The insureds applied for a declaration that their insurer had a duty to defend them in an action where the plaintiff was injured by a tree that was being removed on an uninsured property owned by the insureds. The court found the insurer had a duty to defend the insureds because the true nature of the allegation that the insureds were negligent for failing to hire a competent contractor was a claim arising out of the actions of an individual and was covered under the insured’s homeowner’s policy which provided coverage for “personal actions anywhere in the world.”

Insurance law – Homeowner’s insurance – Coverage – Duty to defend – Bodily injury – Exclusions – Interpretation of policy – Derivative claims – Occupiers liability – Negligence of insured – Triggering event

Hill v. Intact Insurance Co., [2015] O.J. No. 5898, 2015 ONSC 6601, Ontario Superior Court of Justice Ottawa, Ontario, November 10, 2015, P.E. Roger J.

The insured, Jennie Hill, had a homeowner’s policy of insurance with the insurer for a residential property in Ottawa. The insureds also owned two recreational properties in the City of Kemptville, Ontario. The insurer provided coverage for the recreational properties between 2006 and 2010. In March 2010, the insureds were advised that the insurer deemed the recreational properties uninsurable and the policy for the recreational properties would not be renewed.

In 2012, the insureds hired a contractor to remove trees from one of the recreational properties and in the course of that work, on August 16, 2012, a man was seriously injured by a falling tree.

The injured man commenced an action against the insureds and alleged that they were negligent for failing to remove the trees, liable as occupiers of the recreational properties and negligent for failing to hire a competent contractor to remove the trees. The injured man alleged the insureds hired a driveway sealer to remove the tree who in turn hired an incompetent non‑certified arborist.

In August 2012, the residential properties were uninsured and there was liability insurance coverage in place only for the insured’s Ottawa home. The insuring agreement provided as follows:

We will pay all sums which you become legally liable to pay as compensatory damages because of unintentional bodily injury or property damage arising out of:

1. your personal actions anywhere in the world
2. your ownership, use or occupancy of the premises defined in Section II.

The insureds argued there was coverage for the action under the first branch of personal liability coverage of the policy which provided coverage for “personal actions anywhere in the world.” The insureds argued the allegation of negligence for failing to hire a competent contractor to remove the trees fell within coverage for “personal actions anywhere in the world.” The insurer took the position the action was about the ownership, use or occupancy of the residential properties.

The court noted that the applicable test is laid out in Non‑Marine Underwriters, Lloyd’s of London v. Scalera, 2000 SCC 24. First, the court determines the true nature of the claims, looking beyond the choice of labels to examine the substance of the allegations. Second, the court looks to determine if any claims are entirely derivative in nature (such as a claim of negligence in an intentional tort). If the alleged negligence is based on the same harm as what is excluded by an exclusion clause (such as an exclusion for intentional tort), it will not avoid the exclusion clause despite the label. Third, the court decides whether any of the properly pleaded, non‑derivative claims could potentially trigger the insurer’s duty to defend.

The court noted that the policy provided that the insurer will pay all sums that the insureds become legally liable to pay as compensatory damages because of unintentional bodily injury arising out of their personal actions anywhere in the world. The Concise Oxford Dictionary defines “personal” as “affecting or belonging to a particular person” or “involving the presence or action of a particular individual”.

The court found that the true nature of the claim that the insureds were negligent for failing to hire a competent contractor was a claim arising out of the actions of an individual. In addition, the policy did not exclude claims for personal actions arising out of ownership, use or occupancy of an uninsured premises. As a result, the court found that the action could potentially fall within coverage and the duty to defend was triggered.

The court noted that the fact the claim also fell within the ambit of the Ontario Occupiers Liability Act, did not make or transform the claim into one that did not relate to the insureds’ personal actions anywhere in the world.

This case was digested by Aaron D. Atkinson and edited by David W. Pilley of Harper Grey LLP. If you would like to discuss this case further, please feel free to contact them directly at aatkinson@harpergrey.com or dpilley@harpergrey.com or review their biographies at http://www.harpergrey.com.

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