Security in Numbers: Who’s Liable for Coverage for One Incident with Two Policies?

The insurer was ordered to pay 100% of defence costs, subject to reallocation after trial or settlement, despite there being a mix of covered and uncovered claims. The insurer was also unable to seek equitable contribution from the insured as equitable contribution can only be sought from a concurrent insurer, not an insured. 

Insurance law – Commercial general liability insurance – Duty to defend – Equitable defences – Additional named insured – Insurer – Rights, duties and liabilities – Costs; Practice – Appeal

Live Nation Ontario Concerts GP, Inc. v. Aviva Insurance Co. of Canada, [2024] O.J. No. 3875, Ontario Court of Appeal, August 27, 2024, L.B. Roberts, J.C. George and P.J. Monahan JJ.A.

T.M. was injured at a concert when security personnel removed an unruly patron, leading to a lawsuit against Live Nation Ontario Concerts GP, Inc. and Ontario Place Corporation (“Live Nation”) and its contracted security provider, Northwest Protection Services (“Northwest”). Live Nation had a liability insurance policy with Starr Indemnity & Liability Company (“Starr”). Northwest had an insurance policy with Aviva Insurance Company of Canada and Aviva Canada Inc. (“Aviva”), which included commercial general liability coverage for “bodily injury and property damage liability” resulting from the failure of Northwest’s services “to meet the level of performance, quality, fitness or durability warranted or represented” by Northwest. Live Nation was an additional insured on Northwest’s policy. This entitled Live Nation to have Aviva “indemnify, defend and hold harmless [the respondents] from and against any and all claims or loss … arising from the acts or omissions of [Northwest].”

Live Nation sought an order that it had coverage on the Aviva policy that was triggered by T.M.’s claim. Aviva argued that its policy was an excess policy, and it only applied when the limits under the Starr policy were met. The application judge ordered Aviva to pay 100% of the past and future defence costs, subject to their right to apply to reapportion those costs at the end of the trial.

Aviva appealed, arguing the claims against it were mixed and that equitable contribution principles applied. The appellate court found that the application judge failed to recognize that the claims against Live Nation were mixed claims. Mixed claims are those which fall within and outside of the insurance policy. The claims against Live Nation included both security negligence claims and unrelated statutory negligence claims, but the application judge found that all pleaded claims amounted to security negligence claims. To determine whether the claims were covered, the application judge employed the Hanis test. The court of appeal found that while the application judge had applied the correct test, his mischaracterization of the pleadings led him to misapply the test. Ultimately, the court ruled that Aviva was only liable for the security negligence claims, but the court of appeal chose not to disturb the application judge’s order that Aviva must fund 100% of the defence costs initially, subject to Aviva’s right to seek a reallocation of the costs at the end of trial or on settlement.

The court of appeal held that the application judge did not err in concluding that this was not a case of equitable contribution between insurers. Aviva could not seek equitable contribution from Live Nation, as such claims can only be made against concurrent insurers, not the insured. Given that Starr was absent from these proceedings, the court did not make any determination as to whether, and to what extent, Aviva may be entitled to seek a reallocation of costs at the end of the trial or on settlement against Starr in this or any subsequent proceeding.

This case was digested by Aman Taggar and edited by Steven W. Abramson of Harper Grey LLP 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 feel free to contact them directly at [email protected] or [email protected].