Wilkins Ltd. v. Wellington Insurance Company

Wilkins Ltd. v. Wellington Insurance Company Court Supreme Court Date 2001-07-31 Citation 2001 NSSC 108 Docket SH 166812 Judge/Registrar/Adjudicator Goodfellow, Walter R. E. (Honourable Justice) (SC) (SC) Document Type Decision Relations Library Sheet - Wilkins Ltd. v. Wellington Insurance Company - 2001 NSSC 108 - 2001-07-31 - Library Sheet Decision Content Date:20010731 Docket:S.H. 166812 IN THE SUPREME COURT OF NOVA SCOTIA (Cited as: Wilkins Ltd v. Wellington Insurance Company, 2001 NSSC 108 ) BETWEEN: WILKINS LIMITED PLAINTIFF - and - WELLINGTON INSURANCE COMPANY and THE HARTFORD FIRE INSURANCE COMPANY DEFENDANTS DECISION ______________________________________________________________________________ HEARD: at, Halifax, Scotia before the Honourable Justice Walter R. E. Goodfellow on July 31, 2001 DECISION: July 31, 20001 (Orally) COUNSEL: Tim Hill, for the Plaintiff Jonathan C. K. Stobie, Q.C. and Kendrick Douglas, for The Hartford Fire Insurance Company Shawndell Harmon, for the Wellington Insurance Company Goodfellow, J.: [1] This is a decision of Wilkins Limited and Wellington Insurance Company and the Hartford Fire Insurance Company. BACKGROUND [2] Wilkins Limited carry on business as Portland Honda. The principal officers, Maureen Wilkins, Vice President and Gilbert Wilkins, President gave evidence. Mr. Wilkins has been in the automobile dealership industry since 1974 and acquired his first ownership of a dealership in 1982. He is knowledgeable and experienced in his field. Mrs. Wilkins has been Vice President and co-manager since 1993 of Portland Honda. [3] Portland purchased a commercial liability insurance policy from Hartford for the period May 1, 1999 to May 1, 2000. On the 29th of November, 1999, Portland purchased a 2000 Honda Civic for $21,698.00. Portland Honda sells approximately sixteen hundred vehicles per year, which include new and used vehicles. Portland has, at its peak period, approximately one hundred fifty to a hundred eighty new vehicles and approximately fifty to seventy used vehicles on its property, primarily around the perimeter. The keys for the vehicles are kept in a secured cabinet situated behind the receptionist, both the cabinet and the premises have alarm systems. Portland Honda, for market reasons, change its insurance to Wellington for the period May 1, 2000 to May 1, 2001. [4] Honda Canada, to protect its own interest, conducts inventory audits without notice to Portland Honda. They occur generally in the range of every four to six weeks. Portland Honda does not do any inventory audit of motor vehicles with the exception their auditors do some measure of inventory audit for the auditors’ comfort level. No inventory was presented by any of the parties to the other at any time and the insurers did not require an inventory audit for the entry or the continuation of coverage. The insurers relied up the general estimate of the number of vehicles, etc. provided by the insured. [5] On or about the 4th of April, 2000, Honda Canada conducted an unannounced audit through Deutsche. It revealed the presence of all vehicles, including the 2000 Honda Civic. No other audit was done during the remaining term of the Hartford policy and none done from the commencement of the Wellington policy term until July 1, 2000 when Deutsche conducted an inventory and it disclosed the 2000 Honda was missing. No key audit or key inventory system was in place. Extensive investigations by all parties were conducted and I conclude and find that no evidence has been advanced to establish that on a balance of probabilities when the Honda was stolen other than at some time during the period from the 4th of April, 2000 and the 1st of July 2000. It appears the keys to the vehicles were missing at some point in time in this time frame; however, no evidence exists to establish or permit a reasonable inference as to whether it was stolen during the contract term for Hartford, that is to say, prior to May 1, 2000 or during the contract term for Wellington, that is post April 30, 2000. [6] No other vehicle has ever been stolen since the Wilkins began operation of this dealership in 1993. POLICIES [7] The Hartford policy contains the general condition 1. INSURING AGREEMENT This policy, subject to the conditions and limitations as herein set forth, insures the property or coverage described in the Coverage Section attached hereto as cited in the declarations of this Policy against ALL RISKS of direct physical loss or damage from any cause, except as excluded herein, “occurring during the term of this Policy except as herein after excluded”. (Emphasis added) [8] The Wellington policy contains a definition of “occurrence” under the umbrella coverage. Its definition probably does not apply to the theft coverage. Section 5(b) relates to the theft coverage and does state: The deductible clause shall apply to each occurrence including fire or lightning or theft of the entire vehicle. [9] I agree with Mr. Hill that the policy is comprehensive and it is tailored for the automobile dealership industry. CASES [10] Counsel have referred me to a number of cases and I will only incorporate portions of a few of them but I have, in fact, digested and read all of them. [11] Reid Crowther and Partners Limited v. SIMCOE & Erie General Insurance Company (1993), 13 C.C.L.I. (2d) 161 S.C.C. This case dealt with an engineering firm which constructed a sewage and water system in 1974/1975. The firm admitted some faults and took remedial action in 1978 and again in 1981 when further problems were discovered. The Court of Appeal held a claim discovered in 1981 constitutes part of the first claim. The Supreme Court of Canada agreed and went further and held, if it was separate, it was within the policy period. [12] McLachlin, J., as she then was, after concluding the policy was a “claims-made” policy stated at p. 170-171, para. 12: Every insurance policy must provide a mechanism for determining the claims for which the insurers is liable in a temporal sense. The tradition way has been to focus on the occurrence giving rise to the claim. For example, most automobile insurance liability policies provide coverage for accidents caused by the insured’s negligence during the policy period. Provided that the negligent act occurred in the policy period, the insurer is required to indemnify the insured for all loss arising from it, regardless of when a claim is made against the insured for that loss. This type of insurance policy is called “occurrence” policy. [13] Paragraph 13: Alternatively, the policy may focus on the time the claim is made by the third party on the insured. Under a “claims made” policy, the insurer is liable to indemnify the insured for claims made during the currency of the policy, regardless of when the negligence giving rise to those claims may have occurred. Liability for negligent acts predating the policy is covered provided a claim arising from any such negligence act is made during the policy period. On the other hand, liability for negligent acts which occur within the policy period is covered only if a claim is made against the insured on their account within the policy period. [14] Part of para. 15: ... The essential is not the label one places on a policy, but what the policy says. The courts must in each case look to the particular wording of the particular policy, rather than simply to attempt to pigeonhole the policy at issue into one category or the other. Construction of policies at issue in these kinds of cases depends much more on the specific wording of the policy at issue than on a general categorizing of the policy. [15] Finally, para. 34: ... In each case, the courts must interpret the provisions of the policy at issue in light of general principles of interpretation of insurance policies, including, but not limited to: (1) the contra proferentum rule; (2) the principle that coverage provisions should be construed broadly and exclusion clauses narrowing; and (3) the desirability, at the least where the policy is ambiguous, of giving effect to the reasonable expectations of the parties. [16] Mr. Hill asked the court to consider taking the manifestation approach policy. In Alie v. Bertrand, [2000] O.J. No. 1360. It outlines four triggering theories that had been utilized to produce equitable results. Paragraph 329 (a) The Exposure Theory: coverage is triggered by the first exposure to the conditions which causes bodily or injury or property damage (b) The Manifestation Theory: coverage is triggered or property damage is said to occur when the plaintiff first becomes aware of the property damage or the injury. (c) The Injury In Fact Theory: coverage is triggered when property damage or injury actually occurs, whether it was observable or not. (d) The Continuous or Triple Trigger Theory: the injury or property is said to occur from the time of the initial exposure to the time of the manifestation or the discovery of the damage. [17] See also the University of Saskatchewan v. Fireman’s Funds Insurance Company Limited, [1998] I.L.R. Saskatchewan Court of Appeal. Canadian Insurance Law Reporter 3548, commencing at p. 4979: As noted above, the policy provides insurance against “all risks of physical loss or damage.” The policy period is stated to be from June 30, 1984 to November 30, 1985. Other than these two provisions, there is nothing in the policy explicitly stating the loss or damage must occur during the period of insurance. Nevertheless, it is trite law that this be so. The principle is summarized in MacGillivray & Parkington on Insurance Law (8th ed., 1988), at paras. 994-5: 994. The time of loss in relation to period of risk. Difficulties sometimes arise in relation to the time at which a loss, in respect of which a claim is made, occurs. The general rule is that, in the absence of express terms to the contrary, the assured must suffer a loss from a peril insured against during the currency of the risk... [18] The Saskatchewan Court of Appeal, in my view, expressly rejected the manifestation theory. [19] Mr. Hill urges the Court to do what is equitable and, of course, we are mandated by the Judicature Act to seek equitable conclusions for equity to prevail. Mr. Hill’s client paid premiums that cover the period from April 4 to July 1, 2000. There can be no dispute that Wilkins Limited had coverage and in particular theft coverage for its motor vehicles throughout that period. [20] There is no ambiguity in the respective policies and I give the word “occurrence” its common meaning. Occurrence in the Oxford Dictionary reads: The act or an instance of occurring. An incident or event. [21] In cases such as Reid Crowther Limited, above, the Court is really dealing with a discoverability issue. No such question arises in coverage relating to theft of a specific object – in this case a motor vehicle. It is conceded by the Wilkins that they have no evidence to advance as to whether it was stolen prior to or after May 1, 2000. While I have some sympathy for the Wilkins, they have a fundamental threshold required for recovery and they fall short. The obligation on any plaintiff is to establish its case on a balance of probabilities and here, in order for Wilkins Limited to succeed against a specific defendant requires establishing the theft occurred during the policy term of one of the defendants. There is no joint or several liability or relationship between the defendants. It was within Wilkins’ capacity and control, albeit perhaps requiring considerable effort to monitor their inventory. It would be inequitable to fix a party, here an insurance company, for a loss that a plaintiff cannot establish, on a balance of probability, occurred during their period of contractual responsibility. [22] In the result, the action must be dismissed. COSTS [23] Counsel wish to address the matter of cost or are you seeking costs? [24] Mr.Stobie: Yes, My Lord, we are seeking cost. It’s obviously not a complex matter. I would suggest Scale 2. It’s the amount in issue being --- it’s approximately $22,000.00 when you include pre-judgment interest. [25] Court: There are series of cases where pre-judgment interest is not taken into account in determining the amount involved. There’s pre-judgment interest as mandated by the Judicature Act. [26] Mr. Stobie: And the amount in which [27] Court: So you’re looking at about twenty-two hundred dollars. [28] Mr. Stobie: Twenty-one since 98. [29] Court: Mr. Harmon. [30] Mr. Harmon: I would simply echo what Mr. Stobie has already stated, My Lord. [31] Court: Mr. Hill. [32] Mr. Hill: I would suggest, My Lord, that (inaudible) cost normally follow the course. It’s my view one of those cases where you might be incline to exercise your discretion not to award cost and my client’s expense as you can see from the evidence are something like thirty thousand or approaching thirty thousand dollars. [33] Court: Any offers for settlement by anybody? [34] Mr. Hill: Yes [35] Mr. Stobie: We made no offer of settlement, My Lord. [36] Court: Mr. Harmon. [37] Mr. Harmon: I believe there was one [38] Mr. Hill: There was some discussion of paying fifty percent originally on the part of Mr. Harmon. [39] Court: But a formal offer. [40] Mr. Hill: No, not a formal offer, I believe. As I say they’ve paid for two premiums plus the car. They’re bearing their own cost of this application, of this action. We’ve done everything we could do to make it as simple to bring it before the court as we possibly could. It seems to me this might one of those cases where you’d exercise you discretion not to award cost in all the circumstances. [41] Court: Thank you. Costs are the discretion of the court. I’ve written a number of decisions on costs and, generally speaking I am a very strong proponent of costs following the event. You have the unusual situation here because if I give Hartford costs and I give Wellington costs, I will be giving cost to a party that has an obligation to meet the policy because one of them have an obligation. Unfortunately, your client felt short of indicating which one. It seems to me it would be an improper exercising of discretion to provide costs to a party, one of which, at least, is responsible and certainly, I think, the fairest direction and a proper exercise of discretion, each party will bear their own cost. J.