Aquatech Logistics et al. v. Lombard Insurance et al., 2015 ONSC 5858 (CanLII)

Released September 23, 2015 | Full Decision

Justice Dunphy ordered that three insurance companies had the duty to defend. The Application was brought by Aquatech and one of its insurers, Aviva (provider of the automobile policy), against two of Aquatech’s liability insurers:

  • Lombard – provided a $3 million Comprehensive General Liability Policy;
  • ACE INA – provided a $1 million Pollution Incident Liability Insurance

The purpose of the Application was to compel the insurers to share in the costs of defending two claims arising from a 2012 incident at a public pool in St. Catharines. A delivery of chlorine was accidentally poured into a container of muriatic acid. The chemical reaction quickly produced a poisonous cloud of potentially deadly chlorine gas which infiltrated the public area of the pool and the surrounding area.

Two law suits arose, naming the company that delivered the chlorine (Aquatech Logistics Inc.) and the Pool operator (the City of St. Catharines) as defendants. None of the claims have yet been proven.

Relying on the Court of Appeal in McLean(Litigation Guardian of) v. Jorgenson, Dunphy J. noted the duty to defend is “triggered by the mere possibility that the claim could succeed.” Dunphy J concluded that each of Lombard and ACE INA provided Acquatech with insurance polies that may possibly be required to indemnify the claims of the plaintiffs and both policies contained obligations to defend.

Aviva also sought to establish a claim of equitable contribution among the insurers. All three policies were in force and legal. None contained any clauses excluding contribution to defence costs. All covered the same peril. The fact that Aviva “blinked” in this case by honouring its good faith obligations to its client ought not disentitle it to the remedy of equitable contribution.

Dunphy J held the principles of equitable contribution required that each insurer pay a pro-rata (one third) share. Aviva, having paid 100% of the defence costs to date, was to be reimbursed proportionally from the other two insurers. Going forward, defence costs would be shared equally.

Read the full decision on CanLII

Sue Noorloos
Written by

Sue joined Legate and Associates in 2011 after working in a general litigation practice. Sue works closely with the firm’s accident benefit department and her client’s rehabilitation teams to ensure that insurance benefits are provided when required and disputes are addressed promptly.

Sue has a love for music and is the choir director at Knox-St. Andrews Church. She is involved with Courthouse Rocks – a fundraiser for London Lawyers Feed the Hungry. She was the former secretary of the Middlesex Law Association. Her community volunteer activities have included performing/accompanying at community events, sitting on school council, coaching soccer, and judging moots at Western University and local high schools. She resides on a working farm and is involved with the local agricultural community. In addition to the practice of law, Sue is a “green thumb”, a sought after local performer and a busy Dance Mom.