Boland v. Allianz Insurance Company of Canada (Ontario Court of Appeal)

A condominium corporation brought a claim against a former director for alleged wrongful acts.  The director then sought the protection of the corporation’s directors and officers liability insurance policy.  The lower court held that there was no coverage for the particular claim under the D&O Insurance Policy.  [See Condo Cases Across Canada, Part 15, August 2006.] 

The director appealed to the Ontario Court of Appeal, and was successful.  The Court of Appeal overturned the lower Court decision and held that the insurer has a duty to defend in this case.  The Court of Appeal’s reasons were as follows: 

• The insurer provided continuous coverage by means of a series of one-year policies.  In such cases, the “effective date of the policy” is the commencement of the very first policy in the series.  At that time (1994) the director did not have “knowledge of and could not reasonably foresee any circumstance that might result in a claim”.  Therefore, the director did not have knowledge of the potential claim before the effective date of the policy.
• “Although the force of the claim is for deliberate conduct, there is an alternative and independent claim that the appellant acted negligently”.  The “deliberate conduct” claim is not covered under the D&O policy.  The negligence claim may have lacked particulars.  Nevertheless, it was sufficient to trigger the insurer’s duty to defend.