The Commonwell Mutual Assurance Group (CMAG) sought a declaration that it was not obliged to defend or indemnify Shayne Campbell in a personal injury action.
The accident involved an off-road vehicle operated by Campbell, which Guarantee Company of North America (Guarantee) had already denied coverage for under Campbell's automobile policy.
The court found that Guarantee was within its rights to deny coverage due to policy exclusions related to employer-owned vehicles and policy breaches (unlicensed driver, unregistered vehicle).
However, CMAG, having defended Campbell for an extended period (since 2015) without a non-waiver agreement or reservation of rights, was estopped from denying coverage.
The court emphasized that an insurer must be clear about its position and not leave an insured with a false belief of protection.
CMAG's application was dismissed, and Campbell's parallel application against Guarantee was also dismissed.