Facts[]
The Scott's home was damaged by a fire deliberately set by their 15-year-old son without their knowledge or complicity. At the time, they had a homeowner's insurance policy with Wawanesa. Wawanesa denied their insurance claim on the ground that the loss occurred through the "wilful act...of the Insured" within the meaning of an exclusion clause in the insurance policy. The word "Insured" in the policy included "the Named Insured" and "if residents of his household, his spouse, the relative of either, and any person under the age of 21 in the care of an Insured".
The trial judge held that the definition of "Insured" did not include the Scott's son. He found that the son's interest was separate from that of his parents and, accordingly, the exclusion clause was inapplicable to their claim. The Court of Appeal reversed the judgment.
Issue[]
- Does the clause apply only to the parents or to the son as well?
Decision[]
Appeal dismissed with costs.
Reasons[]
L'Heureux-Dubé, writing for the majority, held that when the wording of a contract is unambiguous, the courts should not give it a meaning different from that expressed by its clear terms, unless the contract was unreasonable or had an effect contrary to the intention of the parties. In this case, the terms of the insurance policy were perfectly clear - the policy excluded liability of the insurer for damage caused by the criminal or wilful acts of the insured, or of his minor children living in the home. Accordingly, the damages suffered by the Scott's were clearly excluded from coverage. Moreover, the insurable interests of the parents and of the child were inseparably connected and the misconduct of one was sufficient to contaminate the whole insurance policy. The son's interest was not limited to his personal possessions; he had a direct relationship to the family home and its contents, since they were the source of accommodation and support.
La Forest, in the dissent, found that in construing an insurance policy, the courts must be guided by the reasonable expectation and purpose of an ordinary person in entering such contract, and the language employed in the policy is to be given its ordinary meaning, such as the average policy holder of ordinary intelligence, as well as the insurer, would attach to it. In this case, the Scott's did not take out fire insurance to insure their son's possessions: they insured to protect their house. Where the term "Insured" is defined so as to extend to others than the named insured, that definition should not be construed so as to restrict or limit the coverage enjoyed by the named insured but rather, it is intended to extend coverage. In the absence of clear and precise language in the policy to the contrary, the obligation of the insurer of a fire insurance policy which covers the interests of more than one person, should be considered several as to each of them. Here, there was no clear language in the policy to the effect that the insurer considered its obligations joint. Where the language of the policy is ambiguous, the contra proferentem doctrine should be applied to construe the language in a manner favorable to the insured.
Ratio[]
Courts should not interfere in the plain meaning of contracts and imply terms if the contract is clear.