Part 29 published on 01/02/10
Replacement of defective standpipe system not covered by property insurance
OCSCC No. 687 is a 32-story residential condominium in Ottawa. The standpipes of the building’s fire protection system were either improperly designed or improperly installed. Water escape resulted when a pipe or coupling failed due to a water hammer. Substantial water damage resulted and the standpipe system was replaced.
The respondent insurer covered the damage caused by the water escape. The dispute related to coverage under the insurance policy for the cost of replacement of the standpipe system.
The lower Court ruled in favor of the condominium corporation, finding that replacement of the standpipe system was covered by the insurance. The insurer was successful on appeal. The Court of Appeal held that replacement of the standpipe system was not covered under the insurance policy for the following reasons:
- The failure was the result of the improper design or installation of the system. [The water hammer was a regular or normal occurrence for such a system.]
- This risk or peril was accordingly not covered by the policy and in fact was specifically excluded by an exclusion clause in the policy.
- Also, the replacement of the standpipe system did not constitute “resulting damage” under the terms of the policy or under Section 99(3) of the Condominium Act, 1998.