In 2012, the Ontario Ministry of the Environment issued a clean-up order against 13 former directors of Northstar Aerospace Canada. Northstar was bankrupt and the directors had to pay millions because the company’s D&O policy excluded pollution. A recent article by Greg Meckbach in Canadian Underwriter examines the effect that order has had on the commercial insurance industry in Canada. Meckbach reached out to Jennifer Fairfax, an Osler partner practising in the firm’s Litigation and Regulatory, Environmental, Aboriginal and Land Groups, for comment.
The Northstar case “was a bit of a wake-up call in the insurance industry,” according to Jennifer. “We have been starting to see D&O liability policies that cover environmental situations.” She further suggests that brokers and clients “need to carefully look at the wording” on these policies as many exclude fines and penalties. In addition, she explains, some include defence costs while others don’t.
According to provincial legislation, the Ministry of the Environment can issue an order to pay to clean up pollution to anyone with “management or control” of a piece of land. In ordering the Northstar directors to foot the bill for the clean-up, Jennifer says that the ministry “interpreted ‘management or control’ quite broadly.”
Learn more by reading Greg Meckbach’s full article “The ‘wake-up call’ for brokers placing D&O liability” from October 2, 2018.