SUPREME COURT OF NOVA SCOTIA Citation: Party Bus Atlantic Inc. v. Temple Insurance Company 2016 NSSC 96 Date: 20160412 Docket: Hfx. No. 447434 Registry: Halifax Between: Judge: Heard: Party Bus Atlantic Inc. and The Co-Operators Group Limited Applicants v. Temple Insurance Company Respondent Decision The Honourable Justice Jamie Campbell March 16, 2016 in Halifax, Nova Scotia Written Decision: April 12, 2016 Counsel: Christa Brothers and Laura Rhodes for the Applicants Nancy Murray for the Respondent
Page 2 Campbell, J. [1] The name of the insured in this case is Party Bus Atlantic Inc. ( Party Bus ). When an entity of that name is involved in litigation it is not surprising that the debate would at some point turn to whether the emphasis is on the party or on the bus. [2] This is a dispute about whether an insurer should be required to defend an action taken against Party Bus. The Co-operators Group Limited (the Co- Operators ) issued a motor vehicle policy to Party Bus. Temple Insurance Company ( Temple ) issued a commercial general liability policy to Party Bus. That policy excludes coverage for claims arising out of the use, ownership or operation of an automobile. Now, Party Bus has been sued by a person who says that she was injured in a fall while she was a passenger on the bus operated by Party Bus. The Co-Operators, as the motor vehicle insurer, is already involved in defending against the claim. The Issue [3] The issue is whether Temple, as the commercial and general liability insurer, should be required to defend the action as well. Distilled perhaps to the point of
Page 3 over simplification, the question is whether a claim following a fall that is alleged to have happened on the bus is clearly and unambiguously excluded from coverage under the commercial and general insurance policy because it arises out of the use, ownership or operation of a motor vehicle. The Claim [4] The bus operated by Party Bus is not a form of public transit in which commuters plugged in to various personal devices avoid eye contact in the usually realized hope that a party of some kind will not break out. It appears to be a somewhat unconventional motor carrier for which the end is not the destination as much as the party experience while riding the bus. [5] It is important to consider the precise nature of the claim. The plaintiff alleges that she was on the bus when she was injured in a fall. She says that the bus came to an abrupt stop and she slipped and fell hard to her knees. There are claims arising specifically out of the manner of operation of the vehicle itself. The Co- Operators takes no issue that it is responsible to defend those aspects of the claim. Those relate to how the bus was being driven at the time of the incident. [6] The plaintiff also claims that Party Bus failed to insure the safety of the users and occupants and among other things failed to encourage them to remain
Page 4 secure and seated. She says that Party Bus allowed the consumption of alcohol on the bus and permitted the spillage of alcohol on the floor. She says that they encouraged users and occupants to engage in drunken, inappropriate and unsafe behaviour. Positions of the Parties [7] The Co-Operators argues that these are not entirely motor vehicle claims. There are claims in respect of general business operations. The activities fall outside the scope of typical automobile related activities. Party Bus created a sphere of risk that was not limited to automobile related risks. Automobile insurers insure against the risks involved in conveying people and goods in motor vehicles and not against the kinds of risks that one would associate with a pub or a dance club. Those are risks addressed by general liability insurers. [8] Temple argues that the claims are not covered by the commercial and general liability coverage because the policy excludes claims for damages for bodily injury arising out of the ownership, use or operation by the insured of an automobile. The bus operated by Party Bus is an automobile as defined by the policy. The accident is alleged to have happened on the bus because the bus
Page 5 stopped quickly. This then was an automobile accident and the injuries as alleged arose from that accident. Summary [9] The bus operated by Party Bus is a bus. Its purpose is to convey people from place to place on a public highway. Whether they silently suffer through a trip to a destination or enjoy the mobile party atmosphere, does not change the fact that the purpose of the bus is to convey people. [10] Claims arising from a fall that is alleged to have happened on the bus, may be argued to relate to business practices and as such are self-standing claims, not derived from the driving of the bus or from its operation by the driver. They do however arise directly from the operation of the bus as a vehicle by Party Bus, and from the use and ownership of the bus, as a vehicle, by Party Bus. The claims are clearly and unambiguously exempt from coverage under the Temple commercial and general liability policy. The Law [11] The law as it relates to the duty to defend has been set out concisely by Justice Coady in Breton Petroleum Ltd. v. Aviva Insurance Co. of Canada, 2014
Page 6 NSSC 200. The duty to defend is triggered when there is a possibility that the claim, if proven, would require the insurer to indemnify under the policy. To determine whether there is such a possibility the pleadings, documents referred to in the pleadings and the entire policy have to be read. That means that exclusions from coverage have to be considered as well. To be effective an exclusionary clause must clearly and unambiguously exclude coverage. Hector v. Piazza 2012 ONCA 26. [12] If the insurer can prove that there is no possibility that the policy provides for indemnity there is then no obligation on the insurer to defend the claim. The duty to defend is broader than the duty to indemnify because it depends only on there being a possibility that the insurer will be required to indemnify the insured. The Exclusionary Clauses [13] The Temple commercial general liability policy contains two relevant exclusionary clauses. The first exclusion is found at 2(e) (i) of the policy. It provides that the policy does not apply to injuries; arising out of the ownership, use, operation or entrustment to others by or on behalf of the insured of; (a) any automobile.
Page 7 [14] Automobile is defined in Section V of the policy as including, any self-propelled land motor vehicle which is principally designed and is being used for transportation of persons or property on public roads. [15] It is conceded that the bus operated by Party Bus, under that definition, is a motor vehicle. [16] The second exclusion is found at clause 2(e) (ii). It provides that the policy does not apply to injuries or damages with respect to which any motor vehicle policy is in effect. The policy is not intended to provide additional coverage for motor vehicle liability policies. [17] Temple asserts that the claim here arises out of the ownership, use or operation of an automobile and there is a motor vehicle policy in effect with respect to those damages. The Co-Operators argues that the exclusion is not clear and unambiguous. The threshold of mere possibility is a low one and the claim is capable of giving rise to liability apart from the operation of the bus itself. Clarity or Ambiguity [18] The dispute is whether those clauses clearly and unambiguously exclude coverage for the claims made in this case. That raises the question of what the
Page 8 phrase arising out of the ownership, use [or] operation means in the context of an automobile or motor vehicle. [19] Temple argues that the answer is self-evident. The fall is alleged to have happened on an operating motor vehicle. That clearly arises from the ownership, use or operation of the vehicle. [20] In Reliance Petroleum Ltd. v. Stevenson,1956 CarswellOnt 83, the Supreme Court of Canada dealt with coverage for an accident that happened when a fire was alleged to have been caused by a gasoline tanker truck delivering product to a gas station. The argument was that the negligence did not relate to any function of the truck as a vehicle. The negligence was in a function added to but distinct from that of an automobile, being the discharge of gasoline into the tanks at the station. [21] The expression use or operation would cover all accidents resulting from the ordinary and well known activities to which automobiles are put. The overflow of gasoline was caused by the driver s negligence in discharging the gasoline from the delivery truck and that was a function of the truck itself. [22] Here, the use of the bus as a party bus, does not change the fact that it was being used to convey people, which is precisely what buses are designed and intended to do. The injury is alleged to have taken place during the course of
Page 9 moving people from place to place, on the bus. The situation would be different if the bus were being used as a storage shed, a diving platform or was being put to some use other than an ordinary and well known activity to which vehicles are put. Concurrent Claims [23] The Co-Operators says it isn t that simple. The Co-Operators doesn t dispute that it has to defend against the claims that relate to the alleged negligent operation of the motor vehicle as a vehicle. It is argued that there is concurrent liability arising not from the operation of the vehicle but from the operation of the business. For example, policies or the lack of policies that relate to the the party part of the bus, and not to the operation of the bus as a motor vehicle, may give rise to free standing liability that is distinct from the liability that might arise from the bus as a motor vehicle. [24] An example of concurrent causes of loss is Derkson v. 539938 Ontario Ltd., 2001 SCC 72. In that case a construction foreman picked up road signs from a construction project. He placed a steel plate sign on the tow bar of a compressor unit that was being towed by his truck. He then forgot about it. He did not plan to carry it on the vehicle. He just carelessly placed it there in the process of cleaning up the job site. While the truck was being driven the plate flew off and went
Page 10 through the window of a school bus killing one child and injuring others. The action was commenced against the contractor for negligence in the operation of the vehicle and for negligent cleanup of the construction site including the negligence in failing to properly instruct and supervise workers and the failure to have policies in place. [25] The contractor sought coverage under both the automobile policy and the general liability policy. Both policies applied and both were primary. The Court rejected the argument of the liability insurer that the entire sequence of events arose from the loading of the truck and the transporting of the materials in the truck. There were two separate sources of liability, one automobile related and the other not. Driving with the unsecured sign was negligence in the operation of the truck. The action of the contractor in placing the sign on the truck and forgetting about it, related to the workplace because he had no intention of driving away with the sign resting there. Placing the sign on the tow bar was not part of the loading process relating to the truck, but part of the clean up process related to the work site. [26] There are then circumstances in which two insurers may be required to respond. When there are concurrent causes of action that are non-derivative that may be the case. To be non-derivative the causes must be two independent,
Page 11 discreet and yet concurrent acts. McLean (Litigation Guardian of) v. Jorgenson 2005 Carswell Ont 7013, para. 25. The issue is whether the origin of each cause arises out of a different factual source, so that it can be said that the existence of each cause does not depend on the other. [27] The Co-Operators argues that while it is responsible to defend against allegations of driving related negligence that might have caused the fall, Temple should defend against claims that corporate policies and actions such as failure to clean the floor of the bus caused the fall. The Co-Operators says that those claims are not derivative because in the absence of negligent driving, had the plaintiff simply fallen on a wet floor, there could be a sustainable claim. [28] Not surprisingly, that kind of argument has given rise to a number of claims in which there have been motor vehicle accidents with related claims for negligent business practices. The business involved can be alleged to have been negligent in the hiring, training and supervision of the employee driving the vehicle. That was the case in Unger (Litigation Guardian of) v. Unger 2003 Carswell Ont 4751(CA). The employer of the driver had both an automobile policy and general liability policy. The general liability insurer maintained that the claims for negligent business practices were not covered because they related to the use and operation of a motor vehicle. The Ontario Court of Appeal agreed.
Page 12 [29] The business practices were not discrete causes of action. Doherty J.A. provided a precise explanation of the phrase, discrete causes of action. If the plaintiffs had been able to establish any of the allegations regarding business practices, but failed to establish that the vehicle was used or operated in a negligent manner, they would not succeed in their claim. While the allegations of negligent training and supervision may be germane to whether the owner was negligent in the ownership, use or operation of the vehicle, they do not provide a stand-alone ground for recovery. [30] In Aviva Insurance Co. of Canada v. Pizza Pizza Ltd.2008, ONCA 535, a pedestrian was injured by a pizza delivery driver. The pedestrian alleged negligence against the company claiming that its promise of delivery within 30 minutes or free, encouraged drivers to drive fast or risk having to pay for the pizza themselves. She also alleged negligence in not having proper driving policies, failing to do background checks and failing to check on the driving records of the pizza delivery drivers. The issue was whether Aviva as the commercial and general liability insurer was required to defend the claims. Pizza Pizza claimed that the allegations of negligent business practices were concurrent and were independent of the automobile negligence claims.
Page 13 [31] The Ontario Court of Appeal held that the non-automobile claims were derivative of the negligent operation of the delivery vehicle. The precipitating cause of the plaintiff s injuries was the alleged negligence of the driver, not the negligence of Pizza Pizza in its policies. The 30 minutes or its free policy exists but it is not actionable unless there is negligent driving by a delivery driver causing personal injury or damage. The non-automobile claims were then derived from, and not independent of the automobile claim. [32] Those cases are different from what is alleged to have happened here. The hiring practices for example, could not give rise to a claim without the negligent driving from which they are derived. Here, there could be a claim without any negligent driving at all. Failing to clean up spilled drinks, or encouraging patrons to behave in ways that are unsafe could conceivably support an action entirely on their own without any negligence arising from the driving of the bus. [33] The claims based on business practices or operations are not derivative of the driving of the vehicle. In the absence of any concern at all about the manner of the driving of the bus those business operations could give rise to a cause of action.
Page 14 Arising from the ownership, use (or) operation [34] The exclusionary clauses in the Temple commercial and general liability policy are not limited to claims that relate to the driving of a motor vehicle or even to the operation of a vehicle. They exclude claims that arise from the ownership, use or operation of a vehicle. For example, when an owner s failure to maintain a motor vehicle properly is the cause of an accident, quite apart from any issues related to driving, the claim arises from the use, ownership and operation of the vehicle. [35] The claims in this case arise directly out of the use, operation and ownership of the party bus, which is a motor vehicle. The claims relate to practices and policies of Party Bus but each practice or policy is directed at what takes place on the bus itself. Acting as a mobile party venue is a rather novel use of a bus. Vehicles may be put to all kinds of novel uses some of which may be creative and some just stupid. At the same time, the motor vehicle maintains its essential character as a motorized vehicle intended to move people and goods from place to place. The mobile part of the mobile party venue is why the party bus retains that essential character as a motor vehicle or an automobile as defined in the insurance policy. Policies and practices that relate to what happens in that vehicle are not party policies but policies that relate to what happens in a motor vehicle.
Page 15 Occupiers Liability [36] The Co-Operators argues that the insured could be said to have owed a higher duty of care under the common law rules on occupier s liability to insure that people entering the Party Bus were reasonably safe while on the premises of the bus. The claim that a duty might be owed to patrons of the bus does not change the characterization of the bus as a vehicle being used as a vehicle. The duty to keep the bus safe is part of the obligation of its owner in the capacity as the owner of a motor vehicle. Conclusion [37] The allegations against Party Bus relate to an incident that is alleged to have occurred on the bus, while it was in operation. They include allegations of negligent operation of the vehicle itself. It could be argued that even had the operation of the vehicle, in the sense of driving, been entirely non-negligent, and an accident occurred, there could still be a cause of action founded in the policies that allowed patrons to stand and party while on the bus. The liability that may arise from the policies does not derive from the liability that may arise from negligent driving.
Page 16 [38] But, liability arising from corporate policies or business practices in this context is derived from the use, ownership and operation of the party bus. The claim is based on the plaintiff having fallen on the bus. Without that fall on the bus there would be no claim. Any policy or business practice that could conceivably give rise to liability would have to be related to the fall, on the bus. The liability in that case would arise from or owe its existence not to the driving of the bus but to the ownership and other aspects of the operation of the bus. A claim is still an automobile claim if it relates to the non-driving operation or functioning of the vehicle. [39] The application by the Co-Operators for a declaration that Temple has a duty to defend the action is dismissed with costs in the amount of $1000. J.