The Alberta Court of Queen's Bench recently considered whether Intact was required to defend an Insured who was being sued for breaching a contract.

The Court decided that there was "at least a mere possibility" that the claim against the Insured would fall within coverage, therefore Intact was required to defend the claim.

Citation for CanLII is Creative Door Services Ltd. v AXA Pacific Insurance Co., 2017 ABQB 599.


The Insured company manufactured and installed overhead doors.  They were insured by a Commercial General Liability (CGL) Policy from AXA Pacific (now Intact).  The Insured was contracted to supply and install an overhead door by AltaSteel.

The Insured hired a subcontractor to install this door.  The subcontractor was incorporated, but had only the owner as its sole employee.  The subcontractor did not have WCB coverage and the Insured did not seek a deeming order to have the subcontracted installer declared a worker under the Workers' Compensation Act.

The subcontracted installer was electrocuted while installing the door at AltaSteel's facility.  He sued AltaSteel alleging negligence and occupier's liability.  AltaSteel defended and issued a Third Party claim against the Insured for breaching its contract with AltaSteel by subcontracting the installation and failing to ensure the subcontracted installer had WCB coverage.

The Insured submitted the Third Party claim to Intact, who denied coverage.  Intact argued that the claims being made against the Insured were solely contractual.  The Policy at issue was a CGL, which provided coverage for bodily injury, not contractual claims.  Therefore, there was no possibility the claim would be paid by the CGL Policy.  Intact believed that there was no duty to defend because there was no duty to indemnify.

The Court disagreed with Intact.  The Insured became a party to the Action between the subcontracted installer and AltaSteel when the Third Party claim was issued.  The Insured could "become obligated to pay by reason of the liability imposed by law upon it or assumed by it under contract for compensatory damages because of bodily injury or personal injury."  There was "at least a mere possibility that the claim falls within coverage," triggering Intact's duty to defend and indemnify the Insured for this claim.

The Policy language is set out in the decision, if you are interested.