The plaintiff brought an action against a priest and a diocese for sexual assault.
The parties settled the main action, but a third party action continued regarding insurance coverage.
The trial judge found that the appellant insurer had a duty to defend the claims under its policy.
The insurer appealed, arguing the policy did not cover sexual assaults by an employee.
The Court of Appeal dismissed the appeal, finding the policy language broad enough to cover the claims.
On cross-appeal, the Court upheld the trial judge's allocation of defence costs among the insurers but allowed the cross-appeal regarding costs of the third party proceedings, holding that the insureds were entitled to costs on a solicitor-and-client basis due to the insurer's wrongful denial of the duty to defend.