The appellant insurer appealed a trial judgment awarding the respondent insureds US$15 million under a directors' and officers' liability policy for defence costs incurred in a US action.
The trial judge had been directed by the Court of Appeal to hear extrinsic evidence to resolve an ambiguity in a specific entity subsidiary exclusion endorsement.
The Court of Appeal upheld the trial judge's finding that the extrinsic evidence demonstrated the parties mutually intended for the policy to cover the executives for wrongful acts committed in their capacity as executives of the parent company.
The Court also upheld the finding that the insurer was not entitled to set off the amounts owing against payments made under a separate run-off policy.
