The Court of Appeal held that the automobile insurer did not have a duty to defend because the plaintiff was not an “occupant” of the vehicle at the time of the incident. The Court of Appeal held, however, that the insurer of the homeowner’s policy had a duty to defend. Although the homeowner’s policy excluded coverage for claims arising from the use of a motorized vehicle”, it was at least possible based on the pleadings, that the exclusion may not apply.

Djepic v. Kuburovic, [2006] O.J. No. 97 Ontario Court of Appeal

The Plaintiff was blinded in one eye by a bungee cord while he and the Defendant were attempting to secure a mattress to the roof of the Plaintiff’s vehicle. The Defendant commenced a motion against the Dominion of Canada General Insurance Company (“Dominion”), which insured the Plaintiff’s vehicle, and Belair Direct (“Belair”), which underwrote the Defendant’s homeowner policy.

With respect to the Dominion automobile policy, the Court of Appeal agreed with the motion’s judge that the Defendant was not “an occupant” of the van and therefore was not an “insured person”.

Under the Belair homeowner’s policy, coverage was excluded for claims arising from the ownership, use or operation of any motorized vehicle. In the Statement of Claim, the Plaintiff alleged, among other things, that the Defendant did not provide proper warning of the state and condition of the bungee cord and failed to test the strength of the cord to ensure that it would not come loose. Based on the pleadings, it could not yet be determined specifically how or why the accident occurred.

The Court of Appeal concluded, in considering the various possible scenarios, that a claim encompassed by the pleadings may not “arise from the use of a motorized vehicle”. Furthermore, it was also possible that the Plaintiff’s claim may succeed based on both auto related claims and non-auto claims.

The insured submitted that Axa Insurance v. Dominion of Canada General Insurance Co. (2004), 73 O.R. (3d) 391 (C.A.), stood for the proposition that once a phrase has been interpreted broadly in a coverage provision, the rules of interpretation cannot result in that same phrase being interpreted differently when used in an exclusion clause. The Court of Appeal disagreed and stated that the court in Axa Insurance recognized that, in the appropriate case, an identical phrase may be interpreted differently depending on whether it was used in a coverage or an exclusion clause.

In the result, the Court of Appeal dismissed the appeal with respect to Dominion. The Court allowed the appeal with respect to Belair and held that Belair had a duty to defend.

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