At Malach Fidler Sugar + Luxenberg LLP, we stay up-to-date with the latest developments and notable cases in insurance litigation.

We have created a blog series to discuss noteworthy cases our team has gathered to help our readers make better decisions and achieve successful results.

This week our focus is on cases discussing policy interpretation.

Welcome to our inaugural blog post!

Exclusion for Vacancy Applicable

Morgan v. Co-Operators General Insurance et. al., 2022 ONSC 7254

Does a vacancy exclusion apply if an insured arranges for someone to look after a vacantly property on a daily basis?

In Morgan v. Co-operators et. al., the Ontario Superior Court confirmed that an insurance policy exclusion for vacancy applies, even when insured has arranged for people to look after the vacant property daily, as long as there is no intention to inhabit the place again.
The Plaintiff was the owner of a residential townhouse unit which he rented to a tenant until October 15, 2019, when the tenant moved out. The Plaintiff renovated the property and listed it for sale shortly thereafter.
The Plaintiff purchased an additional Comprehensive Water Endorsement for his home insurance policy, which took effect on November 17, 2019.
While the Plaintiff vacationed in Florida near the end of October 2019, his son attended at the property either daily or every other day to check on it.
On December 9, 2019, the Plaintiff was notified that a pipe had burst at the property, causing severe water damage which cost $100,985.10 to fix.
Co-operators denied the Plaintiff’s claim under the policy’s vacancy exclusion, which read: “We do not insure loss or damage caused by glass breakage, water escape, rupture, freezing, ice back up, vandalism or malicious acts after your dwelling has been vacant for more than five (5) consecutive days.”
The policy defined vacancy as: “regardless of the presence of personal property or furnishings, a dwelling is vacant, in the case of … an existing dwelling, when all residents have moved out with no intention of moving back in and another resident has not yet moved in.”
The court did not agree with the Plaintiff that the phrase “when all residents have moved out with no intention of moving back in” is unclear. The judge stated that this is a plain and understandable description of what the term “vacant” means within the policy.
The judge did not accept that the visits to the property by the Plaintiff and his son make the dwelling not “vacant”. Referring to previous case law, the judge found that more is needed than just occasional visits. Here, there was no evidence that anyone was intending on moving back in or that anybody lived there for more than 30 consecutive days.
The court found that the language of the vacancy exclusion clause was clear and unambiguous and excludes coverage in the circumstances of this case.
The Plaintiff argued that elsewhere in the policy, it states: “if you are away more than five (5) consecutive days, you are covered if you do one of the following: you had arranged for a competent person to enter the dwelling daily to ensure heating is maintained.” The Court found that this particular phrase in the policy was in the context of water damage being caused by the freezing of pipes. There was no evidence in this case that the water leak at the property was due to freezing. As such, this clause was not relevant and had no application.

Read the full decision here:

Definition of Spouse

Holtzhauer v. Intact Insurance Company of Canada, 2023 ONSC 436

What constitutes a spousal relationship? At what point is one not a spouse under a policy?

In Holtzhauer v. Intact, the Ontario Superior Court examined this very issue. The court held that a rocky relationship where a couple have a child together, were living together sporadically, and one referred to his spouse as an “ex” in reports to the police, still counts as a spousal relationship when seen in the context of the entire relationship.

In June 2009, Ryan Holtzhauer was a pedestrian struck by an uninsured vehicle and was seriously injured. He applied for accident benefits under the auto insurance policy of his partner, Kim Melcher. The policy included the OPCF 44R endorsement which provides coverage for “the insured and his or her spouse… while not the occupant of an automobile… who is struck by an uninsured or unidentified automobile.”

The Insurance Act defines “spouse” as people who “have lived together in a conjugal relationship outside marriage… in a relationship of some permanence, if they are the parents of a child.”

While Intact initially agreed Ryan was Kim’s spouse, they later obtained documentation suggesting that the couple had separated one month prior to the accident.

For years, Ryan and Kim had a “roller-coaster ride relationship”. They were the natural parents of a child born in April 2006. Their relationship was marked by volatility, conflict and anger, as well as temporary separations and subsequent reconciliations. They never married and ended up breaking up for good in 2016.

In the Fall of 2006, there was an incident between the couple which led to police involvement. This was followed by brief separations and reconciliations. In June or July 2008, Kim left to reside with friends in Hamilton during which time Ryan continued visiting Kim and vice versa. In the Fall of 2008, Kim moved with their son from Hamilton to Waterloo.

In February 2009, Ryan and Kim had an argument which again led to police involvement. At this time, Ryan was serving an intermittent sentence at a correctional facility. Kim drove him to the correctional facility on Friday afternoons and picked him up on Monday mornings. Kim also took care of the couple’s snowplowing business over the weekend.

Ryan and Kim were still fighting as of March 2009, but they continued working in business together. They started living together again in Waterloo, one month leading up to the accident. The court held that this evidence proved the co-habitation part of the spousal definition.

The court also found that Kim’s reaction to the accident, by showing affection and taking responsibility for all of Ryan’s caregiving needs, demonstrated that the relationship remained intact. These were not the behaviours and attitudes of a person who had formed a settled intention to bring the relationship to an end.

Despite the volatile relationship, the court agreed that Ryan was a “spouse” under Intact’s policy and under Ontario’s Insurance Act.

Read the full decision here:

Subrogation Against Own Insured

Scaffidi-Argentina et al. v. Tega Homes Developments et al., 2020 ONSC 6656

This decision examines the issue of whether or not an insurer can subrogate against its own insured.

In Scaffidi-Argentian et al. v. Tega Homes Developments et al., the Defendants, Goodeve Manhire Inc. and Goodeve Manhire Partners Inc. (“Goodeve”) brought a motion for summary judgment dismissing the crossclaim brought against them by the Defendant, Tega Homes Developments Inc. (“Tega”). Goodeve submitted that Tega’s crossclaim is a subrogated claim being advanced by its insurer seeking to recover funds from them as a result of funds its insurer paid to the Plaintiffs.

Goodeve argued it was an “additional insured” under Tega’s policy with Temple Insurance Policy (“Temple”). Tega admitted that Goodeve was an engineering consultant and subcontractor on the project.

Goodeve argued that Temple could not subrogate as against itself by reason of the waiver of subrogation found in the policy. Tega submitted that Goodeve did not have coverage under the Temple policy by reason of the professional services exclusion, therefore should not be afforded the benefit of any waiver of subrogation.

The court acknowledged that no reported case in Canada had applied a waiver of subrogation to preclude a subrogated claim being advanced by an insurer against a party insured by the policy, in circumstances where there was no coverage under the policy due to a coverage exemption (such as the very common professional services exemption).

The general notion as supported by caselaw from Australia and United Kingdom is that when no coverage for the loss is provided due to a professional services exemption, the professional service provider is not an insured under the policy and subrogation is permitted.

Ultimately, the court decided to give effect to the words of the policy, which clearly and unambiguously precluded subrogation as against Goodeve.

Read the full decision here:

Stay tuned for our next blog post where we look at several cases discussing procedural issues.

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