Hugh Robert Griffith-Jones

Applicants sought a declaration that their insurer owed a duty to defend and indemnify them under a Directors and Officers liability policy in relation to an action by a contractor alleging breach of contract, unjust enrichment, and quantum meruit for unpaid construction work.

The court applied established duty-to-defend principles requiring a broad interpretation of coverage and examination of the pleadings to determine whether a potentially covered wrongful act was alleged.

It held that the essence of the underlying action was a collection claim for unpaid invoices and did not constitute a “wrongful act” within the meaning of the policy.

The court further held that the unjust enrichment and quantum meruit claims were derivative of the breach of contract claim and therefore caught by the contractual exclusion.

The application for declaratory relief was dismissed.

The defendant insurer brought a motion for summary judgment against a third‑party insurer seeking a declaration that the third‑party insurer provided valid coverage to the tortfeasor at the time of a motor vehicle accident.

The moving party argued the third‑party insurer had improperly denied coverage after cancelling the policy prior to the accident.

The court held that the doctrine of privity prevented the moving insurer from asserting contractual rights under the policy because it was not a party to the contract and had not obtained an assignment of rights from the insured.

Further, under s. 258(1) of the Insurance Act, a third party may only proceed directly against an insurer after obtaining judgment against the insured.

As no judgment or assignment existed, the motion for summary judgment was premature and dismissed.

The appellant appealed the judgment of the Superior Court of Justice.

The Court of Appeal found no legal error in the trial judge's reasons, evidentiary rulings, or costs orders, including the Sanderson order.

The appeal was dismissed with costs fixed at $25,000.