Poulin v Wawanesa Mutual Insurance Company, 2016 ABQB 547

Court of Queen’s Bench of Alberta Citation: Poulin v Wawanesa Mutual Insurance Company, 2016 ABQB 547 Date: 20161018 Docket: 1503 01776 Registry: Edmonton Between: Jolene Poulin, Jolene Poulin Litigation Representative for the Estate of Adam Groves, Jolene Poulin Litigation Representative for 1. Harley Reuel Poulin, 2. Harmony Lynn Joy Groves Plaintiffs - and - Wawanesa Mutual Insurance Company Defendant _______________________________________________________ Memorandum of Decision of the Honourable Mr. Justice Sterling M. Sanderman _______________________________________________________ [ 1 ] The parties choose to resolve the outstanding issue between them through a

summary trial. The parties seek a determination as to whether indemnity is to be provided to the Plaintiffs by Wawanesa Mutual Insurance Company as a result of the death of Adam Groves pursuant to the Standard Automobile Policy and the S.E.F. 44 Family Protection Endorsement. The Plaintiffs seek this coverage. The Defendant argues that the Plaintiffs are not entitled to it. The parties ask the court for an

interpretation of the Standard Automobile Policy and the S.E.F. 44 Endorsement having regard to the unique fact situation presented by this case.

[2] The relevant facts are not in issue. The parties filed an Agreed Statement of Facts. It is reproduced below: 1. This matter arises out of a motor vehicle and pedestrian accident on or about June 13, 2014, in Edmonton, Alberta (the"Accident"). 2. At the time the Accident, Adam Groves (the “Deceased”), was attempting to stop his vehicle, a 2006 Dodge Ram (the “Truck"),from being stolen. The Truck was being operated by Jonathan Jake Cardinal (“Cardinal”) without the Deceased's consent. The Deceasedjumped onto the back of the Truck.

He fell off while the Truck was reversing and was run over, resulting in his death. Cardinal wasconvicted of dangerous driving causing death, hit and run, theft of a motor vehicle and driving while disqualified. 3. At all material times, the Deceased was the common law spouse of the Plaintiff, Jolene Poulin (“Poulin”). 4. At the time of his death there were two children living with Poulin and the Deceased; Harley Reuel Poulin born January, 2007and Harmony Lynn Groves born January, 2010. 5. The Deceased was the owner of the Truck that was involved in the Accident.

At all material times, the Truck was insured under apolicy of insurance, policy number 4099799, issued by the Defendant, Wawanesa Mutual Insurance Company. This policy was in fullforce and effect during the relevant period. The Declaration Page for the Policy on the Truck Is attached and marked Exhibit "A".Cardinal was not entitled to coverage under the Wawanesa insurance policy on the Truck because he was operating it without the consentof the owner. 6. At the time of the Accident.

Poulin owned a 2003 Jeep Grand Cherokee insured under a policy of insurance, policy number4096885, issued by the Defendant, Wawanesa Mutual Insurance Company. This policy was in full force and effect during the relevantperiod. The Declaration Page for the Policy on the 2003 Jeep is attached and marked as Exhibit "B". 7. The aforesaid policies consist of, inter alia, the S.E.F. No. 44 Family Protection Endorsement (Exhibit "C") and the AlbertaStandard Automobile Policy S.P.F. No. 1 (Exhibit "D"). 8. At the time of the accident, Cardinal, had no insurance that the Plaintiffs could access.

The Plaintiffs have been paid $200,000.00plus costs and disbursements by the Motor Vehicle Accident Claims Fund. The Plaintiffs quantify their entire claim as being in excess of$800,000. 9. This matter concerns the

Interpretation of the S.E.F. No. 44 Family Protection Endorsement and the Alberta StandardAutomobile Policy S.P.F. No 1, and to what extent, if any, indemnity is to be provided to the Plaintiffs under the aforesaid polices ofinsurance as a result of the Accident. [3] In the recent decision of Ledcor Construction Limited v Northbridge Indemnity Insurance Company, 2016 SCC 37, JusticeWagner reviewed the rules governing the

interpretation of a standard form contract. That is what is being asked of the court in thisapplication. In paragraphs 49 to 51 of Ledcor, Justice Wagner stated: [49] The parties agree that the governing principles of

interpretation applicable to insurance policies are those summarized byRothstein J. in Progressive Homes. The primary interpretive principle is that where the language of the insurance policy isunambiguous, effect should be given to that clear language, reading the contract as a whole: para. 22, citing Non-Marine Underwriters,Lloyd's of London v. Scalera, 2000 SCC 24, [2000] 1 S.C.R. 551, at para. 71. [50] Where, however, the policy's language is ambiguous, general rules of contract construction must be employed to resolve thatambiguity. These rules include that the

interpretation should be consistent with the reasonable expectations of the parties, as long as thatinterpretation is supported by the language of the policy; it should not give rise to results that are unrealistic or that the parties would nothave contemplated in the commercial atmosphere in which the insurance policy was contracted, and it should be consistent with theinterpretations of similar insurance policies. See Progressive Homes, at para. 23, citing Scalera, at para. 71; Gibbens, at paras. 26-27; andConsolidated-Bathurst Export Ltd. v.

Mutual Boiler and Machinery Insurance Co., (SCC), [1980] 1 S.C.R. 888, at pp.900-902. [51] Only if ambiguity still remains after the above principles are applied can the contra proferentem rule be employed to construethe policy against the insurer: Progressive Homes, at para. 24, citing Scalera, at para. 70; Gibbens, at para. 25; and Consolidated-Bathurst, at pp. 899-901.

Progressive Homes provides that a corollary of this rule is that coverage provisions in insurance policies areinterpreted broadly, and exclusion clauses narrowly. [4] In Ledcor, Justice Wagner for the majority and Justice Cromwell’s concurring reasons both stress that context is importantwhenever a court is called upon to interpret a standard form contract. At paragraph 30, Justice Wagner stated:

[30] My colleague Justice Cromwell accepts that, for standard form contracts, there are usually no relevant surrounding circumstances relating to negotiation (para. 106). However, he observes that other elements of the surrounding circumstances - such as the purpose of the contract, the nature of the relationship it creates, and the market or industry in which it operates - have a role in the

interpretation process. [ 5 ] At paragraph 106, Justice Cromwell dealt with the same concept. He stated: [106] I accept, of course, that standard form contracts generally do not have relevant surrounding circumstances relating to their negotiation because there was in no real sense any negotiation of their terms. However, standard form contracts, like all contracts, have many other surrounding circumstances: they have a purpose, they create a relationship of a particular nature and they frequently operate within a particular market or industry.

These factors are all part of the context - of the surrounding circumstances - that must be taken into account in interpreting the text of the contract. As Lord Wilberforce put it in a passage cited with approval in Sattva , "In a commercial contract it is certainly right that the court should know the commercial purpose of the contract and this in turn presupposes knowledge of the genesis of the transaction, the background, the context, the market in which the parties are operating": Reardon Smith Line Ltd. v.

Hansen-Tangen , [1976] 3 All E.R. 570 (H.L.), at p. 574, quoted in Sattva , at para. 47. [ 6 ] In this case, there are a number of factors that need to be examined in order to establish the appropriate context. Any

interpretation of the contract must be done within the framework of the relationship between the parties, the purpose of the standard form contract and how the industry operates. [ 7 ] Before an individual can operate a motor vehicle in this province, he must have insurance coverage. One who desires to drive must purchase this coverage from an insurer. The industry has agreed upon a standard form insurance contract. In addition to the required insurance coverage, a purchaser may access additional forms of coverage. There is no opportunity for the purchaser to negotiate on an individual basis with the insurer.

If the purchaser wishes to drive, he must purchase the basic insurance and if he desires may accept the enhanced coverage offered to him. It is a “take it or leave it” offer. [ 8 ] The S.E.F. 44 is not part of the basic coverage. It is marketed by the insurer as extra protection for the purchaser and his family against uninsured or underinsured drivers. The purchaser must have insurance.

If he chooses a policy with the S.E.F. 44, his expectation is that he will have the protection of the extra coverage purchased if he has the misfortune to be involved in an accident with an uninsured or inadequately insured motorist. [ 9 ] The portions of the S.E.F. 44 and the Standard Automobile Policy that are relevant to this matter are set out below: S.E.F. No. 44 -Family Protection Endorsement 2.

INSURING AGREEMENT In consideration of the premium charged and subject to the provisions hereof, it is understood and agreed that the Insurer shall indemnify each eligible claimant for the amount that such eligible claimant is legally entitled to recover from an inadequately insured motorist as compensatory damages in respect of bodily injury or death sustained by an insured person by accident arising out of the use or operation of an automobile. 1. e.

The term "inadequately insured motorist" means: i. the identified owner or identified driver of an automobile with respect to which the total motor vehicle liability insurance ... is less than the Limit of Family Protection Coverage. ii. the driver or owner of an uninsured automobile or unidentified automobile as defined in the "Uninsured Automobile Coverage" of the Policy. Alberta Standard Automobile Policy S.P.F. No. 1 Subsection 3 - Uninsured Motorist Cover

(2) Uninsured automobile defined An "uninsured automobile" under this

section means an automobile with respect to which neither the owner nor driver thereof has applicable and collectible bodily injury liability insurance for its ownership, use or operation, but shall not include an automobile owned by or registered in the name of (

a) the named insured or by any person residing in the same dwelling premises therewith ... [ 10 ] Before coverage can be claimed under the S.E.F. 44, there must be an inadequately insured motorist involved in the accident. That individual is defined in two ways. It is specifically defined in the S.E.F. 44 and is defined in a different manner in the Standard Automobile Policy. [ 11 ] The first part of the definition of “inadequately insured motorist” refers to the identified owner or identified driver of an

automobile with respect to which the total motor vehicle liability insurance ... is less than the Limit of Family Protection Coverage. The identified owner of the vehicle involved in the accident, in this case, is the deceased, Mr. Groves. On the surface, he cannot fit within this definition as his policy was in full force and effect on the day of the accident. The identified driver is Mr. Cardinal. In this portion of the definition, the word “or” is found. This portion of the S.E.F. No. 44 requires that only one of these individuals meet the definition. The Agreed Statement of Facts indicates that Mr.

Cardinal had no insurance that the Plaintiffs could access. It would appear on the surface that he fits within this definition. [ 12 ] There is a second definition found within the S.E.F. No. 44. It embraces the definition of “Uninsured Automobile Coverage” found in the Standard Automobile Policy. This definition refers to an automobile with respect to which neither the owner nor driver has applicable and collectable bodily injury liability insurance. Exclusions, one of which would catch Mr. Groves, are listed in this definition.

This definition focusses upon an automobile that becomes uninsured because neither the owner nor driver has the requisite insurance. Mr. Groves had a policy in relation to his automobile that was in full force and effect. [ 13 ] The

definitions are not the same. That raises the question as to when the

definitions become operative. Must the first definition be found to be not applicable before the second definition takes effect? Or, are both to be considered at the same time to determine which is applicable? If one is to take precedence over the other, there is no indication of this in the definition sections. This certainly creates an ambiguity. [ 14 ] When Mr. Groves purchased his policy, he believed that he had the protection of the S.E.F. No. 44 Endorsement.

Any person purchasing this extra protection would expect that they would have a remedy against their insurer if they had the misfortune to be involved in an accident with an uninsured or underinsured motorist. Two members of Mr. Groves’ family had policies with the Defendant. They were in good standing. Both were in full force and effect on the date that Mr. Groves encountered Mr. Cardinal. The expectations of the two policy holders would not include the Defendant relying upon an ambiguous exclusion clause to deny coverage. [ 15 ] After having purchased the two policies with the enhanced protection, Mr.

Groves and his common-law wife would have had certain expectations. They believed that they would be entitled to compensation if either policyholder or members of their family were killed or injured through no fault of their own in which adequate compensation was not collectible from the insurer of the offending driver or the responsible vehicle. That is what they bargained for in entering this contractual relationship with the Insurer. This type of coverage is common place in the industry. [ 16 ] What is the mischief attempting to be prevented by drafting the exclusion clause in this fashion?

It would appear as if it is aimed at a family unit that chooses to insure only one vehicle when they are driving more than that vehicle. If an uninsured vehicle driven by a family member is involved in an accident, no claim can be made under the S.E.F. No. 44 Endorsement in relation to the insured vehicle. The exclusion is designed to prevent an inappropriate advantage being gained by taking the extra coverage in relation to a single vehicle. [ 17 ] Having found an ambiguity in relation to the policy’s language, the second situation in Ledcor must be examined. Any

interpretation of the policy should be consistent with the reasonable expectations of the parties, as long as that

interpretation is supported by the language of the policy. The

interpretation should not give rise to results that are unrealistic or that the parties would not have contemplated at the time that the policy was purchased. The expectations of Mr. Groves and his family have been set out. [ 18 ] The insurer, upon selling the extra protection to Mr. Groves, would expect to have to honour the policy if an inadequately insured motorist was involved in an accident with the policyholder. [ 19 ] In interpreting the policy, effect must be given to the reasonable expectation of the parties. The

interpretation of the policy should not result in a windfall for either party. The insurer should not be allowed to collect a premium and deny compensation for a loss. The insured should not be able to collect for a loss that was not intended to be covered by the contract. [ 20 ] Mr. Groves and his family believed that they had a valid policy with the family protection endorsement in place. To find that the exclusion contained in the policy applies to this case would lead to an absurd result. The coverage extended to the Plaintiffs through the S.E.F. No. 44 Endorsement is valid.

They are entitled to this coverage. [ 21 ] In this case, there is no need to go to the third category of analysis in Ledcor . If there was, the position of the Plaintiffs would be fortified. Coverage would be granted as it would be necessary to interpret the exclusion clause in a narrow fashion. [ 22 ] The facts of this case are unique. The

interpretation of the policy urged by the Defendant would create a continuing injustice in relation to Ms. Poulin and her children. It would allow a second victimization of them by Mr. Cardinal. Not only would he be responsible for taking Mr. Groves’ life but his acts would lead to a denial of coverage. [ 23 ] Coverage is extended to the Plaintiffs pursuant to the S.E.F. No. 44 Endorsement. Heard on the 16 th day of September, 2016. Dated at the City of Edmonton, Alberta this 17 th day of October, 2016.

Sterling M. Sanderman J.C.Q.B.A. Appearances: Elvis A. Iginla, Iginla & Company for the Plaintiffs Kelly J. Robinson, Chomicki Baril Mah LLP for the Defendant