duty to defend respondent in actions
against it arising from a gas leak.
Application for declaration that applicant insurer had no duty to defend or
indemnify respondent. Applicant had
provided commercial general liability
insurance to respondent covering two
business locations, which included various stores and apartments and two full
service gas bars. The Attorney General
had commenced an action against
respondent for damages caused by the
alleged escape of pollutants from respondent’s property onto land which it owned.
In a related action, applicant had defended
and indemnified respondent for damages
caused to another plaintiff by the same
escape of gasoline. Applicant relied on a
pollution liability clause in the policy.
HELD: Application denied. Respondent did not release gasoline into the
environment as a result of its business. It
was alleged that the leak occurred as a
result of respondent’s negligence. A reasonable policy holder would not have
expected the exclusion would apply to a
gas leak, but to damage caused by industrial pollution. Respondent should not be
considered to be an industrial polluter. It
was respondent’s negligence in allowing
the gasoline to escape from its tank that
caused the damage that was the subject
matter of the litigation. On that analysis,
applicant did have a duty to defend.
ING Insurance Co. of Canada v.
Miracle (c.o.b Mohawk Imperial Sales),
[2010] O.J. No. 3778, Ont. S.C.J., Pol-
lak J., Sept. 13/10. Digest No. 3023-
DUTY TO DEFEND – Respondent
insurer had a duty to defend appellant
contractor in actions for faulty work-
manship.
Appeal from a Court of Appeal judgment confirming that appellant’s claims
were not covered by the insurance policy
delivered by respondent. Following the
construction of housing complexes, appellant, the general contractor, was cited in
four actions alleging water damage due to
faulty workmanship. Appellant was
insured with respondent. The policies
required respondent to defend and indemnify appellant when it was required to pay
damages for property damage caused by
an occurrence or accident. Respondent
refused to defend appellant on ground the
claims were excluded from coverage. The
exclusion precluded coverage for damage
to appellant’s work once it has been completed. The Court of Appeal concluded
that damage resulting from faulty workmanship could not be considered accidental, and that respondent did not owe a
duty to defend.
HELD: Appeal allowed. The duty to
defend was dependent on the mere possi-
bility that a claim fell within the insurance
policy. Exclusions should be read in light
of the initial grant of coverage with the
focus on the language of the policy at
issue. The definition of property damage
did not include a limitation to third-party
property and must be interpreted accord-
ing to the plain language of the definition,
to include damage to any property.
Whether defective workmanship was an
accident was necessarily a case-specific
determination. The term “accident” should
be given the plain meaning prescribed to it
in the policies and should apply when an
event caused property damage neither
expected nor intended by the insured. The
actions against appellant alleged negli-
gence, which suggested that the damage
was fortuitous. If at trial it emerged that
the damage was expected or intended by
appellant, then respondent would not be
required to indemnify appellant. As there
was still a possibility of coverage, the duty
to defend was triggered.
plaintiff was represented by personal
injury lawyers at the time, so would have
been unreasonable to rely on defendant
for legal advice. Plaintiff did not have a
cause of action for breach of fiduciary
duty. The insurer/insured relationship
was not fiduciary. Plaintiff was sophisticated and in an adversarial relationship
with defendant. The action was dismissed.
Schneider v. State Farm Mutual Auto-
mobile Insurance Co., [2010] O.J. No.
3850, Ont. S.C.J., Code J., Sept. 15/10.
Digest No. 3023-015 (Approx. 22 pp.)
INTELLECTUAL PROPERTY
INSURANCE
(MOTOR VEHICLE)
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LIMITATION PERIOD – Plaintiff
did not have a cause of action against his
insurer for negligent misrepresentation
and breach of fiduciary duty related to a
1992 motor vehicle accident.
Application for summary judgment
dismissing plaintiff’s claims for negligent misrepresentation and breach of
fiduciary duty. Plaintiff was involved in a
motor vehicle accident in 1992 and commenced an action in 2009. Plaintiff’s
claim against the other driver was dismissed as the parties agreed the limitation period had expired. The accident
occurred when the other driver lost control on black ice and cause a chain reaction. Plaintiff’s vehicle was the third
struck and he hit his head on the back
rest. Plaintiff felt stunned and weak, but
drove home and returned to work
immediately. At the time, plaintiff was a
51-year-old self-employed accountant.
Plaintiff was subsequently denied statutory accident benefits on the basis his
medical assessment showed no ongoing
injury. A mediator settled plaintiff’s
accident benefits claim for $40,000, but
his claim for loss of income and ongoing
treatment was dismissed. The parties
went to arbitration and the arbitrator
concluded in 1996 that plaintiff suffered
various injuries but they were resolved
by the end of 1992. Plaintiff appealed the
decision and his appeal was dismissed in
1997. Plaintiff claimed to have suffered
whiplash and fractures to his spine and
pelvis and that his injuries caused his
business to suffer. By the time plaintiff
commenced the action, he was a 69-year-
old retiree. Plaintiff sought damages for
negligent misrepresentation and breach
of fiduciary duty on the basis that
defendant insurer provided incorrect
legal advice that he could not pursue an
action against the other driver and could
only seek no-fault statutory benefits.
HELD: Application allowed. In plaintiff’s 1996 Notice of Appeal, he stated that
defendant had told him he could not sue
the other driver and he believed this information was incorrect. Therefore, plaintiff
was aware he had a cause of action at that
time and the former six-year limitation
period expired in 2002. Furthermore,
COPYRIGHT – Court upheld a find-
ing that a transmission of a musical
work by an online music service was a
communication of that work to the pub-
lic by telecommunications, subject to
the applicable tariff for public com-
munications.
Application for judicial review of a
decision by the Copyright Board. Applicant Internet service providers enabled
their customers to download songs from
the Internet for storage on the customers’
computers. The Board found that the
transmission of a musical work by an
online music service was a communication of that work to the public by telecommunications, subject to the applicable
tariff for public communications. It made
no distinction between the public and
individual members of the public. It noted
that downloads were targeted to an aggregation of individuals. It rejected the service providers’ argument that a communication to the public had to be simultaneous
to different members of the public. The
service providers argued that each download of a music file was a private communication that did not become public
simply because more than one individual
might choose to download the same file.
HELD: Application dismissed. The
Board’s conclusion fell within the range of
possible acceptable outcomes. Whether or
not a communication was made to the
public was a function of two factors: the
intention of the communicator and the
reception of the communications by at
least one member of the public. Nothing
precluded communications to the public
by telecommunications from occurring
one transmission at a time. The intention
of the service providers was the relevant
consideration here. They intended an
aggregation of individuals to download
music from the Internet.
Bell Canada v. Society of Composers,
Authors and Music Publishers of Can-
ada, [2010] F.C.J. No. 1087, F.C.A., per
Pelletier J.A. (Létourneau and Nadon
JJ.A. concurring), Sept. 2/10. Digest
No. 3023-016 (Approx. 13 pp.)
JUDGMENTS & ORDERS
APPEAL – The 30-day time limit for
an appellant to file a notice of appeal
from a Tax Court judgment did not
commence until the formal judgment
was signed.
Motion for an order striking appellant’s notice of appeal because it was filed
out of time and because the appeal had
no chance of success. Appellant sought to
appeal from a Tax Court decision which
dismissed its appeal from excise tax
assessments for the years 1993 through
1996. The Tax Court judge dismissed the
