ROYAL & SUN ALLIANCE INSURANCE COMPANY OF CANADA v CO-OPERATORS GENERAL INSURANCE COMPANY , 2023 ABKB 426
3.14: Originating application evidence (other than judicial review)
3.2: How to start an action
3.72: Consolidation or separation of claims and actions
6.11: Evidence at application hearings
This was an Originating Application by the Applicants, Royal & Sun Alliance Insurance Company of Canada (“RSA”) and APM Construction Services Inc (“APM”), seeking a declaration that the Respondent, Co-operators General Insurance Company (“Co-operators”), owed APM a duty to defend and owed RSA a duty to contribute to APM’s defence (the “Duty to Defend Application”). The underlying Action involved several separate claims arising out of a gas line explosion (the “Canmore Actions”). The Respondent cross-applied (the “Cross-Application”) to adjourn the Duty to Defend Application and to have it joined with the Canmore Actions pursuant to Rule 3.72. In addition, the Respondent sought consequential relief about the use of evidence from the Canmore Actions in the Duty to Defend Application.
By way of background, an entity named DCR provided a document entitled “Confirmation of Insurance” (“COI”) to APM, which appeared to have been issued by DCR’s insurer, Co-operators. On the face of the COI, APM was referenced as an “Additional Insured” in respect of DCR’s commercial general liability insurance policy it held from Co-operators. APM also had a commercial general liability insurance policy with RSA for the relevant period.
Marion J. first addressed the admissibility of evidence from the Canmore Actions that the Respondent sought to use in response to the Duty to Defend Application. Marion J. recognized that the Duty to Defend Application involved both an Originating Application and an Application within the Canmore Actions, and that the two processes would require different evidence. Citing Rules 3.14(1) and 6.11, Marion J. found the records produced in the Canmore Actions, which were exhibited in the Respondent’s Affidavit, could be used in relation to the Rule 3.72 Application, but only for the purposes of proving the records are authentic and were sent and received as indicated. Marion J. further found that the Respondent could not use the Part 5 Questioning transcripts under Rules 3.14 or 6.11.
With respect to whether the Duty to Defend Application could be determined summarily, Marion J. noted that Rule 3.2 directs that a Statement of Claim must be used to start an Action, unless “there is no substantial factual dispute”, among other factors. Further, Courts had significant discretion as to whether and how Originating Applications should proceed.
Marion J. noted that duty to defend Applications are often commenced by Originating Application as they typically do not contain factual disputes. However, where additional factors arise that make a summary determination more difficult, the Rules are not inflexible and the Court holds discretion to determine if the summary process is appropriate based on the circumstances of the case.
Marion J. determined that it was not appropriate to summarily grant the Duty to Defend Application based on the following: first, there was a factual dispute between the parties as to whether APM ever became an Additional Insured, or whether it remained an Additional Insured at the time of the explosion; second, the legal effect of the COI remained a genuine issue for Trial; third, there were no other factors that would support granting the Duty to Defend Application summarily. On the second point, Marion J. further explained that the cases involving COIs adding additional insureds were generally decided after lengthy Trials and held important precedential value in the construction insurance industry.
With respect to whether the Duty to Defend Application should be heard concurrently with the underlying Canmore Actions, Marion J. cited Rule 3.72 and some of the factors listed in Mikisew Cree First Nation v Canada, 1998 ABQB 675 that influence a Court’s discretion to consolidate Actions, and found that: (1) there were common disputes that would result in a significant overlap in the evidence and witnesses in the proceedings; (2) the determination of the Canmore Actions would have a direct and significant impact on some of the issues involved in the Duty to Defend Application; (3) there was no evidence of any prejudice to RSA or APM; and (4) there was no evidence of any prejudice to the other parties to the Canmore Actions.
In the result, Marion J. found it appropriate to join the Duty to Defend Application to the Canmore Actions and have it heard concurrently.View CanLII Details