Policies and insurance contracts - Duty to defend - Settlement of action - Limitation of actions - Running of limitation period - Defence costs

Georgian Downs Ltd. v. State Farm Fire and Casualty Co.

An applicant sought an order that the respondent indemnify it for defence costs incurred in defending a slip and fall claim. The application was granted.

[2013] O.J. No. 1719

2013 ONSC 2110

Ontario Superior Court of Justice

G.M. Mulligan J.

April 15, 2013

The applicant, Georgian Downs, employed North-Gate to provide snow removal services at its premises. It required North-Gate to have insurance, and North-Gate obtained insurance from the respondent, State Farm.

Georgian Downs sought an order requiring State Farm to pay all defence costs that Georgian Downs incurred in defending claim against Georgian Downs and North-Gate for a slip and fall which occurred on December 22, 2008. On September 28, 2012 State Farm settled the underlying action for $65,503.50 based on North-Gate's admission of liability. Georgian Downs did not contribute any monies to the settlement.

Georgian Downs asserted that the duty to defend, and now the duty to indemnify, was triggered because the crux of the claim was North-Gate's negligence in failing to maintain an ice-free parking lot, even though multiple theories were pleaded by the plaintiff.

State Farm opposed the application and argued that Georgian Downs sought relief outside of the applicable limitation period. It was also argued that State Farm had no general duty to defend claims against Georgian Downs which fell outside the coverage provided for its insured, North-Gate. Alternatively, State Farm submitted that the costs claimed should be apportioned given that there were claims against Georgian Downs that were outside the scope of coverage for its insured for which it ought not to be responsible.

The Court found that when there is an absence of a clear and unequivocal denial of a duty to defend or a duty to indemnify, a limitation period commences on the day of judgment, or settlement. The application was brought within months of the settlement and therefore it was within the limitation period.The Court held that the true nature of the claim was North-Gate's negligence in failing to maintain an ice free parking lot. This was borne out by the examinations for discovery and ultimately the settlement arrived at by North-Gate's insurer. In the circumstances, the defence costs should not be apportioned between the owner and contractor. It was ordered that State Farm indemnify Georgian Downs for its defence costs.