Cyber Insurance and D&O Liability

Introduction

In the past decade, there have been several reports of cybersecurity attacks and data breaches to large corporations.1 In many cases, those affected by the breach want to hold the directors and officers accountable, as they feel the corporation failed to implement the proper security measures to prevent a breach from happening or did not effectively handle the aftermath of the breach. However, directors and officers generally enjoy limited personal liability subject to a few exceptions.2 Nevertheless, as more specific guidance emerges for directors and officers handling cybersecurity issues, the scope of this liability may widen.3 Thus, directors and officers should not take comfort in the substantial barriers that prevent them from being held liable for issues relating to the organization.

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Court dismisses statutory misrepresentation claim against credit union board in landmark decision

For the first time, the Ontario Superior Court of Justice released a decision that considered issues of statutory misrepresentation in an offering statement under the Credit Unions and Caisses Populaires Act, 1994[1] (Act). Polla v. Croatian (Toronto) Credit Union also provides extensive guidance on issues of directors’ and officers’ liability more generally. There is very limited jurisprudence in this area, and this landmark decision is expected to provide valuable guidance to boards and insurers on risk prevention. This insight provides a high-level overview of the decision.

Facts

The plaintiff, Ferdinando Polla (Polla), invested CA1 $5 million in the Croatian Credit Union (CCU) after the struggling credit union filed an offering statement in order to raise funds.

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Apportionment of liability under the workers’ compensation scheme in Alberta

McIver v. McIntyre, 2018 ABCA 151 examined the apportionment of liability for damages between multiple defendants where at least one of them is statutorily immune from liability.

The facts

The Defendant, Carlyle McIntyre (McIntyre), took his vehicle into Calgary Propane and Automotive (Calgary Propane) for repairs. A Calgary Propane employee, Lewis Morgan (Morgan), took the vehicle out for a test drive and collided with a vehicle driven by Brent McIver (McIver), causing McIver injuries. Both Morgan and McIver were driving in the course of their employment, but at trial, Morgan’s negligence was found to have caused the collision.

McIver obtained benefits from the Workers’ Compensation scheme under the Alberta Workers’ Compensation Act, RSA 2000, c W-15 (WCA), and the Workers’ Compensation Board (“WCB”) sued McIntyre on the basis that McIntyre was vicariously liable for McIver’s loss as owner of the vehicle under s.

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Liability pitfalls and defences for Directors and Officers under federal and provincial cannabis legislation

Introduction

On October 17, 2018, the lion’s share of the federal Cannabis Act1 and the Ontario Cannabis Act20172 took legal effect, marking the legalization of non-medical cannabis across Canada, within defined limits. Directors and officers of federal and provincial corporations in the legal cannabis sector now operate in a new and dynamic regulatory climate.

As with any regulated industry, directors and officers should apprise themselves of the legal pitfalls in the post-legalization world, and liability insurers should prepare carefully for the potential risks that might shadow the cannabis market in its early days.

At a minimum, liability insurers should consider (a) new offences to which directors and officers are exposed, (b) what procedures are in place with respect to those offences, (c) what penalties might a director or officer be liable to pay, and (d) what defences are available, if any.

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What’s in a name? When is an “unnamed insured” entitled to insurance proceeds?

Is it possible for a party not named in an insurance policy to be entitled to insurance proceeds under that policy? In short, it is. Parties who are not a “named insured” under an insurance policy can be eligible to receive insurance proceeds directly as a replacement for lost property that was covered under the policy of insurance. University of Alberta Professor Barbara Billingsley describes “unnamed insureds” as follows:

Named insureds are mentioned by name in the contract as persons to whom insurance proceeds are payable. Typically, named insureds are the purchasers of the insurance. In contrast, unnamed insureds are not mentioned by name in the contract but are entitled to receive insurance benefits because they fall within a particular class of person covered by the contract. 

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Benefits of a well crafted release: Biancaniello v. DMCT LLP

A release is a contract that relieves one or more parties of future liability surrounding certain incidents. Parties often use releases in the context of settlements, to avoid future litigation in connection with the negotiations.

In the past, it has been uncertain how the courts will interpret the general language of standard form releases in the insurance context (i.e. it was not always clear whether broadly-worded releases would be enforceable against unforeseen claims). Recently, the Ontario Court of Appeal ( “Court”) provided some clarity on this subject. The Court held that express language is required to exclude claims that were not contemplated, provided that the language of the release is sufficiently broad.

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Defining parameters: Insurers duty to defend v. duty to indemnify

Practically every business and homeowner obtains insurance to protect themselves against losses to their property or business caused by an unforeseen event. However, sometimes when these events happen, both the insurers and insureds alike find themselves faced with the seminal question of whether such an event is covered by the insurance policy. Two most important aspects of an insurance policy when determining what is covered are: (i) The insurers duty to defend; and (ii) The insurers duty to indemnify. The duty to indemnify is the most common and known aspect of an insurance policy. This duty requires the insurer to pay for any judgment awarded to the third party against its insured, or any settlement that the parties may reach in lieu of judgment.
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