In GFL Infrastructure Group Inc. v. Temple Insurance Company, the Ontario Court of Appeal (ONCA) ruled for the insureds on an application brought after two insurers (the “Insurers”) refused to defend an action alleging negligent construction of a condominium building. The Court rejected the Insurers’ argument that damages and defence costs associated solely with excluded claims could be distinguished from potentially covered damages and costs. These issues could not be addressed until after the underlying action was tried. The insurers had to provide a full defence.
Jeffrey Brown and Dylan Cox from our office acted for the insureds who took the lead on this appeal and the underlying application.
In 202135 Ontario Inc. v. Northbridge General Insurance Corporation, the Ontario Court of Appeal (ONCA) ruled for the insured on an issue raised by its claim for business interruption losses caused by the Covid-19 pandemic. To our knowledge, this is the first decision by any Canadian appellate court dealing with these kinds of claims. However, it does not shed any light on the principles a court might apply to determine when Covid-19 is a covered event, because the insurer did not dispute that point. The sole issue was whether the limit of liability applied per location or to all locations.
Last year we reported on Northbridge General Insurance Corp v Ashcroft Homes-Capital Hall Inc, in which Justice Perell gave a primer on insurance appraisals in Ontario. In a recent decision, the Ontario Court of Appeal has confirmed the lessons from that case.
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.
Common law courts have developed a variety of fairness doctrines under the rubric of “estoppel” that preclude reneging on express or implied assurances. 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.
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.
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.
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.
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.
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.