IARW Insurance Company Limited settled a claim against its insured, Trenton Cold Storage Limited, and sought contribution from St. Paul Fire and Marine Insurance Company, which had issued an umbrella excess liability policy to Trenton.
The trial judge found both insurers liable to share the settlement and costs equally.
On appeal, the Court of Appeal held that IARW's policy provided primary coverage, while St. Paul's policy was a true umbrella policy providing only excess coverage.
As IARW's primary limits were not exhausted, St. Paul had no obligation to contribute to the settlement or the defence costs.
The appeal was allowed and the cross-appeal dismissed.
