State Farm Fire and Casualty Company v. Royal Insurance of Canada

State Farm Fire and Casualty Company v. Royal Insurance of Canada Collection Decisions of the Court of Appeal Date 1998-10-30 Docket numbers C21862 Judges Carthy, James Joseph; Doherty, David H.; Feldman, Kathryn N. Subject Civil Decision Content Date: 19981030 Docket: C21862 COURT OF APPEAL FOR ONTARIO RE: STATE FARM FIRE AND CASUALTY COMPANY (Appellant) v. ROYAL INSURANCE OF CANADA (Respondent) BEFORE: CARTHY, DOHERTY AND FELDMAN JJ.A. COUNSEL: Robin J. Cumine, Q.C. for the appellant Craig Anderson for the respondent HEARD: October 26, 1998 ENDORSEMENT [1] The motions judge's conclusion is stated at p.8 of her reasons as follows: I find that wording of Royal Policy especially Endorsement #2 makes it clear that the Royal policy was intended to provide coverage excess to any other primary coverage in effect. The State Farm policy is only excess to other property insurance on specifically described property. The Royal policy is not property insurance on specifically described property. On a plain reading, the Royal policy is excess to the State Farm policy. Endorsement #2 reads as follows: OTHER INSURANCE Notwithstanding Condition 9, Other Insurance, of Section IV - Commercial General Liability Conditions, we shall not be liable if, at the time of an occurrence covered by this policy, there is any other insurance which would have attached had this insurance not been effected except that this insurance shall apply only as excess and in no event as contributing insurance, and then only after all other insurance has been exhausted by virtue of losses paid. (emphasis added) [2] The motions judge has read this endorsement as applying to any outstanding insurance coverage as if the wording of the highlighted clause read "there is any other insurance coverage". [3] But this gives no significance to the use of the subjunctive mood "which would have attached had this insurance not been effected". These words imply that a policy would have, but did not in the result, attach because of the existence of the Royal policy. Among such policies that were canvassed in argument, the one that fits the description of this subjunctive expression is a policy which declares that it has no application if another policy provides coverage; what has been termed an escape clause. [4] In our view it is a sensible and complete application of the meaning of the words in the policy to conclude that the intention was to "trump" escape clauses in other policies, rather than to say that the provisions of s.9 were inapplicable to any circumstance where there was another policy providing coverage. [5] We therefore disagree with the motions judge and set aside the judgment below and in its place declare that the policy issued by Royal Insurance of Canada shall share in accordance with paragraph 9(c) of that policy with the policy issued by State Farm and Casualty Company in relation to a hunting accident on October 8, 1994. [6] The costs here and below shall be paid by the respondent to the appellant in the total amount of $10,000. The judgment is to bear interest at the rate of 5% per year commencing the date of this order as to $5,000 and from October 17, 1997 as to $5,000.