Deciphering the Duty to Defend

December 5, 2017 | Emily C. Durst

The Court of Appeal for Ontario recently considered an Ontario Superior Court judge’s decision regarding an insurer’s duty to defend in the context of a maintenance contract.

In August 2013, a worker employed by the landscaping company Lafleur de la Capitale Inc. (“Lafleur”) died while working at the National Art Gallery of Canada (the “Gallery”) in Ottawa. An investigation determined the worker was walking up the entrance ramp of the underground parking facility when a car approached the ramp. The worker stepped to the side to avoid the vehicle and fell over the ledge. The worker’s family members brought claims against the Gallery and Lafleur pursuant to the Family Law Act.

Lafleur added the Gallery as an additional named insured on its CGL policy issued by Intact. The Gallery brought a “duty to defend” Application seeking a defence to the lawsuits from Intact under the Lafleur policy.  The Gallery relied on the terms of the maintenance contract that was in place at the relevant time as well as the provisions of the CGL policy.

The Application judge ruled that the allegations made in the lawsuits “could relate to issues of maintenance or of measures that should have been taken in the cause of maintenance.” Intact was consequently required to provide a defence to the Gallery pursuant to the CGL policy.

On appeal, the Court set aside the decision and ruled that the Application be re-heard by another judge. The Court further found that a more detailed analysis of the Intact policy, the pleadings and the maintenance contract was required before arriving at any conclusions regarding Intact’s duty to defend the Gallery. A bare statement that the duty to defend was engaged based on allegations related to maintenance is insufficient.

In the aftermath of recent “duty to defend” decisions, there remains some question about how far an insurer’s duty to defend will reach, particularly in the case of maintenance contracts. The fact that the deceased in this case was in the course of employment at the time of his death will likely be a significant consideration in whether Intact has a duty to defend the Gallery. In the very least, however, the Court of Appeal’s reasoning suggests that pleaded allegations that could possibly relate to maintenance activities may not be sufficient to trigger a duty to defend.




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