The action of Canadian Universities Reciprocal Insurance Exchange (“CURIE”) against CGU Insurance Co. of Canada (“CGU”) seeking equitable contribution between insurers was dismissed, where the Court held that none of the parties found liable in the underlying action were entitled to coverage under the CGU policy

Canadian Universities Reciprocal Insurance Exchange v. CGU Insurance Co. of Canada, [2005] O.J. No. 3375, Ontario Superior Court of Justice

The underlying action involved injuries sustained by a student at the University of Windsor (the “University”) following a judo class conducted by the University of Windsor Judo Club (the “Club”). As a result of the injuries, the student (“Lam”) was rendered quadriplegic. Lam and his family initiated legal proceedings against the University, the Ontario Judo Black Belt Association carrying on business as Judo Ontario (“Judo Ontario”), supervisors of the class (“Temple” and “Hamel”) and others. In the trial on liability, the University, Hamel and Temple were each found one-third liable for Lam’s damages.

CURIE operates as a reciprocal insurer of universities in the province of Ontario and elsewhere in Canada and was the insurer of the University pursuant to a general liability policy. This policy also provided coverage to Temple and Hamel as additional insureds. CGU was responsible for insuring Judo Ontario and its member clubs. At the trial on liability, Judo Ontario was found to have no liability with respect to the damages of Lam. However, the policy issued to Judo Ontario provided coverage to individuals “participating in or training for a sanctioned sporting or social event of Judo Ontario” and to volunteers acting within the scope of duties assigned to them by Judo Ontario.

The claim advanced by CURIE was for equitable contribution among insurers. The principle of equitable contribution was confirmed by the Supreme Court of Canada in Family Insurance Corp. v. Lombard Canada Ltd. [2002] 2 S.C.R. 695, where the Court held, at para. 14:

It is a well-established principle of insurance law that where an insured holds more than one policy of insurance that covers the same risk, the insured may never recover more than the amount of the full loss but is entitled to select the policy under which to claim indemnity, subject to any conditions to the contrary. The selected insurer, in turn, is entitled to contribution from all other insurers who have covered the same risk. This doctrine of equitable contribution among insurers is founded on the general principle that parties under a coordinate liability to make good a loss must share that burden pro rata …

In this case, CGU acknowledged that its policy constituted primary insurance and that the CURIE policy was excess insurance. However, CGU disputed that Temple and Hamel were covered under the policy issued to Judo Ontario and/or its Member Clubs.

The Court reviewed the status of the Club and noted that it failed to register with Judo Ontario or pay the relevant fees for the relevant year. The Plaintiff argued that Judo Ontario did not provide written notice of default to the Club and it continued to be a member of Judo Ontario despite being in default. The Court did not accept that argument and held that the Club was not a “member club” of Judo Ontario for the purposes of the CGU policy.

Based on the finding of the Court with respect to the status of the Club, the Court was further able to find that neither Temple nor Hamel were “participating in or training for a sanctioned sporting or social event of Judo Ontario” at the time of Lam’s injuries nor acting as volunteers within the scope of duties assigned to them by Judo Ontario at the relevant time. On this basis, the Court concluded that neither Temple nor Hamel were entitled to coverage under the CGU policy.

In the result, the Plaintiff’s action was dismissed with costs.

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