



COURT OF APPEAL FOR ONTARIO

CITATION: Bawden v. Wawanesa Mutual Insurance
    Company, 2013 ONCA 717

DATE: 20131126

DOCKET: C56916

Doherty, Goudge and Lauwers JJ.A.

BETWEEN

Elizabeth Bawden

Applicant (Respondent)

and

Wawanesa Mutual Insurance Company

Respondent (Appellant)

AND BETWEEN

David Bawden

Applicant (Respondent)

and

Wawanesa Mutual Insurance Company

Respondent (Appellant)

A. Charles Gluek and Troy E. Asselin, for the appellant

Todd J. McCarthy, Andrew Suboch and Tessa E. Warmelink,
    for the respondent Elizabeth Bawden

Alastair J. McNish and Gargi Chopra, for the respondent
    David Bawden

Heard: November 5, 2013

On appeal from the order of Justice Mary A. Sanderson of
    the Superior Court of Justice, dated March 22, 2013, with reasons reported at
    2013 ONSC 1618.

By
    the Court:

[1]

On August 7, 2003, eight-year-old Kelly Bawden was struck and injured by
    a motor vehicle owned by Randal Wilson and driven by Joyce Wilson. Kellys
    mother, Elizabeth Bawden, in her capacity as Kellys litigation guardian, sued
    the Wilsons, seeking damages on Kellys behalf for her injuries.  The Wilsons
    defended the action.  They also issued a third party claim against Elizabeth
    and David Bawden, Kellys father, claiming contribution and indemnity because
    of their negligence in failing to properly instruct and supervise their
    daughter Kelly.

[2]

The respondents Elizabeth and David Bawden held a homeowners insurance
    policy issued by the appellant Wawanesa Mutual Insurance Company.  When the
    appellant declined to defend them on the third party claim, they commenced an
    application seeking a declaration that the appellant was obliged to do so.

[3]

The application judge found that the applicable coverage provision in the
    Wawanesa policy encompassed the Wilsons third party claim against the
    respondents, and that it was not excluded by the applicable exclusion provision. 
    She therefore granted the order sought by the Bawdens.  This is the appeal from
    that order.

[4]

The critical coverage provision in the Wawanesa policy is as follows:

You are insured
    for claims made or actions brought against you for:

(1)

Personal Liability:
    bodily injury or property damage
arising out of
your personal activities anywhere in the world. [Emphasis added.]

[5]

The critical exclusion provision is the following:

Exclusions
:
    you are not insured for claims made or actions brought against you
for
:

(3) bodily injury to you or to any person residing in your
    household other than a residence employee.  [Emphasis added.]

[6]

The appellants argument is that the exclusion clause removes all claims
    for bodily injury by the insured and those residing in their household from the
    general coverage for claims against the insured for bodily injury.  In other
    words, claims for bodily injury by anyone against the insured are covered,
    except for those by family members.  The appellant says that the coverage
    provision and the exemption provision differ only in the identity of the
    claimants.  As the appellant acknowledged in argument, this requires equating
    arising out of in the coverage provision with for in the exclusion
    provision.

[7]

In our view, this argument fails.  The coverage provision must be
    interpreted broadly.  Read this way, it clearly encompasses the Wilsons third
    party claim for contribution and indemnity which arises out of the insureds
    personal activities in negligently failing to supervise their daughter, thus
    resulting in her bodily injury.  Indeed the application judge found that the appellant
    conceded that the coverage provision is broad enough to encompass the third
    party claim.

[8]

On the other hand, the exclusion clause must be read narrowly.  Read
    that way, it cannot encompass the third party claim in this case, which is not
    a claim on behalf of Kelly for her bodily injury, but a claim by the Wilsons against
    the Bawdens for contribution and indemnity for negligent supervision.

[9]

Put another way, we do not view arising out of and for as
    interchangeable terms in these two provisions.  Indeed it appears that the
    appellant did not do so either.  Looking at the entirety of the exclusion
    clause, the appellant appears to have deliberately used the term for in the
    exclusion clause at issue, but the term arising out of in a number of other
    specific exclusion provisions.  There appears to be a careful differentiation
    on the part of the appellant in the use of those two terms.

[10]

There
    is also a sound policy explanation for differentiating the two terms.  By
    reading them differently as we have decided, the exclusion clause serves the
    policy objective, which is reflected in the authorities, of removing from
    coverage those claims that raise a risk of collusion between the claimant and
    the insured.  The exclusion provision only catches claims by a family member
    directly against the insured.  Such claims among family members clearly raise a
    risk of collusion that is simply not present in this third party claim by the
    Wilsons against the respondents.

[11]

In
    the end, we cannot improve on the application judges analysis:

[73]    Viewing the Policy as a whole, I have noted the absence
    of "arising out of" language in this exclusion clause, and contrasted
    it to the specific language in the grant of coverage that
does
include
    "arising out of your personal activities."  I have noted the repeated
    use of "arising out of" language in other exclusion clauses in the
    same Policy. The exclusion did not contain the words "directly or
    indirectly" It appears from its use of differing wording in the coverage
    provision and exclusion clause that Wawanesa may not have intended the words in
    the exclusion to have the same scope and meaning as the words used in the grant
    of coverage.

[74]    In the exclusion clause here, it was open to Wawanesa
    to have used the broader wording it used in the grant of coverage, the "
arising
    out of
" language.

[75]    To be effective, the wording of an exclusion clause
    must clearly and unequivocally restrict the extent and scope of the coverage.

[76]    In the exclusion Wawanesa chose not to track the broad
    "arising out of" language it used in the broad Grant of Coverage and
    repeatedly in other exclusions in the Policy.

[77]    It chose not to use words clearly extending the
    coverage to direct or indirect actions. Exclusions must be interpreted
    narrowly.

[78]    The wording of the exclusion clause, when compared to
    the wording of the grant of coverage and in the context of the Policy wording
    as a whole, is consistent with an intent to exclude
only direct claims
between or among family members and to leave coverage for
indirect
claims by third parties against household members intact. Such an
    interpretation would recognize an insurer's apparent intent to protect against
    collusion between and among family members, but would not in the absence of wording
    evidencing such a clear intent to exclude indirect claims, not deprive family
    members of insurance protection for indirect claims for bodily injury arising
    from their actions brought against them by third parties.  [Emphasis in
    original.]

[12]

The
    appeal must therefore be dismissed.  The parties will have three weeks to file
    written costs submissions of no more than five pages each.

Released: November 26, 2013 (D.D.)

Doherty J.A.

S.T. Goudge J.A.

P. Lauwers J.A.


