Single Therapy Session at Family Counsellor’s Home Not a Business Pursuit
Kennedy v. Intact Insurance Company, 2023 NLSC 7, is a quick and interesting duty to defend decision that concerns a homeowners policy’s “business pursuits” exclusion. One of the underlying plaintiffs allegedly slipped and fell while attending at the insured property (a residential home) for a therapeutic counselling session. Stack J. found there was a possibility that the insureds could be held liable for the slip and fall in their personal capacities. He next observed that there was no evidence adduced as to how often or in what manner the insured conducted business from the insured property. The Court declined to apply the liability coverage’s business pursuits exclusion on the basis that a single proven counselling session was not “continuous or regular pursuit” of a trade or profession at the insured property. (“That day may have been an isolated event such as not to engage the exclusion.”). The insureds were entitled to be defended and were awarded costs on a full indemnity basis.
With respect to the facts, the insureds owned and resided at the insured property, which was insured under a homeowners policy with a typical personal liability coverage for claims arising out of the insured personal actions or their ownership, use or occupancy of the insured property. The policy contained an exclusion that withdrew coverage for “business pursuits or any business use of the premises”. “Business” was defined in “any continuous or regular pursuit undertaken for financial gain including a trade, profession, occupation or agricultural operations.”
Firstly, Stack J. found there was a possibility that the insureds could be held liable for the slip and fall in their personal capacities. He then noted that, in their Statement of claim, the underlying plaintiffs pled that the insured property was known under the trade name “JK Consulting & Therapeutic Services” and also that one of the insureds owned the business enterprise, which was the specific purpose of their attendance on the date that injury occurred. Stack J. thus acknowledged “On its face, therefore, it appears that [the insured] was operating a business from the Premises, at least at the time of the Plaintiff’s accident.” Regardless, the Court found there was duty to defend. Stack J. explained:
 As we saw from Ledcor, however, the exclusion will be construed narrowly … Therefore, [the insurer] must establish that [the insured’s] business met the definition of “business” in the Policy exclusion. Specifically, has [the insurer] established that the business conducted from the Premises by [that day] that day was “continuous or regular” as required by the Policy wording? I find that they have not.
 There was no evidence adduced as to how often or in what manner [the insured] conducted business from the Premises. Consequently, I have no evidence upon which I can find that the business they conducted there was continuous or regular. That day may have been an isolated event such as not to engage the exclusion. Consequently, even if the nature of the claim is based upon the business of [the insured], such that the exclusion could apply, [the insurer] has not met its onus of establishing that it does.
The insurer’s lack of success seemingly turned upon its failure to introduce evidence extrinsic to the underling pleadings that spoke to whether the insured’s operation of a counselling business was continuous or regular. Of course, presenting the very evidence necessary to address the disputed issue may have itself proven a difficult endeavor as it well understood that “an insurer's duty to defend can, and should, be decided without consideration and application of extrinsic evidence bearing upon the underlying action” (Halifax Insurance Co. of Canada v. Innopex Ltd,  O.J. No. 4178 ONCA)
Although rare, there are decisions in which Canadian courts have indeed relied upon extrinsic affidavit evidence to determine the scope of exclusionary provisions at the duty to defend stage, including similarly a worded business pursuits exclusion (Borthwick v Lombard Insurance, 2015 ONSC 4845) and an exclusion that withdrew coverage for certain kinds of business activities (Juroviesky et al. v. Lawyers Professional Indemnity Company, 118 O.R. (3d) 627). These decisions are notably few and these may be exceptional cases owing to their particularities. In any event, a court may be amenable to considering extrinsic evidence on such a point if it does not require that that judge, in deciding the preliminary coverage issue, make findings before trial that would affect the underlying litigation. Of course, the success of such argument would turn, firstly, upon the factual issues disputed between the parties in underlying case and the exclusionary wording to be considered.