Kyle Cameron Magee

The appellant insurer appealed a judgment of the Superior Court of Justice regarding insurance policy interpretation.

The insurer argued that there was no "Claim" against an "Insured Person" for a "Wrongful Act" nor was there a "Loss" within the policy's definitions.

The Court of Appeal found no error in the application judge's interpretation of the governing principles or the policy language, and dismissed the appeal.

The respondent was awarded costs of $16,000.

Liberty Silver Corporation sought indemnification from Liberty Insurance Underwriters Inc. for legal costs incurred by its officers and directors during an investigation by the United States Securities and Exchange Commission (SEC) and the Ontario Securities Commission (OSC).

Liberty Insurance denied coverage, arguing the investigative order and subpoenas did not constitute a "Claim" against an "Insured Person" for a "Wrongful Act," and that Liberty Silver was no longer "legally obligated to pay" due to an assignment agreement.

The court found the investigative order was a "formal regulatory investigation" and thus a "Claim," and that a holistic interpretation of the policy meant "Wrongful Act" included matters giving rise to such an investigation.

The court also rejected arguments regarding the assignment agreement and statute of limitations.

The application for indemnification was allowed, and Liberty Silver's proposed allocation of defence costs was accepted.