Speak Now or Forever Hold Your Peace: Ontario Court of Appeal rejects Insurer’s attempt to withdraw defence

The Court of Appeal for Ontario recently held that an insurer which defended its insured for ten months, without a reservation of rights, could not rely on a policy exclusion to withdraw its defence.  The litigation was at the discovery stage, although examinations had not been held, when the insurer tried to withdraw coverage.  The court said, “too bad, too sad” (in other words) and held that the insurer was estopped from withdrawing coverage.

Commercial Litigation

Supreme Court of Canada: Substance-over-Form Dictates Whether Discoverability Applies to Statutory Limitations

There are many statutes containing limitation periods that bar plaintiffs from bringing an action after a specified period of time. Provincial limitation acts have largely codified the “discoverability principle” (i.e. that a cause of action does not arise until it is discovered by the person who suffered the injury alleged) for many general limitation periods. However, other statutes are silent or ambiguous on whether discoverability applies. Whether dealing in real property, insurance, competition, or otherwise, the wording of these limitations vary in scope and when the stated period starts to run.

The Supreme Court of Canada has recently brought clarity to this issue. In its recent decision in Pioneer v. Godfrey, 2019 SCC 42, the Court held that wherever a limitation period is triggered by the accrual of a cause of action, the discoverability rule will apply unless the legislation explicitly states otherwise.

Commercial Litigation

In ODD decision, Supreme Court severs link between certification and common issues trial for price-fixing cases

The Supreme Court of Canada’s decision in Pioneer Corporation v Godfrey, 2019 SCC 42, was a victory for the plaintiff, but it may prove advantageous for class action defendants in other cases. In an 8 to 1 decision released on September 20, 2019, the court accepted a lowered standard for certification of price-fixing claims. But it disconnected that standard from required elements for success at trial, and affirmed a higher standard at the liability stage than other recent case law suggested.


Ontario Court of Appeal: Insured’s Failure to Provide Up to Date Address Not a “Breach of Duty to Cooperate” as not “Substantial”

In Ruddell v. Gore Mutual Insurance Company,1 an insurer argued that its insured’s failure to keep them updated on her current address was a substantial breach of the duty to cooperate. On a summary judgment motion, a judge of the Ontario Superior Court disagreed and ruled that – in these circumstances – the insured’s conduct was not a “substantial” failure to cooperate. This was upheld on appeal.


A coverage ‘Thrilla’ in Manila – Court finds underinsured endorsement provides worldwide coverage

A recent decision of the Alberta Court of Queen’s Bench demonstrates that policy holders must carefully consider the interplay between an insurance policy and its endorsements. In Wage v Canadian Direct Insurance Incorporated, 2019 ABQB 303, the court interpreted a standard form family protection endorsement to an automobile insurance policy to provide coverage for an accident in the Philippines, even though the territorial limit of the underlying policy was Canada and the United States.


Speeding Motor Vehicle Makes an Eggs-press Delivery

An Ontario court recently found that the injuries sustained by a pedestrian when eggs were thrown at her from a vehicle arose “directly or indirectly from the use or operation of an automobile”. The court determined that the act of egg throwing in this case was not a distinct and intervening act from the use or operation of the vehicle, as the speeding vehicle created speed and kinetic energy for the egg(s) which were crucial in causing the extensive damage it did.


Traders v. Gibson: Injury claim between co-habiting family covered by homeowner’s policy despite “household exclusion”

An Ontario court recently found that a personal injury claim, by a daughter against her mother, was covered by homeowner’s insurance. The two lived together and the policy contained an exclusion for claims arising from injury to “any person residing in [the] household”. However, the court concluded that the daughter was a “tenant” under the policy and therefore the exclusion did not apply. In the absence of explicit terms, the court concluded that the insured had a reasonable expectation of coverage for claims made by tenants, even if that tenant was a family member.


Ontario Court rejects well established rules for interpreting insurance policy exclusions

In Pembridge Insurance Company of Canada v Chu, a judge of Ontario’s Superior Court of Justice recently concluded that insurance policies ought to be interpreted differently when multiple insurers are involved. In this problematic decision, the court deviated from the long-standing rule that exclusion clauses should be interpreted “narrowly”. Remarkably, the court began with the assumption that one of the insurance policies must respond to the loss. Based on this assumption, the court decided that different rules of contractual interpretation would apply.

This case is problematic because (i) it conflicts with the well-established rules for policy interpretation; (ii) it suggests that a policy can be interpreted by looking outside the contract to its effect on a non-party; and (iii) the assumption that one policy must indemnify the insured was both irrelevant and an improper consideration on a duty to defend application. Absent appellate guidance, this decision may create confusion and unintended consequences on coverage applications involving multiple insurers.


Let the Bygones be Bygones: Evidence Insurers cannot use in Arson Defence

An Ontario court recently refused an insurer’s attempt to rely on evidence about its insured’s prior conduct. The insurer tried to suggest that a prior loss and misrepresentations on a mortgage application suggested a propensity towards arson or fraud. The judge’s decision demonstrates the heavy burden on an insurer seeking to rely on an arson defence to a fire loss claim.

The case in Azami v. TD Home and Auto Insurance arose out of a fire in September 2012 that destroyed the plaintiff’s home. Following the fire, the plaintiff made a claim with the defendant insurer under his homeowner’s insurance policy for the loss of his home, its contents and living expenses. During a pre-trial motion, the plaintiff moved to exclude certain evidence relating to two matters of pre-loss conduct.


Ontario judge allows insured to amend claim to include additional policies and new heads of damages after expiry of limitation period

An Ontario judge recently permitted an insured to amend its claim after the limitation period had expired, to plead additional insurance policies that applied to the same claim and new heads of damages. The judge’s decision is a sensible one. It protects insureds from having to claim aggravated and punitive damages or a breach of the insurer’s duty of good faith before the evidence underlying those claims is typically available.