Universal Sales Ltd. et al. v. Edinburgh Assurance Co. et al. 2012 FC 418
Insurance - Marine insurance - Duties of insurer
The marine insurance in issue was excess third party liability cover, split between various syndicates and companies. The plaintiffs (the “Irving Group”) sought indemnity from the defendant underwriters for sums paid to the Canadian government in settlement of an action for the cost of refloating the tank-barge Irving Whale and her cargo of Bunker C fuel oil, for the cost of defending that action, and for sue and labouring expenses allegedly incurred on the underwriters’ behalf. The underwriters denied liability. They took the position that the Irving Group were not liable, or, if they were, their liability was not covered by the policies. The limit on liability coverage was $5 million.
The Federal Court was satisfied that one or more of the Irving Group would have been found liable in public nuisance to an amount in excess of $5 million. The court determined that the principal amount of the liability of the excess underwriters was $4,946,001.86 ($4,508,501.86 in liability plus $437,500 in defence costs), on a several, but not joint, basis. The percentage liability of the three defendant companies which did not defend was 7.595% or $375, 648.84. The defending underwriters were liable for 92.405% or $4,570,353.02.