Eric Zadro

The defendant insurer brought a Rule 21 motion to dismiss the plaintiffs' action, which arose after a house fire destroyed a mortgaged property on which the plaintiffs held a registered mortgage.

The insurance policy named a different entity (Community Trust Company) as the mortgagee under the standard mortgage clause, not the plaintiffs.

The court declined to strike the contract claim, finding no binding Ontario authority that the standard mortgage clause is limited strictly to the named mortgagee, and noting language ambiguity identified in out-of-province jurisprudence.

The court also found the rectification claim was properly pleaded, as the statement of claim identified the parties' common and continuing intention to protect the actual registered mortgagee.

The unjust enrichment claim was likewise permitted to continue, with case management directed to coordinate with a companion action.

All three branches of the Rule 21 motion were dismissed.

The applicants sought a declaration that their home insurer was required to reimburse them for legal costs and settlement amounts from an underlying action, despite providing notice to the insurer almost seven years after the action commenced.

The insurer denied coverage due to the late notice.

The court held that while relief from forfeiture can apply to pre-tender defence costs, it should not be granted in this case.

The applicants failed to establish that the nearly seven-year delay was not a grave breach or that the prejudice to the insurer was disproportionate to the forfeited coverage.

The application was dismissed.

An appeal concerning the failure to disclose immediately litigation agreements between a plaintiff (subrogated insurer) and a defendant that converted their adversarial relationship into a cooperative one.

The plaintiff and defendant entered into two agreements (2011 and 2016) whereby the defendant would defend the action and prosecute a third-party claim funded by the plaintiff, and subsequently the plaintiff assigned all its rights in the action to itself.

These agreements were not disclosed immediately but rather piecemeal throughout 2016.

The motion judge found the agreements should have been disclosed but refused to stay the action, finding no prejudice.

The appellate court reversed, holding that failure to immediately disclose agreements that change the litigation landscape constitutes abuse of process requiring a stay of the non-disclosing party's claim as a matter of principle.

Geo.

Williamson Fuels Ltd. moved to stay the action, arguing that the plaintiff and H&M Combustion Services Ltd. failed to disclose a litigation agreement for approximately five years.

The court found that the agreement, which involved the plaintiff's insurer funding H&M's defense and third-party claim, altered the adversarial orientation of the lawsuit and should have been disclosed.

However, applying the principle of proportionality, the court determined that a stay of the action against Williamson was not an appropriate remedy, particularly given that the third-party claim itself was a nullity due to H&M's prior dissolution.

The motion to stay was dismissed.