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Court Clarifies Test for Establishing When Exclusions Apply

Easy Fashion Adaptive Clothing Ltd v Co-Operators General Insurance Company, 2021 NBQB 207.

Reading Time: 3 Minutes

Author: Weston McArthur

Easy Fashion Adaptive Clothing Ltd (the Plaintiff) is a retailer that sells clothing customized to fit the needs of those with disabilities.

In July 2020, the Plaintiff purchased insurance from The Co-Operators General Insurance Company (the Defendant) which protected against certain business losses.

In September 2020, the Plaintiff noticed that its building was full of mould and had to dispose of much of its existing inventory as a result.

The Plaintiff made a claim under its policy with the Defendant to cover the lost inventory as business losses. The Defendant denied the claim and brought a motion for summary judgement against the Plaintiff.

The Defendant’s position was that the claim should be dismissed due to an exclusion in the policy which stated that “loss caused by mould is not covered unless its presence can be attributed to a peril which is covered” [para 5]. In this situation, the cause of the mould had not been identified.

In the end, the Court denied the Defendant’s motion.

As the cause of the mould had not been discovered, the Court concluded that the parties should go through the discovery process to determine the mould’s cause before a decision could be made as to whether the exclusion would apply.

In its decision, the Court stated that “looking to the words of [Hryniak v Mauldin, 2014 SCC 7], I must be confident that a full dismissal of the claim, at this stage, is fair and just. I am not confident” [para 16].

Link: https://www.canlii.org/en/nb/nbqb/doc/2021/2021nbqb207/2021nbqb207.html?searchUrlHash=AAAAAQAPIjIwMjEgTkJRQiAyMDciAAAAAAE&resultIndex=1

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