Nichols v. American Home Assurance Co.

Nichols v. American Home Assurance Co.

The defence clause is confined to suits alleging acts or omissions and seeking damages which are or may be payable under the policy; where the pleadings allege only fraud excluded by the policy, there is no possibility of payable damages and therefore no duty to defend.

Citation
[1990] 1 SCR 801
Parties
Appellant Insurer: American Home Assurance Co.; Appellant Law Society: The Law Society of Upper Canada; Respondent Insured: Alan John Nichols
Court
Supreme Court of Canada
Jurisdiction
Canada
Judgment Date
12 April 1990
Procedural Posture
Appeal Insurance Coverage (duty to Defend) / Appeal to the Supreme Court of Canada From the Ontario Court of Appeal (final Decision)
Outcome
Appeal allowed; respondent's application dismissed.
Legal Topics
Duty to Defend, Policy Exclusions, Construction of Insurance Contracts, Pleadings Versus Facts
Source Language
English
Insurance Law Contract Law Civil Procedure Duty to Defend Policy Exclusions Construction of Insurance Contracts Pleadings Versus Facts

Case Brief

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Parties

American Home Assurance Co.

Appellant Insurer

The Law Society of Upper Canada

Appellant Law Society

Alan John Nichols

Respondent Insured

Procedural Posture

Appeal Insurance Coverage (duty to Defend) / Appeal to the Supreme Court of Canada From the Ontario Court of Appeal (final Decision)

Legal Issues

  1. 1 Whether insurer had a duty to defend where pleadings alleged fraud excluded by the policy
  2. 2 Whether the duty to defend is governed by the pleadings or by facts established at trial
  3. 3 How exclusion clauses interact with defence and indemnity provisions

Ratio Decidendi

The defence clause is confined to suits alleging acts or omissions and seeking damages which are or may be payable under the policy; where the pleadings allege only fraud excluded by the policy, there is no possibility of payable damages and therefore no duty to defend.

Court Disposition

Appeal allowed; respondent's application dismissed.

Orders

  • Appeal allowed
  • Respondent's application dismissed