Published In: Insurance Law Newsletter – 11.Aug.20 August 11, 2020

Case Summary: The court of appeal instructed defence counsel to follow protocols and safeguards when acting for two primary insurers

In circumstances with two primary insurers where both insurers have a concurrent duty to defend, they may be required to pay an equal share of the defence costs until final determination, and may both participate in the defence.

Insurance law – Commercial general liability insurance – Multiple policies – Excess liability – Additional named insured – Conflict of interest between insurer and insured – Appointment and instruction of counsel – Practice – Appeals

Markham (City) v. AIG Insurance Co. of Canada, [2020] O.J. No. 1369, 2020 ONCA 239, Ontario Court of Appeal, March 31, 2020, D.H. Doherty, D.M. Brown and J.A. Thorburn JJ.A.

The City of Markham (the “City”) and Hockey Canada were sued by a boy injured by a puck at the City’s ice rink.

The City had a commercial general liability policy issued by Lloyd’s that provided coverage for all claims of bodily injury or personal injury caused by an occurrence during the policy period. The Lloyd’s policy stated that any other insurance policy “shall apply only as excess”. The City was also an additional insured to Hockey Canada’s commercial general liability policy issued by AIG. The AIG policy covered the City for liability in respect of bodily injury arising from the operations of Hockey Canada and provided that it was “primary insurance”.

The motion judge determined that only AIG had a duty to defend the City. AIG appealed, arguing that Lloyd’s had a concurrent duty to defend and had to pay an equitable share of the City’s defence costs.

The Court of Appeal allowed AIG’s appeal, finding that both AIG and Lloyd’s had a duty to defend. AIG was the primary insurer for claims resulting in bodily injury or property damage arising from the operations of Hockey Canada up to its policy limit because the AIG policy did not have an excess provision. For claims that fall outside the scope of the AIG policy and inside the scope of the Lloyd’s policy, Lloyd’s owes a duty to defend the City. The Court found that in circumstances with two primary insurers, they had a concurrent duty to defend and pay equal shares of the defence costs pending final disposition of the action and the final determination of the allocation of defence costs. With respect to defence counsel, there was no reasonable apprehension of conflict of interest. The fact that an insurer has reserved its rights on coverage does not cause the insurer to lose its right to control the defence and appoint counsel. In order to minimize conflicts of interest, the court instructed certain protocols and safeguards to be in place, such as that defence counsel have no discussion about the case with coverage counsel and must provide identical and concurrent reports to the City and both insurers regarding the defence of the main action.

This case was digested by Erika L. Decker, and first published in the LexisNexis® Harper Grey Insurance Law Netletter and the Harper Grey Insurance Law Newsletter. If you would like to discuss this case further, please contact Erika L. Decker at