Steven Stieber

The Court of Appeal for Ontario dismissed Surefire Dividend Capture, LP’s appeal from the Superior Court’s decision denying insurance coverage for losses suffered in a Ponzi scheme perpetrated by Brenda Smith, CEO of Broad Reach Capital, LP.

The court held that the fidelity bond did not cover losses caused by fraudulent acts of a sub-advisor’s directing mind, as the bond’s language did not extend “Employee” status to such individuals.

The court also found no coverage for “Theft of Customer Property” because SDC no longer had a property interest in the funds once invested in BRC.

The trial judge’s interpretation of the bond was entitled to deference, and no reversible error was found.

This appeal concerned the interpretation of a comprehensive homeowners insurance policy's "Personal Excess Liability Policy" endorsement, specifically its interaction with the insured's automobile insurance policy (OPCF 44R) and whether the primary auto policy limits needed to be exhausted before recourse to the excess endorsement.

The motion judge had dismissed the action against the insurer, finding that the tortfeasor was not an "inadequately insured motorist" under the OPCF 44R definition and that the OPCF 44R limits had to be exhausted.

The Court of Appeal found that the motion judge erred in applying the OPCF 44R definition of "inadequately insured motorist" to the Excess Endorsement and in requiring exhaustion of the OPCF 44R limits, as the Excess Endorsement was intended to provide additional, "stacking" coverage.

The appeal was allowed, and the motion dismissed.

The moving party insurer brought a motion to dismiss the plaintiff's action, arguing that the Personal Excess Liability Policy Endorsement in the deceased's homeowner's policy did not provide coverage for the motor vehicle accident.

The plaintiff's common-law spouse was killed in a collision with a motorist who had $1,000,000 in liability coverage, which equalled the limits of the plaintiff's OPCF 44R family protection coverage.

The court held that the undefined term 'inadequately insured motorist' in the excess endorsement adopted the definition from the underlying auto policy.

Because the third-party motorist's limits were not less than the plaintiff's OPCF 44R limits, the motorist was not inadequately insured, and the excess endorsement was not triggered.

The action against the insurer was dismissed.

The municipality appealed a judgment finding it liable for negligence in granting a building permit and conducting inspections of the Breens' cottage, which resulted in significant structural and code deficiencies.

The Court of Appeal upheld the trial judge's findings on duty of care and causation, affirming that the municipality owed a duty to inspect even without a builder's request and was liable for major deficiencies (crawl space, roof ventilation, structural issues) due to its unreasonable conduct.

However, the Court found the trial judge applied an excessively strict standard of care regarding minor deficiencies (stair headroom, insulation gaps), reducing the damages awarded.

The applicant, 908593 Ontario Limited (Eagle Travel Plaza) by its receiver, brought a motion seeking coverage under a credit risk insurance policy issued by Atradius.

The core dispute was the interpretation of Article 23300 of the policy, specifically whether a $100,000 maximum liability limit for "Discretionary Credit Limit" (DCL) Buyers applied per DCL Buyer or as an aggregate limit for all DCL Buyers per insurance year.

The court found the policy language clear and unambiguous, concluding that the $100,000 limit was an aggregate for all DCL Buyers per insurance year, not per individual DCL Buyer.

The applicant's motion was dismissed.

The plaintiff municipality sought a declaration that its insurers had a duty to defend it in relation to a Director's Order issued by the Ministry of the Environment and Climate Change regarding environmental contamination.

The defendant insurers brought a Rule 21 motion to determine whether the Director's Order constituted a 'civil action' under their respective liability policies.

The court held that a regulatory proceeding, including an appeal of a Director's Order to the Environmental Review Tribunal, is not a 'civil action' as defined by the Rules of Civil Procedure or the Courts of Justice Act.

Consequently, the insurers had no duty to defend the municipality.

The applicants, former directors of PACE Savings & Credit Union, sought a declaration that CUMIS General Insurance Company had a duty to defend them in an action brought by the Financial Services Regulatory Authority (FSRA) as administrator of PACE.

CUMIS denied coverage based on the 'Insured vs. Insured' exclusion in the Directors' and Officers' Liability Policy.

The court held that while the exclusion applied, the 'derivative action' exception restored coverage because the FSRA, acting as a 'person', brought the claim on behalf of the corporation.

The court also ruled that applicants facing fraud claims were entitled to independent counsel due to a conflict of interest, while those facing only negligence claims were not.

A class representative of Mr. Sub franchisees appealed the Court of Appeal's dismissal of their negligence claim against an exclusive meat supplier following a 2008 listeria recall that caused significant economic losses.

The majority held that the supplier owed no duty of care to the franchisees in respect of pure economic losses because the parties lacked the proximity required under the Anns/Cooper framework.

The majority found that neither the negligent misrepresentation nor the negligent supply of shoddy goods categories of pure economic loss applied, and that the multipartite contractual matrix — under which the franchisees could have sought alternative supply sources — precluded a finding of proximity.

The dissent would have recognized a novel duty of care arising from the close and direct relationship between the exclusive supplier and the franchisees who were contractually bound to purchase exclusively from it.

The appeal was dismissed five-to-four, with costs.

The plaintiff claimed indemnity under an insurance policy, alleging its apartment building was structurally damaged by the Ladysmith Earthquake.

The defendant insurer denied the claim, arguing the earthquake did not cause the damage.

After a seven-day trial featuring extensive expert testimony on seismology and structural engineering, the court found the earthquake's force was negligible and insufficient to cause the damage.

The court concluded the structural issues were caused by differential soil settlement and dismissed the plaintiff's action.

This appeal concerns a class action brought by Mr. Submarine Ltd. franchisees against Maple Leaf Foods Inc. following a 2008 listeria contamination outbreak.

The franchisees claimed damages for economic losses arising from reputational harm allegedly caused by their public association with Maple Leaf during the recall.

The motion judge found that Maple Leaf owed a duty of care to the franchisees both in relation to the supply of fit products and regarding representations about product safety.

The Court of Appeal allowed the appeal, finding that while Maple Leaf may owe a duty to supply safe products, this duty is owed to end consumers, not franchisees, and does not extend to protecting against reputational harm or pure economic losses.

The court also found that Maple Leaf's undertaking regarding product safety did not encompass protection of the franchisees' reputational interests.

The defendant, The Corporation of the City of Brampton, brought a summary judgment motion seeking to dismiss the plaintiff's action, but later abandoned it.

The plaintiff, Inzola Group Limited, sought costs for the abandoned motion on a substantial indemnity basis.

The court found the plaintiff was entitled to partial indemnity costs for the period up to September 2016 and substantial indemnity costs for the period between September and November 2016, concluding that the defendant acted unreasonably in delaying the abandonment of the motion after critical evidence emerged.

The court fixed the total costs payable by the defendant to the plaintiff.

The applicant developer brought an application seeking a declaration that the respondent mechanical trade contractor was contractually required to defend and indemnify it in an underlying construction defect action regarding a condominium project.

The court distinguished the duty to defend in a commercial construction contract from that in an insurance policy, noting the indemnification clause was drafted by the developer and must be interpreted strictly against it (contra proferentem).

The court dismissed the application against the contractor's parent company but ordered the contracting subsidiary to pay 33.33% of the developer's reasonable legal fees in the underlying action, reflecting its limited obligation.

Two related actions challenged a municipality’s expropriation of commercial land that formed part of a 1,000‑acre assembly for a vehicle manufacturing plant.

The plaintiffs argued that the municipality unlawfully expropriated the property and conferred an illegal “bonus” on a private manufacturer by transferring the land at the expropriation price rather than its alleged fair market value, contrary to s. 106 of the Municipal Act, 2001.

The court held that the municipality had lawful authority to expropriate the land for valid public purposes related to economic development.

Applying the contextual approach to s. 106 adopted in Friends of Lansdowne Inc. v. Ottawa (City), the court concluded that the transaction did not confer an “obviously undue advantage” on the private enterprise.

Accordingly, the expropriation and subsequent transfer did not breach the statutory prohibition on municipal bonuses.

Following a complex motion regarding insurance coverage for asbestos claims where the plaintiff was unsuccessful, the successful defendant insurers sought their costs.

The plaintiff argued for a reduction based on divided success on factual issues and refusal to admit facts.

The court rejected the plaintiff's arguments, finding the defendants were the clear winners and their refusal to admit facts was not unreasonable.

The court awarded partial indemnity costs to the defendants, making some reductions to specific bills for duplication of effort among multiple counsel, totaling approximately $546,887.

Insurers disputed responsibility for satisfying a tort judgment arising from a fatal apartment fire.

One insurer had paid the balance of the judgment after the other insurer exhausted its primary policy limits and refused to contribute further pending resolution of a priority dispute.

The court held that liability of the building owner and property manager—treated as a single defendant in the underlying tort action—should be apportioned equally between them for indemnity purposes.

Applying principles analogous to Aetna Insurance Co. v. Canadian Surety Co. and restitutionary doctrines, the court concluded the paying insurer had overpaid and was entitled to reimbursement.

Judgment was granted requiring the responding insurer to reimburse the excess amount.