Marcus B. Snowden

The respondents, facing multiple class actions related to the manufacture and distribution of opioids over a 20-year period, sought coverage for defence costs from their successive primary and excess liability insurers.

The application judge allowed the respondents to select a single primary insurer to fund the entire defence, permitted the exhaustion of self-insured retentions (SIRs) using payments from other insurers, granted relief from forfeiture for pre-tender defence costs, and required insurers to sign a Defence Reporting Agreement (DRA) to receive privileged defence information.

The Court of Appeal allowed the insurers' appeals in part, holding that defence costs must be allocated on a pro rata time-on-risk basis, that the insureds must exhaust each applicable SIR before an insurer's duty to defend is triggered, and that relief from forfeiture was unavailable for pre-tender costs.

The Court upheld the DRA requirement for insurers seeking to associate in the defence to mitigate reasonable apprehensions of conflict of interest.

Supplemental reasons issued to correct an error in the court's previous decision (2022 ONSC 12).

The court corrected paragraph 4 to clarify that Lloyds should not have been listed as a party challenging the forum of the action.

The plaintiffs brought an action against multiple insurers for indemnity regarding environmental damage.

Several foreign defendants failed to deliver statements of defence within the required time limits, and one was noted in default.

The defendants sought an extension of time to defend or bring jurisdictional motions, arguing the court should wait for the outcome of a parallel proceeding commenced by one of the insurers in the United States.

The court refused to delay the Ontario proceeding, finding no prejudice to the defendants in requiring them to respond timely, and ordered the defendants to deliver their statements of defence or motion records by a specified deadline.

Following the dismissal of the plaintiff's action for insurance coverage, bad faith, and professional negligence, the successful defendants sought costs.

Economical sought substantial indemnity costs based on unaccepted offers to settle.

The court rejected this, finding no egregious misconduct by the plaintiff, and awarded costs on a partial indemnity scale.

The court fixed the partial indemnity hourly rates at 60% of actual rates and assessed the reasonableness of the time and disbursements claimed, including expert witness fees.

The court awarded $356,452.49 in costs to Economical and $183,979.82 to FCA, emphasizing the objective of fixing an amount that is fair and reasonable for the unsuccessful party to pay.

The City of Markham brought an application seeking a declaration that AIG had a duty to defend it in an underlying personal injury action, and that the City was entitled to appoint independent counsel at AIG's expense due to a conflict of interest.

AIG conceded the duty to defend but disputed the right to independent counsel, pre-tender costs, and argued Lloyd's should share defence costs.

The court found a reasonable apprehension of conflict of interest, entitling the City to independent counsel.

The court denied pre-tender costs based on policy wording and held AIG responsible for all defence costs, including uncovered claims, subject to a right of reimbursement from Lloyd's.

The City of Markham brought an application seeking a declaration that AIG had a duty to defend it in an underlying personal injury action, and that the City was entitled to appoint independent counsel at AIG's expense due to a conflict of interest.

AIG conceded the duty to defend but disputed the right to independent counsel, pre-tender costs, and argued Lloyd's should share defence costs.

The court found a reasonable apprehension of conflict of interest, entitling the City to independent counsel.

The court denied pre-tender costs based on policy wording and held AIG responsible for all defence costs, including uncovered claims, subject to a right of reimbursement from Lloyd's.

Contractors sought declarations compelling three commercial general liability insurers to defend them in an underlying construction action concerning alleged defects in septic systems installed in a residential subdivision.

The court considered whether the pleadings disclosed “property damage” caused by an “occurrence” under the policies and whether exclusions, including the “your work” and “professional services” exclusions, applied.

Although the pleadings raised a mere possibility of property damage caused by an occurrence, the court found that the “your work” exclusion applied and that the subcontractor exception was not established on the pleadings because the alleged supplier of filter sand was merely a supplier and not a subcontractor.

As a result, the insurers had no duty to defend.

The motion for a declaration compelling a defence was dismissed.