Issue: Denial of insurance coverage under a Directors and Officers policy.
Background:
- Policy Period: October 6, 2018 - October 25, 2019.
- OSC Investigation: Started in March 2019. Furtado was legally barred from disclosing the investigation under s. 16(1) of the Securities Act.
- Suspension Clause: The policy allowed suspension of the notice requirement during legal prohibition.
Legal Changes:
- December 2019: Law amended to permit disclosure to insurers under certain conditions.
- OSC Actions: In December 2021 and March 2022, OSC initiated proceedings against Go-To and Furtado.
- Notification: Furtado notified the insurer in early 2022.
Court Findings:
- Breach of Policy: Furtado breached policy terms by not notifying the insurer promptly after the legal prohibition was lifted in December 2019.
- Suspension Clause: Required notification within 14 days after lifting the legal restriction.
- Relief from Forfeiture: Not available due to substantial breach causing prejudice to the insurer, constituting non-compliance with a condition precedent to coverage.
Key Legal Principles:
- Claims-Made Policies: Require claims to be made and reported within the policy period.
- Notice of Circumstance: Must be given within the policy period to preserve future claims coverage.
- Relief from Forfeiture: Generally unavailable for breaches of conditions precedent in claims-made policies.
Decision: Appeal dismissed. Furtado’s failure to comply with policy conditions forfeited coverage. Costs of $22,000 awarded to the respondent.
