Our first case is a Court of Appeal decision with respect to an insurer’s duty to defend. The Court of Appeal upheld the decision of the Application Judge stating that damage caused to structures as a result of the insured’s negligence constitutes a property damage which is caused by an occurrence, thereby triggering a duty to defend.
The second case this month deals with a Motion for Summary Judgment. Here, the Court held that the available evidence was insufficient to determine the outcome if the action proceeded to trial, therefore Summary Judgment was not appropriate.
Beaverdam Pools Ltd. v. Wawanesa Mutual Insurance Co.., 2010 NBCA 1
In August 2005, Beaverdam installed an above-ground pool for Brewer. Brewer then had a deck constructed around the pool by another contractor. A few months later there was “separation between some parts of the pool structure”. Beaverdam attempted to repair the pool unsuccessfully. Brewer commenced an action against Beaverdam. Beaverdam, who was insured by Wawanesa under a Commercial General Liability policy, notified the insurer of the suit and the insurer denied its obligation to defend the action. Beaverdam retained counsel and the matter was settled.
Beaverdam applied to the Court for a declaration that Wawanesa had a duty to defend it in the Brewer action and for reimbursement of the cost of the defence. The Application Judge allowed the application stating that the “Pleadings Rules” dictates that the allegations in the Statement of Claim, not the facts proven, determine if a duty to defend arises. The Court opined that if a claim alleges a state of facts which, if proven, would fall within the coverage of the policy, the insurer is obliged to defend the suit.
Wawanesa appealed on the grounds that the Application Judge failed to follow the prescribed approach and erred in law “in finding that the statement of claim...contained an allegation, which, if true, could result in coverage being afforded under the policy of insurance at issue.” Wawanesa also argued that the Statement of Claim contained no allegation of “property damage” occurring to the deck of Brewer and that even if the costs of raising the deck constituted property damage, such damage was not caused by an “occurrence”.
The Court of Appeal upheld the decision of the Application Judge and held that the exclusionary clauses contained in the CGL excluded coverage or indemnity to the insured for the cost of repairing or replacing “the work” or “work product” of the insured. It does, however, indemnify the insured for liability to repair or replace damage to other structures caused by the insured’s negligence in performing its work. In the case at bar, the cost of elevating the deck so as to make it useable for the purposes for which it was intended is a claim for “property damage” as contemplated by the policy and that such property damage is caused by an “occurrence” if it is caused by the negligence of Beaverdam. As a result, the claim was sufficient enough to trigger Wawanesa’s duty to defend Beaverdam.
Kilcollins Estate v. Wawanesa Mutual Insurance Co. 2009 NBQB 576
This was a Motion by the plaintiffs for Summary Judgment on the issue of the defendant insurer’s liability. The plaintiff had rented his house out to Alphonse Roussel on January 2, 2009. It was destroyed by fire on January 4, 2009. The plaintiff filed a claim for indemnification against the insurer, but the defendant insurer denied the claim on the grounds that the house was vacant at the time of the loss.
The plaintiff argued that Mr. Roussel was an occupant of the house at the time of loss as he had paid January’s rent, had been given a receipt which noted that the house came “furnished, heated and lighted” and was also given the keys to the house. The defendant insurer disagreed, stating that Mr. Roussel had not yet moved into the house at the moment of loss and therefore the house was vacant and as such the insurer was excluded from liability under the policy. The primary question before the court was the proper definition of the term “vacant” as the French and English versions of the policy contained vastly different definitions.
After reviewing the evidence, the relevant portions of Rule 22 and citing the Court of Appeal Decision in Cannon v. Lange (1998), 203 N.B.R. (2d) 121, regarding the governing criteria in granting Summary Judgment, the objectives of Rule 22 and the discretionary power of the Court under the Rule, Justice Leger held that the available evidence was insufficient to conclude that there was no doubt as to what the judgement of the court would be at trial, therefore, Summary Judgment was not granted.