In the recent case of Furtado v Underwriters, 2024 ONCA 579, the Ontario Court of Appeal reviewed an appeal from an insured party challenging an application judge’s decision denying coverage under a Directors and Officers policy (the “Policy”). The Court upheld the application judge’s ruling, determining that the insured had reported its loss beyond the specified notice period outlined in the contract, as well as affirming the recent legal precedents concerning the doctrine of relief from forfeiture in the insurance context. While the Policy was in effect, the Ontario Securities Commission (“OSC“) initiated inquiries into the business dealings of Go-To, a company in which the insured held a directorial position. Following this, the OSC issued an Order for the insured to produce certain documents related to the investigation into Go-To. As part of the process, the insured was cautioned by the OSC that section 16(1) of the Securities Act prohibited … Read More
Full and Frank Disclosure, Material Misrepresentations, and the availability of Directors’ and Officers’ Liability Coverage
The Ontario Court of Appeal’s (the “Court“) recent decision in Davies v AIG Insurance Company of Canada, 2024 ONCA 509 (“Davies“), deals with an insurance coverage dispute related to the defense of a Ponzi scheme fraud claim. Notably, the Court’s decisions underscores the significance of full and frank disclosure by insureds when applying for coverage. In Davies, the subject Applicants acted as the principals of related Ontario real estate development companies (the “Companies”). AIG Insurance Company of Canada (“AIG”) issued directors’ and officers’ liability insurance policies (the “Policies”) to the Companies. As part of this action, the Applicants were named as defendants in two separate lawsuits alleging that they used the Companies to conduct a Ponzi scheme and that the Companies’ alleged real estate developments were funded by millions of dollars in syndicated mortgages (the “Underlying Actions”). Soon after being named as defendants in the Underlying Actions, the Applicants sought … Read More
Covid-19 Pandemic Closures: Considerations For Commercial Tenants And Landlords
What can commercial tenants and landlords do to protect themselves from the impact of Covid-19 related closures on commercial lease obligations? Here are some tips for businesses who are in the difficult situation of having to deal with potential defaults on commercial rent obligations related to closures or reductions due to the Covid-19 situation. 1. Review The Lease Agreement Carefully For Potentially Relevant Clauses In Ontario, the commercial landlord-tenant relationship is governed by the Commercial Tenancies Act, R.S.O. 1990, c. L.7., (the “Act”) which outlines the relationship, rights and obligations between commercial landlords and tenants. However these relationships are heavily governed by the commercial lease agreement in place between the landlord and the tenant, which can take precedence over the Act based on the agreement of the parties. Review the Act and more importantly, review your commercial lease agreement carefully to appreciate whether the agreement contemplates the type of situation … Read More
Court Stays Injunction Claim in Favour of Arbitration / Refuses to Consolidate Arbitration Proceedings Without Consent of All Parties
In Loan Away Inc. v. Western Life Assurance Company, 2018 ONSC 7229, the plaintiff had an agreement with the defendant by which the plaintiff sold the defendant’s insurance policies in return for payments by the defendant. The defendant ceased making payments and the plaintiff commenced an action against the defendant for an injunction to require the defendant to make the payments to the plaintiff and to prevent the defendant from terminating the insurance policies that the plaintiff had sold on the defendant’s behalf. The defendant relied upon an arbitration clause in its agreement with the plaintiff to stay the action. The plaintiff argued, among other things, that the claim should not be stayed because the arbitration clause contained arbitration clause contained an exception for requests for a temporary restraining order or other forms of injunctive relief. The plaintiff argued that its request for a permanent injunction fell under the category … Read More
Renewal time for professional liability insurance? Mind the gap!
How can a policyholder who purchased consecutive policies of professional liability insurance lose the benefit of insurance? On October 29, 2018, the Ontario Superior Court released its judgment in Cronnox Inc. v. Lloyd’s Underwriters, 2018 ONSC 6437 (CanLII), holding that the professional liability insurer did not owe the policyholder a duty to defend or to indemnify it in respect of a subrogated law suit. It was the second part of an insurance coverage dispute among an engineering company, two insurers and a law firm. In the first instalment, the same court also held earlier this year that the second insurer in the sequence was also not liable: Liberty Mutual Insurance Company v. Cronnox Inc., 2018 ONSC 1578 (CanLII). In September, 2013, the policyholder chose not to act on letters and emails from counsel for subrogating insurers who had paid to repair damage to a Toronto-area hotel, allegedly in the millions … Read More
Ontario Appellate Court Recognizes Adjusters’ Agency Immunity
Independent insurance adjusters face unprecedented professional pressures and competing demands from stakeholders. As the front-line representatives of insurance companies in the aftermath of an accident or loss, they deal directly with accident victims, property owners and insurance service providers. Many unnecessary disputes erupt over misunderstandings about the adjuster’s role as an intermediary. As I explained in a 2014 article in Claims Canada, “Addressing E&O Exposures: How adjusters can avoid the squeeze of professional liability claims,” there are useful litigation-prevention strategies for training adjusters to explain their role to stakeholders. Despite the practical and principled impediments to parties suing insurance adjusters, litigants and their lawyers in insurance cases often sue them, preferring to draw their weapons first and to ask the important questions later. What insurance adjusters have lacked in cases where parties have sued them in breach of contract cases together with insurers is a specific legal precedent barring many such actions … Read More
Lost in Cyberspace : Legal causation in the age of AI and driverless cars
One day, in the immediate future, you might very well witness this scene from your office window. A lawyer jaywalks across a Toronto street to avoid being late for a firm risk management committee meeting. While she does so, she texts her colleague in Calgary with instructions on containing the legal liabilities arising from a northern Alberta oil plant shut-down that has already occurred in the future (a reality of simultaneity across locally-logged events across a multi-timezone world) after an eco-terrorist hacked into the plant heating system. It is at this moment that she is struck by an autonomous delivery van. The van was travelling the wrong way down a one-way street because the city transportation department had not uploaded a temporary change to traffic direction to accommodate a condo developer. An algorithm built into the telephone service to warn the lawyer of oncoming traffic fails to alert her because the … Read More
Court of Appeal Allows Negligence Claim Against Individual Starbucks Employees to Proceed
In Sataur v. Starbucks Coffee Canada Inc., 2017 ONCA 1017, the plaintiff alleged that a Starbucks barista poured scalding water on the plaintiff’s hands. The plaintiff sued Starbucks, and also brought claims against the barista and the Starbucks store manager personally. The plaintiff alleged that the barista and the store manager owed the plaintiff a duty of care and that each was personally liable to the plaintiff for breaching those duties. Starbucks brought a motion to strike the plaintiff’s claims against the barista and store manager on the basis that, among others, the plaintiff could not claim against them personally. The motion judge agreed, stating that employees are not liable for acts within the scope of their authority and done on behalf of their corporation. The motion judge struck the plaintiff’s claims against the barista and store manager. The plaintiff appealed. The Court of Appeal, citing the Supreme Court of Canada’s … Read More
Court of Appeal Confirms Retrospective Application of Amendments to Prejudgment Interest, Statutory Deductible and Costs Considerations
The Ontario Court of Appeal recently released the much anticipated decision in Cobb v. Long Estate, 2017 ONCA 717, which addressed the issue of whether legislative amendments in 2015 to prejudgment interest on non-pecuniary damages, statutory deductible and costs considerations apply retrospectively in motor vehicle accident litigation. Ever since Gilbertson Davis LLP’s blog post in November 2014, judges in the Superior Court of Justice and Divisional Court have made divergent rulings on this issue including retrospective application, prospective application and relying on their discretion for something in between. This appellate decision provides much needed guidance and clarity to the claimants, counsel and insurance companies in tort actions involving motor vehicle accidents. Although it is unknown at this time whether the Plaintiff intends to apply for leave to appeal to the Supreme Court of Canada, it is safe to assume that will be the case given the significance of this decision. Prejudgment Interest for Non-Pecuniary Damages On January 1, 2015, the Insurance Act was amended to change the prejudgment interest for non-pecuniary damages from 5% … Read More
Insurance Coverage For Cyber Crime: The Brick v. Chubb
In the recent case of The Brick v. Chubb Insurance, the Alberta Court of Queens Bench held that the plaintiff’s commercial crime policy did not cover the money lost by the plaintiff as a result of a social engineering fraud. The plaintiff had been contacted by unknown persons pretending to be one of the plaintiff’s service providers, and requested banking information from their accounts payable department, which ultimately led to the plaintiff changing their internal records and sending of payments to the fraudsters’ own account instead of their service provider. The plaintiff sought coverage for the losses, and the insurer denied coverage. The court noted that the policy only applied to fund transfers made “without the insured’s knowledge or consent”. The plaintiff argued that they did not consent, since their actions were induced by the fraudulent correspondence. The insurer argued that the policy did not require consent to be “informed” or otherwise … Read More
CASL Private Right of Action Suspended Indefinitely
In a recent press release, the Canadian government stated that they will be suspending the introduction of the private right of action set out in Canada’s anti-spam legislation (frequently referred to as CASL). The private right of action was meant to come into effect on July 1, 2017, but the government has suspended the implementation of this section to give a parliamentary committee more time to review the legislation and determine the best course of action to balance the protection of Canadian consumers against minimizing extra costs and unintended breaches by business owners. The legislation has received mixed reviews thus far. While undoubtedly a step forward in minimizing unwanted spam, many business owners have expressed concern that the definition of commercial activity are vague, the requirements for consent are onerous, and the penalties for even unintentional non-compliance are harsh. The private right of action (most likely to be done as class … Read More
The Low-Down on PIPEDA Requests in Personal Injury Cases
Seemingly out of nowhere, institutional litigants, insurers and the third-party vendors they retain to support their obligations in responding to claims have been inundated with requests for disclosure on pain of complaints or actions to collect damages under the Canadian federal Personal Information Protection and Electronic Documents Act (PIPEDA). In some instances, parties or their lawyers directly approach non-parties such as medical experts and private investigation companies and demand production of documents separately from any disclosure procedures in the claims or law suits. It is hard to point to any single rationale for employing the resort to the federal privacy legislation, except that obtaining access to personal information is probably not one of them. Traditionally, a party to a personal injury law suit would, through his or her lawyer, be the conduit for information in health records, employment files and other personal data. The defendant or respondent would be the … Read More
Is Your Car Insurance Company Violating Your Privacy Rights?
If you are seriously injured in a car accident, there are two types of claims that can be made. One is the no fault claim from your own insurance company for accident benefits, and the other is a lawsuit or court claim, against the at fault driver. In Ontario, there are a number of very large insurance companies that sell car insurance, because of this sometimes your car insurance company may also be the same company that insures the person at fault for your injuries. Even though you can make two separate claims, it is the same insurance company behind the scenes responding to both claims. In these situations, there are strict internal privacy rules insurance companies have to follow to protect your privacy. 1) Accident Benefits And Your Confidential Private Data Your policy provides standard “no-fault” or accident benefits to give you access to early treatment, possibly some income … Read More
Gilbertson Davis LLP Panelists at 2016 Cyber Insurance Webinar
John Davis and Robert Kalanda, of Gilbertson Davis LLP, were co-presenters at The Knowledge Group’s recent Webcast ‘Cyber Insurance: Latest Developments in 2016‘, on March 21, 2016. The panel also included Barry Fleishman of Kilpatrick Townsend & Stockton LLP and Jamie Hull of Cassiday Schade LLP. The webinar focused on issues and developments of interest to both Canadian and United States businesses, insurers, organizations, claims professionals, adjusters, and risk managers who are involved with Cyber Insurance Coverages under Standalone Cyber and more traditional insurance policies, and Cyber Risks, Data Breach, Information Security, Cybersecurity and Privacy issues. The panel discussed the judicial, legislative and regulatory developments as well as important considerations bearing on Applications for Cyber policies, including identification and prioritization of risks and exposures, the impact of conditions and exclusions, and the role of counsel as part of the data breach and Cybersecurity response team. John L. Davis is the Managing Partner of … Read More
Court Declines Jurisdiction over New York MVA Despite Passed Limitation Period
In Mannarino v The Estate of Jane Brown, the Superior Court declined to take jurisdiction over a claim involving a motor vehicle accident that took place in New York, even though the limitation period for bringing a claim in New York had since passed. The plaintiff was a passenger in a vehicle in the state of New York, and was involved in a car accident with another New York driver. The plaintiff sued in Ontario, claiming in part that the injuries suffered exacerbated an earlier motor vehicle injury which was already properly before the courts in Ontario. The plaintiff argued that the nature of the injuries would require the two actions to be consolidated. The court noted that no consolidation motion had yet been brought. Justice Skarica considered the factors outlined in Club Resorts Ltd. v. Van Breda for the court to take jurisdiction over a claim. The court found that none of … Read More
GD Blog analysis vindicated: Court finds s. 258.3(8.1) of Insurance Act retroactively scales back PJI rates
In a post on this site last November, “Why the new s. 258.3(8.1) of the Insurance Act will retroactively scale back prejudgment interest rates in MVA actions,” I stated that the statutory amendment reducing the rate of prejudgment interest for non-pecuniary damage awards (damages for pain and suffering and the non-pecuniary portion of dependent family claims) in automobile tort cases must be applied retroactively. In large or catastrophic claims involving years of pre-trial procedures, the difference can be quite substantial. These past four months, I am told the blog post has been printed off and by defence lawyers across Ontario, and that the reasoning has been debated at mediations and pretrials. Lawyers have been waiting for the court to opine on the subject. In a decision released today but not yet available on the court’s website, Cirillo v. Rizzo 2015 ONSC 2440, the Ontario Superior Court followed the reasoning I stated in the … Read More
Bad Faith Claims against Canadian Liability Insurers: Sober Second Thought
No aspect of insurance defence counsel’s tripartite retainer with an insured and a liability carrier more frequently strains the divided loyalty more than the over-limits exposure. Whether it is an automobile policy responding to a catastrophic bodily injury claim, or a general liability policy building collapse or fire attributed to the carelessness of a tradesperson, the cost of indemnity has increased dramatically in relation to standard million-dollar policy limits. Those limits have not changed in Canada for over a decade. It is a matter of economic conflict between two independent markets. In a competition for premiums, underwriters have failed to market increases in policy limits, while medical and rebuilding costs for commercial buildings have soared. This simple divergence of demand-and-supply curves has many ramifications for tort law in Canada. Here, I discuss one issue, the rise and apparent panic in the insurance industry over the importation of an American doctrine … Read More
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