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Alberta appeal court rules in favour of Intact in dispute over ‘business pursuits’ exclusion in farm liability policy


July 6, 2015   by Canadian Underwriter


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The Court of Appeal of Alberta ruled Friday in favour of Intact Insurance Company in a dispute over an exclusion, for “business pursuits,” in a liability policy on a farm property.

Court records indicate that Terry Burch was injured May 4, 2001 after being thrown from a horse during a riding lesson.

Burch had purchased the horse from Christopher Miller, in a sale agreement that included 30 days of riding and handling lessons. Miller – who died in October, 2001 – had purchased his farm property the year before. He bought a $1-million farm liability policy written by ING Western Union, now Intact Insurance. That policy “included liability coverage for certain bodily injury which occurred on the property,” according to background information provided in the appeal court ruling. The policy also “excluded bodily injury arising out of the conduct of any ‘business pursuits’ on the property other than farming,” wrote Madam Justice Ellen Picard, Madam Justice Patricia Rowbotham and Mr. Justice Brian O’Ferrall of Alberta’s appeal court. In the farm liability policy, farming “was defined as the use of the premises for the production of crops or for or care of livestock.”

 An Alberta court ruled in favour of Intact over a dispute over a farm liability insurance policy

After the riding accident, Terry Burch and Christopher Burch sued the administrator of Miller’s estate. In 2011 they obtained a judgment of nearly $200,000 plus costs. That judgment had not been satisfied, so the Burches and the estate administrator then “initiated a direct recourse action” against Intact.

In a decision released in May, 2014, Madam Justice Sheila Greckol, of the Alberta Court of Queen’s Bench, found that “by providing riding lessons, as part of the horse sale, Miller was engaged in a ‘business pursuit’ undertaken for financial gain.”

Intact contended at the time its brokers “were not authorized” to bind Intact to a farm liability insurance contract “when an application for insurance involved non-farming business activities,” Justice Greckol noted in 2014. Intact – and the broker who sold Miller his policy – noted at the time that policyholders who provided riding lessons would require a separate specialty equine liability policy, sold by a specialty insurance company.

Justice Greckol dismissed the action against Intact. That ruling was upheld July 3, 2015 on appeal.

Justice Greckol found in 2014 that while horse breeding falls within the definition of farming, horse riding lessons do not.

“While training people to ride horses might be compatible with breeding horses, it cannot seriously be contended that it is a ‘necessary operation’ of breeding horses,” Justice Greckol wrote at the time.

On appeal, the Burches relied – in part – on the fact that exclusions in insurance policies “are to be interpreted narrowly with the onus on the insurer to show they apply,” the appeal court noted, adding they found that Justice Greckol “applied the correct legal tests” in interpreting Intact’s policy.

Justice Greckol “was bound by the statement in the Notice to Admit Facts that the parties had agreed that ‘Miller would provide 30 days of lessons to Burch on how to ride and handle the horse,'” the appeal court noted.


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