Financial and Consumer Services Commission (N.B.) v. Arch Insurance Canada Ltd. et al., (2015) 442 N.B.R.(2d) 200 (TD)

• Judge: Rideout, J.
• Court: Court of Queen's Bench of New Brunswick (Canada)
• Case Date: October 07, 2015
• Jurisdiction: New Brunswick
• Citations: (2015), 442 N.B.R.(2d) 200 (TD);2015 NBQB 211

Financial Services v. Arch Ins. (2015), 442 N.B.R.(2d) 200 (TD);

    442 R.N.-B.(2e) 200; 1155 A.P.R. 200

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Sommaire et texte intégral

[French language version follows English language version]

[La version française vient à la suite de la version anglaise]

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Temp. Cite: [2015] N.B.R.(2d) TBEd. DE.008

Renvoi temp.: [2015] N.B.R.(2d) TBEd. DE.008

Financial and Consumer Services Commission (applicant) v. Arch Insurance Canada Ltd., Encon Group Inc., Continental Casualty Company, Temple Insurance Company, XL Reinsurance America Inc., and Aviva Insurance Company of Canada (respondents)

(M/M/102/15; 2015 NBQB 211; 2015 NBBR 211)

Indexed As: Financial and Consumer Services Commission (N.B.) v. Arch Insurance Canada Ltd. et al.

Répertorié: Financial and Consumer Services Commission (N.B.) v. Arch Insurance Canada Ltd. et al.

New Brunswick Court of Queen's Bench

Trial Division

Judicial District of Moncton

Rideout, J.

October 27, 2015.

Summary:

Résumé:

The Financial and Consumer Services Commission was charged with the regulation and enforcement of securities legislation in New Brunswick. From 2010 to February 2012, the Commission's management liability insurance was provided by Encon. From February 2012 to February 2014, the same coverage was provided by Arch. Drapeau commenced a claim against Commission employees in 2011. Encon accepted coverage and appointed counsel to defend the claim. The claim was discontinued in 2013 without payment from Encon. In December 2012, Drapeau gave the Commission notice under the Proceedings Against the Crown Act and, in March 2013, commenced an action against the Commission and an employee (LeBlanc). The Commission reported the 2013 claim to both Encon and Arch. Both insurers denied coverage, denying any duty to defend. The Commission retained counsel to defend the 2013 claim, which was still before the courts. The Commission applied for a determination of policy coverage (i.e., that one of the two insurers had a duty to defend). At issue was whether: (1) the 2013 claim was a continuation of the 2011 discontinued claim (interrelated wrongful acts) and the claim would fall under the Encon policy period, (2) whether it was a non-interrelated claim that post-dated the Encon policy period and fell under the Arch policy period, or (3) whether coverage was excluded under either policy.

The New Brunswick Court of Queen's Bench, Trial Division, held that the 2013 claim was independent of the 2011 claim (not a claim arising from an interrelated wrongful act under the Arch policy). Accordingly, the claim fell under the Arch policy period. The exclusion against coverage for interrelated claims did not apply. Arch had a duty to defend the claim and was ordered to reimburse the Commission for any legal costs already incurred in defending the 2013 claim. The court also granted a Sanderson order requiring Arch to pay the legal costs of the Commission, LeBlanc and Encon for the current application.

Insurance - Topic 725

Insurers - Duties - Duty to defend - The Financial and Consumer Services Commission was charged with the regulation and enforcement of securities legislation in New Brunswick - From 2010 to February 2012, the Commission's management liability insurance was provided by Encon - From February 2012 to February 2014, the same coverage was provided by Arch - Drapeau commenced a claim against Commission employees in 2011 - Encon accepted coverage and appointed counsel to defend the claim - The claim was discontinued in 2013 without payment from Encon - In December 2012, Drapeau gave the Commission notice under the Proceedings Against the Crown Act and, in March 2013, commenced an action against the Commission and an employee (LeBlanc) - The Commission reported the 2013 claim to both Encon and Arch - Both insurers denied coverage, denying any duty to defend - The Commission retained counsel to defend the 2013 claim, which was still before the courts - The Commission applied for a determination of policy coverage (i.e., that one of the two insurers had a duty to defend) - At issue was whether: (1) the 2013 claim was a continuation of the 2011 discontinued claim (interrelated wrongful acts) and the claim would fall under the Encon policy period, (2) whether it was a non-interrelated claim that post-dated the Encon policy period and fell under the Arch policy period, or (3) whether coverage was excluded under either policy - The New Brunswick Court of Queen's Bench, Trial Division, held that the 2013 claim was independent of the 2011 claim (not a claim arising from an interrelated wrongful act under the Arch policy) - The first action involved a defamation claim and the Commission was not a party, while the second action was for inducing breach of contract - The alleged misconduct in the two actions was different in nature and kind, as was the nature and kind of the loss for which recovery was sought - Accordingly, the claim fell under the Arch policy period - The exclusion against coverage for interrelated claims did not apply - Arch had a duty to defend the claim and was ordered to reimburse the Commission for any legal costs already incurred in defending the 2013 claim - The court also granted a Sanderson order requiring Arch to pay the legal costs of the Commission, LeBlanc and Encon for the current application.

Insurance - Topic 725.1

Insurers - Duties - Duty to defend - Costs of defence and other expenses - [See Insurance - Topic 725 ].

Insurance - Topic 7627

Professional liability insurance - Scope of coverage - Policy period - General - [See Insurance - Topic 725 ].

Practice - Topic 7155

Costs - Party and party costs - Liability for party and party costs - Sanderson order - Where success divided - [See Insurance - Topic 725 ].

Cases Noticed:

Optimum Insurance Co. v. Donovan (2008), 340 N.B.R.(2d) 45; 871 A.P.R. 45; 2009 NBCA 6, leave to appeal refused (2009), 398 N.R. 388 (S.C.C.), refd to. [para. 29].

Conservation Council of New Brunswick Inc. et al. v. Encon Group Inc. et al. (2006), 299 N.B.R.(2d) 354; 778 A.P.R. 354; 2006 NBCA 51, refd to. [para. 29].

Progressive Homes Ltd. v. Lombard General Insurance Co. of Canada, [2010] 2 S.C.R. 245; 406 N.R. 182; 293 B.C.A.C. 1; 496 W.A.C. 1, refd to. [para. 30].

Dunn v. Chubb Insurance Co. of Canada et al. (2009), 266 O.A.C. 1 (C.A.), refd to. [para. 32].

Wigle Estate et al. v. Lawyers' Professional Indemnity Co. (2014), 320 O.A.C. 187; 2014 ONCA 492, refd to. [para. 35].

Melanson v. Léger et al. (2005), 279 N.B.R.(2d) 276; 732 A.P.R. 276; 2005 NBCA 19, refd to. [para. 40].

Counsel:

Avocats:

Darren G. Blois, for the applicant;

Nadia M. MacPhee, for Arch Insurance Canada Ltd.;

Elizabeth Bowker, for Encon Group Inc.

This application was heard on October 7, 2015, before Rideout, J., of the New Brunswick Court of Queen's Bench, Trial Division, Judicial District of Moncton, who delivered the following judgment on October 27, 2015.