Insurance law

• Pages: 22-25

Page 22

During the summer of 1995, Cameco Corporation was digging a gold mine in Kyrgyzstan. In October, a tragic helicopter crash killed ten Canadian workers, nine of them having been residents of Saskatchewan. A procedural dispute soon came up among Cameco's three insurers: Global Aerospace, Inc. (Global), Insurance Company of the State of Pennsylvania (ICSOP) and American Home Assurance Company (AHAC). It dealt mainly with Global's efforts to obtain equitable contribution from the other two U.S. insurers to help with the costs of the defense and the settlement of liability claims against Cameco paid out by Global. Both ICSOP and AHAC denied any legal duty to do so.

In February, 1999, Cameco filed suit in the Saskatchewan courts against ICSOP and AHAC (hereafter, "the Cameco action"); the suit sought declarations that these insurers had a duty to defend the claims of the employees' estates and to indemnify Cameco in relation to any liability arising out of the claims. ICSOP filed a third party claim against Global in this action claiming contribution to the payment of any damages, settlement or costs incurred should it be found liable to Cameco. The Cameco action then continued to move forward through discovery. During this time, Global and Cameco pursued settlements on behalf of Cameco in relation to the claims of the deceased employees' estates. As of February 2005, these parties had settled their claims and Global had incurred a total cost of about $6,411,000 in defending and settling these actions. This constituted a full indemnity for Cameco in relation to these claims. Attempts at discussions and mediation among global, ICSOP and AHAC as to sharing this loss by way of equitable contribution ultimately failed.

At this point Global's then counsel advised it that The Limitations Act, barred any formal action for equitable contribution as against ICSOP and AHAC. Accordingly, in March, 2007, Global unsuccessfully applied to the Court of Queen's Bench for an order to amend the statement of claim in the Cameco action to add itself as a plaintiff and to claim payment in accordance with the policies of insurance directly from ICSOP and AHAC to Global by way of contribution to the costs of defence and indemnity paid by Global on behalf of Cameco. The judge ruled, however, that the Rules do not allow a party to amend the pleadings of another party.

All parties were at this time, however, under the impression that the Limitations Act barred Global from directly bringing an action for equitable contribution on its own behalf. Nevertheless, the judge held that the same transaction was involved and the parties would suffer no prejudice so he allowed the proposed amendments to the Cameco actions.

In April 2008, however, the Saskatchewan Court of Appeal overturned that ruling. The majority concluded that § 20 did not permit amendments so sweeping that they would, in effect, transform a contract claim by Cameco against its...