Hold your horses! In some cases, the Court may review pleadings in order to decide whether two actions arise out of related circumstances such that they will be considered one claim under a responding policy. However, if that cannot be done, the Court may decline to decide coverage until findings of fact have been made in the underlying litigation

Ontario Superior Court declines to issue a decision regarding whether two actions brought against a Chartered Professional Accountant arising out of accounting services provided in respect of the same business venture ought to be considered one claim under the wording of the responding insurance policy.  The Court was unable to decide whether the two actions arose from a “common set of circumstances” on review of the pleadings, and indicated the application ought not to proceed until findings of fact had been made in the underlying litigation.

Insurance law – Commercial general liability insurance – Professional negligence – Interpretation of policy; Practice – Underlying action.

Krandel v. CPA Professional Liability Plan Inc., 2026] O.J. No. 127, Ontario Superior Court of Justice, January 14, 2026, L.P. Merritt J.

The plaintiff in this action, Morris Krandel (the “Insured”), was a Chartered Professional Accountant who held multiple professional liability policies issued by the respondent, Continental Casualty Company (the “Insurer”) over several years. The Insured had a policy which covered the period of July 3, 2018 to July 3, 2019 (the “2018 Policy”) and, subsequently, a policy which covered the period of July 3, 2021 to July 3, 2022 (the “2021 Policy”). The 2018 Policy had a $1 million liability limit while the 2021 Policy had a $2 million liability limit.

The relevant wording in the 2018 Policy read as follows:

All demands or allegations arising from a common set of circumstances shall be considered a single claim, regardless of the number of insureds, the number of persons or organizations making demands or allegations, or whether all such demands are made concurrently.

Any such claim shall be subject to the limits of liability and deductible in effect at the time the circumstances were first reported… 

The Insured was named in two separate actions, both of which made allegations of negligence arising from accounting services rendered in respect of the same business venture. The first action was commenced by several plaintiffs in 2019 (the “First Action”), and the second action was commenced by one plaintiff in 2021 (the “Second Action”). The plaintiff in the Second Action had been business partners with one of the plaintiffs in the First Action.

The issue to be decided was whether there was a “common set of circumstances” between the First Action and the Second Action such that they would be considered a single claim under the 2018 Policy, and any indemnity owed to the Insured would be subject to the limits in that policy, or whether the First Action and Second Action would be considered separate claims covered separately under the 2018 Policy and the 2021 Policy, respectively.

The Court reviewed prior cases involving similar policy wording and circumstances. Where pleadings have revealed two claims that are “very different in nature and kind,” the Court has relied on the pleadings to determine whether there is a common set of circumstances. For example, the Court considered a prior case involving multiple pleadings alleging solicitor’s negligence in respect of advice given on mortgages of the same property. The pleadings revealed each claim pertained to a different period of time, related to a distinct mortgage with different financing terms and purposes, and that each client had given the solicitor separate instructions. Those claims were found not to be substantially related such that they were not subject to one liability limit.  However, if the pleadings do not provide sufficient information to allow the court to make that determination, an application for coverage under separate policies will be considered premature.

The Court found this case to fall within the latter category. The Court held it would need to make findings of fact based on the evidence in the case in order to make a coverage determination. As those facts may also be at issue in the underlying litigation, the Court concluded that the underlying litigation is the proper forum to make factual determinations regarding the circumstances giving rise to the claims, based on a full evidentiary record. On that basis, the Court declined to make a decision on the application.

This case was digested by Mollie Clark and edited by Steven W. Abramson of Harper Grey LLP.  If you would like to discuss this case further, please feel free to contact them directly at [email protected] or [email protected].