The appellant insurer appealed a trial judge's decision allocating 95% of the respondent insured's defence costs to the insurer.
The underlying action involved multiple claims, including wrongful dismissal and malicious prosecution, but only the malicious prosecution claim was covered by the policy.
The Court of Appeal dismissed the appeal, holding that the allocation of defence costs for mixed claims is a matter of contractual interpretation, not fairness or equity.
Because the policy contained an unqualified obligation to pay for the defence of covered claims, the insurer was required to pay all reasonable costs associated with defending the malicious prosecution claim, even if those costs also assisted in defending uncovered claims.