The Supreme Court of Canada, in a major insurance
coverage decision released on September 23, 2010, Progressive
Homes Ltd. v. Lombard General Insurance Co. of Canada, has
held that commercial general liability (CGL) coverage can apply to
claims against general contractors arising from construction
In doing so, the Supreme Court of Canada overruled recent cases
in British Columbia. Since 2005, British Columbia courts have
consistently held that CGL policies do not cover claims against
general contractors arising from construction defects (under
standard policy language), because the policies are usually worded
to respond to an "accident" or "occurrence" for
"property damage". In the recent BC cases, the courts
decided that construction defects are not sudden
"fortuitous" events, and that "property damage"
means property damage to the work of someone other than the
beneficiary of the insurance policy. These BC decisions came to
different conclusions from the courts of Ontario and Saskatchewan,
which found coverage applied in these circumstances.
In the Progressive case, the court ruled that damage
arising from construction defects is indeed an
"accident", and went on to say that construction defects
themselves (rather than just the consequential damage from them)
may also be covered (the point was not directly in dispute in the
case, so the court was not called upon to give a definitive answer
to that question). This meant that whether the policy provided
coverage or not would be decided by the policy exclusions. The only
exclusion seriously raised by the insurer was the exclusion for
"work performed" (own work) by the contractor. In this
case, the court was considering three different CGL policies,
issued by the same insurer for separate years. The work performed
exclusion was worded quite differently in each of the three
policies. The court concluded that the specific language of the
exclusion has to be considered carefully, in light of the damage
alleged, to decide if coverage is provided. That being said, the
court interpreted the three clauses quite narrowly – that
is to say, the court was inclined to find that coverage existed
rather than not.
One of the practical issues in Progressive was whether
the insurer was required to provide a defence to the general
contractor. The court found that there was a possibility that the
allegations made by the owner against the contractor would fall
within the insurance policy coverage, and this was enough to
trigger the insurer's duty to provide the contractor with a
This case will result in a re-evaluation of decisions by CGL
insurer to deny coverage for claims. The case provides a national
standard for the interpretation of CGL policies in a construction
context, tending in general to support the provision of coverage.
That being said, the specific wording of each policy, both in terms
of the coverage provisions all applicable exclusions, within the
whole context of the policy and the claims made in the lawsuit,
will have to be considered to determine whether coverage is likely
to apply in any particular circumstance.
The Ontario Court of Appeal confirmed that courts will generally support and uphold decisions of condominium directors because they are better positioned than judges to make decisions pertaining to their buildings.
According to the city bylaws in Calgary, the grading of lots for new buildings must be done properly so that the water never flows toward the new building or any other nearby properties, but away from those buildings.
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