Court File and Parties
COURT FILE NO.: 05-DV-001084 DATE: 2006/05/03
SUPERIOR COURT OF JUSTICE - ONTARIO (DIVISIONAL COURT)
RE: RONALD HARVEY v. ALAIN LEGER AND INNOVATIVE BUILDING MATERIALS LTD.
BEFORE: Mr. Justice Charles T. Hackland
COUNSEL: David R. Elliot, for the Appellants/Defendants Wilfrid Menninga, for Lloyds' Underwriters, Third Parties (Respondents)
HEARD AT OTTAWA: May 1, 2006
Endorsement
[1]
Endorsement
This is an appeal from a decision of Master Beaudoin in which he granted the motion for summary judgment of the third party, Lloyds' Underwriters ("Lloyds"), striking the third party claim of the appellant/defendant Innovative Building Materials Ltd. ("IBML"). The Master concluded that the plaintiff's claim against IBML fell outside the insuring agreement with Lloyds' because (1) IBML's activities on which the plaintiff's claims are based were those of a general contractor, whereas the insured operations, as described in the policy, were those of a "building material wholesaler", and (2) the plaintiff's claim against IBML does not arise out of an "accident", which is a requisite for coverage in the insuring agreement. The appellant IBML argues that there are material facts in issue requiring a trial in reference to both of these issues.
[2]
Policy Coverage and Insured Activities
The plaintiff's allegations against IBML are found in paragraphs 21 and 22 of the statement of claim. I do not accept the appellant IBML's argument that these allegations are capable of applying to IBML's activities as building material wholesalers so as to invoke the policy coverage. Rather, they clearly relate to IBML's activities as a contractor/builder. There is no allegation of defective or unfit materials. The allegations relate to the manner in which the construction was carried out and the adequacy of the soil conditions. This conclusion is evident from the pleadings without reference to the report of Lloyds' expert, (Mr. Szirt). In my view, the Master relied on this expert's report only for the properly admitted evidence that in the insurance industry the level of risk of a contractor/builder is recognized to be much higher than that of a building material wholesaler, with different applicable coverages, limits, exclusions and premiums. In summary, there are no allegations made which are capable of encompassing the activities of a building material wholesaler, rather they relate to the activities of IBML as a contractor/builder and are therefore not covered by the insuring agreement. This is the case notwithstanding that IBML was both the building material wholesaler and the contractor/builder of the house in question. I would add that there is no evidence and no pleading that the insurer was aware of IBML's contracting activities. Indeed the contrary appears from the evidence.
[3]
The "Accident" Issue
It is also argued that the Master erred in finding that the policy coverage would not apply because the plaintiff's damages did not result from an accident. The appellant IBML argues that the characterization of whether the plaintiff's damages resulted from an accident is a triable issue that should have been left to the trial judge. I see no air of reality to the argument that what occurred here was an accident, on the facts as pleaded, which facts are confirmed in a soils expert's report that was before the Master. Here, the damages to the plaintiff's house resulted from settlement of the foundations due to an inadequate soil substrate to support the foundations, not from any type of accident.
4It is common ground between the plaintiff and IBML's principal Alain Leger that this risk (the adequacy of the soil substrate), was discussed, prior to the construction, although they differ as to what exactly was said and what advice was given. The risk of foundation problems developing from inadequate soil conditions which were discussed but not investigated before construction, cannot reasonably be characterized as an accident on any normal usage of that term and the Master was correct in so concluding.
[5]
Disposition and Costs
I am of the view that the Master correctly gave judgment dismissing the appellant IBML's third party claim on the basis that the allegations made by the plaintiff against IBML are not covered by the insuring agreement issued by the third party, the respondent Lloyds'. The appeal is accordingly dismissed. The respondent may submit a claim for costs within 10 days of the release of this endorsement and the appellant may submit a response within 10 days of receiving the appellant's submission.
Mr. Justice Charles T. Hackland
DATE: May 3, 2006
COURT FILE NO.: 05-DV-001084 DATE: 2006/05/03
SUPERIOR COURT OF JUSTICE – ONTARIO (DIVISIONAL COURT)
RE: RONALD HARVEY v. ALAIN LEGER AND INNOVATIVE BUILDING MATERIALS LTD
BEFORE: Mr. Justice Charles T. Hackland
COUNSEL: David R. Elliot, for the Appellants/Defendants Wilfrid Menninga, for Lloyds' Underwriters, Third Parties (Respondents)
ENDORSEMENT
Mr. Justice Charles T. Hackland
DATE: May 3, 2006