Peter E. Manderville

Two lawyers were sued in their capacity as directors of a company.

Their law firm held an outside directorship liability policy issued by Lloyd's, while the company held a directors' and officers' liability policy issued by AIG.

The AIG policy did not provide a duty to defend.

The Lloyd's policy contained a 'follow form' clause.

Lloyd's argued this clause converted its duty to defend into a duty to pay defence costs only, matching the AIG policy.

The Court of Appeal upheld the application judge's finding that the 'follow form' clause applied only to the indemnity provisions, not the duty to defend.

Therefore, the Lloyd's policy was primary for the defence costs.

The appellants appealed a Divisional Court decision dismissing their application to direct the Commissioner of the Cornwall Public Inquiry to state a case regarding his jurisdiction to hear certain evidence.

The Commissioner had ruled he had jurisdiction to hear evidence from a complainant regarding a recent sexual assault by teenagers and the subsequent police investigation.

The Court of Appeal allowed the appeal, finding that the Commissioner committed a jurisdictional error by misconstruing the Order in Council that established his mandate.

The Court held that the inquiry's subject matter was limited to historical sexual abuse of young people by persons in authority or positions of trust, and the proposed evidence fell outside this scope and was not reasonably relevant.