Executive Summary: Key Legal and Evidentiary Issues

• The Court of Appeal for Ontario considered whether an insurer owed a duty to defend and indemnify under a fleet automobile insurance policy.
   
• Central to the appeal was the interpretation of OPCF 21A(c), which withholds coverage for vehicles owned or leased before a policy's effective date and not listed on the schedule, until a request for coverage is filed.
   
• West York's vehicle was never listed on the schedule when the policy began and first appeared on a monthly fleet report filed fourteen days after the applicable deadline.
   
• Dominion argued that no valid request for coverage had been made before the accident, meaning no coverage existed at the time of loss.
   
• The application judge had held that OPCF 21A(c) carried no relevant limiting effect and granted relief from forfeiture, a remedy West York had not sought.
   
• Thorburn J.A., writing for a unanimous panel, allowed the appeal, concluding that no coverage existed and awarding costs to Dominion.
   

Facts of the case

West York Sales and Leasing Inc. owned a 2017 Honda Civic and, along with other vehicles, leased it to 8182485 Canada Inc., operating as Platinum Car and Truck Rental, from February 1, 2017 to January 21, 2021. Dominion issued a fleet automobile insurance policy to Platinum for the term September 15, 2019 to September 15, 2020, and West York was added as an additional insured, receiving a Certificate of Insurance in August 2019. Platinum did not include the Vehicle in its monthly fleet report for September 2019 when the policy term began; West York attributed this to the vehicle having suffered engine failure and being out of service at the time. On August 25, 2020, the Vehicle was involved in an accident, but Platinum did not report this to either Dominion or West York. On September 29, 2020, Platinum listed the Vehicle in its monthly fleet report for August 2020, a filing made fourteen days after the September 15, 2020 deadline. Dominion did not dispute the report as late or return the $7,540 premium paid that month. Platinum first told West York about the accident on July 10, 2023, after both were named as defendants in a lawsuit arising from the accident. West York then sought coverage from Dominion and, when it was not confirmed, commenced an application for coverage and a declaration of Dominion's duty to defend. West York separately settled its claim against its insurance broker, Baird MacGregor Insurance Brokers LP, without disclosing this to Dominion; Dominion learned of the settlement only during cross-examination of a Baird representative. The application judge ruled in West York's favour, and Dominion appealed both that decision and a subsequent costs order.

Policy and legislative provisions at issue

The policy combined the standard Ontario Automobile Policy (OAP1) with the Ontario Policy Change Form Monthly Reporting Basis Fleet endorsement (OPCF 21A). OPCF 21A(a) provides that the policy covers all automobiles owned by and licensed in the name of the insured, or leased for more than 30 days. OPCF 21A(c) states that the schedule of automobiles filed with the insurer includes all such vehicles as of the policy's effective date, but adds, in capital letters, that no coverage is provided for any automobile owned or leased by the insured before the policy's effective date that is not included on that schedule, "until a request for coverage has been filed with the insurer." OPCF 21A(f) requires the insured to report, by the 15th of each month, the information needed to calculate the premium owed for the preceding month. Section 129 of the Insurance Act, R.S.O. 1990, c. I.8, permits a court to relieve against forfeiture of insurance coverage arising from imperfect compliance with a statutory condition, where the court considers it inequitable that coverage be forfeited.

Reasoning and analysis

Thorburn J.A. held that the applicable standard of review was correctness, since the policy is a standard form contract. Where policy wording is clear, courts give effect to it in context; where it is ambiguous, coverage provisions are interpreted broadly and exclusions narrowly. On the first issue, the court found that OPCF 21A(a) and OPCF 21A(c) must be read together, and that the capitalized language in (c) was included to limit the broader coverage in (a); it could not be treated as having no meaning, as the application judge had concluded. Because West York's vehicle was owned or leased before the policy's effective date and was not on the schedule, it fell within the exclusion in (c) and required a request for coverage before coverage would begin. On the second issue, the court noted that, interpreting the undefined term "request" broadly, a communication to the insurer regarding the Vehicle's coverage might be sufficient to constitute such a request, and it proceeded on the assumption that the September 29, 2020 report met this standard, while observing that the report's primary purpose was to calculate premiums rather than establish coverage. Turning to timing, the court held that OPCF 21A(c) makes no provision for retroactive coverage, so any coverage arising from the September 29, 2020 report could not reach back to the August 25, 2020 accident. Having concluded there was no coverage, the court found it unnecessary to decide the relief from forfeiture issue, but observed that such relief would have been available had coverage existed, given the absence of bad faith or prejudice from the two-week filing delay. On the settlement non-disclosure issue, the court found no change in the "litigation landscape" and no resulting prejudice to Dominion, further noting that West York had not been a party to the underlying action and had refused to participate in it [the judgment elsewhere states West York was named as a defendant in the original Statement of Claim arising from the accident], and so had no legal entitlement to notice of the broker's partial settlement of the third-party claim within that action.

Ruling and overall outcome

The Court of Appeal for Ontario allowed Dominion's appeal, holding that the clear wording of OPCF 21A(c) excluded coverage for the Vehicle because no request for coverage had been made before the September 29, 2020 report, and no retroactive coverage was available to reach back to the August 25, 2020 accident. Dominion, the successful party, was therefore found to have no duty to defend West York. By agreement of the parties, the court awarded Dominion partial indemnity costs of $15,000 for the appeal and $20,000 in respect of the decision below, for a total of $35,000, all-inclusive.