Toronto-Dominion Bank, N.A. v. Lloyd’s Underwriters

Toronto-Dominion Bank, N.A. v. Lloyd’s Underwriters

The appeal was allowed and the partial summary judgment set aside because the motion judge erred in law and procedurally by (1) misapplying Rule 20 to grant judgment on an isolated element of a claim rather than on part of the claim in the statement of claim, (2) failing to interpret the insurance policy as a whole (including the professional liability section and all elements of the fidelity insuring clause), (3) adopting an unpleaded constructive trust theory without affording the parties a fair opportunity to address it, and (4) misconstruing the insurers' requested relief; consequently the matter must proceed to trial.

Citation
2017 ONCA 1011
Parties
Plaintiff/respondent: Toronto-Dominion Bank, N.A.; Defendants/appellants: Lloyd’s Underwriters and associated insurers (Antares, Catlin, Novae, Ace, Brit, Chaucer/Pembroke, Aspen, Great Lakes Reinsurance, Lexington, AIG group, Allied World, Arch, Axis, Chubb, Endurance, Houston Casualty, Liberty Mutual, Markel/Max Bermuda, XL, et al.)
Court
Court of Appeal for Ontario
Jurisdiction
Canada
Judgment Date
21 December 2017
Procedural Posture
Civil Insurance Coverage/contract / Appeal From Partial Summary Judgment; Order Set Aside; Action Directed to Proceed to Trial
Outcome
Appeal allowed; partial summary judgment set aside; action directed to proceed to trial; insurers awarded costs on partial indemnity scale fixed at $45,000 inclusive of disbursements and applicable taxes.
Legal Topics
Summary Judgment, Policy Interpretation, Fidelity Bond Coverage, Professional Liability Coverage, Constructive Trust, Knowing Receipt, Knowing Assistance, Procedural Fairness, Rule 20
Source Language
English
Insurance Law Contract Law Civil Procedure Trusts and Equity Summary Judgment Policy Interpretation Fidelity Bond Coverage Professional Liability Coverage +5 more

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Parties

Toronto-Dominion Bank, N.A.

Plaintiff/respondent

Lloyd’s Underwriters and associated insurers (Antares, Catlin, Novae, Ace, Brit, Chaucer/Pembroke, Aspen, Great Lakes Reinsurance, Lexington, AIG group, Allied World, Arch, Axis, Chubb, Endurance, Houston Casualty, Liberty Mutual, Markel/Max Bermuda, XL, et al.)

Defendants/appellants

Procedural Posture

Civil Insurance Coverage/contract / Appeal From Partial Summary Judgment; Order Set Aside; Action Directed to Proceed to Trial

Legal Issues

  1. 1 Whether the motion judge could properly grant partial summary judgment under Rule 20 on a single constituent element of a pleaded claim rather than on part of the claim itself
  2. 2 Proper interpretation of the fidelity coverage preamble term "direct financial loss" and related ownership clause in the context of the policy as a whole including the professional liability section
  3. 3 Whether the motion judge improperly adopted a constructive trust theory not pleaded or argued by the parties, creating procedural unfairness

Ratio Decidendi

The appeal was allowed and the partial summary judgment set aside because the motion judge erred in law and procedurally by (1) misapplying Rule 20 to grant judgment on an isolated element of a claim rather than on part of the claim in the statement of claim, (2) failing to interpret the insurance policy as a whole (including the professional liability section and all elements of the fidelity insuring clause), (3) adopting an unpleaded constructive trust theory without affording the parties a fair opportunity to address it, and (4) misconstruing the insurers' requested relief; consequently the matter must proceed to trial.

Court Disposition

Appeal allowed; partial summary judgment set aside; action directed to proceed to trial; insurers awarded costs on partial indemnity scale fixed at $45,000 inclusive of disbursements and applicable taxes.

Orders

  • Order granting partial summary judgment set aside
  • Action to proceed to trial subject to any further order below