Pleading negligent supervision is not the same as asserting vicarious liability in policy exclusion case: Newfoundland court

Negligent supervision is not the same as vicarious liability and therefore does not fall under a policy exclusion based on “ownership, use, or operation” of an all terrain vehicle (ATV), the Supreme Court of Newfoundland and Labrador’s trial division found in Pender v. Squires in February 2011.
As a result of the decision, the Dominion of Canada General Insurance Company does have a duty to defend the ATV’s owner, Larry Hannam, in three consolidated liability actions related to Hannam’s homeowner’s insurance policy.
The Dominion asked the court to determine whether an exclusion in the Hannams’ homeowner’s policy applied, in which case The Dominion was not required to defend the Hannam.
The litigation arose after the plaintiff, Tanya Pender, was injured in an October 2006 ATV accident.
Pender was a passenger when the first defendant in the action, Kayla Squires, was driving the Hannams’ ATV. Pender’s statement of claim, which contains allegations not proven in court, submits Squires lost control of the ATV, causing Pender to sustain a serious injury.
Larry Hannam owned the ATV. The Dominion intervened in the case, arguing that it did not have a duty to defend the Hannams because the Hannams’ homeowner policy contained a policy exclusion for actions arising from the “ownership, use or operation” of motorized vehicles “by you or on your behalf.”
The Dominion argued the plaintiff’s pleadings attempted to impose vicarious liability on the Hannams through their ownership of the ATV. The court agreed certain parts of the pleadings did in fact attempt to impose vicarious liability on the Hannams, thus falling within the policy exclusion for claims related to the “ownership, use or operation” of a vehicle.
However, the court found, other allegations in the statement of claim related to Hannam’s consent to transfer possession and control of the ATV — what the court refers to as an allegation of “negligent supervision.”
“The claim of negligent supervision is not an excluded claim based on ‘ownership, use, or operation’ of the ATV by Larry Hannam, or on his behalf,” the court wrote in its decision. “[The] claim of negligent supervision against Larry Hannam is a claim based on ‘responsibility or control over the acts of another person’… [I]t is not a claim based on an act of control over the ATV.
“It requires a determination of whether a duty of care was owed by Larry Hannam to the plaintiff [Pender]; it does not require a determination of whether there was an aspect of control of the ATV by him, or on his behalf.”