On Covenants to Insure and the (Un)Reasonable Inference of Risk Assumption

On Covenants to Insure and the (Un)Reasonable Inference of Risk Assumption

In Capital Sewer Servicing Inc v Crosslinx Transit Solutions Constructors, the Court of Appeal for Ontario confirmed that covenants to insure do not, as matter of law, mean the covenantor agrees to assume the insured risk. Instead, the contractual relationship must be assessed in the ordinary fashion, with the covenant to insure as merely one of its incidents. The decision serves to remind contracting parties that inferences arising from agreements must be considered with the express provisions and circumstances in mind.

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SCC Addresses Implied Assurance of Coverage from Continued Defence

SCC Addresses Implied Assurance of Coverage from Continued Defence

Common law courts have developed a variety of fairness doctrines under the rubric of “estoppel” that preclude reneging on express or implied assurances.[1] The Supreme Court of Canada’s recent decision in Trial Lawyers Assn of British Columbia v Royal & Sun Alliance Insurance Co of Canada addresses one such doctrine in the context of an insurer that acknowledges a duty to defend but then denies coverage midway through litigation when it receives new information. Prior law held that where it is reasonable for the insured to imply that coverage has been conceded, the insurer may be “estopped” from afterward changing its position. The Trial Lawyers decision addresses when such an estoppel can arise, and who can assert it.

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Alberta Court of Appeal Rules Property Insurance Claim Out of Time

Alberta Court of Appeal Rules Property Insurance Claim Out of Time

The Alberta Court of Appeal (ABCA) has released a decision reiterating how important it is for insureds to act promptly if they wish to oppose a position taken by their insurer. In Lafferty v. Co-operators, the ABCA repeated that the insured’s limitation period starts to run as soon as it knows or ought to know about the material facts underlying the dispute with its insurer. A person’s ignorance (or misunderstanding) of the law does not delay a limitation period.

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Court of Appeal for Ontario Holds That Loss of Use Does Not Constitute “Physical Damage” In the Context of a Business Interruption Claim

Court of Appeal for Ontario Holds That Loss of Use Does Not Constitute “Physical Damage” In the Context of a Business Interruption Claim

Last year, policy holders were intrigued by a Superior Court decision that suggested business interruption losses caused by COVID-19 restrictions might be covered under their policies. The Court of Appeal has put a damper on these hopes: loss of use is not “physical damage” within the meaning of at least one standard form policy, and business interruption coverage was therefore not engaged.

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Superior Court Provides Guidance on the Use of an Expert’s Report in a Duty to Defend Application

Superior Court Provides Guidance on the Use of an Expert’s Report in a Duty to Defend Application

The Superior Court has released a decision that provides some useful guidance on what use can be made of an expert’s report in a duty to defend application. In AIG Insurance Company v Lloyd’s Underwriters, the court was faced with the question of what knowledge could be imputed to a municipality upon the receipt of an expert’s report. Noting that the report itself may not be non-controversial as the case law demanded to be considered at the duty to defend stage, the Court nevertheless held that the report was too preliminary to either make the harm “expected” within the meaning of an exclusion in the policy, or alternatively crystallize the harm upon receipt of the report such that the harm would constitute an “occurrence” outside of the insurer’s policy period.

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The Hidden Lesson of MDS: How to Obtain an Award for Commercial Prejudgment Interest in Ontario

The Hidden Lesson of MDS: How to Obtain an Award for Commercial Prejudgment Interest in Ontario

The Court of Appeal for Ontario has issued the highly anticipated decision in MDS Inc v Factory Mutual Insurance Company. Last year, the Ontario Superior Court of Justice awarded prejudgment interest based on the insured’s actual cost of borrowing, and not the much lower rates under the Courts of Justice Act. Although the Court of Appeal overturned the trial judge’s decision on the merits, it would not have interfered with the prejudgment interest award.

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Eureka! Supreme Court stakes discovery of a claim on plausible inference

Eureka! Supreme Court stakes discovery of a claim on plausible inference

During the past twenty years, many provinces have simplified their legislation governing limitation periods. One remaining complexity is that courts have continued to assess when a claim is discovered – which starts the limitation clock running – based on knowledge of the material facts to support the required elements of a legal cause of action. That issue has now been addressed by the Supreme Court of Canada in Grant Thornton LLP v New Brunswick, which has simplified the required analysis.

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Ontario court to insurers: give me clarity, or save your breath!

Ontario court to insurers: give me clarity, or save your breath!

Timely reporting to the insurer is essential for liability insurance policies structured on a claims-made basis. Coverage can be lost if a policy renewal intercedes between knowledge of a potential claim and before the insurer is notified. While that result can be justified in some circumstances, a recent decision from the Ontario Superior Court of Justice helpfully confirms that the policy had better be clear for the insurer to take that position.

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Court of Appeal Overturns Order Requiring Insurer to Defend Privacy Class Action

Court of Appeal Overturns Order Requiring Insurer to Defend Privacy Class Action

The Ontario Court of Appeal (ONCA) has released a decision that reiterates a key guiding principle in proceedings brought to enforce an insurer’s duty to defend: the court must carefully review the underlying pleading and focus on the true nature of the claim, not simply the words used by the plaintiff in the underlying claim, to determine if any of the claims could potentially be covered by the policy. In Family and Children’s Services of Lanark, Leeds and Grenville v. Cooperators, the ONCA overturned a lower court judge who the Court said failed to properly conduct this analysis.

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