June 8, 2021 - In Construction Placo inc. c.
In
Placo instituted legal proceedings against Kingspan to recover the deposit for the manufacturing of the panels and then against Cégerco for damages flowing from the resiliation of the contract. In its defence, Kingspan took a cross-claim for transportation costs. In
Northbridge concluded that there were no covered material damages within the meaning of the liability policy, given that the allegations were essentially related to the inexecution of contractual obligations or redoing work as well as the delays resulting from same.
The Court's analysis
The Court analyzed the principles applicable to a
- the occurrence of material or bodily injuries within the meaning of the policy;
- the fact that material damages result from a covered loss;
- the fact that the material damages occur within the period of coverage.
The Court noted that the insured did not benefit from coverage if the claim was solely for costs related to the poor execution of the work whereas no covered loss occurred.
The Court underlined that in order to determine whether Placo benefitted from insurance coverage, it had to assess if, during the period of the policy, the proceedings and the exhibits establish a possibility of an occurrence of material or bodily damages resulting from a loss within the meaning of the policy. In the affirmative, the Court had to address whether the exclusions apply.
To respond to these questions, the Court had to analyze the true recourse of the cross-claims. First, the cross-claim of Kingspan against Placo to recuperate an amount of
With respect to the cross-claim of Cégerco, the Court reviewed the proceedings and noted that Placo had to provide materials and labour for the execution of the subcontract. Cégerco alleged that the exterior wall panels were finally installed one year later than provided for, and that the default and inexecution of Placo caused numerous delays and additional costs to Cégerco. The cross-claim of
Were there any material damages?
The Court concluded that the damages claimed were not material damages within the meaning of the policy. There was no deterioration or destruction of a corporal property. The panels were not installed with the exception of a few and could not cause deterioration or destruction. Furthermore, given that the construction was not completed there was no loss of enjoyment which resulted; besides, only the owner of the building could invoke a loss of enjoyment. It is the delays of Placo in its execution of the contract which provoked the claim in compensation from Cégerco. Pure economic damages which flow from inadequate performance of the product of the insured are not a consequence of the loss. They result from normal and foreseeable incidents which could occur in the normal course of the activities of all enterprises.
The Court underlined that this case is distinguished from
The Court concluded that Northbridge was under no duty to assume Placo's defence.
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