ACE INA Insurance v. Associated Electric & Gas Insurance Services Ltd., (2013) 313 O.A.C. 85 (CA)

• Judge: Gillese, Juriansz and Strathy, JJ.A.
• Court: Court of Appeal (Ontario)
• Case Date: September 26, 2013
• Jurisdiction: Ontario
• Citations: (2013), 313 O.A.C. 85 (CA);2013 ONCA 685

ACE INA Ins. v. Assoc. Electric & Gas Ins. (2013), 313 O.A.C. 85 (CA)

MLB headnote and full text

Temp. Cite: [2013] O.A.C. TBEd. NO.026

ACE INA Insurance (applicant/appellant) v. Associated Electric & Gas Insurance Services Limited (respondent/respondent)

(C56418; 2013 ONCA 685)

Indexed As: ACE INA Insurance v. Associated Electric & Gas Insurance Services Ltd.

Ontario Court of Appeal

Gillese, Juriansz and Strathy, JJ.A.

November 14, 2013.

Summary:

ACE INA Insurance (ACE) was Toronto Hydro Corp.'s (Hydro) primary insurer under a comprehensive general liability policy with a limit of $1 million per occurrence. The policy contained a "duty to defend" clause and covered unlimited defence costs without eroding the policy limit. Associated Electric & Gas Insurance Service Ltd. (AEGIS) was Hydro's excess liability insurer under an "umbrella" policy with a limit of $45 million in excess of the primary policy. Under the AEGIS policy, there was no duty to defend. AEGIS was liable for defence costs only when they were not included in other valid and collectible insurance. A fire resulted in five civil actions against Hydro, claiming damages in excess of $50 million. Defence costs had already exceeded $1 million. Counsel had budgeted for over $1 million more. ACE applied for a declaration that AEGIS had a duty to contribute to Hydro's defence costs.

The Ontario Superior Court dismissed the application. ACE appealed.

The Ontario Court of Appeal dismissed the appeal.

Equity - Topic 1003

Equitable relief - General - When refused - [See second Insurance - Topic 725.1 ].

Insurance - Topic 725.1

Insurers - Duties - Costs of defence and other expenses - In the context of the primary insurer's application for a declaration that the excess insurer had a duty to contribute to the insured's defence costs, the Ontario Court of Appeal discussed the application of the doctrine of equitable contribution - See paragraphs 20 to 31.

Insurance - Topic 725.1

Insurers - Duties - Costs of defence and other expenses - ACE was Toronto Hydro Corp.'s (Hydro) primary insurer under a comprehensive general liability policy with a limit of $1 million per occurrence - The policy contained a "duty to defend" clause and covered unlimited defence costs without eroding the policy limit - AEGIS was Hydro's excess liability insurer under an "umbrella" policy with a limit of $45 million in excess of the primary policy - Under the AEGIS policy, there was no duty to defend - AEGIS was liable for defence costs only when they were not included in other valid and collectible insurance - A fire resulted in five civil actions against Hydro, claiming damages in excess of $50 million - Defence costs had already exceeded $1 million - Counsel had budgeted for over $1 million more - ACE asserted that since AEGIS would have the majority of any ultimate liability, it should share the defence costs - The Ontario Court of Appeal disagreed - The doctrine of equitable contribution did not apply here as the policies did not cover the same risk - The policy's express terms excluded liability for defence costs to the extent that they were covered, as here, by another policy - The liability for defence costs was not "congruent or overlapping" in any way - Each insurer had insured different risks in relation to the defence - The excess coverage by AEGIS complemented the primary coverage - There was nothing unfair in holding the primary insurer to its bargain with the insured - Rather, it would be unfair to rewrite that bargain to reflect ACE's conception of what would be fair - There was no basis on which to invoke equitable principles where each party's liability was in accordance with that for which each party had bargained - While there was some attraction to ACE's policy argument that it would be good to bring AEGIS to the settlement table, the court's function was not to do so by changing the contract between the parties - See paragraphs 32 to 38.

Insurance - Topic 785

Insurers - Liability - Where two or more policies cover risk - Primary v. excess insurance - [See both Insurance - Topic 725.1 ].

Insurance - Topic 2945.1

Contribution among insurers - Two or more policies covering same loss - [See both Insurance - Topic 725.1 ].

Insurance - Topic 2946

Contribution among insurers - Conditions precedent - Two or more policies covering "same interest" - [See both Insurance - Topic 725.1 ].

Cases Noticed:

Alie et al. v. Bertrand & Frère Construction Co. et al. (2002), 167 O.A.C. 20; 62 O.R.(3d) 345 (C.A.), leave to appeal refused, [2003] S.C.C.A. No. 48, refd to. [para. 26].

Family Insurance Corp. v. Lombard Canada Ltd., [2002] 2 S.C.R. 695; 167 B.C.A.C. 161; 274 W.A.C. 161; 2002 SCC 48, refd to. [para. 19].

Trenton Cold Storage Ltd. et al. v. St. Paul Fire & Marine Insurance Co. (2001), 146 O.A.C. 348; 199 D.L.R.(4th) 654 (C.A.), refd to. [para. 19].

Aviva Insurance Co. of Canada et al. v. Lombard General Insurance Co. of Canada (2013), 309 O.A.C. 276; 116 O.R.(3d) 161; 2013 ONCA 416, refd to. [para. 21].

Broadhurst & Ball v. American Home Assurance Co. (1990), 42 O.A.C. 161; 1 O.R.(3d) 225 (C.A.), leave to appeal denied (1991), 136 N.R. 405; 49 O.A.C. 400 (S.C.C.), refd to. [para. 24].

St. Mary's Cement Co. v. ACE INA Insurance, [2008] O.T.C. Uned. D50; 68 C.C.L.I.(4th) 235 (Sup. Ct.), refd to. [para. 29].

Authors and Works Noticed:

Billingsley, Barbara, General Principles of Canadian Insurance Law (1st Ed. 2008), p. 317 [para. 21].

Birds, John, Lynch, Ben and Milnes, Simon, MacGillivray on Insurance Law (12th Ed. 2012), para. 24-032 [para. 21].

Counsel:

Glenn A. Smith and Rory Gillis, for the appellant;

Catherine P. Keyes and Thomas J. Donnelly, for the respondent.

This appeal was heard on September 26, 2013, by Gillese, Juriansz and Strathy, JJ.A., of the Ontario Court of Appeal. On November 14, 2013, Strathy, J.A., delivered the following judgment for the court.