Duty to Defend: Underlying Framework and Judicial Approaches in Duty to Defend Applications

Duty to Defend: Underlying Framework and Judicial Approaches in Duty to Defend Applications

By: Murray Stieber, Chris Afonso, Landan Peleikis

Overview

Liability insurance policies can protect insureds against claims resulting from injuries and damage to other people or property.[1] In addition to indemnifying insureds, many liability insurance policies contain provisions requiring the insurer to defend certain types of lawsuits brought against the insured – otherwise known as the duty to defend.[2] This paper will (1) provide an overview of the legal framework underlying the duty to defend. It will then consider how courts approach duty to defend applications where: (2) parties seek to adduce extrinsic evidence; (3) an insurer alleges an insured breached a condition of the policy; and (4) an insurer alleges that the third-party pleader subsumed allegations of negligence within allegations of intentional torts.

1. Legal Framework Underlying the Duty to Defend

a. Pleadings rule

The pleadings rule is the starting point for determining whether an insurer’s duty to defend has been triggered.[3] An insurer is required to defend a claim if the facts alleged in the pleadings, if proven to be true, would require the insurer to indemnify the insured for the claim.[4] The British Columbia Supreme Court defined the pleadings rule in Bacon v. McBride[5], where Wallace J. stated:

The pleadings govern the duty to defend – not the insurer’s view of the validity or nature of the claim or by the possible outcome of the litigation. If the claim alleges a state of facts which, if proven, would fall within the coverage of the policy the insurer is obliged to defend the suit regardless of the truth or falsity of such allegations. If the allegations do not come within the policy coverage the insurer has no such obligation.[6]

The Supreme Court of Canada adopted this reasoning in Nichols[7], where McLachlin J. (as she was then) held that “general principles regarding the construction of insurance contracts support the conclusion that the duty to defend arises where the pleadings raise claims which would be payable under the agreement to indemnify in the insurance contract.”[8] As the above quotes indicate, it is irrelevant whether the allegations in the pleadings can be proven in evidence.[9] The duty to defend is not dependent on the insured being found liable and the insurer being required to indemnify.[10] All that is required is the mere possibility that a claim falls within the coverage provided.[11] As such, the insurer’s duty to defend is considered broader than the duty to indemnify.[12] Nonetheless, suppose it is clear that the claim falls outside the coverage provided by the policy, either because it is not included in the coverage or because an exclusion clause excludes it. In that case, the duty to defend will not be triggered.[13]

When pleadings are not drafted with sufficient accuracy to determine whether a policy covers the claims, the duty to defend will be triggered where, on a reasonable reading of the pleadings, a claim within coverage can be inferred.[14] Speaking for the Supreme Court in Monenco, Iacobucci J. noted that this principle is consistent with the broader tenets underpinning the construction of insurance contracts, specifically the contra proferentem rule, and the principle that coverage provisions are to be construed broadly, while exclusion clauses are to be interpreted narrowly.[15] However, G. Hilliker in Liability Insurance Law in Canada cautions courts not to engage in “a fanciful reading of the statement of claim merely for the purpose of requiring the insurer to defend.”[16] He argues that it is only where there is genuine ambiguity or doubt that the duty must be resolved in favour of the insured.[17]

When analyzing the pleadings to determine whether a claim falls within the scope of the coverage, the parties to the insurance contract are not bound by the labels selected by the plaintiff.[18] For instance, the use or absence of a particular term will not be determinative of whether the duty has been triggered.[19] Accordingly, courts will peel back the curtains to ascertain the true nature or substance of the claim before deciding whether the duty to defend has been triggered.[20] This is because the Supreme Court does not want the parties to an insurance contract to always be at the mercy of a third-party pleader when determining if the duty has been triggered.[21] The key question to ask, therefore, is whether, “assuming the verity of all of the plaintiff’s factual allegations, the pleadings could possibly support the plaintiff’s legal allegations.”[22] If there is a possibility that the pleadings could support the plaintiff’s legal allegations, the duty will be triggered, and the insurer will be required to defend the insured.[23]

b. Principles of insurance policy interpretation

The Supreme Court briefly summarized the general principles relating to policy interpretation in Progressive Homes Ltd. v. Lombard General Insurance Co. of Canada. Starting at para. 22, the Supreme Court held:

The primary interpretative principle is that when the language of the policy is unambiguous, the court should give effect to clear language, reading the contract as a whole.

Where the language of the insurance policy is ambiguous, the courts rely on general rules of contract construction. For example, courts should prefer interpretations that are consistent with the reasonable expectations of the parties, so long as such an interpretation can be supported by the text of the policy. Courts should avoid interpretations that would give rise to an unrealistic result or that would not have been in the contemplation of the parties at the time the policy was concluded. Courts should also strive to ensure similar insurance policies are construed consistently. These rules of construction are applied to resolve ambiguity. They do not operate to create ambiguity where there is none in the first place.

When these rules of construction fail to resolve the ambiguity, courts will construe the policy contra proferentem – against the insurer. One corollary of the contra proferentem rule is that coverage provisions are interpreted broadly, and exclusion clauses narrowly.[24]

The fundamental objective of the Court is to give effect to the intention of the parties by reference to words in the insurance policy.[25] Courts are to resolve competing meanings attributable to the words used in favour of the more reasonable interpretation.[26] Interpretations that defeat the parties’ intentions in their joint commercial purposes in favour of one which promotes a sensible commercial result should be avoided.[27] However, the literal meaning should not be applied where it would bring about an unrealistic result or a result which would not be contemplated in the commercial atmosphere in which the insurance was purchased.[28] Moreover, when interpreting ambiguous clauses, Courts should avoid interpretations which give a windfall to either party.[29] Lastly, while it was briefly mentioned in Progressive Homes v. Lombard General Insurance Co. of Canada, it is important to highlight that the contra proferentem doctrine can only be applied if all construction rules fail to resolve the ambiguity.[30]

2. Extrinsic Evidence Exception in Duty to Defend Applications

Like most rules, the pleadings rule has exceptions. One exception allows courts to consider documents, such as contracts, which are expressly referred to in the pleadings in the underlying action.[31] It has also been suggested that courts can consider extrinsic evidence of underlying facts where those facts are unrelated to, and not disputed in, the underlying action.[32]

Despite those exceptions, judges are often reluctant to consider extrinsic evidence to resolve duty to defend applications at an early stage for two main reasons. First, using extrinsic evidence to determine whether the duty to defend has been triggered may require findings of fact or the resolution of live issues in the underlying action.[33] This could result in the insured being prejudiced in the underlying action and may also lead to inconsistent findings in the underlying action on the one hand and the duty to defend application on the other.[34] Additionally, the findings of fact made on the application could turn out to be contrary to the evidence tendered on the full record at trial.[35]

Second, judges have been reluctant to consider extrinsic evidence in determining whether the duty to defend has been triggered due to a practical need for an expeditious determination of the issue.[36] This is rooted in a concern for fairness to the insured, who may be left without a defence to the third party’s action while the insurer contests its liability under the policy.[37] For this reason, the Supreme Court held that duty to defend applications should not become a trial within a trial.[38] We will now turn to recent cases that considered and refused to consider extrinsic evidence in duty to defend applications.

a. Optrics Inc. v. Lloyd’s Underwriters[39]

Optrics involved an appeal by the plaintiff from an order denying its request for a declaration that the respondent insurer had a duty to defend against breach of contract and intellectual property rights claims asserted against it in a counterclaim. The appellant engineering firm, Optrics, acted as a reseller of Barracuda Networks Inc.’s (“BNI”) hardware and software products and services. Optrics sought coverage in respect of a claim against it by BNI. In the underlying action, BNI alleged that Optrics breached a 2013 Reseller Agreement and demanded that it turn over ownership of a CudaMail trademark and the CudaMail URLs. BNI notified Optrics of its intention to terminate the 2013 Reseller Agreement. Optrics commenced a U.S. action for damages and other declaratory relief from BNI for its alleged trademark infringement and for BNI’s alleged breach of contract, breach of good faith and fair dealing, interference with the appellant’s prospective economic advantage and other statutory breaches. In its counterclaim, BNI alleged Optrics lost any rights it had to use the CudaMail trademark and CudaMail URLs, that the Optrics’  continued assertion of ownership rights in the CudaMail trademark and its failure to transfer the trademark rights and CudaMail URLs to BNI breached the 2013 Reseller Agreement. Between 2006 and 2017, Optrics was insured under a commercial insurance policy written specifically for tech companies.[40]

The chambers judge was asked to summarily determine whether Lloyd’s had defence obligations under the commercial insurance policies for 2016-2017 and 2012-2013. The chambers judge found there was no duty to defend under the 2016-2017 policy.[41] In reaching her decision, the chambers judge found that the definition of client and business activities in the insurance policy was not ambiguous to the extent that it was necessary to consider the 2013 Reseller Agreement referred to in the pleadings to assist in determining whether the duty to defend had been triggered.[42] The chambers judge could not fairly determine whether the duty to defend was triggered under the 2012-2013 policy on a summary basis and referred this question to trial.

The Alberta Court of Appeal found that the chambers judge committed a palpable and overriding error by overlooking the ambiguity in the description of the appellant’s business activities in the 2016-2017 policy and by failing to consider the 2013 Reseller Agreement when deciding that the breach of contract allegations in the counterclaim did not fit within the scope of coverage.[43] Therefore, the key takeaway from Optrics Inc. is that extrinsic evidence referred to in the pleadings should be relied on in duty to defend applications where relevant terms in the insurance policy are ambiguous. Whether this case will be followed in Ontario remains to be seen.

b. Reeb v. The Guarantee Company of North America[44]

This was an appeal by two insurers from a decision finding they had a duty to defend. It was alleged that on February 25, 2007, 14-year-old Reeb and 14-year-old Riley were playing with BB guns at Reeb’s house. It was further alleged that one of the pellets from Reeb’s BB gun struck Riley in his left eye, and Riley subsequently lost vision in that eye. In December 2012, Riley commenced an action in negligence against Reeb and Reeb’s parents. At all material times, Reeb was living with both parents at their separate residences, pursuant to a joint custody arrangement. Reeb’s mother had a homeowner’s insurance policy with RSA, with a third-party liability limit of $1 million. RSA appointed counsel to defend the claim on behalf of Reeb and his mother. Reeb’s father had a homeowner’s insurance policy with Guarantee, and his second wife had a policy with Co-operators. The respondents took the position that the law allowed the Court to consider the extrinsic evidence, which, they submitted, made it readily apparent that coverage was excluded as the injury resulted from an intentional act by Reeb causing bodily harm. The respondents conceded that both homeowner’s insurance policies contained a provision providing coverage for Reeb if the injury to Riley was unintentional.

The application judge declined to consider extrinsic evidence regarding whether Mr. Reeb’s conduct was intentional so as to bring it within the intentional act exclusion in the relevant policies.[45] Reeb’s conduct was articulated in the pleadings as negligence only.[46] The Ontario Court of Appeal found that the application judge properly applied Monenco because the extrinsic evidence sought to be considered was evidence created after the delivery of the claim and was extrinsic to its content.[47] The key takeaway from Reeb is that extrinsic evidence must not be considered when it was created after the delivery of the claim and is extrinsic to the claim’s content.

c. Owners, Strata Plan BCS 3206 v. KBK No. 11 Ventures Ltd.[48]

This matter involved a coverage dispute that arose in two construction lawsuits relating to the Shangri-La tower in downtown Vancouver. The coverage dispute was between Honeywell International Inc., a third party in both actions, and XL Insurance Company Ltd. In both suits, the plaintiffs were common property owners of different parts of the Shangri-La building. In December 2015, the plaintiffs commenced separate building deficiency lawsuits against the developer, landowner, contractors and others, alleging deficiencies in the sealed insulated glass units of the building. It alleged that the third party in each of the subject actions, Honeywell, manufactured defective desiccant, a substance designed to absorb moisture. A wrap-up liability policy was in place from XL Insurance for the Shangri-La project during its construction. Honeywell sought coverage under the policy, but XL Insurance denied coverage for several reasons.

In determining the scope of coverage, Honeywell objected to the admissibility of invoices appended to an affidavit of a paralegal in the office of XL Insurance’s counsel.[49] These invoices were from an amended list of documents of the third parties, Honeywell UP and Honeywell International Inc.[50] XL Insurance sought to rely on these invoices as part of its denial position because it argued they were contract documents that showed Honeywell’s sale of the product to the initial buyer, as Honeywell failed to produce any other contract documents.[51] Honeywell argued there was no basis for XL’s assertion that Honeywell made those documents and argued that the documents did not fit into one of the exceptions that allow for the consideration of extrinsic documents in determining whether the duty to defend had been triggered.[52]

The court relied on Hilliker’s text, Liability Insurance Law in Canada,[53] to highlight three situations where extrinsic evidence may be considered in duty to defend applications – (1) where the extrinsic evidence is admissible for the purpose of interpreting the terms of the contract, (2) where documents are referenced in the pleadings, and (3) where facts are not in dispute, and there is an issue that does not require findings to be made before trial.[54] The court found that none of the three exceptions applied. The first did not because the invoices did not speak to the parties’ intentions concerning coverage.[55] The second exception did not apply because no contract was incorporated by reference within the pleadings. Even if it was, the second exception does not apply if the contract document itself is a disputed fact, which it was here.[56] Lastly, the third exception did not apply because it was disputed whether these documents were contract documents that evidenced Honeywell’s sale of the subject product.[57] Owners, therefore, highlight that courts remain adamant in refusing to consider extrinsic evidence in duty to defend applications where that evidence will likely be disputed in the underlying action.

3. Where an Insurer Alleges the Insured Breached a Condition of the Policy

In Longo v. Maciorowski,[58] Catzman J.A. concluded there should not be a rigid rule for determining whether an insurer is required to defend an insured where the insurer alleges a breach of condition and instead thought the court should adopt a flexible approach.[59] The court found that this flexible approach should require a consideration of the circumstances of each case, including the relative strength of the positions asserted by the insurer and the insured and the necessity and urgency to furnish the insured with a separate defence.[60]

In Drane v. Optimum Frontier Insurance Co.[61], where an insurer alleged a breach of a policy condition, Deschenês J.A. of the New Brunswick Court of Appeal adopted the flexible approach in Longo and identified several factors to help inform the court’s discretion in determining whether the duty to defend applied. At para. 24 of the decision, Deschenês J.A. held:

In my view, the relevant factors are numerous and, without being exhaustive, relate to such questions as:

Is the breach of condition contested and, if so, on what basis? Is the existence of the breach in serious dispute?

Is it reasonable to expect that the question of the breach of the condition can be dealt with summarily, on an expedited basis? If so, what are the facts supporting such an expectation?

Despite a clear breach of statutory condition, are there circumstances that militate in favor of relief from forfeiture under the Act? Are such circumstances in serious dispute?

If the insured invokes estoppel by reason of the insurer’s conduct, what are the circumstances being relied upon? Is the question of estoppel in serious dispute?

What is the status of the main action against the insured? Has discovery been held? Has a date for trial been secured? If not, when is the main action likely to be heard?

What is the nature of the conflict between the insured and the insurer? For example, what are the specific reasons that prompted the insurer to deny indemnity and to apply to be added as a third party under the Act?

Is the language used in the third party defence filed by the insurer congruent with the language of the statement of defence filed by the insured on his or her own behalf? (Although I hold the view that an insurer is not entitled to file a statutory third party defense that is incongruent with its insured’s interest, it is not necessary to deal with the issue in this case.)

If the conflict between the insurer and its insured is not apparent on the face of the third party defence, is the conflict such as to require, in any event, separate and independent counsel to adequately represent the interest of the insured? If so, why?

What is the particular financial position of the defendant? Is he or she capable of assuming the costs of independent counsel until the issue of the breach of condition is resolved?[62]

The Ontario Court of Appeal adopted and applied the above factors to decide IT Haven Inc. v. Certain Underwriters at Lloyd’s London.[63]

a. IT Haven Inc. v. Certain Underwriters at Lloyd’s London[64]

The respondent insured, IT Haven Inc. (“IT Haven”), was incorporated in 2016 and engaged in the information technology business. Immediately after its incorporation, IT Haven applied for and obtained an errors and omissions and comprehensive liability insurance policy from the appellant, Lloyd’s (the “Policy”). The Policy covered the period from September 2, 2016, to September 2, 2017. It was automatically renewed for one-year periods in September 2017 and 2018. In response to specific questions on the insurance application, IT Haven stated the following: the company was engaged in custom software development and as computer consultants; It received 100% of its revenue in Canada; it did not provide services to the electronic games industry; it always used written contracts with its clients; it had not incorporated any software or product designed by others into its designs; and it had written procedures to safeguard against the infringement of copyright or trademarks of others. Clause 4.9 of the Policy entitled the Underwriters to void the policy as a result of inaccurate or misleading information contained in the proposal or if the insured failed to inform the Underwriters of a material change in the circumstances provided in the Proposal.

On June 14, 2018, Niantic Inc. (“Niantic”) commenced a claim against R.H. and an entity called “Global++” in the United States District Court for the Northern District of California, seeking damages and injunctive relief. Niantic was a producer of computer games played on mobile devices such as cell phones. The core of Niantic’s complaint was that Global++, IT Haven, R.H. and the other defendants infringed its copyright in its mobile applications. Niantic alleged that the defendants created, distributed, and profited from “unauthorized derivative versions” of Niantic’s computer applications and, in doing so, incorporated substantial portions of Niantic’s copyrighted computer code.[65]

The Ontario Court of Appeal found that the existence of misrepresentations or breaches of policy conditions were factual issues that could not be determined by analyzing Niantic’s pleadings.[66] The court found that determining whether IT Haven made misrepresentations about its business or failed to correct its representations at the time of renewal would have required a determination of some of the very issues at play in the underlying action, making IT Haven somewhat analogous to the Owners case.[67]

Before upholding the motion judge’s decision, the Ontario Court of Appeal found that IT Haven was fundamentally a misrepresentation case rather than a breach of condition case, as the breach of condition was founded on the existence of a misrepresentation.[68] Despite that finding, the Ontario Court of Appeal held that the flexible approach identified in Longo and Drane is also appropriate in determining whether the insurer has a duty to defend where an insurer alleges a misrepresentation in the insurance application.[69] The court in IT Haven, therefore, applied the factors in Longo and Drane and ultimately concluded that the insurer owed a duty to defend because:

  1. the insurer’s allegations of misrepresentation and breach of condition were hotly contested;
  2. there was a manifest risk of inconsistent findings of fact and prejudice to the insured if the court were required to determine whether IT Haven’s product is unique to the gaming industry or “agnostic” and whether it incorporated Niantic’s proprietary information;
  3. the resolution of the misrepresentation issue, and therefore the issue of whether coverage has been invalidated, will involve contested factual matters and expert evidence;
  4. there was no information before the court concerning the state of the underlying litigation in California, but it was unrealistic to think that the plaintiff or the court would hold the proceeding in abeyance while the defendants and their insurer litigate their dispute;
  5. there was no evidence before the court concerning IT Haven’s financial position and its ability to finance the defence of the Niantic proceedings; and
  6. there was no evidence that IT Haven will be unable to reimburse its insurers for defence costs, should it ultimately be found that it was required to do so.[70]

IT Haven demonstrates that the flexible factors enunciated in Longo and Drane are to be considered when determining whether an insurer has a duty to defend where an insurer either alleges a breach of a condition or a misrepresentation in the insurance application. IT Haven also highlights that courts are unwilling to rule in favour of insurers in duty to defend applications if to do so would require a determination of some of the issues in the underlying action, regardless of how unambiguous the words in the policy might be.

4. When Allegations of Negligence are Subsumed Within Allegations of Intentional torts

It will be recalled that courts are not bound by the labels selected by the plaintiff when determining whether the duty to defend has been triggered. This is particularly the case when the plaintiff in the underlying action disguises an intentional tort as a negligence claim, as was the case in Henderson v. Northbridge General Insurance Corporation.[71]

a. Henderson v. Northbridge General Insurance Corporation[72]

The insured was a certified Early Childhood Educator and the sole owner and proprietor of a daycare centre. The insured took out a commercial general liability policy with the respondent.

In October 2019, an Infant Plaintiff, by way of his litigation guardian, commenced an action against the insured, alleging the insured: shook the plaintiff to such a degree that a brain injury resulted; in the alternative, permitted other employees of the daycare to shake the plaintiff; the insured was not adequately trained to manage the daycare; the insured failed to adequately meet the needs of the infant; harm was caused to the plaintiff by negligent and/or inappropriate physical handling; and that the insured failed to protect the infant from harm or danger.[73] In the alternative, the infant plaintiff pleaded that the insured’s actions constituted an assault on the infant plaintiff.[74]

The insurer denied coverage under the policy because the commercial general liability policy excluded bodily injuries expected or intended from the standpoint of the insured and because it had an abuse limitation endorsement, which excluded bodily injury sustained by any person arising out of or resulting from claims or actions alleging actual or threatened abuse by or at the direction of an insured.[75] The insurer argued that the action only alleged a single shaking of the Infant Plaintiff and that the intentional tort and the allegations of negligence were one and the same.[76]

The British Columbia Supreme Court cited the Ontario Court of Appeal’s decision in Buchanan v. Gan Canada Insurance Co. to clarify the distinction between intentional acts and injuries at para. 20, noting:

In Scalera, Iacobucci J. dealt first with whether there is any effective distinction between an exclusion clause which covers “intentional acts” and one which covers “intentional injuries”, and concluded that there was not. He held that the relevant distinction to be made is between injuries caused by an intentional tort and those which arise from negligence.[77]

In determining whether the allegations of negligence in the Action were subsumed within the allegations of assault, the British Columbia Supreme Court relied on para. 85 from the Supreme Court’s decision in Scalera, stating:

Having construed the pleadings, there may be properly pleaded allegations of both intentional and non-intentional tort. When faced with this situation, a court construing an insurer’s duty to defend must decide whether the harm allegedly inflicted by the negligent conduct is derivative of that caused by the intentional conduct. In this context, a claim for negligence will not be derivative if the underlying elements of the negligence and of the intentional tort are sufficiently disparate to render the two claims unrelated. If both the negligence and intentional tort claims arise from the same actions and cause the same harm, the negligence claim is derivative and it will be subsumed into the intentional tort for the purposes of the exclusion clause analysis. If, on the other hand, neither claim is derivative, the claimant negligence will survive and the duty to defend will apply. Parenthetically, I note that the foregoing should not preclude a duty to defend simply because the plaintiff has pleaded in the alternative. As Pryor, “The Stories We Tell: Intentional Harm and the Quest for Insurance Funding”, supra, points out at p. 1752, “[p]laintiffs must have the freedom to plead in the alternative, to develop alternative theories, and even to submit alternative theories to the jury”. A claim should only be treated as “derivative”, for the purposes of this analysis, if it is an ostensibly separate claim which nonetheless is clearly inseparable from a claim of intentional tort.[78]

The British Columbia Supreme Court noted that this result was also found in Sansalone v. Wawanesa Mutual Insurance Co.[79], where the Supreme Court, in considering whether an exclusion clause applied equally to claims of sexual battery, negligence battery and breach of fiduciary duty, held:

The allegations of negligence battery and breach of fiduciary duty are subsumed into the sexual battery claim. These claims are based on the same facts, and resulted in the same harm to the plaintiff. The mere fact that they are pleaded as negligence does not, for the purpose of this appeal, change the intentional nature of the acts. Therefore the exclusion clause equally applies to these claims.[80]

In reliance on the rules laid out in the Scalera and Sansalone decisions, the British Columbia Supreme Court ultimately held that the insurer did not have a duty to defend the insured.[81] The underlying elements of the claims in negligence and of the intentional tort of assault were not sufficiently disparate to render the two claims unrelated.[82] The claim in negligence and assault arose from the same actions and caused the same harm.[83] Therefore, the negligence claim was found to be derivative and subsumed into the intentional tort of assault, bringing it within the policy’s initial exclusion clause.[84]

Conclusion

This paper provided an overview of the legal framework underlying the duty to defend and then considered how courts approach duty to defend applications where: parties seek to adduce extrinsic evidence; an insurer alleges an insured breached a condition of the policy; and where an insurer alleges that the third-party pleader disguised an intentional tort as a negligence claim. The recent case law above highlights the many intricacies that come into play when courts are tasked with determining whether the duty to defend has been triggered. As we saw, courts do not like considering extrinsic evidence in duty to defend applications unless it fits neatly into an exception and is absolutely necessary to resolve ambiguities in the policy. In situations where an insurer alleges an insured committed a breach of a condition or a material misrepresentation in their insurance application, the Ontario Court of Appeal held that the flexible approach adopted in Longo and Drane should be applied to determine if the duty has been triggered. Lastly, the British Columbia Supreme Court instructed that the approach in Scalera and Sansalone should be followed when analyzing whether the plaintiff in the underlying action disguised an intentional tort as a negligence claim.

[1] Gordon G. Hilliker, Liability Insurance Law in Canada, 7th Edition (Canada: LexisNexis Canada, 2020) at section 1.13 (“Liability Insurance Law in Canada, 7th Edition”).

[2] Ibid at section 5.1.

[3] Monenco Ltd. v. Commonwealth Insurance Co., 2001 SCC 49 (CanLII) at para. 28 (“Monenco”).

[4] Ibid; Nichols v. American Home Assurance Co., [1990] 1 S.C.R. 801, at pp. 810-811 (“Nichols”).

[5] Bacon v. McBride, 1984 CanLII 692 (BC SC).

[6] Ibid at para. 10.

[7] Nichols, supra note 4.

[8] Ibid at p. 810.

[9] Progressive Homes Ltd. v. Lombard General Insurance Co. of Canada, 2010 SCC 33 (CanLII) at para. 19 (“Progressive Homes”).

[10] Ibid.

[11] Ibid.

[12] Nichols, supra note 4 at p. 810.

[13] Monenco, supra note 3 at para. 29; Nichols at p. 810.

[14] Ibid (Monenco) at para. 31.

[15] Ibid.

[16] Liability Insurance Law in Canada, 7th Edition, supra note 1 at section 5.27.

[17] Ibid.

[18] Progressive Homes, supra note 9 at para. 20.

[19] Non-Marine Underwriters, Lloyd’s of London v. Scalera, 2000 SCC 24, at paras. 79 to 81 (“Scalera”).

[20] Ibid.

[21] Ibid.

[22] Ibid.

[23] Ibid.

[24] Progressive Homes, supra note 9 at paras. 22 to 24.

[25] Consolidated-Bathurst v. Mutual Boiler, 1979 CanLII 10 (SCC); [1980] 1 SCR 888 (“Consolidated-Bathurst”).

[26] Ibid.

[27] Ibid.

[28] Ibid.

[29] Ibid.

[30] Ibid.

[31] Monenco, supra note 3 at para. 36.

[32] Liability Insurance Law in Canada, 7th Edition, supra note 1 at section 5.33.

[33] IT Haven Inc. v. Certain Underwriters at Lloyd’s, London, 2022 ONCA 71 at para. 38 (“IT Haven”).

[34] Ibid.

[35] Monenco, supra note 3 at paras. 36-37; Family and Children’s Services of Lanark, Leeds and Grenville v. Co-operators General Insurance Company, 2021 ONCA 159.

[36] McLean (Litigation Guardian of) v. Jorgenson (2005), 78 O.R. (3d) 308 (C.A.), at para. 5.

[37] IT Haven, supra note 33 at para. 39.

[38] Monenco, supra note 3 at para. 37.

[39] Optrics Inc. v. Lloyd’s Underwriters, 2022 ABCA 26 (“Optrics Inc.”).

[40] Ibid at para. 18.

[41] Ibid at para. 5.

[42] Ibid at para. 29.

[43] Ibid at paras. 46 to 49.

[44] Reeb v. The Guarantee Company of North America, 2019 ONCA 862 (CanLII) (“Reeb”).

[45] Ibid at para. 5.

[46] Ibid.

[47] Ibid.

[48] Owners, Strata Plan BCS 3206 v. KBK No. 11 Ventures Ltd., 2022 BCSC 766 (CanLII) (“Owners”).

[49] Ibid at para. 82.

[50] Ibid at para. 83.

[51] Ibid.

[52] Ibid at para. 84.

[53] Liability Insurance Law in Canada, 7th Edition, supra note 1 at section 5.30.

[54] Owners, supra note 48 at para. 85.

[55] Ibid at para. 86.

[56] Ibid at para. 87.

[57] Ibid at para. 88.

[58] Longo v. Maciorowski, 2000 CanLII 16897 (ON CA) (“Longo”).

[59] Ibid at para. 32.

[60] Ibid.

[61] Drane v. Optimum Frontier Insurance Co., 2004 NBCA 52 (“Drane”).

[62] Ibid at para. 24.

[63] IT Haven, supra note 33 at para. 55.

[64] Ibid.

[65] Ibid at para. 15.

[66] Ibid at para. 43.

[67] Ibid at para. 44.

[68] Ibid.

[69] Ibid.

[70] Ibid at para. 56.

[71] Henderson v. Northbridge General Insurance Corporation, 2021 BCSC 1841 (CanLII) (“Henderson”).

[72] Ibid.

[73] Ibid at para. 7.

[74] Ibid at para. 8.

[75] Ibid at para. 10.

[76] Ibid at para. 35.

[77] Ibid at para. 20.

[78] Scalera, supra note 19 at para. 85.

[79] Sansalone v. Wawanesa Mutual Insurance Co., 2000 SCC 25.

[80] Ibid at para. 23.

[81] Henderson, supra note 69 at para. 62.

[82] Ibid at para. 59.

[83] Ibid at para. 60.

[84] Ibid at para. 61.

Insights & Commentary

Chemical Spills and Remediation Costs: Can an Insurer Directly Recover for Remediation Costs under the Environmental Protection Act? - photo

Chemical Spills and Remediation Costs: Can an Insurer Directly Recover for Remediation Costs under the Environmental Protection Act?

By: Lujza Csanyi The Ontario Court of Appeal in Intact Insurance Company v Zurich Insurance Company Ltd.[1] considered whether Intact Insurance (“Intact”) could recoup money it paid beyond its policy limits from parties other than its own insured, by direct action, for the clean up of a chemical spill. This case highlights that insurers, when … Continued

Contractual Liability Exclusions: How Far do they Reach? - photo

Contractual Liability Exclusions: How Far do they Reach?

By: Avi Sharabi and Lujza Csanyi Commercial operations by nature often involve contracts, whether written or verbal. The commercial general liability (“CGL”) policy’s standard form wording contains a contractual liability exclusion. The exclusion is, on the one hand, often broadly worded. However, on the other hand, it contains exceptions which carve back the exclusion in … Continued

by

All News