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.