Case information

Insurance — Contract — Interpretation — Unambiguous policy language — Determining intent of parties — Relevance of surrounding circumstances and factual matrix to determine intent of parties — What role Insurance Act, R.S.O. 1990, c. I.8, s. 124 plays in interpretation of insurance policies — Whether statutory protections against admitting term or condition not set out in full in insurance policy affects interpretive method — At what point in interpretive process are coverage provisions to be interpreted broadly and exclusion clauses narrowly — Whether ambiguity is required to trigger interpretive principle.

Case summaries are prepared by the Office of the Registrar of the Supreme Court of Canada (Law Branch). Please note that summaries are not provided to the Judges of the Court. They are placed on the Court file and website for information purposes only.

SIR Corp. and its related entities (collectively, “SIR”) own and operate approximately 60 restaurants. During the COVID-19 pandemic, emergency orders prevented SIR from offering in-person dining at its restaurants. It applied for a declaration that it was entitled to coverage for damage to its stock and for business losses allegedly suffered as a result of the orders under an insurance policy issued by Aviva Insurance Company of Canada, and an order directing a reference to determine the quantum of its losses. In 2017, SIR’s prepared a binder which Aviva signed and returned. It was effective until it was replaced by the delivery of a written policy. A manuscript policy negotiated by SIR’s broker and Aviva’s underwriters was issued for 2017-18 and renewed with certain changes proposed by Aviva; the amended policy was renewed for 2019-2020. SIR relied primarily on clause 14 (Civil or Military Authority), which extends insurance to a “loss, as covered herein, which is sustained by the Insured as a result of damage caused by order of civil or military authority to retard or prevent a conflagration or other catastrophe”, and clause 16 (Ingress/Egress), which extends the insurance to “the period of time when as a result of a peril insured or threat thereof, ingress to or egress from any part of premises … is prevented or impaired”. The definitions included in Section I do not define “catastrophe” or “peril insured”.

The application judge, who considered the binder to be part of the policy, dismissed the application. The Court of Appeal held that the binder was not part of the policy. Reinterpreting the policy, it dismissed the appeal.