



COURT OF APPEAL FOR ONTARIO

CITATION: Sam's Auto Wrecking Co. Ltd. (Wentworth
    Metal) v. Lombard General Insurance Company of Canada, 2013 ONCA
    186

DATE: 20130328

DOCKET: C54634

Laskin, Rosenberg and Tulloch JJ.A.

BETWEEN

Sam's Auto Wrecking Co. Ltd., c.o.b. as Wentworth
    Metal

Plaintiff (Appellant)

and

Lombard General Insurance Company of Canada,
Dalton Timmis Insurance Group Inc., and George McCarter

Defendants (
Appellants
/Respondent)

Mark M. O'Donnell, for the appellants

Jack F. Fitch and Jason Arcuri, for the respondent

Heard: September 10, 2012

On appeal from the judgment of Justice Alan C.R. Whitten
    of the Superior Court of Justice, dated October 28, 2011, with reasons reported
    at 2011 ONSC 6441.

Laskin
    J.A.:

A.

overview

[1]

The question on this appeal is whether Lombard General Insurance Company
    is required to indemnify its insured, Wentworth Metal, and Wentworths
    insurance broker, Dalton Timmis Insurance Group Inc., for money they paid to
    settle a personal injury claim brought by Wentworths former operations
    manager, John Ferber.

[2]

Ferber was badly injured in a workplace accident caused by one of
    Wentworths employees, Bill Cooper.  At the time, Ferber was an executive
    officer of Wentworth and was not covered by Workers Compensation.  He sued
    Wentworth and Cooper for damages for his injuries.  Wentworth then sued
    Lombard, Dalton, and Daltons broker, George McCarter, who had secured
    Wentworths insurance.  Dalton and McCarter in turn cross-claimed against
    Lombard.  Wentworth alleged that Ferbers claim was covered by its commercial
    general liability policy with Lombard and, in the alternative, that Lombard,
    Dalton, and McCarter were negligent in failing to provide insurance if it was
    sued by an employee not covered by Workers Compensation.

[3]

Ferbers action was settled.  Wentworth and Dalton contributed to the
    settlement.  Wentworth then discontinued its action against Dalton and
    McCarter, and proceeded against Lombard.  After a trial, Whitten J. dismissed
    Wentworths claim.  He held that at the time of the accident, Ferber was an
    employee of Wentworth and was working in the course of his employment. Therefore
    insurance coverage was unavailable because of the employee injury exclusion
    in Lombards commercial general liability policy.

[4]

Wentworth, Dalton, and McCarter appeal.  The main issue on the appeal is
    whether the trial judge erred in holding that the employee injury exclusion
    applied.  The appellants say that he erred because the exclusion did not apply
    to executive officers.  Lombard says that the trial judge was correct because
    the exclusion applied to all employees, including executive officers like Ferber.

[5]

The appellants also raise three other grounds of appeal.  They submit:

·

The umbrella policy later purchased by Wentworth provides
    coverage for Ferbers injuries;

·

Lombard is obligated to indemnify Wentworths employee Cooper;
    and

·

Lombard is vicariously liable for Daltons negligence.

B.

background facts

(1)

Wentworth

[6]

Sams Auto Wrecking Co. Ltd., c.o.b. as Wentworth Metal, has operated a
    scrap metal business in Hamilton for over 90 years.  When this litigation took
    place, Wentworths principal owners were two brothers, Ken and Lorne Rochwerg.

[7]

All of Wentworths employees were covered by Workers Compensation, as
    required by Ontario law.  However, in 1989 or 1990, Wentworth purchased
    disability insurance for its management team and removed these employees from Workers
    Compensation coverage.  Wentworth determined that the disability insurance was
    less expensive than Workers Compensation premiums.  Lorne Rochwerg testified
    he did not appreciate the relationship between Workers Compensation and the
    coverage purchased from Lombard.

(2)

John Ferber

[8]

In October 1989, John Ferber was hired by Wentworth as its operations
    manager.  He signed an employment contract, which described him as an
    employee.  His responsibilities included overseeing the operation of the
    plant and acting as safety coordinator.  Ken Rochwerg called him an excellent
    employee.

[9]

Ferber was one member of the management team Wentworth removed from Workers
    Compensation and for whom it purchased disability insurance.  In 1990, Ferber
    was made an executive officer: he was appointed vice-president of Wentworths
    parent company.  The appointment was necessary because Workers Compensation
    coverage is automatic and mandatory for workers but optional for executive
    officers.

[10]

Ferber
    stopped working for Wentworth after he sued the company for injuries caused by
    his workplace accident.  On his termination, he was paid all of his outstanding
    vacation pay in accordance with the
Employment Standards Act
, R.S.O.
    1990, c. E.14
[1]
. 
    Also, Wentworth prepared and issued a Record of Employment, as it was required
    to do for all of its terminated employees.

(3)

Wentworths insurance policies with Lombard

[11]

Lombard
    is a commercial liability insurer.  It first insured Wentworth in April 1997,
    several years after Ferber had been removed from Workers Compensation
    coverage.  Lombard sold Wentworth a comprehensive business policy with a
    one-year term, which was later extended.  The policy included commercial
    general liability (CGL) insurance of $2 million.

[12]

The
    CGL insuring agreement provided broad coverage for bodily injury and property
    damage liability.  It also contained exclusions.  One exclusion was the
    employee injury exclusion: the insurance coverage did not apply to bodily
    injury to an employee of the Insured arising out of and in the course of
    employment by the Insured.  The scope of this exclusion is at the heart of
    this appeal.

[13]

In
    February 1998, Wentworth amended its insurance policy to include umbrella
    liability coverage, which provided an additional $3 million in liability
    insurance.  The umbrella policy similarly included an employers liability
    exclusion endorsement, which stipulated that this insurance did not apply to
    personal injury to an employee of the Insured arising out of and in the course
    of employment by the Insured.

(4)

The role of Dalton and McCarter

[14]

Dalton
    was an insurance brokerage firm in Hamilton.  McCarter was one of its insurance
    brokers.  Wentworth relied on McCarter to secure the insurance coverage that it
    needed.  Wentworth had no direct dealings with Lombard.  McCarter acknowledged
    that Wentworth relied on his expertise.

[15]

McCarter
    arranged with Lombard for both the initial comprehensive business policy, which
    included CGL coverage, and the amending umbrella liability policy.  However,
    Wentworth did not tell McCarter and he did not know that Wentworth had
    purchased disability insurance for Ferber and a few other employees and had
    removed those employees from Workers Compensation coverage.  Wentworth also
    did not tell Lombard that it had done so.

(5)

The workplace accident

[16]

On
    May 26, 1998, Ferber was seriously injured in a workplace accident.  He was
    supervising the unloading of a truck.  Wentworth was using one of its crawler
    cranes to do the unloading.  Cooper operated the crane.  Unfortunately, the
    crane struck Ferber and ran over him.  His foot and leg were badly injured.

(6)

The litigation

(a)

Ferbers action

[17]

In
    May 2000, Ferber sued Wentworth and Cooper for damages for the injuries he sustained
    in the workplace accident.  Lombard denied coverage.

(b)

Wentworths action

[18]

In
    September 2000, Wentworth started the present action against Lombard, Dalton,
    and McCarter.  It sought coverage and indemnity for Ferbers claims against
    it.  And it alleged negligence for failing to provide insurance coverage for
    claims by an employee not covered by Workers Compensation.

[19]

Dalton
    and McCarter cross-claimed against Lombard.  Lombard, however, did not assert a
    cross-claim.

(c)

The settlement of Ferbers action and its aftermath

[20]

In
    September 2003, the Ferber action settled.  Ferber received $950,000:  $200,000
    was paid by or on behalf of Wentworth and Cooper; and $750,000 was paid by or
    on behalf of Dalton and McCarter.

[21]

After
    the settlement, Wentworth discontinued its action against Dalton and McCarter
    but continued its claim against Lombard.  Dalton and McCarter continued their
    cross-claim against Lombard.

[22]

In
    addition, after the settlement, Wentworth amended its statement of claim.  In
    the amendment, it pleaded that Ferber was an executive officer and not its
    employee. Therefore it alleged that the employee injury exclusion in the CGL
    coverage did not apply.

[23]

After
    the settlement and the amendment, Dalton and McCarter became, in effect,
    co-plaintiffs with Wentworth.  They all sought indemnification from Lombard for
    the money they had paid to settle the Ferber action.

C.

analysis

Issue 1  Did the trial judge err
    in holding that the employee injury exclusion in the CGL coverage disentitled
    Wentworth to indemnification?

[24]

This
    is the main issue on the appeal.   To frame the issue, it is necessary to
    consider the wording of the relevant provisions of the CGL coverage in
    Wentworths insurance policy.  Two provisions are relevant: Section I on
    coverage and Section II on who is an insured.

[25]

Section
    I contains a broad grant of coverage and certain listed exclusions, including
    (d) the employee injury exclusion:

SECTION I  COVERAGES

COVERAGE A.  BODILY INJURY AND PROPERTY DAMAGE LIABILITY

1.       Insuring Agreement

a.       We will pay those sums that the Insured becomes
    legally obligated to pay as compensatory damages because of bodily injury or property
    damage to which this insurance applies

2.       Exclusions.

This insurance does not apply to:



d.       Bodily injury to an employee of the Insured
    arising out of and in the course of employment by the Insured.

This exclusion applies:

1)       Whether the Insured may be liable as an employer or in
    any other capacity; and

2)       To any obligation to share compensatory damages with
    or repay someone else who must pay compensatory damages because of the injury.

This exclusion does not apply:

1)       To liability assumed by the Insured under an Insured
    contract; or

2)       To employees on whose behalf contributions are made by
    or required to be made by the Insured under the provisions of any workers
    compensation law.



[26]

The
    employee injury exclusion in commercial general liability policies has a sound
    rationale.  Commercial general liability coverage is intended to protect the
    insured against losses to third parties or to the public arising out of the
    operation of the insureds business:  see
Alie v. Bertrand & Frere
    Construction Co. Ltd.
(2002), 62 O.R. (3d) 345 (C.A.), at para. 27.  The
    coverage is not intended to protect the insured against losses to its own
    employees from workplace injuries.

[27]

Turning
    to the language of the exclusion, it is evident from its wording that it does
    not refer to executive officers.  It simply says, in substance, that Wentworth
    is not covered for bodily injury to one of its employees arising out of and in
    the course of employment with it.

[28]

However,
    Section II, on who is an insured, appears to distinguish between employees and
    executive officers:

SECTION II  WHO IS AN INSURED

1.       If you are designated in the Schedule of Part VI as:



c.       An organization other than a partnership or joint
    venture, you are an Insured.  Your executive officers and directors are
    Insureds, but only with respect to their duties as your officers or directors

2.       Each of the following is also an Insured:

a.       Your employees, other than your executive officers,
    but only for acts within the scope of their employment by you.  However, none
    of these employees is an Insured for:

1)  Bodily injury or personal injury to you or to
    a co-employee while in the course of his or her employment

[29]

Ferber
    was undoubtedly an executive officer at the time he was injured.  Although the
    insurance policy does not define executive officer, the Procedure Manual of
    the former Workmens Compensation Board defined executive officers to include
    among others, vice-presidents: see
Ryan v. Ontario (Workmens Compensation
    Board)
(1984), 6 O.A.C. 33.  Similarly the Ontario Workplace Safety and
    Insurance Appeals Tribunal has defined an executive officer as anyone holding
    the position, among others, of vice-president: see
Decision No. 14/98
,
    [1999] O.W.S.I.A.T.D. No. 199 (Ont. W.S.I.A.T.).

[30]

Ferbers
    injuries undoubtedly arose out of and in the course of his employment with
    Wentworth.  He was injured while supervising the unloading of a truck.  The
    trial judge concluded that the employee injury exclusion disentitled Wentworth
    to coverage.  He found that Ferber was an employee of Wentworth.  However, in
    his view, any distinction between employee and executive officer was
    academic.  Wentworth had no coverage for Ferbers injury, no matter how
    Ferber was classified.  The trial judge wrote at, para. 68 of his reasons:

There was no coverage for the personal injury to Mr. Ferber
    either as an employee or an executive officer.  The distinction between the two
    terms is academic.  If it were not, the court would be inclined to say that Mr.
    Ferber was within the classic definition of an employee.  He was not an
    independent contractor.  He was an employee subject to the terms of his
    employment contract and the appreciation of the Rochwergs.  He was described as
    such by the latter.

[31]

Wentworth
    challenges the trial judges holding on two grounds: first, it argues that
    Ferber was not an employee; second, it argues that even if he was an
    employee, the employee injury exclusion does not extend to employees who are
    also executive officers.  Lombard says in response that the evidence amply
    supports the trial judges finding that Ferber was an employee and that the
    employee injury exclusion applies to all employees whether or not they are
    executive officers.  I agree with the trial judges conclusion, though my
    reasons differ somewhat.

[32]

In
    my view, this ground of appeal raises two questions. One, was Ferber an
    employee of Wentworth? And two, if he was, does the employee injury exclusion apply
    to employees who were also executive officers?

(1)

Was Ferber an employee of Wentworth?

[33]

Ferber
    was an executive officer of Wentworth.  However, as the trial judge noted,
    there is no inconsistency in being both an executive officer and an employee.  Neither
    the insurance policy nor the
Workplace Safety and Insurance Act, 1997
,
    S.O. 1997, c. 16, Sched. A, states that an employee does not include an
    executive officer. Compare:
Berger v. Willowdale A.M.C.
(1983), 41
    O.R. (2d) 89 (C.A.).  Executive officers who work for a company typically will
    also be employees of the company.  American courts have so held, and their
    holdings seem to me to be reasonable.  It accords with commercial and business
    reality:  see
Fontana v. Zurich Insurance Company
, 430 So.2d 718
    (1983) (Court of Appeal of Louisiana) and
Zaiontz v. Trinity Universal
    Insurance Company
, 87 S.W. 3d. 565 (2002) (Court of Appeals of Texas).

[34]

Whether
    a person is an employee is largely a question of fact.  The evidence at trial
    reasonably  indeed, overwhelmingly  supports the trial judges factual finding
    that Ferber was an employee when he was injured.  Some of that evidence is the
    following:

·

Ferbers employment contract referred to him as an employee;

·

Ferbers employment contract prescribed his hours of employment;

·

Ferber did not have an ownership interest in Wentworth;

·

Ken Rochwerg, one of Wentworths owners, called Ferber an
    excellent employee;

·

Ferber was part of Wentworths management team, but Ken Rochwerg
    testified that management had titles for the sake of titles;

·

Ken Rochwerg also testified that though Ferber was an executive
    officer, he was like all of them a salaried employee of the company;

·

Ferber was not a signing officer of Wentworth and had no
    authority to sign cheques;

·

When his employment ended, Ferber was paid his outstanding
    vacation pay under the
Employment Standards Act
;

·

When he stopped working for Wentworth, the company issued a
    Record of Employment, as it was required to do for all of its employees whose
    employment was terminated.

[35]

Thus,
    I see no basis to interfere with the trial judges finding that Ferber was an
    employee of Wentworth.  Ferber was, therefore, both an employee and an
    executive officer of Wentworth when he sustained a workplace injury.

(2)

Did the employee injury exclusion apply to employees who were also
    executive officers?

[36]

This
    is a question of contract interpretation.  The employee injury exclusion
    provides:

This insurance does not apply to:



d.       Bodily injury to an employee of the Insured
    arising out of and in the course of employment by the Insured.

This exclusion does not apply:

(2) To employees on whose behalf contributions are made by or
    required to be made by the Insured under the provisions of any workers
    compensation law.

[37]

The
    principles for interpreting insurance policies, and in particular exclusion
    clauses, are well-established.  The policy should be interpreted to promote a
    reasonable commercial result; provisions granting coverage ought to be
    construed broadly; provisions excluding coverage ought to be construed
    narrowly; in the case of ambiguity, the interpretation most favourable to the
    insured should be adopted; and even a clear and unambiguous clause should not
    be given effect if to do so would nullify the coverage provided by the policy.

[38]

The
    trial judge considered these various principles.  He concluded, at para. 62,
    that there was no ambiguity in the insuring agreement or the employee injury
    exclusion and that the exclusion did not nullify coverage:

There is no ambiguity in subsections 1 and 2.  The
    Insuring Agreement and Exclusions (specifically subsection (d)), Personal
    Injury to the public described above is covered.  However, what is
    exempted is personal injury to an employee working in the course of his or her
    employment.  Given the nature of the business, that exemption could be
    anticipated to be covered by the WSIB regime.  That exception is
    understandable in such coverage and is a function of the existence of the WSIB
    scheme and the need to avoid double indemnification.  The exemption per se
    does not render the coverage a nullity or a departure from reasonable
    commercial expectations.

[39]

Wentworth
    submits that the trial judge erred in two ways: first, he failed to consider
    the interplay between Sections I and II of the CGL coverage  between the
    insuring agreement and who is an insured; and second, he erred by not at least
    finding ambiguity in the interpretation of the employee injury exclusion.  I do
    not agree with Wentworths submission.

[40]

Wentworth
    says that because Section II of the CGL coverage differentiates between
    employees and executive officers, then logically that differentiation should
    also apply to Section I, absent contrary language.  Thus, according to
    Wentworths argument, the employee injury exclusion should apply only to
    employees, not to executive officers even if they are also employees, because
    executive officers are not expressly referred to in Section I.  At worst,
    Wentworth argues, the interpretation of the exclusion is ambiguous and so
    should not apply to Ferbers injury.

[41]

I
    reach the opposite conclusion.  In my opinion, the employee injury exclusion is
    unambiguous and applied to all employees including those, like Ferber, who were
    also executive officers.  Section II of the CGL coverage differentiates between
    employees who are not executive officers and those who are solely for the
    purpose of determining who is an insured and in what circumstances.  A person
    sued as an executive officer is treated differently from a person sued as an
    employee.  And, presumably, a person can be an insured in both capacities.

[42]

However,
    Section I of the CGL coverage, and in particular the employee injury exclusion,
    does not distinguish executive officer employees from non-executive officer employees. 
    As Section II does differentiate between these two types of employees, one can
    reasonably infer that the lack of differentiation in Section I was intended. 
    All employees, including those who are executive officers, come within the
    exclusion.  To give effect to Wentworths position would require reading words
    into the exclusion.  The exclusion would have to read:



d.       Bodily injury to an employee of the Insured
other than an employee who is also an executive officer


[43]

Reading
    words into a provision that is unambiguous in its scope is not justified. 
    Wentworth is not entitled to insurance coverage for the workplace injury to
    Ferber because Ferber was an employee of Wentworth at the time, yet not covered
    by Workers Compensation.

[44]

I
    acknowledge that my interpretation of the exclusion seems to produce an odd
    result, perhaps because the language of the policy is drawn from American
    usage.  The exclusion takes away coverage where an Ontario employer might wish
    to have it: for a workplace injury not covered by workers compensation legislation. 
    The exception to the exclusion brings back into coverage claims by employees for
    whom the employer paid or was required to pay workers compensation premiums:
    that is, for a workplace injury where insurance coverage is not needed because
    of Workers Compensation.

[45]

Ferbers
    claim does not fall within the exception to the exclusion because Wentworth did
    not pay nor was it required to pay Workers Compensation premiums on his
    behalf.  Thus, his claim is one of an undoubtedly small group of workplace
    injuries for which the employer has neither workers compensation nor insurance
    coverage.  In short, there is a coverage gap.  See Mark G. Lichty and Marcus
    B. Snowden,
Annotated Commercial General Liability Policy
, Loose Leaf
    Edition (Aurora: Canada Law Book, 2006), pp. 16-02  16-17.

[46]

Wentworth,
    however, had at least one and likely two ways to eliminate this coverage gap,
    one through Workers Compensation and the other through insurance.

[47]

One
    certain way to have provided coverage would have been to have had Ferber
    covered by Workers Compensation.  Section 12(2) of the
Workplace Safety
    and Insurance Act
, allows a company to have its executive officers covered
    by Workers Compensation:

Upon the application
    of a Schedule 1 or Schedule 2 employer who is a corporation, the Board may
    declare that an executive officer of the corporation is deemed to be a worker
    to whom the insurance plan applies. The Board may make the declaration only if
    the executive officer consents to the application.
[2]

[48]

Wentworth
    elected not to do this.  Instead, to save money, it decided to take Ferber and its
    other executive officers out of Workers Compensation and pay for a private
    disability insurance policy.  It was, of course, entitled to do so, but its
    decision had the consequences that have led to this litigation.

[49]

The
    second way Wentworth could have eliminated the coverage gap would have been by
    buying an employers bodily injury liability coverage extension endorsement. 
    Wentworth did not purchase this endorsement before Ferbers injury.  There
    appears to be conflicting evidence in the record on whether Wentworth could
    have obtained this endorsement from Lombard.  It also appears, however, that neither
    Wentworth itself nor McCarter on its behalf tried to purchase this
    endorsement.  But the existence of this endorsement combined with Wentworths
    decision to take Ferber out of Workers Compensation coverage shows that in
    this litigation, Wentworth is seeking a benefit it never paid for: insurance
    coverage for an employee not covered by Workers Compensation.

[50]

I
    would not give effect to this ground of appeal.

Issue 2  Did the umbrella policy provide coverage for
    Ferbers claim?

[51]

The
    umbrella policy amended the comprehensive business policy, which Lombard had
    sold to Wentworth in April 1997.  It provided an additional layer of liability
    insurance above the primary liability insurance in the CGL coverage.  McCarter
    testified that umbrella liability insurance would provide primary coverage for
    defence costs and indemnity if the primary policy does not provide coverage or
    if the limits under the primary policy are exhausted.

[52]

The
    umbrella policy was added to Wentworths liability insurance by a Change
    Endorsement, which Dalton received from Lombard in February 1998.  The Change
    Endorsement listed a schedule of coverages.  One of the coverages was the Employers
    Liability Exclusion endorsement which provided:

This Insurance shall not apply to "personal injury"
    to:

1.       An employee of the insured arising out of and in the
    course of employment by the Insured;

This exclusion applies:

1.       Whether the Insured may be liable as an employer or in
    any other capacity; and

2.       To any obligation to share damages with or repay
    someone else who must pay damages because of injury.

[53]

On
    its face, this exclusion endorsement, like the employee injury exclusion in the
    CGL coverage in the original policy, would disentitle Wentworth to coverage for
    Ferbers injury.  However, Wentworth submits that Lombard is not entitled to
    rely on this exclusion endorsement because it was not delivered to Wentworth
    in accordance with Section 124.(1) of the
Insurance Act
, R.S.O. 1990
    c. I.8.  I do not accept this submission.

[54]

Section
    124.(1) of the
Insurance Act
states:

All the terms and conditions of the contract of
    insurance shall be set out in full in the policy or by writing securely
    attached to it when issued, and, unless so set out, no term of the contract or
    condition, stipulation, warranty or proviso modifying or impairing its effect
    is valid or admissible in evidence to the prejudice of the insured or
    beneficiary.

[55]

The
    delivery of the umbrella policy, including the exclusion endorsement, complied
    with s. 124.(1).  The terms and conditions of the umbrella policy were set out
    in policy forms.  Those forms were specified in the schedule of coverages
    listed on the Change Endorsement and were in Daltons possession in Lombards
    forms book.  This book was available to McCarter, who accepted the umbrella
    policy for Wentworth.

[56]

McCarter
    did not forward the policy forms to Wentworth.  However, I do not think his
    failure to do so matters.  He was Wentworths agent, at least for the purpose
    of accepting delivery of the umbrella policy.  Wentworths past practice shows
    this to be so.  All of the communications for its insurance were between
    McCarter and Lombard.  Wentworth had no direct dealings with Lombard.  It
    relied on McCarter to take care of its insurance needs.  Implicitly, if not
    explicitly, Wentworth authorized McCarter to accept delivery of the umbrella
    policy on its behalf.  See
Barnet Properties Ltd. v. Commonwealth Insurance
    Co.
(1998), 113 B.C.A.C. 31.  Indeed, Lorne Rochwerg testified that he
    would not have looked at the policy forms even if they had been sent to him.

[57]

Thus,
    I am satisfied that when Lombard delivered the Change Endorsement to
    Wentworths agent, McCarter, it complied with its obligation under s. 124.(1)
    of the
Insurance Act
to provide the policy wordings to Wentworth. 
    McCarter had the policy wording.  And when he received the Change Endorsement
    listing the coverages and referencing the policy forms, he must be taken to
    have known what coverages were provided and what exclusions applied.  Wentworth
    does not suggest otherwise.  I would not give effect to this ground of appeal.

Issue 3  Is Wentworth obligated to
    indemnify Wentworths employee Cooper?

[58]

Wentworth
    submits that Lombard is obligated to indemnify Cooper.  Wentworth points out
    that Cooper was a defendant in Ferbers action and claims that it contributed
    $200,000 to settlement on Coopers behalf as well as on its own behalf. 
    Wentworth submits that the employee injury exclusion does not apply in respect
    of claims against an employee. Even without considering whether the exclusion
    applied to a claim against a co-employee, I would not give effect to this
    ground of appeal.

[59]

Wentworth
    never asserted before the trial judge or at any time in the eight year period
    between the settlement of the Ferber action and the trial that Lombard was
    obligated to defend or indemnify Cooper.  Wentworth is the sole plaintiff in
    this action.  Cooper is not a plaintiff.  The amended statement of claim makes
    no claim on behalf of Cooper.  In it, Wentworth does not allege: that it made a
    payment on behalf of Cooper; that Cooper incurred any costs to defend Ferbers
    action; or that Cooper contributed any money to the settlement of that action. 
    Moreover, no evidence was led at trial that he did so.  As there is no
    allegation or evidence that Cooper sustained a monetary loss or that Wentworth
    sustained a loss on his behalf, Lombard cannot be required to indemnify him.

[60]

For
    these reasons I would not give effect to this ground of appeal.  It is
    therefore unnecessary to consider whether the exclusion applied to Cooper.

Issue 4  Is Lombard vicariously liable for Daltons
    negligence?

[61]

Wentworth
    submits that Lombard is vicariously liable for Daltons negligence.  It
    contends that Dalton was Lombards agent and thus legally responsible for
    Daltons acts and omissions.  Its contention of agency rests on an admission in
    Lombards pleadings.  In paragraph 4 of its amended statement of claim,
    Wentworth alleges that at all material times Dalton was an agent of Lombard. 
    In paragraph 1 of its statement of defence, Lombard admits the allegations in
    paragraph 4 of the amended statement of claim.

[62]

Lombards
    admission in paragraph 1 of its statement of defence is obviously an unintended
    slip.  It is inconsistent with its overall position and with express
    allegations in other paragraphs of its pleading.  For example, in paragraph 5
    of its statement of defence, Lombard expressly denies that McCarter was its
    employee, servant, or agent.  In paragraph 23, Lombard pleads that at all
    material times, Dalton and McCarter were Wentworths insurance brokers.  Thus,
    I would hold that the so-called admission in paragraph 1 of Lombards
    pleading is not determinative of whether Dalton was Lombards agent.

[63]

In
    my opinion, Wentworths submission of vicarious liability cannot succeed for
    either of two reasons.  First, Wentworth did not pursue its negligence claim against
    Dalton and McCarter.  Thus, there is nothing for which Lombard could be
    vicariously liable.

[64]

Second,
    no evidence was led at trial to support Wentworths contention that Dalton was
    Lombards agent.  At trial, McCarter called himself a property and casualty
    insurance broker for Dalton, a Tier 2 insurance brokerage.  He marketed
    himself as an independent broker, entitled to sell the products of various
    insurance companies.  He acted quite differently from the insurance agent of a
    particular insurer.  He was not beholden to Lombard or any other insurance
    company.  If anything, as I have said earlier, he was Wentworths agent.  He
    certainly was not Lombards agent.  See
Keddie v. Canada Life Assurance Co.
,
    1999 BCCA 541, 179 D.L.R. (4
th
) 1, especially at paras. 41-43.

[65]

I
    would not give effect to this ground of appeal.

D.

conclusion

[66]

I
    have concluded that the appellants are not entitled to be indemnified for the
    money they paid to settle Ferbers personal injury claim.  I would, therefore,
    dismiss the appeal with costs in the agreed-upon amount of $20,000, inclusive
    of disbursements and applicable taxes.

Released: Mar 28, 2013                                         John
    Laskin J.A.

JL                                                                     I
    agree M. Rosenberg J.A.

I
    agree M.H. Tulloch J.A.





[1]
This act has been superseded. The reference here reflects the version that was
    in force until 2001.



[2]
This version of s. 12(2) was in force until December 31, 2012. On January 1,
    2013, an amended version came into force.


