Jesuit Fathers of Upper Canada v. Guardian Insurance Co. of Canada,  O.J. No. 4534, Ontario Superior Court of Justice
The Jesuit Fathers operated and administered what was popularly known as the “Spanish Residential School” from 1913 until its closure in 1958. In the early 1990s, allegations of physical and sexual abuse committed by specific Jesuit Brothers started to emerge. Guardian had provided insurance coverage in the form of a comprehensive general liability policy and an umbrella policy from September 30, 1988 through September 30, 1994. In early 1994, a former resident, Cooper, retained a lawyer to write seeking damages from the Jesuit Fathers. At that time, counsel for the Jesuit Fathers, Zimmerman, wrote to Guardian reporting the situation with respect to allegations from both named and unnamed perpetrators and complainants. The Cooper claim was not formalized until after the expiration of the Guardian policies. The Cooper Statement of Claim was one of approximately 100 such claims that ultimately were filed, all alleging that the Jesuit Fathers were negligent in their administration of the Spanish Residential School. The Jesuit Fathers applied to the court for a declaration that Guardian was required to defend and indemnify them for these claims on the basis that the administration of the school fell within coverage granted for “the provision of professional services” in the policy.
The court reviewed the coverage granted in the policies to determine the scope of “professional services”. The court held that administration and supervision of the school were aspects of a professional service and, consequently, negligence resulting from the performance of or failure to perform such aspects were within the coverage provided. The court refused to exclude coverage under the Intentional Act exclusion, finding that there was a distinction in the policy wording between “an insured” and the “Named Insured”. The court noted that an intentional act by “an insured” would not exclude coverage for the Named Insured under the policy. Therefore, even if coverage was not available to the individual Jesuit Father accused of committing the abuse, this would not vitiate coverage for the Jesuit Fathers organization.
The primary issue reviewed by the court was whether or not the claims advanced fell within the particular policy period. The court carefully analyzed the wording of the Guardian policy and noted that this was a hybrid policy, a claims-made or discovery policy with occurrence-based elements. The court held that the blend of a claims-made policy with occurrence-based language made for an inherent ambiguity in the nature of coverage and, consequently, it was necessary for the court to consider extrinsic evidence and the reasonable expectations of the parties in determining what constituted a “claim”. The court reviewed the decision of the Supreme Court of Canada in Reid Crowther and Partners Ltd. v. Simcoe and Erie General Insurance Co. (1993), 1 S.C.R. 252 and noted that the Supreme Court of Canada had indicated that the Court should be careful not to construe claims-made or hybrid policies in such a way as to exclude claims discovered by the Insured during the policy period on the ground of some technical deficit in the nature of the claim. Based upon this analysis, the court held that an objectively reasonable insured would deduce that the Cooper claim and those claims communicated by Zimmerman in his original letter would be “claims” within the policy and present a basis upon which a duty to defend arose. However, claims made on behalf of Plaintiffs not described within the policy period could not constitute “claims” for the purpose of coverage as they were neither “first made” during the policy period, nor were they discovered during the policy period. Non-specific general information relating to the possible existence of further complaints did not constitute a sufficient basis for a “claim” under the policy.
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