Court File and Parties
COURT FILE NO.: CV-19-628068 DATE: 20220718
ONTARIO SUPERIOR COURT OF JUSTICE
BETWEEN:
Dana Canada Corporation Applicant
– and –
XL Specialty Insurance Company, XL Insurance America, Inc., Westport Insurance Corporation, and Swiss Re Corporate Solutions Elite Insurance Corporation Respondents
Counsel: R. Lee Akazaki, C.S., for the Applicant David Liblong, for the Respondent XL Specialty Insurance Company Jason Mangano, for the Respondents Westport Insurance Corporation and Swiss Re Corporate Solutions Elite Insurance Company
HEARD: June 6, 7, 8, and 9, 2022
BEFORE: J.T. Akbarali J.
Overview
[1] The applicant, Dana Canada Corporation (“Dana”) brings this application to determine the extent of liability insurance coverage provided to it by the respondent insurers in respect of a product liability claim that Dana settled for $24 million USD.
Brief Background
[2] Dana is an automobile parts manufacturer. It produces transmission oil coolers (“TOCs”). TOCs are installed into automobile transmissions. They keep coolant and transmission fluid separate.
[3] From February 2014 to March 2016, a machining error in Dana’s plant caused crushed turbulizers in the TOCs, leading some of the TOCs to separate during use. When the TOCs separated, transmission fluid and coolant mixed, causing damage requiring the replacement of the vehicle’s transmission, and in some cases, the entire engine.
[4] In addition, during the period from April to July 2015, a secondary press misfeed issue occurred at Dana’s plant, causing a bubble deformation in the TOCs. According to Dana, this bubble issue caused a spike period of a larger number of claims, but the bubble alone could not have caused the TOCs to separate if the turbulizers were not crushed.
[5] The TOCs are manufactured on a just-in-time basis for installation into transmissions which are built by another auto parts manufacturer, and the transmissions in turn are installed into car engines. On June 23, 2016, the transmission manufacturer notified Dana of a claim for damages based on reports from the car manufacturer that the TOCs were leaking and damaging auto parts that were not built by Dana (“non-Dana parts”), such as the transmissions and engines. By the time Dana learned of the problem, the TOCs had been installed into many cars that had been sold and were on the road.
[6] Initially, Dana denied liability and reported the claim to its insurers. In May 2019, Dana settled the claim for damage to non-Dana parts for $24 million. At that time, it calculated the total amount of the claim, including repair costs forecasted to be incurred in the future relating to cars which were on the road with defective TOCs, to be $59,717,775 USD.
[7] The respondent XL Specialty Insurance Company (“XL Canada”) argues that it has paid out the limits on its policy. Dana agrees, although it states that, depending upon my findings, XL Canada or its parent company, XL Insurance America Inc., (“XL US”), which has not appeared on this application although properly served, may have some additional exposure.
[8] The respondents Westport Insurance Corporation and Swiss Re Corporate Solutions Elite Insurance Corporation are Canadian and American subsidiaries of Swiss Re Group. I refer to them jointly in these reasons as “Swiss Re”. Swiss Re provided umbrella coverage to Dana and Dana’s American parent company, Dana Incorporated (“Dana US”). Swiss Re has paid out about $8.6M USD to Dana. In this application, it raises a number of coverage defences, and argues that it has no additional liability under its policies.
[9] Also relevant is a policy of insurance issued to Dana US by the Hartford Fire Insurance Company (“Hartford”), although Hartford is not a party to this application. The Hartford insurance is fronted insurance; that is, the deductible on the policy is equal to the amount of coverage provided under the policy. In other words, the fronted policy is a method of self-insuring when an insurance policy is required, for example, for regulatory reasons. The only practical risk Hartford takes on in the fronted policy is the risk that Dana cannot pay the deductible.
[10] The insurance at issue in this case applies to property damage to non-Dana parts. The damage to the TOCs is not covered, and the costs of providing new, non-defective, TOCs to the transmission manufacturer for repairs does not form part of the damage claim in this application.
Issues
[11] The parties to this application raised a number of issues, many of which are not necessary to my conclusion, and as a consequence, I do not address those. I address only those issues which are required for me to resolve the application.
[12] The issues that require determination on this application are:
a. At what point does the umbrella coverage provided by Swiss Re respond, having regard to the other policies of insurance held by Dana? This question relates to the retained limits in the Swiss Re policies, or, put another way, the amount of damage that must be covered either by Dana itself or by another insurer before the Swiss Re umbrella coverage applies. Answering this question requires me to determine:
i. Whether there are one, two, or more “occurrences” for purposes of the XL policy.
ii. Whether coverage is available under the Hartford policy for the property damage that occurred;
iii. How many Swiss Re policy periods are implicated in Dana’s claim?
b. What is the quantum of Dana’s claim? In particular,
i. Is $1.3 M of the settlement unrecoverable under the Swiss Re policies because it is comprised of unverified claims and as such, is not damages that Dana would be legally obligated to pay?
ii. Are forecast repair costs recoverable under the Swiss Re policies?
Brief Conclusion
[13] For the reasons that follow, I conclude that Dana has established that it has coverage under the Swiss Re policies for the balance of its loss, in the full amount claimed, after the XL policies paid out their limits. XL Canada and XL US have paid out their full limits on the policy and have no further liability.
The Insurance Policies
[14] I begin by outlining the key features of the insurance policies at issue.
The XL Policies
[15] The XL insurance coverage consisted of international and local policies.
[16] First, Dana US is the named insured under an international commercial liability policy underwritten by XL US. Dana is also an insured, although not a named insured, under the XL US policy. The XL US policy provides coverage for property damage to which the policy applies. To apply, among other conditions, the damage must relate to “property damage” that is “caused by an occurrence that takes place in the coverage territory”. An “occurrence” is defined as “an accident, including continuous or repeated exposure to substantially the same general harmful conditions”. The coverage territory under the XL US policy excludes, among others, the “United States, including its territories, possessions, Puerto Rico, and Canada”. However, “coverage will apply on an Excess Difference in Limits and Difference in Conditions basis to any territory or possession of the United States of America, Puerto Rico and Canada if a local underlying program policy [“LUPP”] has been issued for each such country as part of the program”.
[17] Dana purchased a LUPP from XL Canada. The LUPP provides for coverage for those sums that the insured becomes legally obligated to pay as damages because of property damage to which the LUPP applies. To apply, the property damage must be “caused by an occurrence that takes place in the coverage territory”. Under the LUPP, an “occurrence” has the same meaning as it does under the XL US policy; it is “an accident, including continuous or repeated exposure to substantially the same general harmful conditions”. The LUPP defines the coverage territory to include “Canada and the United States of America”.
[18] The “excess difference in limits and difference in conditions basis” means that, if coverage arises under the LUPP, but coverage under the LUPP is lower in limits or stricter in conditions than is coverage under the XL US policy, the insured gets the benefit of the higher limits and/or the more beneficial condition(s).
[19] Both policies also include what is referred to as a “batch clause”. The batch clause in the XL Canada policy provides:
Two or more incidents arising out of a single act, cause or occurrence or a series of related acts, causes or occurrences shall be treated as a single occurrence and shall be considered to have occurred at the time at which the first such incident took place.
In no event shall the assertion of claims based upon two or more incidents as described in the preceding paragraph increase the limits of insurance available for a single occurrence under the applicable policy. Policies issued subsequent to the date of occurrence, as the date is arrived at pursuant to the first paragraph of this endorsement, shall not apply to such occurrence or to any claim or suits arising out of such occurrence.
[20] The XL US policy provides:
If any Coverage Part under this policy and any other Coverage Part of policy issued to you by us or any company affiliated with us applies to the same occurrence or accident, we will not pay more than the actual amount of the loss or damage. Also, the aggregate maximum Limit of Insurance under all the Coverage Parts or policies shall not exceed the highest applicable Limit of Insurance under any one Coverage Part or policy.
[21] The XL US policy also provides:
Two or more incidents, claims, or suits that arise out of a single act, cause or occurrence; a series of related acts, causes or occurrences; or which arise out of common facts, circumstances, situations, events or transactions that are temporally, logically or causally connected, shall be treated as a single occurrence and shall be considered to have occurred at the time at which the first such incident was known by you…
In no event shall the assertion of claims based upon two or more incidents as described in the preceding paragraph increase the limits of insurance available for a single occurrence under this Coverage Part. Policies issued by us or local underlying program policies coordinated by us issued subsequent to the date of occurrence, as the date is arrived at pursuant to the preceding paragraph, shall not apply to such occurrence or to any claim or suits arising out of such occurrence. …
[22] The policy limit under the XL Canada policy is $2 million CAD per occurrence limit. The policy limit under the XL US policy is $2 million USD. Thus, due to the excess difference in limits, the limit available to Dana Canada for a claim under the LUPP is $2 million USD.
[23] I note that the XL Canada and XL US policies were issued for three consecutive policy terms: 2014-2015; 2015-2016; and 2016-2017.
The Hartford Policy
[24] The Hartford Policy is described as a “Commercial General Liability” policy. Dana US is the named insured under the policy. As I have already noted, the policy is a fronted policy.
[25] Although the parties disagree whether Dana Canada is an insured under the Hartford policy, it is not necessary to consider that question for purposes of my analysis, so I do not address the provisions regarding who is insured under the policy here. Rather, I assume without deciding that Dana is an insured under the Hartford policy.
[26] Of relevance, the Hartford policy contains an exclusion for “specified other insurance policies”, that provides:
Any coverage or any duty to defend we may have under the terms and conditions of this policy does not apply if the claim or suit is covered in whole or in part by the following policies or renewals, or would be covered but for the exhaustion of the limits of such policies, and regardless of whether they are in full or partial force and effect:
Any other General Liability policy issued to the Named Insured in the Declarations, executive officers, directors and/or subsidiaries, associated and affiliated companies or owned and controlled companies as now or hereafter constituted…
Any other policy, including but not limited to Directors and Officers Liability, Advertiser’s Liability, Fiduciary Liability, or Employer’s Liability, without exception.
[27] Under the Hartford policy, “Claim” means “a demand received by any insured for damages alleging injury or damage to persons or property including the institution of a “suit” for such damages against any insured”.
[28] The Hartford policy was renewed annually during the period of time at issue in this litigation.
The Swiss Re Policies
[29] The insuring agreement in the Swiss Re policies provide that Swiss Re will pay on behalf of the insured, “those sums in excess of the ‘retained limit’ and that the ‘insured’ becomes legally obligated to pay as damages by reason of liability imposed by law because of … ‘property damage’ to which this insurance applies”.
[30] The insurance applies to “property damage” only if it is “caused by an ‘occurrence’ that takes place in the ‘coverage territory’ and the … ‘property damage’ occurs during the ‘policy period’”.
[31] An “occurrence” means, with respect to property damage, “an accident including continuous or repeated exposure to substantially the same general harmful conditions. All such exposure to substantially the same general conditions shall be considered as arising out of the same ‘occurrence,’ regardless of the frequency or repetition thereof, or the number of claimants.
[32] Under a “designated coverage retained limit amendatory endorsement” “retained limit” is defined to mean “the applicable limit(s) listed in the Schedule of Retained Limits”, solely as respects coverages listed in the Schedule of Retained Limits. The Schedule of Retained Limits reveals a retained limit of $1,000,000 USD for each occurrence and $1,500,000 USD products completed operations aggregate over and above the Hartford policy limits.
[33] With respect to the XL policies, however, the Swiss Re policies define “retained limit” to mean “the total applicable limits of ‘scheduled underlying insurance’ and any applicable limit of ‘other insurance’ providing coverage to the ‘insured’. “Scheduled underlying insurance” is defined to mean “the policy or policies of insurance and limits of insurance shown in the Schedule of Underlying Insurance forming a part of this policy”.
[34] It is a condition of the Swiss Re policy that Dana maintain its “scheduled underlying insurance”. The failure to do so does not invalidate the Swiss Re policy, but the Swiss Re policy “will apply as if the ‘scheduled underlying insurance’ were maintained as required by this policy”.
General Principles applicable to the Interpretation of Insurance Policies
[35] There is no dispute over the principles of interpretation to be applied to insurance policies. The Supreme Court of Canada has identified the primary interpretative principle: when the language of the policy is unambiguous, the court should give effect to clear language, reading the contract as a whole: Ledcor Construction Ltd. v. Northbridge Indemnity Insurance Co., 2016 SCC 37, at para. 49.
[36] Where the policy’s language is ambiguous, general rules of contract construction apply to resolve the ambiguity. These rules include that the interpretation should be consistent with the reasonable expectations of the parties, as long as that interpretation is supported by the language of the policy; it should not give rise to results that are unrealistic or that parties would not have contemplated in the commercial atmosphere in which the insurance policy was contracted, and it should be consistent with the interpretations of similar insurance policies: Ledcor, at para. 50.
[37] Only if ambiguity remains after the principles identified above are applied can the contra proferentum rule be employed to construe the policy against the insurer: Ledcor, at para. 51. A corollary of the contra proferentum rule is that coverage provisions in insurance policies are interpreted broadly and exclusion clauses are interpreted narrowly: Ledcor, at para. 51.
[38] The initial onus of bringing the liability into the coverage grant is on the insured. The onus then shifts to the insurer to establish that certain aspects of coverage are excluded. The insured then bears the onus to prove that exceptions to the exclusions apply to limit or oust the effect of the exclusions: Ledcor, at para. 52.
When do the Swiss Re policies respond?
[39] In view of Swiss Re’s coverage grant which applies only to those amounts in excess of the retained limits, it is necessary to consider how the XL and Hartford policies respond in order to determine when the Swiss Re policies respond.
The XL Policies
[40] I begin with the XL policies. It is common ground that the XL policies respond to Dana’s loss in respect of the damage to non-Dana parts, although there is some disagreement between the parties about whether the XL policies cover Canadian and American property damage, and whether there are one or more occurrences. The debate around the number of occurrences relates to Swiss Re’s contention that the occurrence is the failure of the TOCs, and not the machining error that crushed the turbulizers in the TOCs.
[41] In my view, the language of the XL policies is clear and unambiguous.
[42] The XL Canada policy responds because property damage has occurred that was caused by an occurrence that took place in the coverage territory. By the terms of the policy, the coverage territory includes Canada and the United States.
[43] XL and Dana argue that the occurrence at issue is the machining error that led to the crushed turbulizers in the TOCs. Swiss Re argues that the occurrence at issue is the failure of any particular TOC, and as such there are multiple occurrences. Dana addresses a situation where the machining error is one occurrence, and the bubbling error is a second occurrence, but no one strongly advances this argument.
[44] For purposes of interpreting the XL policies, it is not necessary to determine whether there is one occurrence, two occurrences or multiple occurrences. Whatever the occurrence is, or the occurrences are, the batch clause in the XL policies deems all the incidents to result from a single occurrence, and deems it to have occurred at the time at which the first incident took place. The batch clause also, clearly and unambiguously, excludes coverage under any policy of insurance issued subsequent to the date of occurrence for claims arising out of such occurrence.
[45] Under the XL Canada policy, therefore, whatever the occurrence or occurrences, there is only a single occurrence that took place at the time of the first incident in 2014. The excess difference in limits coverage means that the insurance limit for a single occurrence is increased from $2 million CAD under the LUPP to $2 million USD under the XL US policy. However, the policies only respond to a single occurrence.
[46] XL Canada states that it has paid Dana the $2 million CAD per occurrence limit, and XL US has paid Dana the difference between the $2 million CAD XL Canada policy per occurrence limit and the XL US $2 million USD per occurrence limit. Although Swiss Re raises some issues about whether the entirety of this amount was paid, or whether some of it was credited against Dana’s deductible, the fact remains that XL Canada argues that the full limits under the policies, as they operate together pursuant to the difference in limits coverage, has been paid, and Dana agrees. Evidence in the record from Dana’s affiant, Steven Monte, supports this conclusion.
[47] XL Canada and XL Specialty have paid out their limits appropriately. They have no further liability.
The Hartford Policies
[48] The key aspect to the Hartford policy is the exclusion for specified other insurance policies. In my view, this exclusion is clear and unambiguous, and applies to oust coverage under the Hartford policies.
[49] The “claim”, that is, the demand received by Dana from the transmission manufacturer for damages alleging damage to property is covered “in whole or in part” by the XL policies, “or would be covered but for the exhaustion of the limits of such policies”.
[50] The XL policies are specified other insurance policies for purposes of the Hartford exclusion. The exclusion describes such specified other insurance policies as including “any other General Liability policy”. The XL policies are commercial liability policies. While Swiss Re is correct that “general liability policy” and “commercial liability policy” are different phrases, their meaning is clear enough. Dana is a commercial entity. It purchased liability insurance from XL. The Hartford policies exclude coverage where there is another general liability policy. It strains credibility to think a commercial liability policy would not be a general liability policy when held by a commercial entity. Moreover, the coverage grant in the commercial liability policy uses language consistent with a general liability policy.
[51] Even if somehow the commercial liability policy were not a general liability policy, the exclusion in the Hartford policy also refers to “any other policy”. The exclusion operates to exclude liability under the Hartford policy when coverage is available, in whole or in part, under any other policy.
[52] Here, coverage for the claim, in whole or in part, is provided by the XL policies.
[53] I pause here to note briefly that the parties made argument on whether the payout under the XL policies included coverage for property damage that occurred in the United States, or whether coverage existed for such losses under the XL policies. In my view, this issue is a red herring. First, there is nothing in the XL Canada policy that would suggest that coverage would not be afforded for property damage sustained in the United States as long as the occurrence was in the coverage territory, which includes Canada and the United States. Second, given the coverage in the XL Canada policy, it is not relevant whether coverage is available under the XL US policy for property damage in the United States, because the exclusion in the Hartford policy is engaged by the XL Canada policy alone. Third, even if I am wrong that the XL Canada policy extends coverage for property damage in the United States, at the very least it provides coverage “in whole or in part” for the “claim” made against Dana for purposes of the Hartford exclusion.
[54] As noted above, the terms of the XL policies deem the entirety of the incident(s) that occurred (and therefore the loss that flowed from it or them) to be a single occurrence. Thus, the XL policies limits have been exhausted.
[55] As a result, under the terms of the XL policies, the limits have been paid out, and because of the coverage afforded under the XL policies, there is no Hartford coverage available to Dana due to the exclusion in the Hartford policies.
When does Swiss Re drop down?
[56] The effect of the analysis, above, is that Swiss Re’s insuring obligation is engaged once the XL policy limits are paid out:
a. The Schedule of Retained Limits does not give rise to any retained limits linked to the Hartford policy. The Schedule of Retained Limits only applies when the Hartford policy has application, and in this case, the exclusion in the Hartford policy ousts its application.
b. Swiss Re’s obligation does not arise until the scheduled underlying insurance is exhausted, but once XL US and XL Canada’s policy limits are paid out (and they have been), Swiss Re’s obligation arises.
[57] I agree with Swiss Re that its insuring obligation spreads out over several policy periods. The Swiss Re policy terms are clear that the insurance applies to “property damage” that occurs during the policy period. The property damage at issue is the damage to the non-Dana parts, that is, the transmissions and engines. The record indicates that the transmissions and engines were damaged at different times, influenced by factors including when the car was sold, and the driving habits of the individual driver. Thus, the Swiss Re policies implicated begin with the 2014-2015 policy year, and continue until the settlement of the claim during the 2018-2019 policy year.
[58] Having said this, it is of no practical significance how many Swiss Re policies are involved, because in view of my conclusions regarding the manner in which the XL policies and the Hartford policies interact, Swiss Re is responsible for all of Dana’s loss after the XL policy limits are exhausted.
[59] My conclusions also make it unnecessary to consider Swiss Re’s argument that, under the terms of its policies, there are multiple occurrences consisting of the failure of the TOCs, rather than a single occurrence consisting of the machining error that led to the crushed turbulizers.
[60] However, I note briefly that the effect of Swiss Re’s argument could easily be to vitiate coverage for which an insured reasonably believed they had purchased. For example, if every TOC failure was an occurrence, the damage to each vehicle would be subject to a separate deductible. No one was able to point me to any case law where multiple individual linked events have been considered to be multiple occurrences triggering separate deductibles.
[61] If that were the case then, under the XL Canada policy, each individual car would be subject to a $250,000 deductible. Clearly, this would deprive the insured of any coverage for significant damage to non-Dana parts caused by a machining error in Dana’s plant. Dana would reasonably have thought it purchased coverage for such an error. I thus have significant doubts that Swiss Re’s approach to “occurrence” is correct.
[62] In contrast, my conclusions about the manner in which these policies respond to Dana’s loss are consistent with the unambiguous language of the policies, but also with the reasonable expectations of the parties. It is not unreasonable for Swiss Re to respond to the entirety of Dana’s loss (subject to the quantum arguments I address below) after the XL policy limits are paid out. Dana US paid a significant premium to Swiss Re. For example, in the 2015-2016 policy period, Dana US paid a premium of $855,000 USD. Swiss Re’s policies provided for retained limits having specific regard to the Hartford policy, which it must be taken to have understood, including the exclusion of coverage under the Hartford policy where coverage is available under another policy. Swiss Re’s policy terms give it the benefit of the XL policies having to respond first, but thereafter, it is reasonable to expect it to respond to Dana’s loss.
What is the quantum of Dana’s claim?
[63] Swiss Re raises two issues regarding the quantum of Dana’s claim. First, it argues that $1.3 million of the settlement that Dana entered into is unrecoverable because it is comprised of unverified claims and as such, is not damages that Dana would be legally obligated to pay. Second, it argues that to the extent the settlement includes forecast repair costs, those are not recoverable under the Swiss Re policies which only cover property damage that happens during the policy term.
Unverified Claims
[64] The parties disagree about whether the settlement includes $1.3 million USD in unverified claims.
[65] The issue around the $1.3 million USD figure is complicated somewhat by Swiss Re’s initial position. Swiss Re’s proposed expert, Reinhard Krestel, a forensic accountant, originally suggested that the $1.3 million USD was a duplication of costs. On cross-examination, after lengthy questioning, he eventually agreed it was not a duplication.
[66] Swiss Re’s position on the motion is that, in fact, the $1.3 million USD in repair costs are unverified claims. They rely on an affidavit from Mr. Krestel, in which he deposes that his firm identified a $1.3 million USD difference in the databases and the summaries Dana provided relating to repairs to replace cooling system parts and to flush the system on the one hand, and a spreadsheet entitled “complete dataset – analysis” on the other.
[67] Assuming that Mr. Krestel is properly qualified as an expert, this evidence tells me very little. In different datasets and summaries prepared that deal with millions of dollars in repairs relating to hundreds of unique repairs, there is a discrepancy. There is no evidence that $1.3 million USD in claims were identified by Dana as being ‘unverified” but mistakenly included in the settlement calculation (which, in any event, calculates the overall claim at nearly $60,000,000 and then proposes $24,000,000 in settlement without specifically allocating the $24,000,000 to any particular heads of damage). Rather, the highest this evidence goes is that $1.3 million USD in repair costs are included as part of the calculation of the total claim, but not included in a document titled “complete dataset – analysis”.
[68] The calculation of the claim prepared by Dana in preparation for its settlement offer describes the $1.3 million USD as “repair/replacement of damaged cooling system; not replaced during initial discovery and transmission replacement”. Dana’s evidence is that these costs relate to repairs in vehicles that were repaired twice — once as the problem with the TOCs was just becoming apparent but was not yet fully understood, and a second time once the problem was fully understood and it was clear that not all required repairs had been completed the first time.
[69] I see nothing in the record that challenges Dana’s explanation for the $1.3 million USD. Dana’s evidence indicates that the $1.3 million USD in fact represents damages that Dana would be legally obligated to pay, and is therefore covered under the Swiss Re policies.
[70] In view of this conclusion, I do not address the parties’ estoppel arguments, or the argument that the ratio in Cansulex Ltd. v. Reed Stenhouse Ltd. (1986), 1992 1545 (BC CA), 70 B.C.L.R. 273 (B.C.S.C.) applies to prevent Swiss Re from challenging the quantum of the settlement.
Forecast Repair Costs
[71] I turn next to the question of coverage for the forecast repair costs. I note first that Swiss Re calculates the forecast repair costs that form part of the settlement figure to be just shy of $3,800,000 USD. At the same time, the total amount of the claim, including all forecast repair costs, is estimated to be $59,717,775 USD. The parties treat the forecasted costs included in the settlement as comprising a small portion of the overall forecasted costs. By my calculations, based on these figures advanced by Swiss Re, the settlement covers 9.6% of the forecast repairs.
[72] The difficulty with Swiss Re’s argument that forecast repairs are not covered is that it conflates the date on which the repair cost is incurred with the date of the property damage. It is the property damage that has to occur during the policy period, not the repair. The evidence suggests that the last defective TOC was manufactured in March 2016, and presumably installed into a transmission shortly thereafter, given the “just-in-time” manufacturing process. The data in the record indicate that the largest repair costs were incurred in June 2015-May 2017, or put another way, fairly close in the time to the manufacture of the TOCs. In my view, it is reasonable to infer that, of the forecast repair costs, at least 9.6% of them would be in respect of TOCs in which the property damage was ongoing and unrepaired at the time of the settlement. This is consistent with submissions made at the application by Swiss Re’s counsel that the forecast damages represented property damage that was unrepaired and ongoing at the time of the settlement.
[73] Accordingly, I find that the portion of the settlement comprising future repair costs is recoverable under the Swiss Re policies. I agree with Swiss Re that, to the extent it is relevant, future repair costs are most reasonably allocated to the policy term in effect at the time of the settlement, that is, the 2018-2019 term.
[74] In conclusion, with respect to quantum, having regard to the figures in evidence:
a. The Dana settlement of $24,000,000 USD includes $20,205,293 USD for non-Dana part damages the repairs of which had been crystallized at the time of the settlement. This figure includes the $1.3 million USD that I have found is a covered loss.
b. The settlement also includes $3,794,704 USD in forecast repair costs, which I have found is a covered loss.
c. XL Canada and XL US have together paid out $2,000,000 USD. Swiss Re has paid out $8.6 million USD.
d. Thus, Swiss Re is obligated to pay $13,400,000 USD to Dana.
[75] Based on the figures in the record, it appears counsel can agree on how the losses are attributed among each policy period if it is necessary to do so. If counsel have any difficulties, they may write to my assistant to seek my assistance.
Disposition
[76] The questions I identified earlier in these reasons are answered as follows:
a. The umbrella coverage provided by Swiss Re responds once the XL policy limits are paid out.
b. Taking into account the payments already made, the quantum of Dana’s claim is $13,400,000 USD.
[77] XL Canada and XL US have paid out their policy limits. They have no further liability.
[78] Swiss Re is liable to Dana in the amount of $13,400,000 USD.
Costs
[79] If the parties are unable to agree on costs, written submissions may be filed as follows:
a. Written submissions of no more than five pages, plus bills of cost and any relevant offers, to be delivered by XL Canada and Dana by August 15, 2022;
b. Responses to costs submissions of no more than ten pages, plus a bill of costs and any relevant offers to be delivered by Swiss Re by August 29, 2022. If Dana wishes to respond to XL Canada’s costs submissions, it shall do so by the same date, with submissions limited to five pages;
c. XL Canada and Dana may deliver reply submissions of no more than two pages in length by September 6, 2022.
d. Submissions shall be filed through the portal with a copy uploaded to CaseLines and a copy sent to my assistant by email.
J.T. Akbarali J.
Released: July 18, 2022
COURT FILE NO.: CV-19-628068 DATE: 20220718
ONTARIO SUPERIOR COURT OF JUSTICE
BETWEEN:
Dana Canada Corporation Applicant
– and –
XL Specialty Insurance Company, XL Insurance America, Inc., Westport Insurance Corporation, and Swiss Re Corporate Solutions Elite Insurance Corporation Respondents
REASONS FOR JUDGMENT
J. T. Akbarali
Released: July 18, 2022