Murray Bay Motor Co. Ltd. v. Bélair Insurance Co., [1975] 1 SCR 68

Supreme Court of Canada

Murray Bay Motor Co. Ltd. v. Bélair Insurance Co., [1975] 1 S.C.R. 68

Date: 1973-12-21

The Murray Bay Motor Company Limited (Plaintiff in warranty) Appellant;

and

Bélair Insurance Company (Defendant) Respondent;

and

Fernande Leduc Ferland (Plaintiff) Mise-en-cause.

1973: February 12; 1973: December 21.

Present: Fauteux C.J. and Abbott, Judson, Ritchie and Pigeon JJ.

ON APPEAL FROM THE COURT OF QUEEN’S BENCH, APPEAL SIDE, PROVINCE OF QUEBEC

Insurance—Liability—Taxi owner—Passenger injured in accident—Driver’s wife—“Person insured”—“Omnibus clause”—Exclusion of liability—Rider—Expressio unius exclusio alterius—Civil Code, art. 1014.

Appellant was the owner of several cars used as taxis. The mise-en-cause was injured in an accident while she was a passenger in one of those taxis which was rented and driven by her husband. The appellant was insured under an automobile insurance policy issued by respondent and covering his public liability as owner of automobiles. Appellant was found liable to the mise-en-cause for damages under the Highway Victims Indemnity Act and filed against respondent a claim in warranty which was dismissed. This decision was upheld by the Court of Appeal. Hence the appeal to this Court, the point at issue being the interpretation of the insurance contract.

Held (Pigeon J. dissenting): The appeal should be dismissed.

Per Fauteux C.J. and Abbott, Judson and Ritchie JJ.: The driver was not named as an insured party in the policy, but he was covered as a person driving the automobile with the owner’s consent, by the words “any person insured”. The use of the words “person insured” in the paragraph relating to exclusion of liability, and not simply the word “insured”, appears clearly related to the extension of coverage. The effect of these words is, therefore, to make the exclusion stipulated therein applicable to liability towards the driver’s wife or child as well as to

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liability towards the wife or child of the insured named in the policy.

Per Pigeon J., dissenting: The rider attached to the policy when it was issued contains at the outset a paragraph in which the second sentence clearly stipulates that the insurer will be liable for injury to any passenger in an insured automobile. As worded this stipulation is not limited by the first part of the sentence, since this first part simply states that a departure is thereby made from exclusion (d) and does not state that only exclusion (d) is being departed from. The insurance contract originated with the insurer and he should bear the burden of any ambiguity. If by the sentence in question he merely meant that exclusion (d) of Section A of the Insuring Agreements was deleted or withdrawn, he should have said so, but this he did not do. In order to exclude the Insurer’s liability something must be read into the provision that is not there, and the reference to a specific case has to be given an implied effect which is not stated.

APPEAL from a judgment of the Court of Queen’s Bench, Appeal Side, Province of Quebec[1], affirming a judgment of the Superior Court. Appeal dismissed, Pigeon J. dissenting.

R. Lacoste, Q.C., for the plaintiff, appellant.

F. Mercier, Q.C., for the defendant, respondent.

The judgment of Fauteux C.J. and Abbott, Judson and Ritchie JJ. was delivered by

ABBOTT J.—The relevant facts which are not now in dispute are set out in the judgments below and in the reasons of my brother Pigeon. It is not necessary for me to repeat them.

The sole issue on the appeal to this Court is whether the respondent, La Cie d’Assurance Bélair, is bound to indemnify appellant for loss or damage sustained by the mise-en-cause who is the wife of Ferland, the driver of the taxi-cab owned by appellant. At trial, Mr. Justice Albert Leblanc held that the respondent was not liable and that judgment was unanimously affirmed by

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the Court of Appeal. Montgomery J.A., speaking for himself, Taschereau and Owen JJ.A. said:

Regarding the appeal against the Insurance Company, its defence is based upon Section A of the policy (Exhibit PG-1, at p. 53) which reads in part as follows:

[TRANSLATION] “The Insurer agrees to indemnity the Insured, his succession or his administrators, and in the same manner and to the same extent as if named herein as the Insured, every other person who with the consent of the Insured or the consent of an adult member of the Insured’s household, other than a chauffeur or domestic servant, personally drives the automobile, for any liability imposed by law upon the Insured or upon any such other person for loss or damage arising from the ownership, use or operation of the automobile within Canada, the United States of America, or upon a vessel plying between ports thereof, and resulting from:

BODILY INJURY TO OR DEATH OF ANY PERSON OR DAMAGE TO PROPERTY

Provided always that the Insurer shall not be liable under this section:

…

(b) for loss or damage resulting from bodily injury to the death of (i) the son, daughter, wife or husband of any person insured by this policy while being carried in or upon or entering, getting into or alighting from the automobile; or (ii) any person insured by this policy;”

Defendant replies that Plaintiff is not the wife of a person insured by the policy. It is true that Ferland is not named as an insured party in the policy, which covers (Les Membres de l’Association de Taxis Diamond et “ou Radio Taxis Limitée”. (It is not disputed that Defendant is a member of the Diamond Taxi Association). Ferland was, however, covered under the first paragraph of Section A as a person driving the automobile with the owner’s consent. In my opinion, he is covered by the words “toute personne assurée”. When the policy refers to the named insured it uses the term “l’Assuré”.

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I am in agreement with the reasons and conclusions of the Court of Appeal and have nothing to add.

I would dismiss the appeal with costs.

PIGEON J. (dissenting)—This appeal is against a decision of the Court of Appeal of Quebec which upheld a judgment of the Superior Court maintaining the action brought by plaintiff Fernande Leduc against appellant but dismissing the latter’s action in warranty against respondent Bélair Insurance Company. The only point in issue is as to the interpretation of the insurance contract.

Appellant is the owner of several cars used as taxis. It is a member of the Diamond Taxicab Association Limited. At the time of the accident on which the action is based, it was insured as such under an automobile insurance policy issued by respondent, covering the public liability of members of this association as owners of automobiles. In a list attached to the policy there are mentioned opposite appellant’s name six cars, including the one in which plaintiff was riding at the time of the accident. The car was being driven at the time in question by a driver who had rented it at so much a day.

It was held that under the Highway Victims Indemnity Act (R.S.Q. c. 232, s. 3), as the driver had not exculpated himself, appellant was responsible for the damages suffered by plaintiff in the accident. This conclusion was not challenged: appellant has not appealed from the judgment rendered against it in plaintiff’s favour, only from the dismissal of its action in warranty against the insurer.

The ground on which the insurer denies liability is based on the exclusion of liability set out in paragraph (b) of section A of the Insuring Agreements. The relevant portion of that section reads as follows:

[TRANSLATION] The Insurer agrees to indemnify the Insured, his succession or his administrators,

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and in the same manner and to the same extent as if named herein as the Insured, every other person who with the consent of the Insured or the consent of an adult member of the Insured’s household, other than a chauffeur or domestic servant, personally drives the automobile, for any liability imposed by law upon the Insured or upon any such other person for loss or damage arising from the ownership, use or operation of the automobile within Canada, the United States of America, or upon a vessel plying between ports thereof, and resulting from:

BODILY INJURY TO OR DEATH OF ANY PERSON OR DAMAGE TO PROPERTY

Provided always that the Insurer shall not be liable under this section:

…

(b) for loss or damage resulting from bodily injury to or the death of (i) the son, daughter, wife or husband of any person insured by this policy while being carried in or upon or entering, getting into or alighting from the automobile; or (ii) any person insured by this policy: or

…

(d) for loss or damage resulting from bodily injury to or the death of any person being carried in or upon or entering, getting into or alighting from the automobile, if the automobile is other than of the private passenger, station wagon or bus type, and if at the time of the accident more than THREE PERSONS (exclusive of the driver) are being carried in or upon or entering, getting into or alighting from such automobile; or

…

Plaintiff is the wife of Louis Albert Ferland, the driver, who had rented and was driving the taxi at the time of the accident. As such the latter is a “person insured” in view of the stipulation in his favour contained in the first paragraph of Section A (the “omnibus clause”). As this Court held in Hallé v. The Canadian Indemnity Company[2], such a stipulation creates a contract between the insurer and the third party. The use of the words “person insured” in paragraph (b), and not simply the word

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“insured”, appears clearly related to the extension of coverage. The effect of these words is, therefore, to make the exclusion stipulated therein applicable to liability towards the driver’s wife and child as well as to liability towards the wife and child of the insured named in the policy. Of course, the latter would only arise when the named insured is an individual, not a limited liability company.

Counsel correctly pointed out that the “omnibus clause” is an extension of the protection provided by the policy, not a limitation of the insurer’s liability, but the wording leaves no doubt that the clause as a whole does have this double effect. In view of the Indemnity Act, which makes the automobile owner liable for damage caused by the act of the driver, this exclusion of the insurer’s liability is not easy to understand. One can readily appreciate the reasons why it might be found advisable to prevent the wife and child of an automobile owner from bringing a damage suit which in reality is directed against the Insurer; but the situation is quite different when, as here, the driver is a third party. The automobile owner definitely is not in the same position towards the victim as when his own family is involved. He has no means of protecting himself from liability resulting from the act of the driver and on the other hand, the insurance policy, which he is in effect required to obtain, does not protect him against this risk, though its provisions are subject to regulation. However, the duty of the courts is to give effect to the letter of the law and of the contract. Such considerations therefore cannot be used to defeat a clause the meaning of which is not doubtful.

One further point remains to be considered however. A rider attached to the policy when it was issued contains at the outset the following paragraph:

[TRANSLATION] 1. In accordance with the stipulations of condition 5(B) of this policy, permission is granted to use the automobile as a TAXI, for trans-

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porting passengers for hire. Notwithstanding any stipulation to the contrary, contained in exclusion (D) of Section A of the Insuring Agreements of this policy, the Insurer shall be liable for loss or damage resulting from bodily injury to or the death of any person being carried in or upon or entering, getting into or alighting from the automobile.

The second sentence of this paragraph clearly stipulates that the Insurer will be liable for injury to any passenger in an insured automobile. As worded this stipulation is not limited by the first part of the sentence, since this first part simply states that a departure is thereby made from exclusion (D) and does not state that only exclusion (D) is being departed from. To find in this first part of the sentence a limitation of the general scope of the provision, something has to be read into it which is not there, namely the word “only” or some equivalent expression. In other words, it is necessary to apply here the principle that reference to a specific case precludes application of the other cases not referred to (Qui dicit de uno negat de altero, Inclusio unius est exclusio alterius, Expression facit cessare taciturn). In spite of these old maxims, the principle is very far from being recognized as a general rule of interpretation. This Court refused to apply it in L’Alliance des Professeurs Catholiques de Montréal[3]. On this point the following comment will be found in the reasons of Chief Justice Rinfret (at p. 154):

[TRANSLATION] As to this see the judgment of Farwell L.J., Re Lowe v. Darling & Son [1906] 2 K.B. 772 at 785:

The generality of the maxim ‘Expressum facit cessare tacitum’ which was relied on, renders caution necessary in its application. It is not enough that the express and the tacit are merely incongruous: it must be clear that they cannot reasonably be intended to coexist. In Colquhoun v. Brooks (19 Q.B.D. 400 at 406) Wills J. says: ‘May observe that the method of construction summarized in the maxim “Expressio unius exclusio alterius” is one that certainly requires to be watched… The failure to make the

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“expressio” complete very often arises from accident, very often from the fact that it never struck the draftsman that the thing supposed to be excluded needed specific mention of any kind. Lopes L.J. in the Court of Appeal (21 Q.B.D. 52 at p. 65) says: ‘The maxim “Expressio in unius exclusio alterius” has been pressed upon us. I agree with what is said in the Court below by Wills J. about this maxim. It is often a valuable servant, but a dangerous master to follow in the construction of statutes or documents. The exclusion is often the result of inadvertance or accident, and the maxim ought not to be applied, when its application, having regard to the subject-matter to which it is to be applied, leads to inconsistency or injustice’.

Respondent’s counsel argued that if the reference to exclusion (D) is not taken as a limitation of the scope of the general provision, that reference is rendered meaningless. This is true, but this argument can be made every time the principle of interpretation in question is relied on. In all cases the situation is the same: if an express reference to a specific case is not taken as implicitly excluding every other case, it means that without such reference the effect of the provision would be the same, that it would apply to all cases, whether referred to or not. However, that is exactly what the Court refused to accept in the Alliance case, and this for the reason indicated above. In fact, to admit that because the result would be the same without any reference to a specific case, the latter should be taken as an implicit exclusion of any other case, would amount to setting up as a general rule of interpretation an extremely questionable principle. The provisions of Art. 1014 C.C. should be borne in mind:

Art. 1014. When a clause is susceptible of two meanings, it must be understood in that in which it may have some effect rather than in that in which it can produce none.

There is no question here of interpreting the clause in a way that would render it meaningless. The question is whether something which is not expressed should be implied in order to give legal effect to every word. In fact, the only question is whether a reference to a specific case should be interpreted as an implied limita-

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tion. As we have just seen, this certainly is not an absolute rule.

Counsel also relied on the fact that there is the following clause at the end of the rider:

[TRANSLATION] Subject to this rider, all conditions and provisions of the policy shall remain in effect.

I do not see how this stipulation can affect the interpretation of the document. Even if it had not been included, could the result be otherwise? In no way does the stipulation mean that the rider only modifies the provisions expressly mentioned therein.

Thus we are faced with a rider which provides textually that the Insured will be liable for damage resulting from bodily injury to any passenger in an insured automobile. To say that this provision does not apply to the case at bar, one has to read into the reference to paragraph (d) an implied exclusion of the other paragraphs, (b) in particular. Should the document be read in this way? I think not. This is an insurance contract. It originated with the insurer, and he should bear the burden of any ambiguity. If by the sentence in question he merely meant that exclusion (d) of Section A of the Insuring Agreements was deleted or withdrawn, why did he not say this? Why did he go to the length of writing “the Insurer shall be liable for loss or damage resulting from bodily injury to or the death of any person being carried in or upon or entering, getting into or alighting from the automobile”, if that is not what he meant? An automobile insurance policy is taken to be written for the automobile owner to read and understand. Is an ordinary reader likely to understand on reading such a stipulation that, although the document states that the Insurer is liable for injury to any passenger, this is not what it means, that it only means that the Insurer’s liability shall not cease merely because there are more than three passengers?

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The rider shows that there was proper concern for the exclusions of liability lest they have a disastrous effect for the taxi owners who obtained the policy. The latter were undoubtedly fully reassured by reading that the Insurer would be liable for the passenger risk. If this liability was intended to be subject to exceptions, this should have been stated, and it was not. Once again, I say that in order to exclude the Insurer’s liability in the case at bar something must be read into the provision that is not there. The reference to a specific case has to be given an implied effect which is not stated. This I cannot accept in a case of this kind.

For this reason I would allow the appeal with costs in all courts against respondent, Belair Insurance Company, reverse, as against the latter, the decision of the Court of Appeal and the judgment of the Superior Court, maintain the action in warranty and condemn defendant‑in-warranty, the respondent in this Court, to indemnify appellant from the condemnation against it on the principal demand in capital, interest and costs.

Appeal dismissed with costs, PIGEON J. dissenting.

Solicitors for the plaintiff, appellant: Lacoste, Savoie, Joncas & Smith, Montreal.

Solicitors for the defendant, respondent: Stikeman, Elliott, Tamaki, Mercier & Robb, Montreal.

Solicitors for the plaintiff, mise-en-cause: Lafontaine & Lajeunesse, Montreal.