Law Times

Law Times • January 14, 2019 Page 5 www.lawtimesnews.com Will lead to fewer disputes between insurers Court of Appeal clarifies insurance conflict test BY DALE SMITH For Law Times T he Ontario Court of Appeal has ruled that an application judge wrongly decided an insurance case involving two insurers with matching poli- cies, and that the two compa- nies should share in the defence and indemnity of the driver stemming from the passenger's claim. Lawyers say this decision helps to clarify a test outlined by the Supreme Court of Canada around competing insurance policies. In TD General Insurance Company v. Intact Insurance Company, 2019 ONCA 5, the passenger of a boat claimed she was injured when the it struck the shoreline. The driver of the boat was covered by two insurance poli- cies — one from TD, covering the owner of the boat (his fa- ther) and anyone using it with the owner's permission, which the driver had; the other was the driver's own homeowner policy through Intact. Each policy had an identical "other insurance" clause that maintained that if the insured party had another policy that would apply to the loss or claim, it was to be used first and the first policy would be considered excess insurance. Intact claimed that the TD policy should be the one that ap- plied in the situation. In a unanimous decision, the Ontario Court of Appeal ruled that the application judge wrongly decided that the TD policy should take precedence because it charged an addi- tional premium of $516 for the Personal Liability Extension, and granted the appeal. Because the two "other in- surance" clauses were irrecon- cilable, both companies were or- dered to equally share the costs. Marc Isaacs, managing part- ner with Isaacs & Co. Barristers and Solicitors in Toronto, who represented TD General Insur- ance Company, says that the decision helps to clarify and simplify the Supreme Court of Canada's test in Family Insur- ance Corp. v. Lombard Cana- da Ltd., 2002 SCC 48. "It helps further clarify the law on how to deal with other insurance clauses, and when you have two insurance policies that cover the same loss and the same risk," says Isaacs. Isaacs says that the appli- cation judge applied what is known as the "Minnesota test" to determine which policy was more specific or charged a high- er premium, which courts have subsequently rejected because it would lead to disputes like the one in this particular case. Isaacs says that the Court of Appeal decision reduces down the test into two discreet ques- tions — whether there is overlap- ping coverage, and if so, whether the policies are irreconcilable. Isaacs says that this decision helps clarify the means to get- ting to the second stage of the analysis. "It also clarifies that particu- lar aspects of the policy, such as whether a boat was specifically scheduled on a homeowner's policy or whether one insurer charged a higher premium than the other insurer is not the con- trolling factor," says Isaacs. "The court is not to attempt to divine the insurer's intentions in writing the policy when faced with the issues of multiple insur- ance policies to cover that same loss," he adds. Isaacs says that he hopes this decision will lead to fewer dis- putes between insurers in re- spect to other insurance clauses and multiple policy situations. Sudevi Mukherjee-Gothi, a partner and head of the insur- ance defence practice group at Pallett Valo LLP in Mississauga, says that from a practical stand- point, insurance lawyers deal with these situations all the time, and that usually the two insurers will take the approach of equally contributing funding. "[The test] goes into it suc- cinctly about overlapping cover- age and whether or not there is any limitation within the policy to limit the obligation to con- tribute," says Mukherjee-Gothi. "It gives a framework going for- ward as to how to address com- peting policies." While the decision was just released, Isaacs doesn't antici- pate that it will be appealed. "It's not the kind of case where you would get leave on, in my view, because you won't be able to show that the Court of Appeal decision was incorrect," says Isaacs. "Secondly, it doesn't really es- tablish any new legal point that the Supreme Court of Canada hasn't spoken on before, because they did speak on it before in Family Insurance." Gary Marcuccio, partner with Miller Maki LLP in Sud- bury, who represented Intact Insurance Company, said that while he feels that the court's decision was well reasoned, he disagrees with the ultimate out- come. "We do take the position that the TD policy did insure a different risk then the Intact policy," says Marcuccio. "It is our position that the TD policy in essence insured the water craft involved in the accident, while the Intact policy insured its policy holder's own negligence." Marcuccio said that his clients have not yet decided whether they will appeal the decision. LT NEWS Visit gpllm.law.utoronto.ca Questions? gpllm@utoronto.ca Master the law. Canada's leading law school offers a graduate degree in four unique streams: Business Law Canadian Law in a Global Context Innovation, Law and Technology Law of Leadership Apply today. Untitled-1 1 2018-05-10 10:52 AM Marc Isaacs says a recent Ontario Court of Appeal decision helps to clarify 'the law on how to deal with other insurance clauses, and when you have two insurance policies that cover the same loss and the same risk.'

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