Canastream v. Chubb - 2023 - Cyber Insurance

COURT FILE NO.: CV-22-00678708-0000

DATE: 20230508

ONTARIO

SUPERIOR COURT OF JUSTICE

BETWEEN:

CANASTREAM HOLDINGS LTD. Applicant

Aoife Quinn and Eli Lederman, for the

Applicant

– and –

CHUBB INSURANCE COMPANY OF

CANADA

Respondent

Reid Lester, for the Respondent

HEARD: March 2, 2023

DINEEN J. 

[1] The issue on this application is whether a cyber insurance policy covers losses suffered by  a finance company for fraudulent transactions made using credit cards it had issued to  customers. The charges occurred after fraudsters obtained the expiry dates and CVC codes  for some of the applicant’s credit card numbers through an attack on third party websites.  

[2] The applicant contends that these losses fall squarely within the policy’s coverage for  damages arising from claims after a “cyber incident.” The respondent argues that the  applicant’s losses were contractual payments that were expressly excluded from coverage. 

[3] The applicant further takes the position that if the losses are not covered, then the doctrine  of nullification of coverage should apply. It submits that these losses are the obvious risk  for which it purchased this coverage and that denying recovery would be an unfair and  commercially unreasonable result. The respondent submits that the policy is a liability  policy that was never intended to cover the sort of property loss that the applicant suffered  and that the doctrine does not apply.  

[4] Finally, the applicant submits in the alternative that its loss can also be characterized as a  “payment card loss” under the policy, a type of loss not covered by the contractual  exclusion. The respondent submits that the definition of payment card loss does not capture  what occurred here.