struck the
    shoreline. The passenger sued both the driver and the owner of the boat.

[2]

The driver was covered by two policies of insurance. The owner of the
    boat held a TD insurance policy that covered the driver, who was driving the
    boat with the owners permission. The driver was also covered by his own
    homeowners policy, issued by Intact.

[3]

The two policies have identical other insurance clauses that provide:

If you have other insurance which
    applies to a loss or claim, or would have applied if this policy did not exist,
    this policy will be considered excess insurance and we will not pay any loss or
    claim until the amount of such other insurance is used up.

[4]

TD brought an application seeking an order that both insurance companies
    were on an equal footing and had to share equally in the defence and indemnity
    of the driver stemming from the passengers claim.

[5]

The application judge dismissed the application. TD appeals. I would
    allow the appeal.

A.

Reasons of the Application Judge

(a)

Family Insurance Corp. v. Lombard Canada Ltd.

[6]

The application judge began his analysis by noting the governing
    authority was the Supreme Courts decision in
Family Insurance Corp. v.
    Lombard Canada Ltd.
, 2002 SCC
    48, [2002] 2 S.C.R. 695. He succinctly set out the facts and conclusion in that
    case.

[7]

He noted that in
Family
    Insurance
, the insured was
    covered under a homeowner policy issued by
Family Insurance

with a
maximum benefit of one million dollars. The insured also had
    coverage issued by
Lombard Canada
    Ltd.

under a commercial general liability
    policy for claims up to five million dollars. Both policies contained other
    insurance clauses that declared the policies to be excess insurance to any
    other insurance coverage. Each insurer relied on its other insurance clause
    to shield itself from primary liability. The Supreme Court concluded that because
    the two other insurance clauses were irreconcilable, the insurers were
    required to share their obligations.

[8]

The application judge also correctly noted in
Family Insurance

the Supreme Court held the
insurance policies themselves must be
    construed to determine the liability of each insurer, and the court should not
    refer to surrounding circumstances or look outside the policies.

(b)

The provisions of the policies

[9]

The application judge noted the TD Home Insurance Policy contained a
    Personal Liability Extension that insured liability arising from the specific
    boat involved in the accident. Section II  Liability of the TD Policys
    Declarations section states: Personal liability extension(s): WATERCRAFT
    LOC.01 OUTBOARD 101HP-150HP 1. The Policys Appendix contains a Schedule of
    Personal Property Watercraft Insurance that provides coverage for the following:

2008 ALUMA CRAFT 171/2 FT SERIAL
    #ACBJ9501A808 $17000 MOTOR IS OB MOTOR 2006 135 HP OPTIMAX MERCURY SERIAL
    #1B427575 $3000 TRAILER EASY HAULER SINGLE AXEL $1000

[10]

The
    application judge noted the TD Policy charged an additional premium of $516 for
    the Personal Liability Extension.

[11]

The
    driver of the boat was covered by the TD Policy because he was operating it
    with the owners consent. The TD Policy states that [y]ou or your refers
    to the Insured, which is defined by the TD Policy as including any person or
    organization legally liable for damages caused by a watercraft or animal owned
    by you, and to which this insurance applies.

[12]

The
    application judge then turned his attention to the Intact policy. He noted the
    Intact policy provides coverage for liability for unintentional bodily injury
    arising out of the policy holders personal actions anywhere in the world
    including claims arising out of [his] use or operation of any type of
    watercraft.

[13]

He
    goes on to observe that the Intact policy limited coverage for watercraft owned
    by the policyholder to watercraft  equipped with an outboard motor or motors
    of not more than 19kW (25H.P.). He also observed that in a similar fashion the
    TD Policy limited coverage to watercraft with an outboard motor of not more
    than 16 H.P. unless specifically mentioned in the Declarations Page.

[14]

The application judge reasoned that the
    Personal liability extension(s) demonstrated an intention on the part of TD
    to cover a different type of risk than that covered by the basic watercraft
    coverage in each policy. He found it was clear that TD intended to provide the
    primary insurance coverage for the watercraft. He added that Intact had
    conceded that it is an excess insurer to the claim that has been presented
    should such claim exceed the limits of the TD policy.

[15]

Since the TD Policy provided the primary
    insurance for the watercraft in question and Intact conceded it provided
    excess insurance, the application judge dismissed TDs application for an order
    that the two companies had
to share equally in the defence and indemnity
    of the driver
.

B.

Analysis

[16]

The application judge erred in law by
    applying the closeness to the risk approach characterizing the Minnesota
    approach, which the Supreme Court expressly rejected at paras. 22-28 of
Family
    Insurance
. In para. 22,
    Bastarache J. described the modern manifestation of the Minnesota approach to
    overlapping coverage as having 
evolved into an analysis of the
    competing policies in an effort to determine each insurers intention to cover
    the particular loss. In assessing each of the insurers closeness to the
    risk, courts that employ the Minnesota approach look to the following
    non-exclusive factors:

(1) Which policy specifically described the accident-causing
    instrumentality?

(2) Which premium is reflective of the greater contemplated
    exposure?

(3) Does one policy contemplate
    the risk and use of the accident-causing instrumentality with greater
    specificity than the other policy  that is, is coverage of the risk primary in
    one policy and incidental to the other?

[17]

These
    are factors that the application judge employed in this case. In
Family
    Insurance
the Supreme Court rejected this approach to overlapping coverage.
    It adopted a different approach to overlapping coverage. Where there is overlapping
    coverage 
the focus of the
    examination is to determine whether the insurers intended to limit their
    obligation to contribute, by what method, and in what circumstances
vis-à-vis
the insured; at para. 28. Where there are no limiting intentions or where
    those intentions cannot be reconciled, the insurers must share the burden
    equally under a coordinate obligation to make good the loss.

[18]

In my view, the analysis may be boiled
    down to two questions.

[19]

The first question is
    whether there is overlapping coverage. The answer in this case is yes.
The
    TD Policy covered the drivers liability, as the application judge found, by
    virtue of the Personal Liability Extension. The Intact policy covered the
    drivers liability from the accident in the 135H.P. Aluma watercraft because
    he, as the policy holder, did not own it. The clause limiting coverage to
    watercraft equipped with an outboard motor of not more than 25H.P. applied only
    to watercraft owned by the policy holder.

[20]

The second question is
    whether the insurers intended to limit their obligation to contribute, by what
    method, and in what circumstances vis-à-vis the insured. The focus in answering
    the second question is on the excess insurance clauses. The application judge
    found it significant that Intact would be an excess insurer should the claim
    exceed the limits of the TD Policy. However, as noted in para. 3 above, both
    policies had identical other insurance clauses. So in the same way, should the
    claim exceed the limits of the Intact policy, TD would be an excess insurer
    should. The limiting obligations in the two policies were irreconcilable.

[21]

The proper application
    of
Family Insurance
leads to the result that the two insurers must share the burden equally under a
    coordinate obligation to make good the loss.

[22]

The
    application judge found support for his conclusion in the decision of this
    court in
Lawyers Professional Indemnity Company v. Lloyds Underwriters
,
    2017 ONCA 858. The case is distinguishable on its facts. In
Lloyds
    Underwriters
, the LPIC policy expressly acknowledged that other policies,
    specifically arranged to apply as excess insurance to LPIC's policy, were to be
    treated as being excess policies. In these circumstances, the application judge
    correctly found the Lloyds policy was excess to the LPIC policy, a conclusion
    upheld on appeal. In the present case, both policies, by their terms, afforded
    primary coverage to the driver for the claim, and both policies provide that
    they are excess to other insurance that covers the loss. The conflict is
    irreconcilable.

[23]

The appeal is allowed. The application
    judges order is set aside and replaced with an order granting the relief
    requested in paras. (a)-(d) of TDs notice of appeal. TD is granted costs of
    the appeal fixed in the amount of $10,000.00 inclusive, and costs of the
    application fixed in the amount of $2,000.00 inclusive.

Released: RGJ Jan 9 2019

R.G. Juriansz J.A.

I agree. David Brown
    J.A.

I agree. Roberts
    J.A.


