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May 2015

Case Summary

Carneiro et al and Regional Municipality of Durham et al and Zurich Insurance Company Ltd., 2015 ONSC 2427

Van Krkachovski
Van Krkachovski,

On April 15, 2015 Justice Lemon of the Ontario Superior Court of Justice released an important interlocutory decision regarding the defence and indemnification of additional insureds in Comprehensive General Liability policies. A motion was brought forward in this matter by the Regional Municipality of Durham (a defendant) seeking an order that Zurich Insurance Company Ltd. (a third party) defend Durham against the claims alleged by the plaintiffs. As counsel for Zurich, McCague Borlack's very own Van Krkachovski successfully defended this motion, absolving Zurich of its duty to indemnify Durham.

This matter arose out of a tragic motor vehicle accident that occurred in the Region of Durham during a long winter storm. Durham contracted out the winter maintenance of its roads to Miller Maintenance Ltd. with the requirement that Miller obtain a Comprehensive General Liability (CGL) policy of insurance for public liability and property damage naming Durham as an additional insured. Pursuant to the contract however, the CGL only insured Durham "in respect of all operations performed by or on behalf of Miller" and did not include damages caused by the negligence of Durham or its employees.

The main issue in this motion was whether Zurich was contractually obligated to indemnify Durham for the claims alleged by the plaintiffs.


The main issue in this motion was whether Zurich was contractually obligated to indemnify Durham for the claims alleged by the plaintiffs. The fact that the plaintiffs alleged separate claims of negligence against Durham as against Miller, however, meant that the solution to this issue was not immediately obvious.


Durham submitted that the true nature of the plaintiffs’ claims allege a failure on the part of Durham to remove snow, which goes to the essence of Durham’s contract with Miller. Additionally, it claimed that the allegations of negligence against it are so intertwined with those against Miller that they are impossible to distinguish.

Conversely, MB’s Van Krkachovski argued on behalf of Zurich that the plaintiffs’ allegations against Durham do not relate to Miller’s operations but rather point to particulars such as road design and failure to inspect or close the road, thus falling outside the scope of the insurance policy. To reinforce his point that Durham is not covered by the policy, Mr. Krkachovski pointed to the supervisory role that Durham maintained over Miller’s performance and the fact that the agreement to indemnify Durham did not apply to the negligence of their employees.


J. Lemon did not agree with Durham that the true nature of the pleadings could simply be attributed to the essence of the contract. In fact, J. Lemon did not think the pleadings were even determinable at the current stage of the proceedings.

Because some of the causes of action pre-dated Miller’s involvement with Durham, J. Lemon concluded that they could not comprise that for which Zurich had insured Miller and therefore constituted entirely independent causes of action. Additionally, Van Krkachovski submitted that if the issues are as clear as Durham suggests and Miller were found liable but Durham was not, then Zurich would be required to indemnify Durham for their defence costs anyway meaning they would have their protection in the end.

In light of the foregoing, J. Lemon concluded that Zurich should only be required to defend Durham with respect to the specific claims as insured by Miller. Therefore, despite being named as an additional insured in their policy, Zurich is not required to indemnify Durham for its defence costs at the current stage of proceedings.


This recent decision demonstrates MB’s nuanced and sophisticated comprehension of "defend and indemnify" clauses in insurance contracts. Our extensive experience in Insurance Defence gives us a marked advantage over our opponents and significantly benefits our clients. As a result of this landmark decision, insurers can avoid the onerous obligation of indemnifying additional insured parties where the allegations are distinct from that for which it is insured.

For the full decision see 2015 ONSC 2427.


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