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.