To mark the New Year and
recall the one just past, we offer (in no particular order) our list of the “Top 10" significant cases in insurance law of 2011.
Foster & Company is pleased to announce that Charles Foster, the firm’s founder and principal, was appointed Queen’s Counsel at a ceremony held in Fredericton on December 12, 2011. The Queen’s Counsel designation recognizes his commitment to the law, the professional manner in which he serves his clients and his contributions to the Law Society of New Brunswick
￼Our Top 10 Significant Cases in Insurance Law in 2011
10. Dominion of Canada v. Kingsway, 2011 ONSC 1249
This case elaborated on the limits of an insurer’s duty to defend a claim, following the 2010 Supreme Court of Canada decision in Progressive Homes Ltd. v. Lombard General Insurance Co. The Court in this case held that nothing in a standard automobile insurance policy obligates an insurer to continue to defend an insured once it has paid its limits and costs in full. In other words, if there is no possibility of a duty to indemnify, then there is no duty to defend.
9. Pender v. Squires, 2011 NLTD (G) 23
In another case referencing the Progressive Homes decision, the Court here attempted to clarify the threshold required to trigger the insurer’s duty to defend. In the case, three separate court actions were all held to fall within the coverage of an insured’s policy; therefore, the insurer had a duty to defend its insured in all three actions.
8. Bulldog Bag Ltd. v. AXA Pacific Insurance Company, 2011 BCCA 178
The third of our “Top 10" cases which were decided in the wake of Progressive Homes, this one considered an exclusion clause contained within a commercial general liability policy. The BC Court of Appeal overturned a trial judge’s decision that the exclusion clause operated to limit an insured’s recovery for losses suffered due to claims against it for defective products. Instead, the Court of Appeal found that the exclusion clause, properly interpreted, did not bar the insured from recovering from its insurer.
7. Coachman v. Lombard, 2011 ONSC 1655
This case dealt with the meaning of the term “rental” in a situation involving two automobile insurance policies, in order to determine which policy was primary and which was excess. A car dealership allowed a customer to use a “loaner” vehicle while the customer’s vehicle was in for repair. When the customer became involved in an accident while driving the “loaner” car, both the customer’s personal policy and the dealership’s fleet policy were tagged to respond to claims arising from the accident. From the facts, the Court determined that the dealership’s loan was not a “rental,” and therefore the dealership’s insurer was the primary insurer in the matter.
6. Aviva Insurance Company of Canada v. Thomas, 2011 NBCA 96
In this case, the NB Court of Appeal pronounced on two noteworthy issues. First, it held that an insurer who fails to ask its insured to update it periodically as to things it would consider material changes to the risk insured against, cannot then deny coverage to the insured on that basis. Second, it declared that the “Fire Insurance” provisions of the Insurance Act apply to so-called “multi-peril” insurance policies.
5. Webb v. Aviva Insurance Company, 2011 NBQB 98
This case dealt with what medical services are considered “essential” under the policy wordings found in Section B of the New Brunswick Standard Automobile Policy. Two subparagraphs found in that section of the policy were found to have two different thresholds to determine whether a treatment was “essential”. The higher threshold required recommendations from two doctors that a treatment was necessary. The lower threshold was silent as to what evidence was needed; the Court reasoned, based on the two-doctor requirement, that a lower threshold therefore only required a recommendation from one doctor.
4. Jones v. Jenkins, 2011 ONSC 1426
The Court in this case invoked the doctrine of unconscionability and clarified its use. It held that an adjuster hired by the defendant’s insurer had used his position to achieve a strategic advantage over a plaintiff in negotiating a final release between the parties. The agreement reached in the end was sufficiently divergent from community standards of commercial morality as to be unconscionable, and so the final release signed by the plaintiff was declared void and set aside.
3. Cabell v. The Personal Insurance Company, 2011 ONCA 105
This case concerned the interplay between additional-coverage endorsements attached to a property insurance policy and common exclusions contained in the policy. An Ontario trial judge had found the policy’s common exclusions applied to the endorsement, and so insured homeowners could not recover for damage to their above-ground pool. The Court of Appeal ruled that the trial judge’s interpretation would essentially nullify coverage under the endorsement, a result which could not have been within the reasonable expectation of the parties, and overturned the trial judge’s decision.
2. ING Insurance Company of Canada v. Miracle (Mohawk Imperial Sales and Mohawk Liquidate), 2011 ONCA 321
A pollution-liability exclusion found in a CGL policy is the subject-matter of this case, which involved an insured gas bar owner and its CGL insurer. Following a gasoline leak onto another property, the insurer sought a declaration that it had no duty to defend the insured due to the exclusion. The Court of Appeal agreed with the insurer, deciding that the insured’s activities fell squarely within the exclusion. The exclusion itself was neither ambigious nor contrary to the parties’ reasonable expectations. Therefore, the insurer was not required to defend or indemnify its insured in claims brought against it because of the gasoline leak.
1. Bennett v. State Farm Fire and Casualty Company, 2011 NBCA 27 / 2011 NBQB 273
The final case is a ‘two-for-one’ special, dealing with two motions in a single matter concerning production of an RCMP investigation file following a suspicious house fire which resulted in no charges being laid. In the first instance, the property’s insurer sought production of the records directly from the RCMP, a tactic which succeeded at the initial motion but was then denied on appeal. Once the RCMP records were released to the insured homeowner, the insurer tried again to have the records produced from the insured herself. This time, the motions judge held that the records did have to be produced, the insured’s assertions of various types of privilege over the documents failing. The Court of Appeal has granted leave to appeal the motions judge’s decision; the appeal is pending at this time.