Court File and Parties

Court File No.: CV-21-00658408-0000 Date: 2024-10-03 Ontario Superior Court of Justice

Between: 2689686 Ontario Inc., Plaintiff And: Lloyd’s Underwriters, Aime Nil Rivard, and 1687979 Ontario Inc. also known as Rivard Engineering, Defendants

Counsel: John H. Reiterowski and Sareena Samra, Lawyers for the Plaintiff Chester Wydrzynski and Raya Sidhu, Lawyer for the defendant, Lloyd’s Underwriters

Heard: July 11, 2024

Before: G. Dow, J.

Reasons for Decision

[1] This motion, by the defendant, Lloyd’s Underwriters (“Lloyd’s”) is for summary judgment and dismissal of the action by the plaintiff 2689686 Ontario Inc. (“268 Inc.”). The claim arises from the collapse of the roof at 19 Duncan Avenue South, Kirkland Lake on or about April 1, 2020.

[2] The action was previously dismissed as against the remaining co-defendants by order dated December 23, 2022.

[3] The action is post examinations for discovery. While the plaintiff opposed the motion, it did so only to the extent that it be dismissed (as opposed to the extent the plaintiff be granted judgment in a specific amount).

Background

[4] Briefly, the plaintiff became the owner of four adjacent properties in April, 2019. Both 15 and 17 Duncan Avenue South, Kirkland Lake were empty lots. The building at 19 Duncan Avenue South was a two and three storey building adjacent to a larger former hotel on the corner with the address of 2 Government Road. The plaintiff intended to renovate these buildings into a hotel or apartments. Work dismantling the inside proceeded in the summer of 2019.

[5] To that end, new roof shingles were installed in May, 2019 at 19 Duncan Avenue South. Plans were in the process of being drawn up for the submission of building permits. A structural engineer, Ehsan Tawhidi had been retained and had visited the site on May 29, 2019 and November 2, 2019.

[6] There are three invoices from Fast Renovations relied on by the parties regarding removal of debris. They are dated: a) September 3, 2019 in the amount of $19,752.40; b) July 30, 2019 in the amount of $5,003.64; and c) September 3, 2020 in the amount of $16,305.90.

[7] The parties agree a temporary electricity meter was installed. Hydroelectricity bills were produced indicating some electricity used between September 13, 2019 through to April 21, 2020 invoices. This compares to the plaintiff’s evidence of a temporary natural gas connection not supported by production of any evidence such as invoices to confirm same.

[8] The name of a project manager and an individual tasked with “visiting the Properties daily for inspection” (see paragraph 18 of the affidavit of Mansoor Syed Naqvi, President of 268 Inc. sworn October 19, 2023) was tendered. That is, no affidavit evidence from either individual was provided (and thus this evidence was hearsay).

[9] As part of the defendant’s investigation of the claim, it retained and relied on the affidavit evidence of its structural engineer, Aime Nil Rivard which attached his reports detailing his observations from the site visit on April 8, 2020 (eight days after the roof collapsed). His reports observed: a) “severe structural problems with the building foundation walls of the whole building. The damages as reviewed in our opinion are not new or recent, and may be as much as 30 or 40 years old or more”; b) “much more recent structural steel bracing frame added to the north wall in the center of the building”; c) “the failure of the back three (3) storey roof system, is mainly as a result of the frost heaving of the basement slab that lifted the interior partitions and the floors above, most likely jacking up the center of the roof framing, and causing failure. As such, snow was not the main cause of failure of this roof and in the absence of frost heaving , most likely would not have resulted in the failure of this roof’s system”.

[10] This compares to a May 6, 2020 email sent by Mr. Rivard which contains the sentence “At the back 3 storey portion of the building, there has been an obvious failure of the roof as a result of snow loads”. That paragraph ends with the sentence “This building is likely 80 years old or more and has withstood snow loads till now, including the record snow conditions of 2019”.

[11] The plaintiff relies on this as contradictory evidence raising a credibility issue and the need for a trial. It chose not to cross-examine Mr. Rivard leaving his expert opinion uncontested.

[12] There is also a contradiction in the evidence tendered by the plaintiff’s structural engineer, Ehsan Tawhidi. Within his file, which was produced, are two letters, both dated January 28, 2021. In one of the letters there is the following sentence: “In our opinion, based on our visual observations, as of than (sic) the property was structurally sound and was safe for repair work. As there were repair works needed due to building left unheated and unused for several years”. The other letter stated “We again performed a site visit on November 2 nd , 2019 and advised to install steel bracing to stabilize the heavily cracked basement foundation walls. We also noticed/felt that the building ambient temperature was comfortable and seems like heating was provided.”

[13] The policy of insurance, with a premium of $25,553, was known as a Builder’s Risk policy. The declaration pages identified 19 Duncan Avenue South, Kirkland Lake as an included risk location. The “Property Insured” clearly sets out it was “property in course of construction”. The perils excluded, at paragraph 6B(e) included “frost or freezing”.

Analysis

[14] The first issue to address is whether this motion is appropriate for summary judgment. Since Hryniak v. Mauldin, 2014 SCC 7, our court has been inundated with motions relying on the broader interpretation allowing such motions to not only proceed but succeed. Adopting the plaintiff’s summary of when and how to proceed (at paragraph 49 of its factum), the following guidelines are to be followed: a) as part of more affordable, timely and fairly justly adjudication of claims, summary judgment becomes a legitimate alternative to determine legal disputes; b) matters where the process allows the court to make necessary findings of fact, apply the law to the facts to achieve a just result, can proceed; c) the steps to be followed are first to determine if there is a genuine issue requiring a trial and second, if there is a genuine issue can it be determined by using the expanded powers found in Rule 20.04(2.1) and/or (2.2) to weigh the evidence, evaluate credibility and draw reasonable inferences; and d) finally, does the material presented give the court confidence to make the necessary finding of fact to be made and apply to the relevant legal principles to determine the dispute.

[15] This requires the parties (and the court may assume) the material before it contains the evidence before it the parties would present at trial. After careful thought and reflection, I have concluded determination of this dispute can and should occur.

[16] I further agree with the plaintiff’s submission (at paragraph 52 of its factum) this analysis requires: a) the insured has the initial onus of establishing that the damage or loss falls within the initial grant of coverage; b) the onus then shifts to the insurer to establish one of the exclusions applies; and c) if the insurer is successful, the onus reverts to the insured to prove that an exception to the exclusion applies.

[17] In this regard, the plaintiff pointed to the wording in the Indemnity Agreement portion of the policy which extends coverage for “any of the property insured”. However, that phrase continues with “loss or damaged by the perils insured against”. It is clear and the defendant relies on the definition of the “Property Insured” to include only “property in the course of construction, installation, reconstruction or repair”. Were this the end of the analysis, I have been inclined to find in favour of the plaintiff. This is despite the apparent cessation of any real or meaningful progress in the gutting of the property before plans were completed and submitted, permits issued and construction commenced.

[18] The first stage of preparing the property for building had apparently been completed. This is supported by the initial two invoices from Fast Renovation being July 30 and September 3, 2019. The inference is the invoices were sent soon after the work was completed. No evidence to contrary was presented. The next invoice is not until months after the roof collapsed and lacks any detail as to what was done and when.

[19] Again, based on the law interpreting insurance coverage on a wide basis and exclusions on a narrow basis, were this the end of the analysis, I would be inclined to find in favour of the plaintiff. However, construction and particularly renovation work can experience periods of time when for one reason or another (for example, supply of materials or issuance of building permits or required inspections) work is stopped for uncertain periods of time. This appears to be what occurred in this matter by the Fall of 2019 based on the invoices dated September 3, 2019 and September 3, 2020 rendered by Fast Renovation.

[20] However, the list of things not insured against clearly states: “frost or freezing” in subparagraph 6B(e) of the “Perils Excluded”. The expert evidence tendered by the defendant in the form of the report of Mr. Rivard attached to his affidavit was uncontested. That is, no cross-examination of the conclusion frost and/or heaving was the cause of the damage or loss which occurred.

[21] I disagree with the plaintiff’s characterization that Mr. Rivard’s opinion was contradictory to the email of May 6, 2020. Those comments appeared to have made following the initial inspection before completion of Mr. Rivard’s analysis, as an engineering expert, and his final opinion as contained in his initial report dated May 29, 2020.

[22] I am reinforced in this conclusion by reading the entire paragraph of the May 6, 2020 email in which the possibility of the roof collapse due to snow load needed to be considered in greater detail given the previous snow loads, including a “record snow condition of 2019” having not collapsed the roof. As a result, I have concluded that the final opinion should be preferred. Alternatively, if there were two opinions, the plaintiff’s submission that “a full trial is needed” (at paragraph 67 of the plaintiff’s factum) does not meet the requirement of that party putting its best foot forward as often stated as required in summary judgment motions.

[23] The plaintiff’s structural engineering reports did not address the defendant’s engineering opinion or explain why it was incorrect. It offered no alternative explanation. That engineer’s report and file was not tendered by an affidavit of the engineer upon which it could be tested by cross-examination.

[24] As part of the final step in the analysis, no exception to the exclusion was raised by the plaintiff. The plaintiff did make submissions that the Court may choose not to enforce the exclusion on the basis the result would defeat the main object of the contract. This principle of law was addressed in MDS Inc. v. Factory Mutual Insurance Company, 2020 ONSC 1924 (at paragraphs 603 to 611) and relied on the statement of the law from Weston Ornamental Iron Works Ltd. v. Continental Insurance Co., [1981] O.J. No. 78 (C.A.) (at paragraph 28).

[25] In MDS Inc. v. Factory Mutual Insurance Company, supra, I understand the action arose from the leaking of heavy water containing radioactive Tritium at the Atomic Energy of Canada Limited Research facility at Chalk River in 2009 requiring shut down and the loss of production of radioisotopes. The plaintiff processed those radioisotopes for sale and profit. The defendant issued a worldwide All-Risk policy to the plaintiff. This was apparently 45% of the plaintiff’s world revenue and directly comparable to the loss incurred by the plaintiff in Weston Ornamental Iron Works Ltd. v. Continental Insurance Co., supra. No such evidence was tendered of this nature in the matter before me. As a result, I disagree this matter is of a nature that nullifies the coverage sought to be provided and thus is distinguishable.

[26] I would further note in submissions, the plaintiff confirmed having retained an insurance broker to secure the coverage obtained, in the form of a Builder’s Risk Policy. That is, the plaintiff had someone with expertise in insurance coverage assisting it to obtain the coverages it required. The policy sets out the scope of coverage, the property insured and the exclusions included.

Conclusion

[27] As a result, I find the policy of insurance obtained, Builder’s Risk Policy did not afford coverage to the plaintiff for the loss suffered on or about April 1, 2020. I find the loss suffered was a result of frost followed by heaving, which raised the basement floor followed by the center of the roof framing, causing the failure of the roof. Given there is no recovery available under the policy, this action is dismissed.

Costs

[28] I obtained from counsel for the defendants a draft Bill of Costs for defending the entire action in the amount of $40,652.10 for partial indemnity fees plus HST of $5,284.78 and disbursements of $319.79 for a total of $46,246.67. The draft Bill of Costs from the plaintiff was only for the motion and sought impartial indemnity fees in $8,625.

[29] I was advised no offers to settle had been exchanged.

[30] I urge the parties to agree on costs. If they cannot, counsel for the defendants shall forward to me (through the email address they received this decision) their written submissions not to exceed five double spaced pages in compliance with Rule 4.01 due on or before November 1, 2024. Plaintiff’s counsel shall have until November 21, 2024 to respond, identically limited.

Mr. Justice G. Dow Released: October 3, 2024