Michael I. Burgar

The primary insurer defended an action arising from a motor vehicle accident and sought equitable contribution for defence costs from the excess insurer.

The excess insurer was not notified of the claim until four and a half years after the accident and was not plainly at risk until shortly before trial.

The application judge ordered the excess insurer to pay a proportionate share of the defence costs.

On appeal, the Court of Appeal held that an excess insurer's obligation to contribute to defence costs is premised on the existence of a duty to defend, which only arises upon notice of a claim.

Given the late notice and the fact that the excess insurer did not sit back and benefit from the primary insurer's work, it was not fair or equitable to require contribution.

The appeal was allowed and the application dismissed.

The insurer, Halifax, appealed an order to pay the insured's legal costs, and the insured, Innopex, cross-appealed a summary judgment declaring Halifax had no duty to defend it in a US trademark infringement lawsuit brought by Gucci.

The Court of Appeal allowed the cross-appeal, finding that the motion judge erred by relying on extrinsic evidence to determine the 'true facts' rather than relying on the pleadings.

The Court held that the Gucci complaint contained allegations that could potentially fall within the 'advertising liability' coverage and the 'title' exception to the trademark exclusion in the policy.

Halifax was ordered to defend the action, and the summary judgment dismissing Innopex's counterclaim for punitive damages was set aside.