– Hants Realty Ltd. v. Travelers Guarantee Co. of Canada, 2013 NSSC 195.

Hants Realty brought an application to have its insurer, Travelers, assume carriage of the defence of a civil action brought against it by former clients, the Pattens. Travelers denied that it was obligated to respond under the insurance policy on the basis of two arguments: (1) that the claim was not “first made” during the policy period, and (2) that the claim was excluded in any event.

The insurance policy was a “claims made” policy. Travelers argued that the claim was not “first made” during the policy period because before bringing their civil claim against Hants Realty, the Pattens had made a complaint to the Nova Scotia Real Estate Commission. It was when the Pattens filed this complaint, Travelers argued, that the claim was “first made”, such that the claim was outside the policy period. The Nova Scotia Supreme Court disagreed. It held that because the complaint to the Commission was administrative in nature and no damages were available, there was no “claim” against Hants Realty of which it should have notified Travelers. The policy defined a “claim” as a written demand for damages, a civil proceeding, or an alternative dispute resolution proceeding. The court found that the claim was not “first made” until Hants Realty received correspondence indicating that the Pattens intended to seek damages. This was within the policy period.

Travelers also argued that the claim was excluded in any event, pursuant to a policy exclusion for “Loss in connection with any claim … arising out of … Any Wrongful Act, or any … situation … indicating the possibility of a Claim and already known to the Insured prior to the effective date of the initial policy”. The court found that the broad wording of the exclusion mandated a narrow interpretation. The fact that the Pattens’ complaint to the Commission had been resolved in favour of Hants Realty had led Hants Realty to reasonably believe that there was no claim, or possible claim, at the time its policy with Travelers was issued. The court thus concluded that Travelers had an obligation to defend the civil action.