An Ontario appeal court has ruled in a split decision that a lower court judge was wrong to strike out portions of an amended defence filed by ING
Canada Inc. in its suit with Transamerica Life Canada Inc.

The action involves a claim by Transamerica and Aegon Canada Inc. to recover damages for misrepresentation and breach of warranties and covenants in an agreement under which Transamerica purchased all the shares of NN Life Insurance Company of Canada from ING. Transamerica’s complaints relate to alleged problems with the business, operations and systems of NN Life and to NN Life’s failure to administer insurance policies and investment products according to the policies’ terms. Transamerica claims indemnity for the amounts required to fix the problems and compensate policy and unit holders.

ING denies the problems existed and alternatively pleads that if such problems did exist, they were not material and that therefore there was no misrepresentation or breach of any warranty or covenant. ING also pleads that Transamerica breached certain implied duties of good faith and fair dealing and is, therefore, precluded from asserting its indemnity claims.

ING Canada, appealed a decision of Nov. 27, 2002 granting a motion in a lower court to strike certain portions of its amended statement of defence.

The lower court judge struck pleas alleging that Transamerica had implied duties of good faith requiring it to notify ING before closing if it became aware of the problems that it alleges in its claim and to consult with ING about the remedial actions it took after losing. The Appeal Court majority concluded that the lower judge erred in striking those pleas.

In addition, the Appeal Court majority found the judge erred in striking a plea that the agreement should be construed in accordance with the intentions and expectations of the parties. The higher court also indicated the lower court judge was wrong to strike pleas involving certain factual matters.

http://www.ontariocourts.on.ca/decisions/2003/december/transamericaC39314.ht
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