SCOTTISH & YORK INSURANCE CO. LIMITED COMPAGNIE D’ASSURANCE SCOTTISH & YORK LIMITEE APPELLANT/RESPONDENT ON CROSS-APPEAL AND: CLEMENT DROVER v. EILEEN DROVER, 2014 NLCA 31

Date: 201408 27 Docket: 13/80 & 13/81 Citation: Scottish & York Insurance Co. Limited v. Drover , 2014 NLCA 31 IN THE SUPREME COURT OF NEWFOUNDLAND AND LABRADOR COURT OF APPEAL BETWEEN: SCOTTISH & YORK INSURANCE CO. LIMITED COMPAGNIE D’ASSURANCE SCOTTISH & YORK LIMITEE APPELLANT/RESPONDENT ON CROSS-APPEAL AND: CLEMENT DROVER AND EILEEN DROVER RESPONDENTS/APPELANTS ON CROSS-APPEAL Coram: Barry, White and Hoegg JJ.A.

Court Appealed From: Supreme Court of Newfoundland and Labrador (Trial Division) 200801T1866 (2013 NLTD(G) 150) Appeal Heard: June 13, 2014 Judgment Rendered: August 27, 2014 Reasons for Judgment by Barry J.A. Concurred in by Hoegg J.A. Dissenting Reasons by White J.A. Counsel for the Appellant/Respondent on Cross-Appeal: Stephen F. Penney Counsel for the Respondents/Appellant on Cross-Appeal: Wade D. Drover

Barry J.A.: [ 1 ] The Drover family’s Florida vacation in 2006 turned nasty when the vehicle rented and driven by Wade Drover was rear-ended as the family drove from Orlando airport to their rental vacation home. Injured parties included Wade Drover, his wife, their four children, and Wade Drover’s parents, the respondents, appellants on cross-appeal. [ 2 ] Clement and Eileen Drover had accepted their son’s offer of an all-expense-paid trip from Newfoundland in return for their looking after Wade’s four children as needed.

Clement and Eileen sued for coverage under the S.E.F. 44 Endorsement and Supplement of their son’s automobile insurance on the grounds that they were “principally dependent” upon Wade while in Florida, as a result of their agreement with him. Scottish & York applied for a

summary trial and dismissal of the claim, arguing the parents were neither residing with their son nor principally dependent upon him as required by the policy. [ 3 ] On a

summary trial, the judge below concluded Wade Drover’s parents were covered by his policy. The trial judge also ordered Scottish & York to pay Clement and Eileen Drover costs on a party-and-party basis, stating it was not an appropriate case for solicitor-and-client costs. Scottish & York appealed and the Drovers cross-appealed on costs. The Insurance Provisions [ 4 ] Wade Drover’s insurance policy contained a Family Protection Endorsement S.E.F No. 44 and S.E.F. No. 44 Supplement. The relevant provisions read as follows: S.E.F. No. 44 1.

DEFINITIONS: Where used in this endorsement, . . . (

b) The term “ dependant relative ” means: (ii) a parent or relative (1) of the named insured … residing in the same dwelling premises and principally dependant upon the named insured … for financial support. (Underlining added.) S.E.F. No. 44 Supplement AGREEMENTS 1. (

a) Supplementary Agreement 1(

b) below applies only where the person injured or killed is not an insured person as defined in the Family Protection Coverage of any policy of insurance or does not own an automobile which is licensed in any jurisdiction of Canada where Family Protection Coverage is available. (

b) Subject to 1(

a) above, the insurer undertakes to include in the definition of ‘ dependant relative ’ the following: (

i) any relative of the named insured, or of the spouse of the named insured, who resides in the same premises as the named insured; and (ii) any other relative of the named insured, or of the spouse of the named insured, but only while an occupant of the described automobile, a newly acquired automobile, or a temporary substitute automobile, as defined in the policy. (Underlining added.) The Trial Judge’s Decision [ 5 ] The trial judge found that Clement and Eileen Drover owned their own home in Newfoundland, were financially independent, and therefore would not be considered dependent relatives of their son prior to the Florida vacation. [ 6 ] Noting that Wade Drover had agreed to look after all of his parents’ expenses, including rental accommodations, while in Florida, the trial judge held that the relevant period of time was the date of loss and that when the parents left St.

John’s to travel to Orlando “their status changed from independent to dependent relatives of their son and they were therefore insured persons under his endorsement policy”. The Standard of Review (

a) On the Merits [ 7 ] The parties accept that the standard of review on appeal is generally as set out in Housen v. Nikolaisen , 2002 SCC 33 , [2002] 2 S.C.R. 235, at paras. 8 and 10 , by Iacobucci and Major JJ. for the majority:

On a pure question of law, the basic rule with respect to the review of a trial judge’s findings is that an appellate court is free to replace the opinion of the trial judge with its own. Thus the standard of review on a question of law is that of correctness … … The standard of review for findings of fact is that such findings are not to be reversed unless it can be established that the trial judge made a “palpable and overriding error” … [ 8 ] At paragraphs 19-25, the majority in Housen concluded the same standard of palpable and overriding error should be applied to inferences of fact.

At paragraphs 26-37, they considered the standard of review for questions of mixed fact and law involving the application of a legal standard to a set of facts, and concluded the standard of review was “palpable and overriding error unless it is clear that the trial judge made some extricable error in principle with respect to the characterization of the [legal] standard [being applied] or its application, in which case the error may amount to an error of law” (para. 37). [ 9 ] Since argument in the present case the Supreme Court of Canada in Sattva Capital Corp. v.

Creston Moly Corp. , 2014 SCC 53 , revisited the question of whether contractual

interpretation is a question of law or of mixed fact and law. The Court concluded it should abandon the historical approach of always treating the determination of legal rights and obligations under a written contract as a question of law. The Court decided at paragraph 50 that “[c]ontractual

interpretation involves issues of mixed fact and law as it is an exercise in which the principles of contractual

interpretation are applied to the words of the written contract, considered in light of the factual matrix”. In arriving at this conclusion, the Court at paragraph 47 noted the overriding concern is to determine “the intent of the parties and the scope of their understanding … [by reading] the contract as a whole, giving the words used their ordinary and grammatical meaning, consistent with the surrounding circumstances known to the parties at the time of formation of the contract”.

The Court emphazised that consideration of the surrounding circumstances “recognizes that ascertaining contractual intention can be difficult when looking at words on their own, because words alone do not have an immutable or absolute meaning”.

For this reason “the meaning of words is often derived from a number of contextual factors, including the purpose of the agreement and the nature of the relationship created by the agreement” (paragraph 48). [ 10 ] While affirming the applicability to contractual cases of the Housen approach of identifying in some cases an “extricable question of law” from within what might be initially characterized as a question of mixed fact and law, the Court at paragraph 54 stressed that courts should be cautious in so proceeding in disputes over contractual

interpretation. Because the goal of contractual

interpretation, namely, ascertainment of the objective intentions of the parties, is inherently fact specific, “the circumstances in which a question of law can be extricated from the

interpretation process will be rare” (paragraph 55) in the absence of a legal error such as “the application of an incorrect principle, the failure to consider a required element of a legal test, or the failure to consider a relevant factor” (at paragraph 53, citing King v. Operating Engineers Training Institute of Manitoba Inc. , 2011 MBCA 80 , 270 Man. R. (2d) 63). [ 11 ] The Court found support for its conclusion that contractual

interpretation should be treated as a question of mixed fact and law in Housen ’s deference to fact-finders and in the recognition that appeal courts should limit their interventions to cases where “the results can be expected to have an impact beyond the parties to the particular dispute” (paragraph 51) because of their degree of generality or “precedential value”. [ 12 ] Recently, in Hryniak v. Mauldin , 2014 SCC 7 , [2014] 1 S.C.R. 87, the court discussed the standard of review to be employed on an appeal from a

summary judgment under Ontario rules: [81] In my view, absent an error of law , the exercise of powers under the new

summary judgment rule attracts deference . When the motion judge exercises her new fact-finding powers under Rule 20.04(2.1) and determines whether there is a genuine issue requiring a trial, this is a question of mixed fact and law. Where there is no extricable error in principle , findings of mixed fact and law should not be overturned, absent palpable and overriding error, Housen v. Nikolaisen , 2002 SCC 33 , [2002] 2 S.C.R. 235, at para. 36 . [83] Provided that it is not against the “interest of justice”, a motion judge’s decision to exercise the new powers is discretionary .

Thus, unless the motion judge misdirected herself , or came to a decision that is so clearly wrong that it resulted in an injustice, her decision should not be disturbed. [84] Of course, where the motion judge applies an incorrect principle of law, or errs with regard to a purely legal question , such as the elements that must be proved for the plaintiff to make out her cause of action, the decision will be reviewed on a correctness standard ( Housen v.

Nikolaisen , at para. 8 ). (Emphasis added.) [ 13 ] Another decision of the Supreme Court of Canada, renderered since the hearing in the present case, has relevance in determining the standard of review to be employed here on the merits. In Canada (Attorney General) v.

Confédération des syndicats nationaux , 2014 SCC 49 , the Court concluded the Court of Appeal for Quebec had made a critical error in its analysis by treating the allegation that the Consolidated Revenue Fund was indebted to the Employment Insurance Account as a fact that had to be assumed for the purposes of a motion to dismiss, when it was really “a legal characterization of the facts”, which ran counter to an earlier decision in Confédération des syndicats nationaux v. Canada (Attorney General) , 2008 SCC 68 , [2008] 3 S.C.R. 511.

That case had decided that the Employment Insurance Accounts formed part of Canada’s government accounting and the premiums form part of the governments revenues which can be used for purposes other than paying benefits. No debt of the Consolidated Revenue Fund to the Employment Insurance Account ever existed since the government cannot be indebted to itself. (Paragraphs 40-45.) [ 14 ] Similarly, in the present case, the trial judge’s conclusion that Clement and Eileen Drover were “dependents” of their son is more a legal characterization of facts rather than a factual finding.

The essential facts are not in dispute. Instead, the case turns primarily on whether applying the appropriate principles of

interpretation to the words of the insurance contract (particularly to the words “dependent” and “residence”), considered in light of the agreed factual matrix establishes that the intent of the parties, determined by reading the contract as a whole, and giving the words used their ordinary and grammatical meaning, consistent with the surrounding circumstances known to the parties at the time of formation of the contract, was to provide insurance coverage for Clement and Eileen

Drover in the agreed circumstances. [15] This could fall within the class of cases involving an extricable principle of law, since the parties do not dispute the underlyingfacts. I need not finally decide this, however, since, even if the issue should properly be regarded as a question of mixed fact and lawrequiring a “palpable and overriding error” standard of review, for reasons set out below I am of the opinion the trial judge’s conclusionswere correct and the same results will follow. (

b) Review of an order of Costs [16] This Court addressed the standard of review on an appeal from an order of costs in Cornhill Insurance v. Sphere DrakeInsurance, 2006 NLCA 56, 260 Nfld. & P.E.I.R. 173, where at para. 171 the Court wrote: This Court will not interfere with a trial judge’s order for costs, an exercise of discretion, unless the trial judge has erred in principle, ormade an order for costs which is plainly wrong (Open Window Bakery).

The Supreme Court of Canada has more succinctly expressedthe standard which in this Province is generally stated as limiting the right of this Court to interfere unless the trial judge exceeds his orher jurisdiction or has failed to apply or has misapplied an applicable principle or made a palpable and overriding error in his or herappreciation of the facts or the failure to interfere would otherwise cause a manifest injustice. Langor v. Spurrell (1997), (NL CA), 157 Nfld. & P.E.I.R. 301 (NLCA) at para. 33 and Winter (c.o.b. Atlantic Waste Management) v.

Newfoundland, 2005NLCA 66, 251 Nfld. & P.E.I.R. 322. (Italics added.) [17] On the issue of costs, the Drovers allege the trial judge apparently inadvertently failed to provide an opportunity for a hearing. This alleges an error of principle, resulting in a correctness standard of review on this issue as well. The Issues [18] Six issues arise: (

i) Is leave to appeal required? (ii) Was the trial judge correct in concluding that the parents’ entire circumstances at the date of loss should determine whethercoverage existed? (iii) Was the trial judge correct in concluding that the agreement between Clement and Eileen Drover and their son, Wade, was arelevant factor to be considered in determining whether the parents were “dependent” relatives at the time of the accident? (iv) Was the trial judge correct in concluding that Clement and Eileen Drover could be “dependent relatives” for insurance purposeswhile in Florida, although financially independent at all times? (

v) Did the trial judge err by failing to consider the matter of residence in determining whether coverage existed under the S.E.F. 44Endorsement? (vi) Did the trial judge err in rejecting solicitor-and-client costs? The Law and Analysis (

i) Leave to Appeal [19] Rule 57.02(1) of our Rules of Court provides: Leave to appeal shall be obtained by application to the Court where (

a) during the course of a proceeding or prior to a final order, a party seeks to appeal from an interlocutory order, or (

b) a party seeks to appeal from an order (

i) as to costs only, or (ii) made by the consent of the parties. [20] Scottish & York does not require leave to appeal since the order regarding it was not interlocutory but rather a final oneregarding liability. In distinguishing interlocutory from final orders, Marshall J.A. for this Court in U.F.C.W., Local 1252 v. Cashin(1994), 124 Nfld. 7 P.E.I.R. 201, applied the “effect of the order” test. He stated, at para. 31: … the issue whether an order or judgment is to be treated as interlocutory or final depends upon the nature and effect of the disposition.

If it brought the proceedings at first instance to an end, regardless of whether it actually disposes of the rights between the parties, it isfinal. However, if the disposition’s effect is such that the real matter in dispute between the parties remains to be determined in the veryproceeding from which it issued, the disposition is interlocutory. [21] In the present case the effect of the order is that Scottish & York will have no further opportunity to challenge coverage underthe policy if the appeal does not proceed. The only remaining step will be to determine the Drovers’ damages.

The proceedings at firstinstance regarding liability will be brought to an end. Therefore, the order regarding Scottish & York is final rather than interlocutory asdetermined by the U.F.C.W. test and does not require leave to appeal.

[22] As for the Drovers’ cross-appeal, the Drovers seek leave because they say they were denied an opportunity to speak to whetherthe case was an appropriate one for solicitor-and-client costs. They say the trial judge reserved judgment for the weekend on the issue ofcoverage and they assumed they would be given an opportunity to address the question of costs before a decision on this. It is in theinterests of justice and a matter of principle that parties be given an opportunity to be heard on all relevant issues, including costs.

Accordingly, the Drovers have leave to cross-appeal as to costs , if leave is necessary. (In House of Haynes (Restaurant Ltd. v. Snook(1995), (NL CA), 134 Nfld. & P.E.I.R. 23 (Nfld. C.A.), this Court indicated leave to appeal costs may not berequired, where the order has been rendered in excess of jurisdiction or contrary to principle.) (ii) The appropriate period for determining residency and dependency [23] Both statutory and common law point to the two week vacation period as the relevant period for determining coverage under thepolicy. For example, our Automobile Insurance Act, RSNL 1990, c.

A-22, s. 4(5) provides that an insurer shall not be liable for morethan the actual cash value of the automobile at the time loss or damage occurs. [24] In Somersall v. Friedman, 2002 SCC 59, [2002] 3 S.C.R. 109, at paragraph 36, the majority concluded that the contractual rightto indemnification should be established as of the time of loss, under the Family Protection Endorsement to an automobile insurancecontract. To the same effect see Lawlor v. Royal (1997), (NL CA), 153 Nfld. & P.E.I.R. 36 (Nfld. C.A.), Turcott v.Jones, 2001 CarswellOnt 3007 (S.C.J.); Barnard Estate v. Safeco Ins.

Co. of America (1986), (ON SC), 57 O.R. (2d)558 (H.C.J.); Harris v. Pilot Ins. Co. (1997), (ON CA), 34 O.R. (3d) 633 (C.A.); Taggart v. Pilot Ins. Co. (2001), (ON CA), 52 O.R. (3d) 704 (C.A.) and Graham v. SOFSCO, 2010 ONSC 7129. [25] I conclude, based on the above, that the trial judge in the present case did not err in focusing upon the date of loss and the twoweek vacation period when determining the residence and dependency of the parents. (iii) The relevance of the Florida agreement [26] The trial judge in the present case, however, did not focus exclusively on the parents’ circumstances at the date of loss.

Heexpressly noted that they had owned their own home for some time and were financially independent before the Florida trip. Thequestion here is whether he made an error in concluding that, considering all the circumstances, the agreement made with their son Wadefor the Florida trip meant that they should be regarded as “principally dependent” upon Wade for insurance purposes at the time of theaccident. [27] By the agreement Wade promised to look after all of his parents’ financial needs for two weeks. He was to pay for all food,entertainment and accommodation.

They were not authorized drivers under the car rental agreement and therefore had to rely uponWade for their transportation while in Florida. [28] Webster’s New Dictionary (1989), at p. 184, defines “dependent” (also “dependant”) as “one who depends on, or is supportedby another”. It defines “depend” as “to rely on”. Adopting this definition, I am unable to conclude the trial judge erred in deciding thatWade Drover’s parents “depended” or “relied” upon him while in Florida. [29] It is also worth noting the definition of dependent in the Family Law Act, RSNL 1990, c.

F-2, s. 35(a.1): “‘dependent’ means aperson to whom another has an obligation to supply support under this Act”. While the obligation under the Act is to support a parent“in need” (s. 38), the trial judge did not err in recognizing that an obligation to supply support might arise by way of an agreementbetween parents and son. [30] At the very least, the term “dependent” is ambiguous. In these circumstances the provisions of the S.E.F. 44 Endorsementshould be construed in favour of the person claiming coverage.

Thus, in Somersall, at paragraphs 47-48, Iacobucci J. stated for themajority: The applicable principle of

interpretation is that we interpret insurance contracts contra proferentem, or in favour of the insured. In Non-Marine Underwriters, Lloyd’s of London v. Scalera, [2000] 1 S.C.R. 551, 2000 SCC 24, at para. 70, in comments reaffirmed in Derksenv. 539938 Ontario Ltd., [2001] 3 S.C.R. 398, 2001 SCC 72, the Court said: Since insurance contracts are essentially adhesionary, the standard practice is to construe ambiguities against the insurer. . . . A corollaryof this principle is that “coverage provisions should be construed broadly and exclusion clauses narrowly”. . . .

Therefore one mustalways be alert to the unequal bargaining power at work in insurance contracts, and interpret such policies accordingly. See also July v. Neal (1986), (ON CA), 57 O.R. (2d) 129 (C.A.). There is little doubt that this is an adhesionarycontract. The insurance industry was intimately involved in the development of the SEF 42 and subsequently the SEF 44, while theinsured was simply presented with the standard endorsement on a “take it or leave it” basis.

Therefore, if we find that there is any ambiguity in the subrogation clauses as to whether or not the insurer has a right that the LimitsAgreement could have interfered with, such an ambiguity must be resolved in favour of the insured. … It should be noted that the S.E.F. 44 Endorsement and Supplement are optional for an insured. The wording is not mandated by statute. It has been chosen by the insurer and may be changed by it for future policies if the terms used create problems. [31] Somersall has been followed and applied by this Court in Royal and Sun Alliance Insurance Company of Canada v.

Guest, 2004NLCA 13, 234 Nfld. & P.E.I.R. 179, at para. 15, and in Donovan v. McCain Foods Limited, 2004 NLCA 12, 234 Nfld. & P.E.I.R. 122,at para. 49. See also Dominion of Canada General Insurance Company v. Hannam, 2013 NLCA 37. [32] Scottish & York in support of its argument relies on Miller v. Safeco Insurance Co. of America (1984), 483 O.R. (2d) 451(H.C.J.), upheld for the most part on appeal (1985), (ON CA), 50 O.R. (2d) 797 (C.A.). There an injured son claimedloss of income payments under the limited accident benefits of a policy issued to his father. The son was 23 years old, living with his

parents, periodically unemployed but for three months had been employed full time at a gross hourly wage of $5.50 per hour. Miller J., in concluding the son was a “dependent” under the policy stated, at paragraphs 6-8: McTurk J. concluded the applicable insurance legislation was intended for the protection of the insured and should be construed most favourably to the insured. With respect, I think that conclusion may beg the question as the question to be answered is whether the individual is an insured within the meaning of the policy. In my view, it would be preferable to approach the question of this

interpretation on the basis the legislation was of a remedial nature, intended to broaden insurance coverage to include members of family units as persons insured under the policy. Obviously, cases of this kind will be approached on their own particular facts.

In my view, however, in considering who is an “insured person”, the legislative intent should be kept in mind and, in addition, matters such as the amount and duration of the financial or other dependency, the financial or other needs of the claimant, the ability of the claimant to be self-supporting, and the general standard of living within the family unit should be considered. [ 33 ] The Ontario Court of Appeal upheld this decision but held the reference to “the general standard of living with the family unit” was not an appropriate consideration. [ 34 ] Scottish & York argues that Miller supports the view that “dependency” cannot be determined strictly on the basis of payment of expenses and is a term that is intended to be considered “holistically”.

As previously noted, the trial judge did take a holistic approach and considered all the circumstances, including the agreement regarding payment of expenses. [ 35 ] Scottish & York also relies upon Security National Insurance Co. v. Wawanesa Mutual Insurance Co. , 2013 ONSC 7589 , 118 O.R. (3d) 341, where the Court had to determine which of two insurers was responsible for paying a claim. The claimant was an elderly Bangladeshi parent of the insured son and daughter-in-law. The driver who struck the claimant was also insured.

Under the Ontario statutory accident benefit regime, an uninsured victim must be compensated by the driver, while a “dependent” of an insured person must claim under the insured’s policy. [ 36 ] The 81-year-old claimant was a retired engineer living in Canada on a visitor’s visa, had no income source in this country, and lost his pension payments from Bangladesh upon arriving in Canada. Prior to arriving, the claimant owned considerable land in Bangladesh and had the resources to be entirely self-supportive there.

He had paid his own way into Canada. [ 37 ] Morgan J. found the claimant was supported by his son and daughter even though he made some minor payments for groceries for the household. Morgan J. went on to state: The fact that Mr. Kibria was in fact supported by his son and daughter-in-law does not, however, end the analysis of dependency. The relevant question is not only whether the alleged dependant is in fact dependent on his or her family but whether he needs to be so dependent.

The arbitrator in Liberty Mutual made this point succinctly in the decision that was ultimately approved by the Court of Appeal. ‘Dependency’ implies something more than receipt of a financial benefit. It requires some kind of need on the part of the person alleged to be a dependent.

A very wealthy person might receive food, shelter and other financial benefits from a family, but this would not support a conclusion that the person is principally dependent upon the family structure. (Emphasis added.) Morgan J. concluded the claimant was not a dependent in the circumstances, emphasizing the expansion of risk to which insurers would otherwise be exposed should the claim be allowed. [ 38 ] It should be noted that Morgan J. relied upon the “holistic” approach in Miller and referred to the reliance in that case upon the remedial nature of the legislation.

At paragraph 19, he noted that the legislation before him gave “precious little in the way of interpretative or policy-oriented guideposts” and that it was difficult to know how to resolve any ambiguity in applying the Miller factors. At paragraph 20, he referred to the comment of O’Brien J. in Miller that “it would be preferable to approach the question of this

interpretation on the basis the legislation was of a remedial nature, intended to broaden insurance coverage to include members of family units as persons insured under the policy”. At paragraphs 21-22, Morgan J. suggested his approach might have been different had the case involved a question of whether coverage existed as opposed to being a “priority contest between insurers”: That remedial posture may be the general policy objective of the present legislation as well.

Understanding that overall policy, however, is not helpful when it comes to a priority contest such as that spawned by section 268(5) of the Insurance Act and section 2(6) of the SABS. While one might find comfort in erring to the side most generous to the accident victim if the question were one of insurance coverage vs. no coverage, the question here is as between two insurers. The victim will receive his benefits one way or the other. It is not a question of remediation and the broadening of coverage. See Dominion of Canada General Insurance Co. v.

Ontario , 2013 ONSC 4717 , at para 19 (SCJ). [ 39 ] Considering the contra proferentem rule discussed in Sommersall and its corollary that the courts should adopt the

interpretation which supports coverage (which Morgan J. indicated might have been his approach in a case with coverage at issue) I am not persuaded that Miller or Security National support the view that the trial judge in the present case erred. (iv) Dependent in Florida though independent at home [ 40 ] The wording of the S.E.F. 44 Supplement clearly establishes that Wade Drover’s insurance policy contemplated that a person could be considered dependent for purposes of coverage although financially independent. Thus, by S.E.F. 44 clause 1(b), included in

the definition of “dependent relative” is any relative of the named insured, who resides in the same premises as the named insured. Residence alone determines dependency in the Supplement, whatever the financial position of the relative. [41] I am not ignoring the submission of Scottish & York that the Supplement does not apply because of the requirement in 1(

a) thatthe person claiming coverage “not own an automobile which is licensed in Canada where Family Protection Coverage is available”. Because of my

interpretation of the S.E.F. No. 44 Endorsement, I need not decide whether the parents might be covered under theSupplement. I refer to the wording of the Supplement merely to demonstrate that “dependent relative” is a term of art in the policy. Itmay have a special meaning in the context of the S.E.F. 44 Endorsement and Supplement, which it might not have in common usage. The meaning to be given it need not always relate to long-term financial circumstances.

The Drover’s claim that the parents should beconsidered “principally dependent” upon Wade because of the agreement with him puts no more strain on the ordinary meaning of thesewords than does the express definition under the Supplement. The parents may be principally dependent upon Wade on a short-termbasis while in Florida though in the long term financially independent. The corollary of the contra proferentem rule discussed abovesupports the

interpretation which favours coverage. The trial judge did not err in his conclusions regarding dependancy. (

v) The matter of residence [42] The trial judge did not expressly make a finding that the parents should be considered as residing with their son Wade while inFlorida. The trial judge probably considered it redundant to do so after finding that Wade had “arranged for them to live in the samerental house with his family”. The trial judge had earlier noted the position of the insurer that the parents had to be residing in the samehouse and be dependent upon their son for financial support in order to be considered insured persons under the insurance contract.

It isclear from the trial judge’s reasoning that he accepted that the parents were “residing” with their son while in Florida, as required byS.E.F. 44, clause 1(b)(ii). [43] Both statutory and common law accept that a person may have more than one residence. See Thomson v. Minister of NationalRevenue, (SCC), [1946] S.C.R. 209, where the Court held that a person may be resident in more than one country forincome tax purposes. See also Harris (Litigation Guardian of) v.

Pilot Insurance Co. (1997), (ON CA), 102 O.A.C.170 (C.A.), at para. 14, where the court concluded that a young person living parts of the year with each of his separated parents mightbe regarded as having a dual residence. [44] In submitting that “residency” denotes some element of “permanency”, the insurer is in essence asking the court to read into theinsurance contract the adjective “permanently” in front of the word “residing” in clause 1(f)(1) of the endorsement.

Considering thecontra proferentem rule and the principle that ambiguous coverage provisions of insurance contracts should be construed in favour ofcoverage, the trial judge did not err in refusing to accept this submission. (vi) Costs [45] Rule 17A.05(2) of our Rules of Court states: Where on an application for

summary trial under this rule, the applying party obtains no relief, the Court shall fix the opposite party’scosts of the application on a solicitor and client basis and order the applying party to pay them forthwith unless the Court is satisfied thatthe bringing of the application, although unsuccessful, was nevertheless reasonable, in which case the costs may be assessed on a partyand party or some other lesser basis, or not at all. [46] The Drovers submit that the trial judge erred in not providing an opportunity for them to be heard on the issue of costs beforehe decided that this is not an appropriate case for solicitor-and-client costs.

They also express concern that the trial judge may haveoverlooked Rule 17A.05(2), since he did not refer to it. [47] The Drover’s submissions have merit. Failure to consider their arguments would result in a manifest injustice. See Cornhill. Normally, because the Drovers had inadvertently been denied a fair hearing on costs, the case would be sent back to the trial judge forfurther consideration of costs under Rule 17A.05(2).

But in the circumstances of this case, where all of the necessary facts were set outin the materials, this Court is in as good a position as the trial judge to determine whether it was reasonable for Scottish & York to havemade their application. My review of the circumstances leads to the conclusion that the trial judge correctly decided this case is not anappropriate one for the imposition of solicitor-and-client costs.

Specific reference to Rule 17A.05(2) does not warrant interference withthis decision, because Scottish & York’s application was reasonable in that it saved time and expense for both parties to have themeaning of “resident” and “dependent” clarified before getting into a trial on the issue of damages. The meaning of these terms withinthe policy had not been previously litigated in this jurisdiction. There is no reasonable possibility that the result would be different as tocosts if the case were sent back to the trial judge with direction to analyze the issue with express reference to Rule 17A.05(2).

Summary and Disposition [48] In

summary: (

i) Scottish & York do not require leave to appeal since the trial judge’s order is final regarding liability.

Leave to cross-appeal as tocosts should be granted to the Drovers since it is in the interests of justice that they be given an opportunity to be heard on the issue ofsolicitor-and-client costs; (ii) the trial judge did not err in concluding that it was appropriate to consider the parent’s circumstances as of the date of loss indetermining dependency; (iii) the trial judge did not err in concluding that the agreement between Wade Drover and his parents for the Florida vacation was arelevant factor in determining whether Wade Drover had an obligation to support his parents while they were in Florida;

(iv) the trial judge did not err in concluding that Clement and Eileen Drover were dependents of their son while in Florida, even though they were financially independent at all times; (

v) the trial judge’s reasoning made it clear that Clement and Eileen Drover should be considered as “residing” in the same dwelling premises as their son while in Florida and the trial judge did not err in so finding; (vi) the appeal of Scottish & York is dismissed; and (vii) Clement and Eileen Drover shall have their costs both here and at trial on a party and party basis since, in the circumstances and in light of the ambiguous language of the S.E.F. No. 44 Endorsement, it was reasonable for Scottish & York to move for

summary judgment. _________________________________ L. D. Barry J.A. I Concur: ________________________________ L. R. Hoegg J.A.

White J.A. (Dissenting): [ 49 ] My colleague, Barry J.A. clearly states the pertinent issue: “the question here is whether (the trial judge) made an error in concluding that, considering all the circumstances, the agreement (the Drovers) made with their son Wade for the Florida trip meant that they should be regarded as ‘principally dependent’ upon Wade for insurance purposes at the time of the accident”. [ 50 ] Noting that by the agreement Wade promised to look after all his parents’ financial needs for two weeks (in return for the parents performing the agreed child care services), Justice Barry adopts a dictionary definition of “dependant” and is unable to conclude that the trial judge erred in deciding that the parents “depended” or “relied” on Wade while in Florida. [ 51 ] With respect, I cannot agree.

The Drovers were not “principally dependant” on Wade “for financial support” while in Newfoundland and Labrador nor while in Florida. [ 52 ] The trial judge found that the nature of the financial relationship was in contract. In such circumstances, there is no dependency for financial support. The Drovers entered a contract giving them an entitlement to compensation for services to be rendered under its terms. [ 53 ] The definition to be interpreted to determine if there is insurance coverage is partially set out by my colleague. I set it out again with subparagraph (b)(

i) included: S.E.F. No. 44 FAMILY PROTECTION ENDORSEMENT 1.

DEFINITIONS: where used in this endorsement, … (

b) The term “dependant relative” means: (

i) a person, (1) under the age of 18 years who resides with the named insured and is principally dependant upon the named insured or the spouse of the named insured for financial support . (2) 18 years of age or over who, because of mental or physical infirmity is principally dependant upon the named insured or the spouse of the named insured for financial support , or (3) 18 years of age or over who, because of full-time attendance at a school, college or university, is principally dependant upon the named insured or the spouse of the named insured for financial support, or (ii) a parent or relative, (1) of the named insured, or (2) of the spouse of the named insured, residing in the same dwelling premises and principally dependant upon the named insured or the spouse of the named insured for financial support .

(Underlining added.) [ 54 ] As can be seen the overall scheme of the definition is directed to longer term and real financial dependency not to a short-term contractual arrangement. Nor does the definition focus totally on residency which is not required under clauses (b)(i)(2) and (3).

The emphasis is clearly on principal dependence for financial support. [ 55 ] The definition in the contract of insurance and in the cases cited by my colleague relate to dependency in a social welfare sense, not in an artificial, constructive, or contractual sense. [ 56 ] The practical effect of the majority decision is that financially independent parents who pay nothing or render no services (the holiday was an outright gift) or share expenses (for airfare, food, hotel, automobile, etc.) would not be within the ambit of the definition but would be if they pay nothing in cash and instead pay by rendering services as the quid pro quo under a contract. [ 57 ] I cannot conclude that otherwise fully financially independant persons can be properly found to be principally dependant for financial support when they are, as the trial judge found, being compensated for services rendered under a contract, and are not otherwise in any societal sense needful of financial support from anyone.

Surely, in determining whether a person is dependent, a functional and practical analysis is preferred. [ 58 ] The Drovers are financially independent and not, principally or otherwise, dependent for financial support on anyone else, either while in Newfoundland and Labrador or while in Florida. It is artificial to conclude otherwise. [ 59 ] Because of my

interpretation of the S.E.F. No. 44 Endorsement, I need to consider whether the parents might be covered under the Supplement. [ 60 ] The Canadian Oxford Dictionary, 2d ed., defines “reside” as “(of a person) have one’s home, dwell permanently”. This definition would not require the court to read into the insurance contract the adjective “permanently”, as my colleague suggests.

The notion of permanence is an inherent part of the ordinary meaning of “resides” and therefore does not engage the contra proferentem rule as there is no ambiguity to resolve. [ 61 ] Accordingly, I would conclude on the basis of the ordinary meaning of “resides” that the Supplement does not afford coverage. [ 62 ] I agree that leave is not required, and would allow the appeal. [ 63 ] As to costs, I would award Scottish & York costs here and at trial on a party-and-party basis. ________________________________ C.W. White J.A.