C.A. Allows Extrinsic Evidence in Finding Duty to Defend Snowmobile Claim

In McLean v. Jorgenson, released this afternoon, the Ontario Court of Appeal addressed the often-litigated issue of an insurer’s duty to defend. Its decision contained some interesting elements that are likely to have significance in future cases, particularly those involving interpretation of the phrase, “ownership, use or operation of a motor vehicle”.


The action arose out of a snowmobile accident in December, 2003, on the property of the Jorgenson family. The plaintiff, Adam McLean, was helping another young man, Joshua Jorgenson, lift the back of a snowmobile off the ground, while the operator was revving the throttle. When the operator eased up on the throttle, the snowmobile track shredded. One of the pieces struck the plaintiff, seriously injuring his leg, which eventually had to be amputated.

McLean sued Joshua Jorgenson and Jorgenson’s parents, Lorelei and Allan, with whom Joshua resided. The Jorgensons, in turn, brought third party proceedings against their auto insurer (TD General Insurance Company) and their homeowner’s insurer (Germania Farmers’ Mutual), both of which companies had refused to defend the McLean claim.

The Jorgensons brought a motion, asking the court to determine whether TD, Germania or both had a duty to defend them. On the return of that motion (a link to the decision is provided here), Justice Guy DiTomaso ruled that TD owed a duty to defend and Germania did not. He ordered costs on a substantial indemnity basis against TD, in another decision, to which a link is provided here.

The Court of Appeal today dismissed TD’s appeal. We will get into the C.A. decision below, but first, we need to establish a bit of context by looking at the motions judge’s ruling.

Extrinsic Evidence

One of the key parts of the decision of DiTomaso J.’s decision was that he allowed the Jorgensons to place before the court an affidavit sworn by Lorelei Jorgenson. The reason that this was significant is that ordinarily, duty to defend cases are decided on the basis of “the pleadings” (and there is some uncertainty in the caselaw as to which pleadings may be referred to), documents referred to in the pleadings, and the policy wording. The well-established rule is that if there is a possibility that the policy might cover the claim, as pleaded, then a duty to defend arises.

But ordinarily, affidavit evidence is not admissible in duty to defend cases, because the court is not to decide the underlying facts. It is only concerned with whether the pleaded claim might result in a finding of liability that falls within the policy coverage. Plus, the Rule under which the motion was brought provides that no evidence is admissible without leave of a judge (or on consent).

The affidavit of Lorelei Jorgenson, which Justice DiTomaso allowed into evidence, addressed an important issue in the case: ownership of the snowmobile. The snowmobile in question had only been acquired by the Jorgenson family the day before the accident. For there to have been coverage under the TD policy as a “newly acquired automobile”, the snowmobile had to have been “acquired as owner”. In her affidavit, Lorelei Jorgenson swore that she had purchased the snowmobile and had intended to insure it with TD. She was prevented from doing so, she said, only by the accident having happened so soon after taking delivery. The affidavit also indicated that all of the members of her family were named insureds in relation to the other vehicles insured with TD (of which there were several).

According to the reasons of the motions judge, TD’s position was that the duty to defend would only arise if Lorelei Jorgenson were found to be the owner of the snowmobile.

What was a little peculiar about this case was that in her statement of defence, Ms. Jorgenson had denied that she was the owner of the snowmobile. Yet on the hearing of the motion against TD, her counsel appears to have argued that at trial, she might be found to have been the owner and that therefore, there was a possibility of coverage.

After the motion was heard and decided, TD obtained (from another insurer involved in the case) a statement from the plaintiff, taken by an adjuster, saying that Joshua Jorgenson and not his mother was the owner of the snowmobile. On the appeal, TD argued that the affidavit of Lorelei Jorgenson ought not to have been admitted into evidence on the original motion but that if TD were to lose on this ground, that it should be given leave to introduce the Adam McLean statement into evidence in the Court of Appeal.

The Court of Appeal’s Ruling

1. Admissibility of the Extrinsic Evidence

The Court of Appeal, as noted above, dismissed the appeal. It found that the motions judge had properly admitted the affidavit of Lorelei Jorgenson. However, the court did say that “[i]t would have been preferable for the Jorgensons to amend their statement of defence and third party claim to specifically plead, in the alternative, that Lorelei Jorgensen was the owner of the snowmobile and to refer to the Application for Transfer in these pleadings.” It held that the failure by Lorelei, to plead that she was the owner of the snowmobile, was “an irregularity” which the Court was entitled to relieve against.

TD was not so fortunate in its attempt to introduce fresh evidence, in the form of the statement taken from the plaintiff by an adjuster from another insurance company. The Court of Appeal refused to receive that statement, saying that “it does not appear to be reliable evidence”. It also held that allowing the affidavit into evidence would trespass on the function of the trial judge, who would have to hear evidence about the issue of ownership.

2. “Ownership, Use or Operation”

Having ruled on what evidence could properly be considered by it, the Court of Appeal then turned to the more conventional role of comparing the pleaded allegations with the wording of the TD auto policy and the Germania homeowner’s coverage. The former provided insurance for damages for bodily injury “as a result of owning, using or operating the automobile” while the latter excluded claims “arising from the ownership, use or operation of any motorized vehicle”. The Court of Appeal referred to the Germania policy as being the “mirror image” of the TD policy.

It is not entirely clear what TD’s position was on this issue. As the Court of Appeal noted, the motions judge had said, at paragraph 39 of his reasons, that “There is no dispute that the injury to Adam was caused by the ownership, use or operation of a snowmobile and that the definition of a snowmobile or “motorized snow vehicle” is included in the definition of automobile found in the TD policy.” But, as the Court of Appeal went on to say, “the issue of whether McLean’s injuries arose out of the ‘ownership, use or operation of a motor vehicle’ was very much disputed.”

It appears therefore, that TD argued that lifting the rear of a snowmobile, or suggesting that this be done, was not “an ordinary and well-known activity” to which snowmobiles are put. (This language comes from the Supreme Court of Canada’s decision in Amos v. I.C.B.C., which interpreted the phrase, “ownership, use or operation”.) Seemingly on this basis, TD contended that the claim did not involve “ownership, use or operation” of the snowmobile and therefore, did not trigger coverage.

The Court of Appeal again ruled against TD. It said that “lifting the rear of the snowmobile cannot be viewed in isolation.  It is inextricably linked to the starting and revving of the motor….Unless attempts are made to start the snowmobile or the snowmobile has been started and is running, no dangerous activity is carried on by the Jorgensons and no situation of danger is created.  In my view, TD has a duty to defend McLean’s claims against the Jorgensons.”

3. Concurrent Causation (Coverage Under Germania Policy)

Finally, the fact that TD had been found to have a duty to defend did not necessarily mean that Germania did not. It was quite possible that the allegations in the statement of claim could have triggered a duty to defend on the part of both insurers. This would have been the result if the pleaded claim had given rise to a possibility that liability would be found on the basis of general negligence, such that the “ownership, use or operation” exclusion in the Germania policy did not apply.

For this to occur, said that Court of Appeal, there would had to have been the possibility of concurrent causes of action, non-derivative of each other: “To be non-derivative, the causes must be two independent, discreet and yet concurrent acts. The trier of fact must be able to, in theory, find the defendant liable on one but not the other.”

No such concurrent causation was present in this case, according to the Court: “Whether the Jorgensons provided verbal direction as to how to deal with the snowmobile or failed to appreciate the risk involved in their actions does not detract from the fact that this incident arose from the attempted repair of a snowmobile. The allegations of negligence, allegedly outside of the use, operation or ownership of the snowmobile, cannot stand alone as a ground for recovery.”

Therefore, Germania did not owe a duty to defend.


This case is important for two reasons. First, the issue of extrinsic evidence. The admission of the affidavit of Lorelei Jorgenson into evidence will almost certainly lead to this approach being tried in future coverage disputes. It is particularly surprising to see the Court admit an affidavit that was apparently aimed at establishing a proposition (ownership of the snowmobile) that was the opposite of what had been alleged in that same party’s pleading and to have the Court view this as a mere “irregularity”.

The Court of Appeal itself described the rationale of the rule against extrinsic evidence in coverage applications as being “the need to avoid making premature findings at a preliminary stage that could affect the issue of liability and to avoid the protraction of proceedings by a trial within a trial” [para. 16]. But in electing to receive the Lorelei Jorgenson affidavit, the Court heard evidence of what will clearly be a disputed issue at trial (ownership of the snowmobile). While it did not decide this issue, the Court did conclude that a possible outcome at trial was that Lorelei might be found to have been the owner and the affidavit does seem to have played a part in that finding.

The Court did not lay down any guidelines for extrinsic evidence, so it can be anticipated that future coverage disputes will see attempts by insureds to introduce all sorts of factual elements which have hitherto been out of bounds.

In light of the Court’s stated “policy” of avoiding “premature findings at a preliminary stage”, TD is probably scratching its corporate head today about the fact that the Court of Appeal not only refused to admit TD’s own extrinsic evidence, but commented that that evidence “does not appear to be reliable”.)

The second important aspect of this decision is on the issue of concurrent causation. Our office has a case on its way to the Court of Appeal on the same issue; whether a fire that broke out while an insured tenant was repairing his car gives rise to a concurrent cause of action in “general negligence”, so as to take it outside an “ownership, use or operation” exclusion in the tenant’s property policy. That case is Tucker v. Blight and the motion decision of Justice Lally (who ruled that there was no coverage under the tenant’s package) can be viewed on our website, here. The appeal is scheduled to be heard by the Court of Appeal on February 2, 2006.

In Tucker, we face the same argument as was advanced (and rejected) in today’s case: that the Supreme Court of Canada’s decision in Derksen v. 539938 Ontario Ltd. opens the door to multiple policies being triggered by the same sequence of events. The Court of Appeal has now made it clear that there are limits to that argument. In rejecting the argument of concurrent causation today, the Court said: “Whether the Jorgensons provided verbal direction as to how to deal with the snowmobile or failed to appreciate the risk involved in their actions does not detract from the fact that this incident arose from the attempted repair of a snowmobile. The allegations of negligence, allegedly outside of the use, operation or ownership of the snowmobile, cannot stand alone as a ground for recovery.”

Thus, it appears that concurrent causation is not made out unless the cause of action that is alleged to be concurrent can stand on its own, wholly independent of the excluded cause of action. We will see what the Court of Appeal has to say in February, in theTucker case.

This entry was posted in Duty to Defend, Insurance News. Bookmark the permalink.