Report from the Chair
By John A. Vamplew, Whitelaw Twining Law Corporation, Vancouver
Welcome to the latest edition of Underwritings, the newsletter of the CBA's National Insurance Law Section.
Deduction of settlement funds from a damage award at trial: A case comment on Bedard (Next Friend of) v. Martyn
By Dan A. Downe, Q.C., Field LLP, Calgary, Alberta
The Court of Appeal's decision in Bedard has reinforced the principle that the Court's overriding view is to properly compensate a party and to avoid a double recovery. This principle outweighs the public interest of encouraging settlements between parties.
Derivative redux
By Peter Shea, Cox and Palmer, St. John's, Newfoundland & Labrador
In Pender v. Squires, the Supreme Court of Newfoundland and Labrador took up the question of whether allegations of negligent transfer of possession and control and negligent supervision fell within scope of “use or operation of a motor vehicle” exclusion.
The evolving interpretation of the CGL policy: Thoughts on Progressive Homes
By John A. Vamplew, Whitelaw Twining Law Corporation, Vancouver
Over the past several years in British Columbia, it can be argued there has been a narrowing of the manner in which the courts interpreted the insuring provisions of Commercial General Liability (CGL) insurance policies.
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Report from the Chair
By John A. Vamplew
Welcome to the latest edition of Underwritings, the newsletter of the CBA's National Insurance Law Section.
The Section Executive had its annual in-person meeting in Toronto on April 2, 2011 to identify new initiatives and plan future activities for the Section. As always, this meeting included updates from the provincial insurance law Sections. The roundtable discussion that evolves from these updates provides a valuable opportunity for provincial Section representatives to exchange ideas with their colleagues that can then be implemented within the activities being offered in the provincial insurance law Sections.
One of the exciting initiatives emerging from our recent meeting was a renewed commitment to providing professional development opportunities to members of the Insurance Law Section. At present, a webinar is being organized for Fall 2011 to address the Supreme Court of Canada's most recent insurance-law case, Progressive Homes. The speakers will be Gordon Hilliker, Q.C. and Christopher Rhone, both of whom were counsel in that case.
The Insurance Law Section Executive will next be turning its attention to arranging additional insurance law-related webinars and we are exploring the possibility of including an insurance law-related seminar as part of the CBA's Canadian Legal Conference to be held in Vancouver in 2012. Further details of these events will follow in the next edition of Underwritings.
Regards,
John A. Vamplew
Chair, CBA National Insurance Law Section
Deduction of settlement funds from a damage award at trial: A case comment on Bedard (Next Friend of) v. Martyn1
By Dan A. Downe, Q.C.
Background facts
Logan Bedard was born on April 19, 2001. His twin brother, Brayden, followed within minutes. Logan suffered a subdural hematoma during the birth process, if not prior to the actual delivery. As a result of the subdural hematoma, Logan sustained injuries within his head. By age 7 Logan was suffering from severe cerebral palsy, permanent neurological and cognitive impairment as well as seizures. He was unable to walk without the assistance of another person, was unable to speak normally and would not ever be able to look after himself alone.
His parents commenced a lawsuit in 2003 against the treating physicians and the obstetrician who delivered Logan, as well as against the doctors and nurses who were involved in the delivery process. Also included in the claim were the Foothills Medical Centre and the Calgary Health Region.
The issues against the named physicians were whether they were negligent in their care of Logan before, during and after the birthing process. The issues against the Foothills Medical Centre and the Calgary Health Region were whether the nursing staff properly monitored the situation, particularly in the immediate hours after Logan's birth.
Trial decision
The trial proceeded approximately 6 years after the Statement of Claim was filed. The parties had agreed on the quantum of damages. The Plaintiff had discontinued their action against the treating physicians and the obstetrician. The action against the Calgary Health Region and Foothills Medical Centre was settled on the eve of trial by way of a Pierringer Agreement. Therefore the trial was concerned with the liability of Drs. Amin and Maurer. Justice Hawco found that both doctors breached the standard of care expected with respect to their involvement in Logan's care by failing to request and ensure that an ultrasound or CT scan be carried out on an urgent basis following Logan's birth. Justice Hawco further ruled that a lumbar puncture should not have been done in the face of increasing intracranial pressure without a full neurological examination. While he ultimately determined that the lumbar puncture did not cause additional injuries to Logan, it did constitute a breach of the standard of care by Dr. Amin as a specialist in the field of neonatology.
Justice Hawco had to address the causation issue as it had been determined that Logan suffered a subdural hematoma during or prior to birth which resulted in a brain injury. Therefore the issue was whether the doctors' breach of the standard of care with respect to their treatment of Logan had resulted in any additional damages. Justice Hawco concluded that the doctors' negligence in delaying an ultrasound or CT scan caused an additional 25% by way of additional injuries to Logan. As a result the Plaintiffs were awarded 25% of the agreed damages.
Pierringer Agreement
As the Calgary Health Region and Foothills Medical Centre had entered into a Pierringer Agreement with the Plaintiffs prior to trial, Justice Hawco had to determine what extent those Defendants were liable. This determination was required because the terms of the Agreement were to limit the liability of Drs. Amin and Maurer to their several liability.
Justice Hawco held that the Calgary Health Region Defendants were not liable in any manner or to any degree for what occurred in this case. Therefore the remaining physicians were completely responsible for the 25% share of the agreed damages.
Post-trial Pierringer Agreement issue
As a result of Justice Hawco's decision counsel for the physicians took the position that the amount of the settlement within the Pierringer Agreement should be disclosed and that the amount of the settlement should be deducted from what the doctors were responsible for after trial. The Plaintiffs and Calgary Health Region Defendants took the position that there were separate and distinct allegations of negligence raised against the CHR Defendants for which they settled before trial. Therefore, disclosure of the amount was not necessary and a deduction from the amount awarded by the Court against the doctors was not required.
Justice Hawco heard the parties on application to rule on the disclosure and deductibility of the settlement between the Plaintiffs and CHR Defendants.
The Plaintiff and CHR's position that the settlement amount should not be deducted from the trial award was based on the argument that the settlement was for potential liability against those Defendants alone, even though the Court ultimately determined that there was no negligence against those Defendants. Furthermore it was argued that it would be unfair to interfere with that agreement and provide the negligent physicians with the benefit of having that settlement amount deducted from their award at trial.
The Defendant physicians' argument was that if the deduction did not occur there would be a double recovery for the Plaintiffs.
In determining this issue Justice Hawco addressed the issue of unfairness. He stated that the Plaintiffs and Calgary Health Region Defendants wanted to ensure that each were protected, the Plaintiffs wanted to receive some amount of funds by way of settlement from the CHR and the CHR wanted to limit its liability thereby avoiding the uncertainty and cost associated with trial. Justice Hawco stated that the unfairness arises from the perspective that the Defendants who were found 100% at fault were now asking to reduce their liability by the amount of settlement from the CHR Defendants who were not found liable at trial.
Notwithstanding this element of unfairness, Justice Hawco concluded that the Supreme Court of Canada had made it clear that a Plaintiff will not be entitled to recover more than his or her actual loss. Based on a thorough review of both Alberta and Canadian authorities, including a recent decision from the Ontario Court of Appeal in Laudon v. Roberts, Justice Hawco concluded that disclosure of the settlement must be divulged and the settlement monies would be credited to the Defendant physicians.
Court of Appeal
The Plaintiffs appealed Justice Hawco's ruling to the Alberta Court of Appeal on the issue of whether the settlement funds should be deducted from the damages awarded at trial.
The Court of Appeal stated that the issue called for a balancing of competing policy objectives, namely the public interest in encouraging settlement of multi-party litigation versus the rule against double recovery in tort claims.
The Court of Appeal started from the proposition that the Supreme Court of Canada has made it very clear that the primary goal of tort damages is compensation of the injured person and not the punishment of the tort feasor. Under the Supreme Court of Canada approach to tort damages, the task of a Court is to assess actual loss and to ensure, to the extent possible, that the injured party is compensated for the amount of that loss. While the Courts have recognized exceptions to the rule against double recovery in very limited circumstances, the Court of Appeal recognized that the Appellant's argument would create a similar exception for settlement proceeds. Appellant Courts in Ontario and British Columbia have declined to do so. Therefore the Alberta Court of Appeal stated that in order for them to determine whether they would depart from existing case law and embark on a new path for the use of Pierringer Agreements in Alberta, they needed to determine what unfairness from the current approach should be avoided.
The Appellants argued that deducting settlement proceeds from a damage award would discourage settlement. The Court of Appeal rejected that argument and concluded that the concern over double compensation outweighs the public interest in encouraging settlement. As a result they agreed with the trial judge's analysis of the law and his conclusion that the amount of settlement under the Pierringer Agreement must be deducted from the damage award at trial.
The Court of Appeal made a small adjustment such that only the net proceeds of the settlement after costs should be deducted from the trial award.
Analysis
The Court of Appeal's decision in Bedard has reinforced the principle that the Court's overriding view is to properly compensate a party and to avoid a double recovery. This principle outweighs the public interest of encouraging settlements between parties. Therefore, in cases where Pierringer Agreements are involved, the Alberta position, consistent with other Canadian jurisdictions, will require the settlement amount under the Pierringer Agreement to be deducted from an award at trial against the non-settling Defendants.
1 2010 ABCA 3 aff'g 2009 ABQB 392 (additional reasons at 2009 ABQB 165).
Derivative Redux: Allegations of negligent transfer of possession and control and negligent supervision ruled as not falling within scope of “use or operation of a motor vehicle” exclusion (Pender v. Squires, 2011 NLTD(G) 23)
By Peter Shea
Just when you thought you knew what was derivative, the Supreme Court of Newfoundland and Labrador has upset the apple cart. Tanya Pender was a passenger on an all-terrain vehicle (“ATV”) owned by Larry Hannam, and operated by Kayla Squires. Hannam did not purchase an available ATV insurance policy. Squires lost control of the ATV and crashed, causing serious personal injuries to Pender.
The Dominion of Canada General Insurance Company (Dominion) provided insurance to Hannam through a broad homeowners policy, and sought a declaration as to whether it had a duty to defend the claim by Pender. Dominion did not dispute that the claim fell within the initial grant of coverage, however argued that the “ownership, use or operation by you or on your behalf of motorized vehicles” exclusion applied and therefore precluded coverage for the claim by Pender.
The court held that the allegations respecting imposition of liability based on ownership and vicarious liability clearly fit with the exclusion clause. However, the court held that the allegations respecting negligent consent to transfer control and possession of the ATV did not constitute “use” by or on behalf of Hannam, and accordingly did not fit within the exclusion clause. In reaching this conclusion, the court held that “use” does not include the act of permitting another to operate a vehicle, but rather the function to which the vehicle was put at the time of the accident. The court further determined that the claim of negligent supervision was non-derivative of the excluded claim respecting ownership.
The Supreme Court of Canada in Non-Marine Underwriters, Lloyds of London v. Scalera, 2000 SCC 24, set out a three-step process with respect to determining an insurer's duty to defend. These three steps include determining whether allegations are properly pleaded, whether any of the properly pleaded claims are entirely derivative in nature, and whether any of the properly pleaded, non-derivative claims could potentially trigger a duty to defend. In particular, with respect to the second step of the analysis, namely determining whether any of the claims are derivative, the Supreme Court of Canada directs that the focus be placed on the harm complained of, using the example that if the alleged negligence is based on the same harm as an intentional tort allegation, it will not allow an insured to avoid an exclusion clause for intentionally caused injuries. Scalera mandated a vigorous analysis of the true nature of claims, so as to avoid pleadings designed to trigger coverage.
While the court in Pender purports to undertake a Scalera-based analysis, the issue of whether the varying allegations are based on the same harm is not discussed. Clearly, the true nature of the claim by Pender arises from harm caused by the use and operation of a motor vehicle, for which coverage should not be afforded under a broad homeowners policy. This decision is currently under appeal.
The evolving interpretation of the CGL policy: Thoughts on Progressive Homes
By John A. Vamplew
Over the past several years in British Columbia, it can be argued there has been a narrowing of the manner in which the courts interpreted the insuring provisions of Commercial General Liability (CGL) insurance policies. Multiple cases, nearly all of which arose from what is commonly known as “leaky condo” litigation, addressed the issue of whether those involved in the construction industry had coverage under CGL policies for construction deficiency claims. The case law focussed on the CGL insuring provision, and in particular the issues of whether there had been an accident or occurrence, and whether there had been property damage, while at the same time the case law downplayed the role of the CGL exclusions.
The B.C. line of case authority found that under a CGL policy, damage to a general contractor's own project does not constitute property damage and thus does not trigger the insuring provision of the CGL. The line of case law had its roots in Privest Properties Ltd. v. Foundation Co. of Canada Ltd. (1991), 57 B.C.L.R. (2d) 88 (S.C.), blossomed in Swagger Construction Ltd. v. ING Insurance Co. of Canada, 2005 BCSC 1269 and became firmly entrenched with the B.C. Court of Appeal's decision in Progressive Homes Ltd. v. Lombard General Insurance Co. of Canada, 2009 BCCA 129, rev'd 2010 SCC 33.
This uniquely British Columbian perspective of a restrictive interpretation of the CGL definition of property damage was, for the most part, at odds with cases from other provinces involving similar policy wordings and similar fact patterns. In those other cases, the courts found that damage to one's own work can constitute property damage, and thus the CGL insuring provision can be triggered in a construction deficiency claim and therefore it is necessary to look at the policy exclusions to assess whether the claim is covered. Examples of those cases include Alie v. Bertrand and Frere Construction Co. (2002), 222 D.L.R. (4th) 687 (Ont. C.A.), Westridge Construction Ltd. v. Zurich Insurance Co. 2005 SKCA 81 and Bridgewood Building Corp. v. Lombard General Insurance Co. of Canada (2006), 266 D.L.R. (4th) 182 (Ont. C.A.).
The Swagger case
The Swagger decision offers insight into the approach taken in B.C. over the last several years regarding the interpretation of CGL polices in the context of construction deficiency claims. Swagger was the general contractor for the construction of a building at the University of B.C. After commencing an action against UBC seeking compensation for extra work and delays, UBC counterclaimed against Swagger for deficiencies in Swagger's work, much of which involved deficiencies in the building envelope. Swagger defended the counterclaim on its own for several years, but eventually sought coverage from the three insurers who had issued CGL policies to Swagger during the relevant time frame. The insurers all denied coverage and Swagger then brought a Petition seeking a declaration that the insurers had a duty to defend.
The court held that the insurers did not have a duty to defend. In doing so, the court focussed entirely on the insuring provisions in the CGL policies and did not rely on any of the policy exclusions. There were two grounds for the court's decision that the insuring provisions were not triggered.
First, the court concluded that the majority of the claims were not claims for “property damage” as that phrase was defined in the policies. The majority of the claims against Swagger were for the cost to repair Swagger's defective work which was pure economic loss rather than damage to property. The policies only covered damage to “tangible property” which does not include the cost of remedying the insured's own defective work.
Second, the court concluded there was no “occurrence”. The court considered this issue because it appears to have accepted that there were some claims which constituted property damage, namely claims for resulting damage to non-structural portions of Swagger's work, such as damage to carpeting and drywall. The court concluded that because the claims arose out of defective workmanship, there was no accident or occurrence and therefore the insuring provisions in the policies were not triggered.
The Progressive Homes case
The Progressive Homes case was also a “leaky condo” action where the plaintiff alleged that Progressive Homes was negligent in the construction of a condominium, and that it was also liable for the negligence of its sub-contractors. Progressive Homes sought a declaration that it was owed a defence pursuant to its various CGL policies with Lombard.
The B.C. Court of Appeal's decision in Progressive Homes largely followed the reasoning of Swagger and further entrenched the notion of a narrow interpretation to the CGL insuring provision by upholding the view that property damage, as that term is typically defined in a CGL policy, only included damage to third party property, but did not include damage to one's own work. As such, the B.C. Court of Appeal held that Progressive Homes was not owed a defence in respect of the construction deficiency claim that had been brought against it.
On September 23, 2010, the Supreme Court of Canada released its decision in Progressive Homes and, in reversing the decision of the B.C. Court of Appeal, brought renewed clarity and consistency to the manner in which CGL polices are to be interpreted and applied across Canada.
The Supreme Court of Canada began its analysis by restating the principles to be applied when interpreting insurance policies. Although the court's comments on this issue largely echo principles from earlier decisions of the court, the court did provide a new focus on the importance of giving effect to the clear language of the policy. The following passage from the decision succinctly sets out the principles to be applied when interpreting an insurance policy:
[22] The primary interpretive principle is that when the language of the policy is unambiguous, the court should give effect to clear language, reading the contract as a whole (Scalera, at para. 71).
[23] Where the language of the insurance policy is ambiguous, the courts rely on general rules of contract construction (Consolidated-Bathurst, at pp. 900-902). For example, courts should prefer interpretations that are consistent with the reasonable expectations of the parties (Gibbens, at para. 26; Scalera, at para. 71; Consolidated-Bathurst, at p. 901), so long as such an interpretation can be supported by the text of the policy. Courts should avoid interpretations that would give rise to an unrealistic result or that would not have been in the contemplation of the parties at the time the policy was concluded (Scalera, at para. 71; Consolidated-Bathurst, at p. 901). Courts should also strive to ensure that similar insurance policies are construed consistently (Gibbens, at para. 27). These rules of construction are applied to resolve ambiguity. They do not operate to create ambiguity where there is none in the first place.
[24] When these rules of construction fail to resolve the ambiguity, courts will construe the policy contra proferentem — against the insurer (Gibbens, at para. 25; Scalera, at para. 70; Consolidated-Bathurst, at pp. 899-901). One corollary of the contra proferentem rule is that coverage provisions are interpreted broadly, and exclusion clauses narrowly (Jesuit Fathers, at para. 28).
Applying these principles, and having regard to the pleadings, the Supreme Court of Canada held that the insured met the onus of proving that the insuring provision was triggered as there was “property damage” caused by an “accident”.
With respect to the meaning of “property damage”, the court held that this phrase included damage to any tangible property, which included the building being constructed, and was not limited to damage to the property of a third party. As such, damage to one part of the building which was allegedly caused by another part of the building constituted “property damage”.
With respect to the meaning of “accident”, the court held this requirement had been met because the pleadings alleged negligence, which on their face suggested that the damage was fortuitous. The Supreme Court of Canada rejected the insurer's argument that a claim for faulty workmanship could never be an accident on the basis that each case had to be determined on its facts. The court also rejected the argument that equating faulty workmanship with an accident would convert the CGL policy into a performance bond, noting that the CGL policy picks up where the performance bond leaves off.
The onus then shifted to the insurer to prove that an exclusion applied. The court held that a “work performed” exclusion did not clearly and unambiguously apply to all of the claims made against the insured and as such, the insurer owed a duty to defend.
The Bulldog Bags case
The first (and at the time of writing this article, only) appellate decision to apply the Supreme Court of Canada's decision in Progressive Homes in the context of a CGL policy is the B.C. Court of Appeal's decision in Bulldog Bag Ltd. v. AXA Pacific Insurance Co., 2011 BCCA 178.
Bulldog manufactured plastic and paper packaging. In the spring of 2008, Bulldog manufactured and supplied to Sure-Gro plastic packaging which was printed with Sure-Gro's logos and product use instructions. Sure-Gro intended to use these bags to sell soil and manure to Canadian Tire. For the 2008 season, Bulldog supplied Sure-Gro with more than 1 million of these printed bags. Sure-Gro proceeded to fill the bags with soil and manure, but before the bags were shipped to Canadian Tire, Sure-Gro discovered that moisture was causing the ink on the bags to run, rendering the labeling partially illegible. Also, ink and moisture had mixed together and pooled on the finished products.
Sure-Gro had not yet filled 844,000 of the bags, and these were returned to Bulldog, which provided replacement bags that utilized a different type of ink.
Sure-Gro then brought an action against Bulldog in respect of the bags that had already been filled. Sure-Gro sought reimbursement for the cost of emptying the soil and manure from the bags, disposing of the defective packaging, repackaging the soil and manure, and lastly Sure-Gro sought damages for the loss of about 10% of the soil and manure during this process. Bulldog settled the action with Sure-Gro. Bulldog then sought indemnity from its liability insurer AXA for the settlement amount, less the amount attributed to the initial cost of the defective bags that had already been filled, as Bulldog conceded that the cost of the bags themselves were not covered.
Bulldog had a fairly typical CGL policy. The policy's insuring provision stated that the insured had coverage for sums the insured became legally obligated to pay by reason of liability imposed by law for “compensatory damages because of:… property damage… due to an accident or occurrence…” The policy defined “property damage” as “physical injury to or physical destruction of tangible property, including loss of use thereof, or loss of use of tangible property that has not been physically injured or destroyed.”
AXA took the position that the only physical injury or damage to tangible property was the bags themselves, which was Bulldog's own product, and that all other costs incurred by Sure-Gro were pure economic losses that were not covered under Bulldog's CGL.
At the trial (which concluded before the Supreme Court of Canada released its decision in Progressive Homes), the judge agreed with AXA's argument that Bulldog's packaging had not been incorporated into Sure-Gro's product, and thus had not changed the essential nature of Sure-Gro's product so as to make the packaging inseparable from the contents of the packaging. The trial judge further held that the loss of 10% of the soil and manure through the repackaging process did constitute physical destruction of tangible property and thus this claim was covered under Bulldog's CGL policy. The value of that lost material was only about $12,000.
On appeal, because the Supreme Court of Canada's decision in Progressive Homes had since been released, AXA was compelled to concede that the trial judge's approach to the interpretation of property damage was wrong. Accordingly, on appeal, AXA conceded that all of the claims against Bulldog constituted an accident and that there was property damage because Bulldog's bags were injured and Sure-Gro lost the use of them. The focus of the appeal therefore turned away from an interpretation of the CGL's insuring provision, and instead turned to the issue of whether any of the exclusions in the CGL policy applied.
AXA argued that exclusion 6(a) excluded all of the claims against Sure-Gro. Exclusion 6(a) stated there is no coverage for claims for property damage to goods or products manufactured or sold by the insured. AXA argued that all of the costs claimed by Sure-Gro were all part of the repair program, that is, they related to the loss of use of the bags and involved costs associated with repairing and replacing Bulldog's faulty product, and as such, there was no claim for resultant damage or loss of use of other property.
The Court of Appeal rejected AXA's argument respecting exclusion 6(a), and wrote:
[33] On balance, I am not persuaded that AXA's approach to the interpretation of clause 6(a) is correct. Bearing in mind that exclusion clauses are to be read narrowly and in a manner consistent with the parties' reasonable expectations, I find that the clause operates to exclude claims for damage to Bulldog's bags, including loss of use thereof, but cannot be extended to compensation for Sure-Gro's costs separating those bags from its products, repackaging in different bags, and salvaging the “old” product some months later. To deny coverage would, as Mr. Ward suggested, be a ‘perversion’ of Progressive Homes. Furthermore, even before Progressive Homes, cases such as Carwald and Gulf Plastics had established that the “own product” exclusion did not apply to loss incurred by the insured's customer as a result of defects in the insured's own product. Spencer J., for example, stated in Gulf Plastics:
Exclusionary cl. (h) [similar to clause 6(a) in the case at bar] does not assist [the insurer] here. The damage that was the subject matter of the original claim was caused not to the plaintiff's own product but to its customer, Flexpack's film made from the plaintiff's product. It is true that the masterbatch itself was damaged in the sense that it too was rendered unsuitable for its intended use, but that was not the subject of the claim. [At para. 10.]
In a cross-appeal against the trial judge's finding that the $12,000 attributed to the lost 10% of the soil was covered, AXA argued that this claim was excluded by the policy's exclusion 7(b). Exclusion 7(b) is a typical “work performed” CGL exclusion and stated as follows:
This insurance does not apply…to claims arising from loss of use of tangible property that has not been physically injured or destroyed resulting from:…
(b) the failure of the Insured's products or work performed by or on behalf of the Insured to meet the level of performance, quality, fitness or durability warranted or represented by the Insured…
The Court held that exclusion 7(b) did not apply, because the threshold requirement that the property not be physically injured or destroyed had not been met. Specifically, the 10% of the soil that remained stuck to the defective bags was physically injured or destroyed because it could no longer be used for its intended purposes.
Where do we go from here?
The Supreme Court of Canada's interpretation of the CGL policy in Progressive Homes is refreshing in that it restored the idea that insurance policy insuring provisions should be read broadly and in accordance with their ordinary meaning. For example, “property damage” should be interpreted to mean exactly what a person would expect it to mean: Physical damage to property. In the absence of specific language restricting its meaning to only third party property, the phrase “property damage” must be given a broad interpretation and must be read as applying to damage to all tangible property, including one's own.
Progressive Homes did leave open one question, that is, what is meant by “loss of use” as that phrase is used in the second branch of the CGL's definition of “property damage”. If property has defects as a result of poor workmanship and as a consequence the property cannot be used, arguably there has been “loss of use” of that property and thus there may be “property damage”. This issue was not fully explored by the court, but this issue is likely to be the subject of future litigation and could be the basis upon which the defence obligation owed to contractors is expanded even further.
The further impact of Progressive Homes is likely to be that courts will be more inclined to find that there has been an “accident” and that there has been “property damage”. Going forward, the CGL's insuring provision is more likely to be triggered, not only in construction deficiency claims, but as seen in Bulldog Bags, all manner of liability claims. This will place greater emphasis on the interpretation of CGL exclusion clauses with the result that the body of Canadian case law interpreting CGL exclusions is likely to continue evolving in the years to come.
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