[D.E.], et al. v. Unifund Assurance Company

(Ontario) (Civil) (By Leave)

(Publication ban in case) (Publication ban on party)




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Insurance — Liability insurance — Insurers’ duty to defend and indemnify — Negligence — Whether test in Sattva Capital Corp. v. Creston Moly Corp., 2014 SCC 53, [2014] 2 S.C.R. 633, for giving deference to lower court’s interpretation of contracts has been abandoned for decisions considering insurance policies — Whether Court of Appeal fundamentally changed judicial rules for interpreting insurance contracts in Canada.

The applicants, D.E. and L.E., have a homeowners’ insurance policy with the respondent, Unifund Assurance Company. The policy includes liability coverage if their personal actions cause unintentional bodily injury or property damage. D.E. and L.E. are defendants in a lawsuit where the anchor claim is that their daughter and two other girls, all Grade 8 students, bullied a fellow student, causing her physical and psychological injuries. The claim against D.E. and L.E. sounds in negligence, namely, their failure to control their daughter. D.E. and L.E. requested that Unifund defend and indemnify them pursuant to the insurance policy. Unifund refused, relying principally on two exclusion clauses in the policy. D.E. and L.E. brought an application seeking a declaration that Unifund had a duty to defend and indemnify them in the underlying action.

The Ontario Superior Court of Justice granted the application for a declaration that the respondent has a duty to defend and indemnify the applicants in the underlying action. The Ontario Court of Appeal unanimously allowed the appeal, set aside the judgment of the Superior Court of Justice, and declared the respondent does not have a duty to defend and indemnify the applicants.

Lower Court Rulings

September 11, 2014
Ontario Superior Court of Justice

CV-13-495144, 2014 ONSC 5243
Applicants’ application for declaration that respondent has duty to defend and indemnify, granted.
June 11, 2015
Court of Appeal for Ontario

C59471, 2015 ONCA 423
Respondent’s appeal, allowed; application judge’s decision set aside; declaration respondent does not have a duty to defend or indemnify the applicants.