Wilkie v Gordian Runoff

The case of Wilkie v Gordian Runoff involved a dispute over the obligations of an insurer to cover the defence costs of its insured. The insured, who was a director of a company, sought to have their defence costs paid by the insurer under a directors' and officers' liability insurance policy. The primary issue before the court was whether the insurer was obligated to pay the insured's defence costs within a reasonable time and if so, whether the amounts required to be paid were reasonable. The court also had to determine whether the payment of cancellation fees to counsel in advance was reasonable and, if not, what the reasonable amount should be.

The court considered the terms of the insurance policy and found that the insurer was indeed obliged to pay the insured's defence costs. However, the issue of what constituted a reasonable time for payment was contentious. The court found that the policy did not explicitly state the time frame within which the insurer had to pay, but the insured argued for a prompt payment. The court examined the circumstances of the case, including the nature of the claims and the urgency required, to determine if the insurer's actions were within a reasonable time frame. Regarding the cancellation fees, the court found that while the insurer had a right to seek reimbursement for cancellation fees, the amount charged needed to be reasonable. The insurer argued that the fees were necessary to cover their costs, but the court found that the amount charged was excessive and not aligned with industry standards.

Ultimately, the court concluded that the insurer was required to pay the insured's defence costs within a reasonable time, which was determined based on the specific circumstances of the case. The court also found that the payment of cancellation fees in advance to counsel was not reasonable, and the amount charged was excessive. The matter of the reasonable amount for the cancellation fees was referred to for determination under the relevant rule of the Uniform Civil Procedure Rules. The final orders included that the insurer was to pay the insured's defence costs within the determined reasonable time frame and that the reasonable amount for the cancellation fees was to be determined as per the court's reference.