International Radiography and Inspection Services (1976) Ltd. v. General Accident Assurance Co. of Canada, (1996) 193 A.R. 1 (CA)

• Judge: Belzil, Côté and O'Leary, JJ.A.
• Court: Court of Appeal (Alberta)
• Case Date: November 29, 1996
• Citations: (1996), 193 A.R. 1 (CA)

Intl. Radiography v. General Accident (1996), 193 A.R. 1 (CA);

    135 W.A.C. 1

MLB headnote and full text

International Radiography and Inspection Services (1976) Ltd. (respondent/plaintiff) v. The General Accident Assurance Company of Canada (appellant/defendant)

(Appeal No. 9503-0454-AC)

Indexed As: International Radiography and Inspection Services (1976) Ltd. v. General Accident Assurance Co. of Canada

Alberta Court of Appeal

Belzil, Côté and O'Leary, JJ.A.

November 29, 1996.

Summary:

General Accident Assurance Co. of Canada issued a comprehensive general liability insurance policy to International Radio­graphy and Inspection Services (IRIS). IRIS was sued by third parties. General Accident refused to defend the claims on behalf of IRIS. IRIS commenced an action for a dec­laration that General Accident was obligated to defend.

The Alberta Court of Queen's Bench held that General Accident was obliged to defend IRIS, but declined to make any finding on the ultimate entitlement to indemnity. The judge directed that the law firm retained by General Accident in the declaration proceed­ings could represent IRIS in the liability actions, subject to IRIS's right to later apply for removal. No ruling was made respecting a claim by IRIS for defence expenses already incurred. General Accident appealed and IRIS cross-appealed.

The Alberta Court of Appeal dismissed the appeal, affirming that General Accident had an obligation to defend. The court dismissed the cross-appeal, stating that it was prema­ture to consider the issue of IRIS's ultimate right to indemnity and the issues respecting counsel and costs were best left for separate proceedings.

Insurance - Topic 725

Insurers - Duties - Duty to defend - IRIS hard­ness-tested steel fittings installed in Sun­cor's plant following a fire - Subse­quent readings taken by Suncor showed unac­ceptable hardness levels in the fittings which had to be remedied causing Suncor additional expense and delay in getting the plant on line - Suncor et al. claimed against IRIS - IRIS's insurer under a comprehensive general liability policy (General Accident) refused to defend - The Alberta Court of Appeal affirmed that General Accident was obliged to defend IRIS pursuant to the policy terms - The court noted that while there was no claim for physical injury to or destruction of tangible property, there was a claim that IRIS's breach of contract or negligent performance thereof caused the loss of use of Suncor's tangible property which had not been physically injured or destroyed.

Insurance - Topic 725

Insurers - Duties - Duty to defend - The Alberta Court of Appeal stated that "Cana­dian courts have adopted a general rule that the allegations made against the insured in the pleadings determine the nature of the claim and thus the existence of a duty to defend" - The court discussed the "pleadings rule" - See paragraphs 9 to 11.

Insurance - Topic 6878

Liability insurance - Business - Compre­hensive policy - Duty to defend - [See first Insurance - Topic 725 ].

Cases Noticed:

Nichols v. American Home Assurance Co. et al., [1990] 1 S.C.R. 801; 107 N.R. 321; 39 O.A.C. 63; 68 D.L.R.(4th) 321, refd to. [para. 8].

Bacon v. McBride (1984), 6 D.L.R.(4th) 96; 5 C.C.L.I. 146; [1984] I.L.R. ¶1-1776 (B.C.S.C.), refd to. [para. 9].

Opron Maritimes Construction Ltd. v. Canadian Indemnity Co. (1986), 73 N.B.R.(2d) 389; 184 A.P.R. 389; 19 C.C.L.I. 168; 21 C.L.R. 173; [1986] I.L.R. ¶1-2108 (C.A.), leave to appeal refused (1987), 76 N.R. 399; 76 N.B.R.(2d) 360; 192 A.P.R. 360; 21 C.C.L.T. xxxv (S.C.C.), refd to. [para. 9].

Cansulex Ltd. v. Reed Stenhouse Ltd. (1986), 18 C.C.L.I. 24; 70 B.C.L.R. 273 (S.C.), refd to. [para. 10].

Authors and Works Noticed:

Brown, Craig, and Menzies, Julio, Insur­ance Law in Canada (2nd Ed. 1991), generally [para. 15].

Hilliker, Liability Insurance Law in Canada (1991), pp. 62 to 67 [para. 10].

Counsel:

R.L. Duke, Q.C. and M. Pucylo, for the respondent/plaintiff;

J.W. Rose, Q.C., and H.L. Stout, for the appellant/defendant.

This appeal was heard on November 29, 1996, before Belzil, Côté and O'Leary, JJ.A., of the Alberta Court of Appeal. The follow­ing memorandum of judgment was delivered by the court on November 29, 1996.