Aviva Insurance Co. of Canada et al. v. Lombard General Insurance Co. of Canada, 2013 ONCA 416

• Judge: Blair, Tulloch and Lauwers, JJ.A.
• Court: Court of Appeal (Ontario)
• Case Date: March 18, 2013
• Jurisdiction: Ontario
• Citations: 2013 ONCA 416;(2013), 309 O.A.C. 276 (CA)

Aviva Ins. v. Lombard General (2013), 309 O.A.C. 276 (CA)

MLB headnote and full text

Temp. Cite: [2013] O.A.C. TBEd. AU.004

Aviva Insurance Company of Canada, Tandem Realty Administration Inc., Tandem Group Management Inc., Van Forbell and Paul Reid (plaintiff/respondent/appellant by way of cross-appeal) v. Lombard General Insurance Company of Canada (defendant/appellant/respondent by way of cross-appeal)

(C55661; 2013 ONCA 416)

Indexed As: Aviva Insurance Co. of Canada et al. v. Lombard General Insurance Co. of Canada

Ontario Court of Appeal

Blair, Tulloch and Lauwers, JJ.A.

June 20, 2013.

Summary:

Aviva Insurance Co. and Lombard General Insurance Co. disagreed over the ranking of policies required to respond to losses arising from a fire in an apartment building. The two insurers had defended the tort actions as ཁone defendantཁ, without seeking a decision as to contribution and indemnity as between them. Each ཁtried to outwit the otherཁ. At the end of the day, Aviva paid the entire amount of the excess claim to the tort plaintiffs. Aviva sued Lombard for one-half of its damages payment.

The Ontario Superior Court, in a decision reported at [2012] O.T.C. Uned. 3219, held that Lombard was required to reimburse Aviva for one-half of the damages payment on unjust enrichment/restitutionary grounds. The trial judge awarded costs on a partial, not substantial, indemnity basis. Lombard appealed. Aviva cross-appealed as to costs.

The Ontario Court of Appeal dismissed Lombard's appeal, based on equitable contribution and unjust enrichment/restitution. The court dismissed the cross-appeal.

Equity - Topic 1000

Equitable relief - General - [See second Insurance - Topic 2945.1 ].

Insurance - Topic 785

Insurers - Liability - Where two or more policies cover risk - Primary v. excess insurance - [See second Insurance - Topic 2945.1 ].

Insurance - Topic 788

Insurers - Liability - Where two or more policies cover risk - Contribution among insurers - [See first Insurance - Topic 2945.1 ].

Insurance - Topic 2944

Contribution among insurers - Excess coverage clauses - [See second Insurance - Topic 2945.1 ].

Insurance - Topic 2945.1

Contribution among insurers - Two or more policies covering same loss - The Ontario Court of Appeal considered the way in which the doctrine of equitable contribution applied in the insurance context - ཁ[T]wo considerations are at play. The first is the need to prevent over-recovery by an insured who can look to more than one insurer for payment. The second is the need to avoid a windfall to insurers other than the ཁselected insurerཁ because that selected insurer paid in full a claim arising out of shared liability. This latter goal is achieved by requiring the other insurers who cover the same risk to share pro rata in responding to that risk.ཁ - See paragraph 34 - ཁAt its heart, the doctrine of equitable contribution as between insurers turns less on the existence of a single insured than on the fact that multiple insurers are responsible for the same liability of that insured arising out of the same riskཁ - See paragraph 41.

Insurance - Topic 2945.1

Contribution among insurers - Two or more policies covering same loss - Losses arose from a fire in an apartment building - The owner of the building (Axes) and the property manager (Tandem) were found liable as ཁone defendantཁ - A Lombard primary policy and a Lombard umbrella policy insured both Axes and Tandem - An Aviva primary policy, with an excess coverage clause, insured Tandem only - The plaintiffs' claims in the tort actions exceeded the limits of the Lombard primary policy - Aviva and Lombard disagreed over which insurer was responsible for what portion of the excess losses - At the end of the day, Aviva paid the entire amount of the excess claim - In this action, Aviva submitted that Lombard should be responsible for one-half of that payment - The trial judge found that Lombard was required to reimburse Aviva for one-half of the Axes/Tandem liability on unjust enrichment/restitutionary grounds - The Ontario Court of Appeal dismissed Lombard's appeal - Principles of equitable contribution were germane - Aviva was equivalent to the "selected insurer" because it paid the damage claim in full; Lombard had covered the same risk, i.e., the risk of indemnifying against the losses associated with the ཁone defendantཁ award - Lombard and Aviva were each equally obligated to respond to the plaintiffs' claims in full - The fact that Aviva ཁblinkedཁ first did not detract from Lombard's legal obligation to respond, had the tort plaintiffs pursued Axes alone - See paragraphs 23 to 37 - The court also upheld Lombard's responsibility to contribute equally to the damages awarded against Axes/Tandem on unjust enrichment/restitutionary grounds - See paragraphs 47 to 60.

Restitution - Topic 5

General principles - Restitutionary claims - What constitute - [See second Insurance - Topic 2945.1 ].

Restitution - Topic 62

Unjust enrichment - What constitutes - [See second Insurance - Topic 2945.1 ].

Cases Noticed:

Family Ins. v. Lombard Can. Ltd., [2002] 2 S.C.R. 695; 167 B.C.A.C. 161; 274 W.A.C. 161; 2002 SCC 48, refd to. [para. 30].

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. 39].

Kerr v. Baranow, [2011] 1 S.C.R. 269; 411 N.R. 200; 300 B.C.A.C. 1; 509 W.A.C. 1; 274 O.A.C. 1; 2011 SCC 10, refd to. [para. 48].

Rathwell v. Rathwell, [1978] 2 S.C.R. 436; 19 N.R. 91, refd to. [para. 48].

Sorochan v. Sorochan, [1986] 2 S.C.R. 38; 69 N.R. 81; 74 A.R. 67, refd to. [para. 48].

Becker v. Pettkus, [1980] 2 S.C.R. 834; 34 N.R. 384, refd to. [para. 48].

Peter v. Beblow, [1993] 1 S.C.R. 980; 150 N.R. 1; 23 B.C.A.C. 81; 39 W.A.C. 81, refd to. [para. 48].

Aetna Insurance Co. et al. v. Canadian Surety Co. et al. (1994), 149 A.R. 321; 63 W.A.C. 321 (C.A.), refd to. [para. 61].

Authors and Works Noticed:

Billingsley, Barbara, General Principles of Canadian Insurance Law (1st Ed. 2008), p. 317 [para. 31].

Ivamy, Edward Richard Hardy, General Principles of Insurance Law (6th Ed. 1993), p. 518 [para. 30].

Counsel:

Ronald G. Slaght, Q.C., and Dena N. Varah, for the appellant/respondent by way of cross-appeal;

Steven Stieber and Elizabeth Bowker, for the respondent/appellant by way of cross-appeal, Aviva Insurance Company of Canada.

This appeal and cross-appeal were heard on March 18, 2013, before Blair, Tulloch and Lauwers, JJ.A., of the Ontario Court of Appeal. In reasons written by Blair, J.A., the Court delivered the following judgment, dated June 20, 2013.