Summary

Keywords

Insurance - Property insurance, Interpretation - Insurance law - Property insurance - Exclusion clauses - Interpretation - Vehicles stolen from parking lot of park and fly hotel - Action in warranty against hotel’s insurer - Whether Court of Appeal erred in law in applying “care, custody and control” insurance exception - Whether Court of Appeal erred by not giving facts proper implications or applying them properly, having regard to their significance, characterization and scope.

Summary

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The appellant Éconolodge hotel (“Éconolodge”), which was located near the Pierre Elliot Trudeau airport, offered its customers a park and fly service, that is, a modestly priced room plus free parking for the duration of their travel out of the country. In the winter, customers had to leave the keys to their vehicles with Éconolodge to facilitate snow removal. On two occasions, customers’ vehicles were stolen while parked at Éconolodge.

In this case, a customer whose vehicle was stolen filed a claim for the theft of his vehicle with his insurer, AXA Insurance Inc. (“AXA”), which compensated him and, in return, brought an action in subrogation against Éconolodge. Éconolodge argued that the claim was covered by its insurance policy, so it brought an action in warranty against the respondent Lombard General Insurance Company of Canada (“Lombard”).

However, Lombard refused to defend Éconolodge, arguing that the [TRANSLATION] “custody, control or management” exclusion in the insurance policy applied.

The trial judge confirmed that Éconolodge was liable but held that the exception clause did not apply in this case. She therefore ordered Lombard to compensate Éconolodge, on the basis of the quantum of damages admitted, for the award made against it in AXA’s favour. Lombard was also required to pay Éconolodge’s defence costs, which were estimated at $25,000.

Lombard’s appeal on the applicability of the exclusion clause was allowed. The Court of Appeal held that the handing over of vehicle keys gave Éconolodge a real power of protection, preservation, direction and physical control over its customers’ cars while its customers were travelling.