No equitable contribution in personal injury case with two insurers: Ontario Superior Court

Event staff allegedly struck a concertgoer while removing an unruly patron

No equitable contribution in personal injury case with two insurers: Ontario Superior Court

The Ontario Superior Court of Justice has refused to apply the principle of equitable contribution in a recent personal injury case involving two insurers.

In Live Nation v. Aviva, 2023 ONSC 2284, Live Nation Ontario Concerts GP Inc. operates the Budweiser Stage at Ontario Place in Toronto. The stage hosted a concert in September 2016. Live Nation had contracted security for the concert to Northwest Protection Services LTD (NWP). NWP personnel allegedly injured a concertgoer while removing an unruly patron during the show. The injured concertgoer, Tara Nimmo, sued Live Nation, NWP, and others for the incident. The essence of the claim relates to the NWP security personnel's alleged act of striking Nimmo while removing the unruly patron.

The contract between Live Nation and NWP required NWP to have liability insurance, in which Live Nation was named as an additional insured. NWP contracted a commercial general liability insurance policy with Aviva Insurance Co. of Canada and Aviva Canada Inc. The Ontario Superior Court acknowledged that Live Nation was named as an additional insured under the Aviva policy, protecting Live Nation against liability arising out of NWP's conduct under the Live Nation security contract. The court further noted that since Live Nation is an additional insured under the Aviva policy, they are entitled to defence for Nimmo's claim.

Equitable contribution

Aviva argued that it is responsible for only 50 percent of Live Nation's defence costs because it allegedly had its insurance policy with Starr Indemnity and Liability Company, which Aviva asserted should also provide coverage.

Starr argued that its policy "is excess over any other insurance whether primary, excess, contingent or on any other basis." As a result, the Starr policy would only kick in once the Aviva policy has been exhausted.

Aviva argued that its policy has a similar provision. Aviva suggested that when two policies compete as excess, the concept of equitable contribution requires both policies to share the risk equally until the lower policy is exhausted. At that point, the policy with the higher limit will be liable for any remaining amounts up to the limit of the higher policy. However, the court refused to accept this argument since both the language of the Aviva policy and the commercial practice of adding parties as additional insureds contradict this argument.

Additional insured

The court reviewed the Aviva policy and found that if NWP was added as an additional insured in another policy, then Aviva's policy would be considered excess to that policy. However, NWP was not added as an additional insured to the Starr policy. The contract between Live Nation and NWP did not require Live Nation to add NWP as an additional insured to their insurance policy. Instead, it needed NWP to add Live Nation as an additional insured to NWP's policy. Therefore, the Aviva policy is not considered excess over the other policy.

The court explained in most cases, contracts that call for one party to be added as an additional insured to the other party's insurance do so because the additional insured is retaining the insured to do work which has the potential to create liability for the additional insured. The court found that Live Nation hired NWP to carry out security work, potentially creating liability. The court further said that NWP has the most control over how it carries out its operations and whether it carries out its operations in a manner that reduces the risk of liability. Live Nation has little if any, control over that risk. As a result, the court said it was commercially sensible for NWP to assume that risk and to protect Live Nation from the risks arising out of NWP's operations, just as NWP protects itself from those risks by carrying commercial general liability insurance.

The court said that if NWP has been named as an additional insured under the policy of another, it is because NWP wanted to shift risk from itself to the other party with whom it was contracting.

The court further said that Aviva knew, or it ought to have known, that NWP's clients would demand insurance and indemnification from NWP. Adopting principles of equitable contribution in this situation would relieve Aviva of the contractual bargain it made with NWP and would not be consistent with the commercial concept underlying the inclusion of additional insureds in commercial general liability policies.

The court noted that Nimmo's claim made allegations that went beyond the strict conduct of NWP, although it was clear that the claim was based on the allegation that she was stuck by NWP personnel who were removing an unruly patron. In those circumstances, the court said it would be most appropriate to require Aviva to pay 100 percent of past and future defence costs, subject to Aviva's right to apply to re-apportion those costs at the end of a trial of settlement.

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