



COURT OF APPEAL FOR ONTARIO

CITATION: Allstate Insurance Company of Canada v. Aftab, 2015
    ONCA 349

DATE: 20150515

DOCKET: C59505

Strathy C.J.O., LaForme and Tulloch JJ.A.

BETWEEN

Allstate Insurance Company of Canada

Applicant (Appellant)

and

Sumaira Aftab

Respondent (Respondent)

and

Meng C. Chiu and Honda
    Canada Finance Inc.

Respondents

Sheldon A. Gilbert, Q.C.,
    for the appellant

Louis P. Covens, for the respondents
    Meng C. Chiu and Honda Canada Finance

Dena Oberman, for the
    respondent Sumaira Aftab

Heard: May 11, 2015

On appeal from the order of Justice David Price of the
    Superior Court of Justice, dated October 15, 2014, with reasons reported at
    2014 ONSC 5996.

ENDORSEMENT

[1]

The application judge determined that the appellant Allstate Insurance
    Company of Canada had a duty to defend its insured, Sumaira Aftab, under her
    homeowner insurance policy. The issue on appeal is governed by the decision of
    this court in
Sheppard v. Co-Operators General Insurance Co.; Quick v.
    MacKenzie
(1997), 33 O.R. (3d) 362. The application judge effectively
    found that decision had been displaced by our more recent decision in
Bawden
    v. Wawanesa Mutual Insurance Company
, 2013 ONCA 717, 118 O.R. (3d) 189. We
    disagree, and for that reason allow the appeal.

Background

[2]

Aftabs young son, Sameer, was hit by a car while crossing the road
    after getting out of her van.

[3]

Aftab commenced an action on behalf of Sameer against the respondent Chiu,
    the driver of the car that hit him. Chiu counterclaimed against Aftab for
    indemnification, alleging she had failed to take reasonable steps to ensure her
    sons safety.

[4]

Aftabs auto insurer, Unifund Assurance Company, and her homeowner
    insurer, Allstate, brought separate proceedings for declarations that they had
    no duty to defend the counterclaim or to provide coverage for damages.

[5]

The applications were heard together. Unifund argued that Sameers
    injury did not arise from the use and operation of the van. Allstate argued
    that it did arise from the use of the van and was therefore excluded from
    coverage under the homeowner policy. It also argued that in any event, the homeowner
    policy excluded coverage for bodily injuries to residents of Aftabs household.

[6]

The application judge held that both insurers had a duty to defend Aftab
    from the counterclaim against her. Allstate appeals, asserting that coverage
    for the counterclaim is excluded by its homeowner policy, because it is a claim
    arising from bodily injury to a person residing in Aftabs household.

[7]

The relevant provisions of Allstates policy are as follows:

You are insured
    for claims made against you
arising from
:

1.

Personal
    Liability  Legal Liability arising out of your personal actions anywhere in
    the world.

You are not
    insured for claims made against you
arising from
:

(a)

The ownership, use or operation of any motorized vehicle, trailer, or
    watercraft, except those insured in this policy;



  Bodily Injury to you or to any
    person residing in your household other than a residence employee. [Emphasis
    added.]

[8]

There is no dispute that the counterclaim for inadequate supervision
    falls within the broad scope of coverage and that, absent an applicable
    exclusion, Allstate has an obligation to defend. The issue is whether this
    courts decision in
Quick
, interpreting virtually identical contract
    language, should be applied, or whether
Bawden
represents a change in
    the law, reflecting the purpose of the exclusion and the reasonable
    expectations principle.

Analysis

[9]

The coverage and exclusion provisions in the Allstate policy are
    virtually identical to the provisions of the homeowner policy considered by
    this court in
Quick,
above.

[10]

Quick
,
    heard together with
Sheppard
,

also involved a counterclaim by
    a tortfeasor against a parent for negligent failure to supervise a child. The
    motion judge had held that the claim did not arise from the injury to the
    child, but from the parents lack of supervision. Catzman J.A., speaking for this
    court, rejected this interpretation and allowed the appeal. He held that on the
    plain wording of the policy, the counterclaim against the parents was one
    arising from the childs bodily injury.

[11]

Here,
    the application judge referred to the decision in
Quick
, noting that
    the exclusion clause there was almost identical to the exclusion in this
    case. He stated, however, that the exclusion had been more recently considered
    in
Bawden
, which interpreted the exclusion more narrowly. He noted
    that in that case the court had observed that a narrow interpretation of the
    exclusion was consistent with the purpose of the clause, namely to remove from
    coverage claims that raise a risk of collusion between the claimant and the
    insured family member. Thus, direct claims by a family member against the
    insured homeowner would be excluded, but indirect claims by a third party
    against the homeowner would not be excluded.

[12]

Bawden
is distinguishable because, as this court noted, the ambiguous language of
    the exclusion clause there was quite different from the clause in
Quick
and
    in this case. Here, as in
Quick
, both the coverage clause and the
    exclusion clause use the term arising from. In
Bawden,
the use of the
    word for in the exclusion clause, rather than arising out of, was found to
    limit the scope of the exclusion. Here, in contrast, there is symmetry between
    the coverage on the one hand and the exclusion from the scope of coverage on
    the other.

[13]

A
    reading of the reasons of Sanderson J. of the Superior Court in
Bawden
,
    2013 ONSC 1618, 116 O.R. (3d) 9, at para. 53, serves to distinguish that case
    from
Quick
:

In
Quick
,
    the Court of Appeal considered whether the parents of Laura were entitled to
    coverage for damages for their failure to supervise her despite an exclusion
    clause in their homeowners policy: you are not insured
for claims made against you arising
    from: bodily injury to you or to any person residing in your household
.
    The exclusion clause referred to claims made against the insureds
arising from bodily injury to Laura
.
    The Court of Appeal held the counterclaim was a claim
arising from
Lauras bodily injury within the
    meaning of the clause. In
Quick
,
    the words
arising from
were used in both the coverage provision and the exclusion clause. The scope of
    the wording in the exclusion was clearly as broad as the scope of the coverage
    provision.
Arising from
clearly covers indirect claims. [Emphasis in original.]

[14]

Later
    in her reasons, in language that was specifically approved by this court, Sanderson
    J. noted the absence of the words arising out of in the exclusion clause, in
    contrast with their use in the coverage clause, observing that it was open to
    the insurer to have used the same broad language in the exclusion.

[15]

In
    our view, nothing in
Bawden
supports the interpretation of the policy
    advanced by the respondent. Indeed,
Bawden
supports the appellants
    submission that the language in Allstates policy, like the homeowners policy
    in
Quick
, serves to exclude coverage for the counterclaim because it
    arises from the injury to Sameer.

[16]

There
    is no dispute about the applicable principles of insurance policy
    interpretation, including the principle that coverage provisions should be
    construed broadly and exclusions should receive a narrow interpretation:
Monenco
    Ltd. V. Commonwealth Insurance Co.
, 2001 SCC 49, [2001] 2 S.C.R. 699, at
    para. 31.

[17]

It
    remains the law, however, that the primary interpretative principle in the
    construction of insurance policies is that, where the policy is unambiguous,
    the court should give effect to its clear language, reading the policy as a
    whole:
Progressive Homes Ltd. V. Lombard General Insurance Co. of Canada
,
    2010 SCC 33, [2010] 2 S.C.R. 245, at para. 22;
Non-Marine Underwriters,
    Lloyds of London v. Scalera
, 2000 SCC 24, [2000] 1 S.C.R. 551, at para.
    71.

[18]

Another
    important principle is that the courts should strive to ensure that similar
    insurance policies are construed consistently:
Progressive Homes
,

at
    para. 23;
Co-operators Life Insurance Co. v. Gibbens
, 2009 SCC 59, [2009]
    3 S.C.R. 605, at para. 27. This gives certainty and predictability to insurance
    companies and their customers.

[19]

The
    respondents submit that the application judges interpretation gives effect to
    the reasonable expectation of the parties. In our view, the reasonable
    expectations doctrine has no application where, as here, the policy language is
    unambiguous and where, as here, the plain meaning of that language does not
    strip the policy of all efficacy or deprive the insured of what she bargained
    for.

[20]

Nor
    would we give effect to the appellants reliance on the purpose of the
    exclusion clause discussed in
Bawden
 to prevent collusion between
    family members. That may well have been the purpose of the narrower exclusion
    in that case, but the purpose of the clause here is clear and broader  to
    exclude the risk of claims arising from injuries to the insured or residents of
    her household.

Disposition

[21]

For
    these reasons, the appeal is allowed, the order of the motion judge is set
    aside, and this court declares that the respondent Sumaira Aftab is not
    entitled to coverage from the appellant with respect to the counterclaim in
    Court File CV-11-37117-00.

[22]

We
    see no reason why the respondents should not pay costs in the usual course.
    Their positions were advanced by insurance companies with a direct financial
    interest in the outcome. Costs of the appeal are fixed in the agreed amount of
    $14,389.26, all inclusive, and shall be paid by the respondents, jointly and
    severally. The costs below are fixed at $5,650.00, all inclusive, payable by
    the respondents Chiu and Honda Canada Finance Inc.

G.R.
Strathy C.J.O.

H.S. LaForme J.A.

M. Tulloch J.A.


