The insured corporation sought a declaration that its directors’ and officers’ liability insurer was obligated to indemnify it for defence costs and settlement payments arising from Ministry of Labour enforcement proceedings under the Employment Standards Act, 2000.
Former employees of a predecessor company claimed termination and related entitlements, and the Ministry determined that the insured corporation was a related employer under s. 4 of the Act and jointly and severally liable.
The insurer denied coverage, arguing that no claim had been made against the insured or any insured person during the policy period and that the alleged conduct did not constitute a covered wrongful act.
The court held that a claim had been made during the policy period because the Ministry was investigating and pursuing the corporation and its director for liability.
The court further held that liability as a related employer for wrongful dismissal constituted an “Employment Practices Wrongful Act” within the policy and was not excluded by the termination notice exclusion.
The insurer was therefore obligated to indemnify the insured for its losses.