In A.R.G. Construction Corp. v. Allstate Insurance Co., Mr. Justice Ferrier of the Ontario Superior Court has provided an up-to-date review of the law pertaining to duty to defend, particularly in the context of a CGL policy. The decision can be viewed at: http://www.canlii.org/on/cas/onsc/2004/2004onsc12488.html .
The case doesn’t break much new ground, but does contain a rather detailed summary of the law in the area, including reference to many of the major cases, including Alie v. Bertrand, Monenco v. Commonwealth and Lloyd’s v. Scalera.
There is an interesting discussion of the effect of “manipulative” pleadings (i.e., pleadings deliberately worded in such a way as to try to trigger coverage). Justice Ferrier said that although this was “improper and manipulative and is conduct which ought to be discouraged”, ultimately, a court would still have to examine the pleading in order to rule on the coverage issue.
He referred to the decision of the Court of Appeal in Cooper v. Farmer’s Mutual Insurance in May, 2002. There, the pleadings in the underlying action had purposely been manipulated to try to attract insurance coverage. (The original statement of claim had characterized the plaintiff as an employee of the defendant, but when the plaintiff’s solicitor realized that the defendant’s insurance policy contained an exclusion for injuries suffered by employees, a second statement of claim was issued, in which it was alleged that the plaintiff had been “hired or retained by the defendant “from time to time”.)
The Court of Appeal in Cooper held that for purposes of determining the duty to defend, the court below was required to consider the allegations in the second statement of claim and ought not to have considered the first pleading as part of a fact-finding exercise as to whether the plaintiff was or was not an employee.
The A.R.C. v. Allstate case is a further indication that pleadings that are obviously calculated to attract coverage will not deter courts from undertaking the usual type of analysis: a comparison of the pleading with the policy wording.