An insurance coverage firm can solely declare equitable contribution towards one other insurer, not towards an insured, Ontario’s Courtroom of Enchantment dominated Aug.27.
The authorized doctrine of ‘equitable contribution’ between insurers applies when two insurance coverage insurance policies are ‘irreconcilable,’ which means they each cowl the identical loss, and neither is clearly in extra to the opposite.
“When these circumstances happen, each insurers will probably be required to equally contribute to the insured’s defence and indemnification,” because the idea is defined on the web site of B.C. regulation agency Richards Buell Sutton.
However within the business insurance coverage declare, Live Nation Ontario Concerts GP, Inc. v. Aviva Insurance Company of Canada, one of many two insurers with insurance policies overlaying the identical factor, Starr Indemnity & Legal responsibility Firm, was not known as in as a celebration to the lawsuit. And so, Aviva Canada requested the court docket to search out the insureds — Stay Nation and Ontario Place — answerable for 50% of the defence prices.
“If equitable contribution is out there, that treatment ought to have been sought, and will presumably nonetheless be sought, towards Starr, however not towards the respondents [Live Nation and Ontario Place Corporation,] who usually are not an insurer,” the Courtroom of Enchantment discovered. “Equitable contribution can solely be sought from a concurrent insurer, not from the insured.”
Nevertheless, regardless of discovering Aviva Canada is 100% on the hook for Stay Nation and Ontario Place’s defence prices in a private harm negligence lawsuit, the Enchantment Courtroom dominated Aviva doesn’t must pay defence prices for the elements of the declare that its coverage doesn’t cowl.
Background
Tara Nimmo attended a live performance promoted by Stay Nation on the Budweiser Stage in Toronto in September 2016. Ontario Place and Stay Nation contracted NorthWest beneath a service settlement to supply “crowd administration providers” for all exhibits on the Budweiser Stage.
Aviva insured the service settlement beneath a CGL coverage, overlaying “bodily harm and property injury legal responsibility” ensuing from the failure of NorthWest’s providers “to satisfy the extent of efficiency, high quality, health or sturdiness warranted or represented” by NorthWest.
Stay Nation and Ontario Place have been listed as ‘further insureds’ on Aviva’s coverage.
On the night time of the Sept. 1 live performance, Nimmo “was allegedly injured when safety personnel eliminated an unruly patron,” the Enchantment Courtroom ruling states. “The allegations towards NorthWest have been that it was negligent in its provision of safety providers on the live performance and that Ms. Nimmo was injured when NorthWest safety personnel ejected ‘an inebriated and uncontrolled patron in a careless and negligent method.’”
Nimmo made two units of negligence allegations towards Stay Nation, Ontario Place and NorthWest.
In a single set of ‘security-related’ allegations, she claimed NorthWest was negligent in its offering safety providers on the live performance. She additionally claimed Stay Nation and Ontario Place “didn’t correctly practice, supervise, and instruct their safety personnel to deal correctly with unruly patrons and have been chargeable for NorthWest’s actions,” because the appellate court docket summarized the declare.
In an unrelated set of negligence allegations, Nimmo mentioned Stay Nation and Ontario Place weren’t compliant with the province’s liquor regulation rules. She claimed Stay Nation and Ontario Place served alcohol in extreme quantities and didn’t take steps to supply protected premises.
None of those allegations have been confirmed in court docket.
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What the courts discovered
Stay Nation and Ontario Place had an insurance coverage coverage with Starr that included CGL protection for “bodily harm and property injury legal responsibility.” Underneath the Starr coverage, Stay Nation and Ontario Place had a self-insured retention of $1 million relevant to “every wrongful act” that needed to be exhausted earlier than Starr’s responsibility to defend and pay defence prices was triggered.
Each Aviva’s and Starr’s insurance policies had ‘different insurance coverage’ clauses limiting the insurers’ obligations to pay defence prices in sure circumstances, “if different legitimate and collectible insurance coverage is out there to the insured for a loss coated.”
Within the decrease court docket, a decide decided Aviva’s coverage was the first coverage, since there was substantial overlap within the ‘security-related’ negligence allegations between the 2 insurance policies. And since Starr was not a celebration to the lawsuit, Aviva needs to be on the hook for 100% of the defence prices.
Aviva appealed, noting its coverage didn’t cowl negligence for the liquor licence allegations. And since Starr was not a celebration to the case, Aviva tried to say the insureds — Stay Nation and Ontario Place — needs to be 50% on the hook for equitable contribution.
The Ontario Courtroom of Enchantment denied Aviva was entitled to argue equitable contribution from the insureds. It famous neither occasion to the lawsuit – neither Stay Nation and Ontario Place, nor Aviva Canada — known as in Starr as a celebration of the lawsuit.
The court docket discovered Aviva was nonetheless entitled to name Starr in as a celebration to the lawsuit and declare equitable contribution from the insurer.
Nevertheless, the Enchantment Courtroom did agree with Aviva that the 2 units of negligent claims didn’t overlap – and that the liquor licence-related allegations weren’t coated by Aviva’s coverage.
So, whereas Aviva is 100% on the hook for the defence prices “for now,” the court docket dominated, as soon as the lawsuit was over, and the defence prices have been recognized, Aviva wouldn’t must pay for the prices associated to defending the liquor license allegations.
Function picture courtesy of iStock.com/Daniel Hanscom
