As a result of an alleged brain injury sustained during a sparring match with a martial arts instructor, the plaintiff in the underlying action commenced proceedings against the instructor as well as the martial arts club involved in arranging the match. Both clubs tendered the claim to their insurer and sought a defence.1
The insurer (who was the same for both defendant clubs) denied coverage on the basis of the following exclusion:
Any bodily injury caused or contributed by any Insured to a participant and/or caused or contributed by any participant in a match or practice in regards to Category 4 Sports unless specified in the Declarations.
While “martial arts” was listed in the policy as a Category 4 Sport, “martial arts” was also specified in the Declarations.
The insurer argued that the phrase “unless specified in the Declarations” applied – unambiguously –to “match or practice” and not to “Category 4 Sports”. The insurer was arguing that in order to benefit from the exception to the exclusion, the actual “match or practice” where the plaintiff had been injured would have to have been specified in the Declarations. The insurer took the position that to read the phrase to apply to “Category 4 Sports” was to render the exclusion clause meaningless.
The Court of Appeal confirmed that the exclusion was ambiguous and that such ambiguity was to be resolved contra proferentum – in favour of the insured.
The Court expressly disagreed with the insurer’s argument that such an interpretation rendered the exclusion meaningless; it simply rendered the exclusion inapplicable. A result expressly contemplated by the language of the exclusion.
This case provides a helpful re-articulation of the principles of contractual interpretation in the context of insurance policies. Those involved in drafting policy language should be ever mindful that an insured is entitled to the benefit of any ambiguity where such an interpretation is supportable by the text of the policy and the reasonable expectations of the parties.