Insured sought indemnification under policy for settled claims
The Ontario Court of Appeal has dismissed an appeal against an Ontario Superior Court judgment that ordered an insurer to indemnify the insured land surveyor company for $3.2 million for the settlement of one of two claims it faced.
As a member in good standing of the Association of Ontario Land Surveyors at the relevant time, the applicant insured had to maintain professional liability insurance under a master policy issued by the respondent insurer.
The policy was in effect during the July 1, 2021, to July 1, 2022 policy period (PP1) and during the July 1, 2022, to July 2, 2023 policy period (PP2). For each period, the policy offered a $5-million per-claim limit and a $6-million aggregate limit.
From Lloyd’s Underwriters, the insured obtained professional liability insurance coverage for its engineering work. The Lloyd’s coverage explicitly excluded claims arising from land surveying activities.
In January 2022, Earth Boring Co. Limited engaged the insured to provide surveying services for a wastewater utilities installation project in Halton Hills. On June 9, 2022, Earth Boring notified the insured of its intent to pursue a claim against it for deficient work.
On July 12, 2022, the insured reported this claim to the insurer, which retained an independent insurance adjuster to investigate.
On July 27, 2022, Earth Boring notified the insured that it planned to pursue another claim against it for deficient work on a project in the Port Lands area of Toronto.
The insured and Earth Boring settled both the Port Lands and Halton Hills claims. On the insured’s behalf, the insurer paid Earth Boring $5 million for the Port Lands claim under the policy for PP2. The insurer had yet to pay out money for the Halton Hills claim.
The insured applied for indemnification under the respondent insurer’s policy. The insured specifically sought a $3.2 million settlement payment to settle the Halton Hills claim.
Insured’s application succeeds
On Aug. 15, 2025, in Monteith & Sutherland v Novex Insurance, 2025 ONSC 4697, Justice Charles Chang of the Ontario Superior Court of Justice ordered the insurer to indemnify the insured for the full $3.2 million settlement amount for the Halton Hills claim.
The court also directed the insurer to pay partial indemnity application costs of $75,000, all inclusive.
First, the court decided that the subject matter of the Halton Hills claim fell within the coverage of the insurer’s professional liability insurance policy. Upon giving the policy’s indemnity language its plain and ordinary meaning, the court found no ambiguity.
The court interpreted the indemnity language to mean that the insurer should indemnify the insured for any claims made against it in the course of its provision of professional land surveying services or for its failure to render the services it should have.
Here, the court noted that Earth Boring claimed that the insured failed to correctly measure and mark drilling locations for the safe drilling of dewatering holes.
Regarding the Lloyd’s coverage, the court found it irrelevant to the insurer’s duty to indemnify the insured for the Halton Hills claim. The court pointed out that the Lloyd’s coverage expressly excluded claims arising from land surveyor activities, which were the subject matter of the Halton Hills claim.
Second, the court determined that the Halton Hills claim fell within PP1, not PP2. Upon giving the policy’s relevant words their plain and ordinary meaning, the court again saw no ambiguity.
The court interpreted the indemnity language to mean that the insurer should indemnify the insured for any applicable claims for which the insured and/or the insurer received notice within a policy period.
Here, the court noted that Earth Boring notified the insured of the Halton Hills claim on June 9, 2022, while the insured notified the insurer of the claim on July 12, 2022. The court ruled that the claim was “first presented” on the earlier of those two dates, which fell within PP1.
Regarding the policy’s curative provision, the court interpreted it to apply to any scenario in which the insured failed to notify the insurer of a claim in either or both of the prescribed timeframes, specifically during the applicable policy period and/or as soon as practicable.
According to the court, if the parties wanted the curative provision to apply solely to a failure to give notice of a claim as soon as practicable, they would have phrased the provision in a manner that reflected that intention.
Third, the court concluded that the insured did not substantially breach its duty to cooperate, such that it adequately vitiated the insurer’s obligation to indemnify it for the Halton Hills claim.
In reaching this conclusion, the court considered the insurer’s participation in the defence of the Halton Hills claim, its failure to request or demand from the insured what it wanted or needed for the defence, and the absence of any evidence of any consequent prejudice to the insurer.
The court pointed out that the insured did not prevent or impede the independent adjuster’s investigation.
The insurer appealed against the Ontario Superior Court judgment.
Insurer’s appeal denied
Last June 3, in Monteith & Sutherland Limited v. Novex Insurance Company, 2026 ONCA 384, the Court of Appeal for Ontario dismissed the appeal and found the insured entitled to all-inclusive costs of $79,100, as agreed.
First, the appeal court found no error in the Superior Court judge’s decision to proceed by application. The appeal court noted that the parties agreed to proceed via application because they did not dispute the underlying facts.
Second, the appeal court saw no error in the judge’s determination that the insured did not breach its duty to cooperate. The appeal court said the judge was entitled to find no substantial breach of the duty.
Finally, the appeal court found no error in the judge’s interpretation of the curative provision to permit the giving of notice in the next policy period, in the absence of any prejudice to the insurer.
