Thomas J. Donnelly

An insurer sought to amend its statement of defence approximately nine years after a fire destroyed the insured's restaurant to assert that the insured had deliberately set the fire, rather than relying on its original defence of non-cooperation with the fire investigation.

The motion judge dismissed the amendment motion and awarded substantial indemnity costs.

The Court of Appeal upheld the dismissal of the amendment but reduced the costs award, finding that while the insurer's delay was inordinate and triggered a presumption of prejudice that was not rebutted, the conduct did not rise to the level of egregious misconduct warranting substantial indemnity costs.

A commercial premises was largely destroyed by fire, causing the tenant to cease operations and stop paying rent.

The landlord sought coverage for lost rental income from its insurer, who denied the claim on the basis that the tenant remained legally obligated to pay rent.

The motion judge found the lease was frustrated and ordered the insurer to pay.

On appeal, the Court of Appeal upheld the result but for different reasons, finding that the loss of anticipated rental income triggered the business interruption coverage regardless of the tenant's continuing legal obligations.

The insurer was required to pay the claim and could subsequently pursue the tenant via subrogation.

The plaintiffs sought partial summary judgment regarding their Guaranteed Rebuilding Cost Coverage (GRC) endorsement in a homeowner's policy following a fire loss.

The defendant insurer disputed the claim, arguing that the plaintiffs had not commenced rebuilding within the two-year period stipulated by the endorsement.

The court found that the plaintiffs had taken sufficient steps to "begin to repair or rebuild" within the two-year period, or alternatively, within the extended period provided by a Tolling Agreement.

The court also considered and rejected the application of relief from forfeiture under the Insurance Act or Courts of Justice Act as an alternative basis for relief.

The plaintiffs' motion for partial summary judgment was successful, entitling them to GRC coverage.

The defendant insurer brought a motion to amend its statement of defence to allege that the plaintiffs committed arson and fraud, eight years after the fire that destroyed the plaintiffs' business.

The insurer had originally only pleaded a lack of co-operation.

The court dismissed the motion, finding that the extreme and unexplained delay in seeking the amendment would cause non-compensable prejudice to the plaintiffs, who had lost the opportunity to properly investigate the allegations when the evidence was fresh.

The court also noted concerns regarding the insurer's duty of utmost good faith.

The appellants appealed an order dismissing their motion to strike portions of a statement of claim that asserted a claim in conspiracy.

The appeal was heard together with a companion case involving similar issues.

The Divisional Court dismissed the appeal, applying the same principles and reasons as in the companion case, and awarded agreed costs of $10,000 to the respondent.

The plaintiff hospital sued the general contractor (Compass) and subcontractor (Black Creek) for water damage caused during a kitchen renovation.

Black Creek brought a motion under Rule 21 to determine whether Compass's cross-claim against it for contribution and indemnity was barred by the 'covenant to insure' in the general contract.

Black Creek argued the tort immunity principle barred the cross-claim for damage to the entire hospital.

Compass argued the immunity only applied to the 'work' (the kitchen project) and not the adjacent property (the rest of the hospital).

The court held that the covenant to insure and the builder's risk policy only covered the project site (the kitchen), not the entire hospital.

Therefore, Compass's cross-claim against Black Creek for damages outside the kitchen was not barred.

On motions under Rule 21, the court considered insurance coverage issues arising from alleged failures of valves installed in condominium HVAC systems that led to flooding claims.

The court held that the duty to defend could be determined on the pleadings and policy wording, notwithstanding unresolved factual disputes relating to waiver, estoppel, misrepresentation, fortuity, and exclusions.

Reading the underlying claims broadly and drawing reasonable inferences, the court found a mere possibility that the defective valves deteriorated progressively from installation through failure, thereby constituting property damage during both insurers' policy periods.

Continental's motion denying any duty to defend was dismissed, and declarations were granted that the claims potentially fell within both policies, with Continental bound to defend.

The appellant, a primary insurer, sought a declaration that the respondent, an excess insurer, had a duty to contribute to defence costs incurred on behalf of their common insured.

The primary policy contained a duty to defend, while the excess policy did not and stipulated that defence costs eroded its policy limit.

The Court of Appeal dismissed the appeal, holding that the doctrine of equitable contribution did not apply because the primary and excess policies did not cover the same risk.

The primary insurer was held to its bargain with the insured, and the excess insurer was not required to contribute to defence costs.

The defendants brought a motion under Rule 49.09(a) of the Rules of Civil Procedure for judgment enforcing a settlement allegedly accepted by the self‑represented plaintiff.

The underlying action concerned allegations by a former Ph.D. student that his academic supervisor and the university engaged in harassment and misconduct that prevented him from completing his studies and caused psychological harm.

The court reviewed extensive settlement negotiations conducted by email and found that the defendants made a formal settlement offer which the plaintiff unequivocally accepted.

The plaintiff argued that there was no meeting of the minds, citing mental health issues, limited English proficiency, and alleged duress arising from financial pressure and the potential termination of health benefits.

The court rejected these arguments, finding that the plaintiff had the capacity to contract, understood the terms including the requirement of a full and final release of all claims, and freely accepted the offer.

The settlement was enforced and judgment granted in accordance with its terms.

The applicant municipalities sought a declaration that their insurers had a duty to indemnify them for damages sought in two underlying actions relating to the expropriation of lands for a Toyota manufacturing plant.

The insurers argued the application was premature as the underlying actions involved substantial disputed facts and potential coverage exclusions, including whether the municipalities gained a personal profit or advantage, or if the claims were for restitution or statutory compensation.

The court dismissed the application, holding that unlike the duty to defend, the duty to indemnify must generally be determined after trial based on findings of fact, and the current record contained too many disputed facts to resolve the coverage issues prematurely.

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 Court of Appeal for Ontario issued a costs endorsement following an appeal.

The court reviewed the parties' written submissions and largely agreed with the appellant's position, finding it fair and reasonable.

The court slightly increased the award to the main respondent to reflect its greater participation.

Costs were awarded to the respondents on a partial indemnity basis, totaling $30,000.

The appellant insurer appealed a decision finding it had a duty to indemnify the respondent insured under a commercial general liability policy for damages arising from defective concrete.

The insurer relied on the 'Your Work' and 'Rip and Tear' exclusions.

The Court of Appeal dismissed the appeal, holding that the 'Your Work' exclusion was ousted by the 'subcontractor' exception because the entity that supplied the defective concrete was properly characterized as a subcontractor.

The Court also found the 'Rip and Tear' exclusion incomprehensible and therefore inapplicable.

The appellant religious order operated a residential school and held a claims-made comprehensive general liability policy.

During the policy period, the appellant became aware of allegations of abuse at the school and notified the insurer of potential future claims.

After the policy expired, numerous former students brought actions.

The insurer denied a duty to defend, arguing the claims were not made during the policy period.

The Supreme Court of Canada held that the policy was unambiguously a claims-made policy.

Because a 'claim' requires the communication of an intention to hold the insured responsible for damages, and no such intention was communicated by the subsequent plaintiffs during the policy period, the insurer had no duty to defend those actions.

The applicants obtained a judgment against a moving company after their belongings were stolen from a trailer parked on the street.

When the judgment went unsatisfied, they brought an application under s. 132 of the Insurance Act against the moving company's insurers.

The application judge found that the loss fell under the $1 million warehouse insurance limit rather than the $500,000 transportation insurance limit.

The Court of Appeal allowed the primary insurer's appeal in part, holding that the breach was a failure to deliver under the transportation contract, so the $500,000 transportation limit applied.

However, the Court upheld the application judge's finding that the insurer was liable for post-judgment interest and costs exceeding the policy limit.

Following an appeal, the court issued a costs endorsement.

The appellant was ordered to pay the respondents their costs of the appeal on a partial indemnity basis, fixed at $20,000 inclusive of disbursements and GST.

The insurer appealed an order requiring it to indemnify the insured general contractors under two Commercial General Liability (CGL) policies for the cost of repairing structural defects in new homes caused by defective concrete supplied by a subcontractor.

The insurer argued that CGL policies inherently do not cover an insured's own defective work or product.

The Court of Appeal dismissed the appeal, holding that the application judge correctly focused on the specific language of the policies rather than general insurance principles.

The policies contained an explicit exception to the defective work exclusion for work performed by a subcontractor, which operated to restore coverage.

The appellant was blinded in the eye by a bungee cord while helping the respondent secure a mattress to the roof of a van.

The appellant sued the respondent for negligence.

The respondent sought coverage under the appellant's automobile insurance policy and his own homeowners' policy.

The Court of Appeal held that the respondent was not an 'occupant' or in 'possession' of the van, so the automobile insurer had no duty to defend.

However, the Court found that the homeowners' insurer did have a duty to defend, as the allegations of negligence (failing to warn about or test the bungee cord) could constitute concurrent non-auto related causes, meaning the claim did not clearly fall within the policy's exclusion for injuries arising from the use of a motor vehicle.

The appellants, a rental car company and its commercial umbrella insurer, funded a $3 million settlement for a passenger severely injured in an accident involving one of their rental vans.

They sought contribution from the respondent, the personal automobile insurer of the driver who rented the van.

The Court of Appeal held that the commercial umbrella policy constituted an 'owner's policy' under the Insurance Act because the foreign insurer had filed an undertaking in Ontario.

Consequently, the umbrella policy was first loss insurance under s. 277(1) of the Act, and the respondent, as an excess insurer, was not required to contribute to the settlement or indemnify the driver against the rental company's claims.

The appellant, a clinical psychologist, sought a declaration that her insurer had a duty to defend her against an action for negligence and defamation arising from a psychological report she prepared.

The insurer denied coverage based on a professional services exclusion in her Commercial General Liability policy.

The Court of Appeal upheld the application judge's decision, finding that the injuries alleged were due to the rendering of professional services and did not fall within the incidental medical malpractice exception.

The appeal was dismissed.