On March 15th, 2016, Qi An Weng, one of the defendants, burned down her landlord’s residence while attempting to extract resin from marijuana. Her landlord, the plaintiff, sought coverage for the property damage from his home insurer. The insurer denied coverage based on two exclusion clauses within his insurance contract: a marijuana production exclusion clause, and an illegal activities clause. The plaintiff commenced a claim against the parties responsible for the fire, and against his insurers seeking coverage under his home insurance policy.
While the plaintiff’s claim was ongoing, a new section, s. 129.1, was added to the Insurance Act. This new provision narrows the applicability of intentional or illegal act exclusion clauses in insurance policies to those responsible for the intentional or illegal activity. In other words, s. 129.1 protects innocent persons from being denied coverage because of another person’s illegal or intentional act.
After s. 129.1 was added to the Insurance Act, the plaintiff amended his statement of claim to plead the applicability of s. 129.1 to his claim for coverage. The defendants did not amend their statement of defence in response.
Positions of the Parties on Summary Judgment
On summary judgment on the insurance issue, the defendant insurers argued that s. 129.1 was not applicable to the plaintiff’s claim because:
- S. 129.1 should not be applied retrospectively; and
- S. 129.1 does not apply to the marijuana exclusion clause in any event.
The plaintiff, citing r. 26.05(2) of the Rules of Civil Procedure and Rodaro v. Royal Bank of Canada, argued that the defendants were precluded from making arguments about s. 129.1’s applicability because they did not rely on s. 129.1 in their statement of defence.
Motion Judge’s Decision
The motion judge found that:
- The defendants were entitled to address the applicability of s. 129.1 despite not mentioning s. 129.1 in their statement of defence;
- S. 129.1 is not applicable to the plaintiff’s claim because it came into effect after the plaintiff’s loss occurred; and
- S. 129.1 is not applicable to the marijuana exclusion clause.
The motion judge accordingly held in favor of the defendant insurers, and dismissed the action against them. The plaintiff appealed this decision to the Court of Appeal.
Issues on Appeal
Issue 1: In the motion for summary judgment, were the defendants entitled to raise arguments about the applicability of s. 291.1?
The appellate judge applied a deferential standard of review to this issue, having found it was one of mixed fact and law.
The motion judge decided that the defendants were entitled to discuss the applicability of s. 291.1 in the motion for summary judgement because:
- The defendants relied on the Insurance Act as amended in their Statement of Defence, and therefore relied on s. 291.1 by implication and so were entitled to address its applicability;
- The plaintiff raised the issue of s. 129.1’s applicability in his motion for summary judgement, and as such, the defendants were entitled to discuss s. 129.1 in their response to the plaintiff’s motion; and
- Because both parties disclosed their arguments in their motion materials, there would be no “unfair surprise” to either side by allowing the defendant to discuss the applicability of s. 129.1.
The Court of Appeal found no reason to interfere with the motion judge’s findings, and found that the defendants were entitled to address the applicability of s. 129.1 in the motion for summary judgment.
Issue 2: Does s. 129.1 apply retrospectively to the plaintiff’s claim?
The Court of Appeal applied a standard of correctness to this issue, having found that it was one of statutory interpretation.
In their decision, the Court explained the difference between retroactive and retrospective application of a law, stating that the former applies the new law to events in the past, while the latter applies the new law to events in the future that depend on facts from the past. The Court found that while the motion judge had used the term ‘retrospective’ in his analysis, the issue of the applicability of s. 129.1 in this case was more accurately characterized as a retroactive application of the law.
The Court stated that there is a strong presumption against applying laws retroactively. For a law to be retroactively applied, the legislature must explicitly state this as their intention. The Court examined s. 129.1 and concluded that the legislature did not intend for it to be applied retroactively.
Plaintiff’s Arguments for Applying s. 291.1
The plaintiff argued that because his claim was ongoing, s. 129.1 would not need to be applied retroactively. He argued that the word “claim,” as used in the section, should be interpreted as a current event, not a past one.
The Court rejected this argument, and stated that when read in the context of the Insurance Act, the word “claim” is best understood as relating to a specific event (usually the date of loss), and not a contemporaneous status (as the plaintiff argued). The Court further stated that if the legislature had intended for “claim” to relate to a contemporaneous status, this would need to be explicitly stated in s. 129.1.
The plaintiff further argued that pursuant to the Supreme Court of Canada’s decision in Brosseau v. Alberta Securities Commission, the presumption against retroactivity does not apply to statutes that confer a benefit, and that s. 129.1 benefits insureds (who do not commit illegal acts).
The Court noted that the portion of the Brousseau decision cited by the plaintiff was obiter dictum and was not cited in any subsequent Supreme Court decisions, and held that it did not apply to this case.
The Court also stated that the word “beneficial” was interpreted differently in Brousseau than as suggested by the plaintiff. In Brousseau, “beneficial” referred to a public benefit, whereas in this case, “beneficial” would refer to a benefit to only one party (the insured). Additionally, Brousseau involved a retrospective application of a statute, not a retroactive one.
Having found that s. 129.1 does not apply to the plaintiff’s claim, the Court upheld the motion judge’s decision and dismissed the appeal. The Court noted that it was unnecessary to determine the applicability of s. 129.1 on the marijuana production exclusion, given their other findings.
 Insurance Act, R.S.O. 1990, c. I.8
 Rules of Civil Procedure, R.R.O. 1990, Reg. 194
 Rodaro v. Royal Bank of Canada (2002), 59 O.R. (3d) 74 (C.A.)
 Lin v. Weng, 2022 ONCA 367 at para 22
 Brosseau v. Alberta Securities Commission,  1 S.C.R. 301, at pp. 318–20