28/04/2020 – Jurisdiction Alberta
Part 70 published on 01/06/2020
Appeal allowed. Damage to parking area covered by corporation’s insurance
The condominium corporation hired a contractor to provide “parking rehabilitation and maintenance work to the parking surface in the parkade area” of the complex. The work involved cutting into the membrane of the parkade surface. The contractor cut too deeply, causing damage to the structural integrity of the parkade. The question was whether or not that damage was covered by the corporation’s property insurance policy.
The insurance policy was an “all risks” policy that included an exclusion for faulty or improper workmanship. However, the exclusion said that the exclusion “does not apply to loss or damage caused directly by a resultant peril not otherwise excluded” in the policy.
At the first level of appeal, the Court of Queen’s Bench held that the damage to the parkade was excluded under the insurance policy, because the damage was all part and parcel of the contractor’s faulty work. [See Condo Cases Across Canada, Part 64, December 2018.]
On further appeal, the Court of Appeal held that the damage was covered by the corporation’s insurance policy. The Court of Appeal said that the damage to the parkade was resultant damage, covered by the policy. The Court of Appeal said:
In our view, the resultant peril, or consequence, that causes a risk of loss to property, is the loss of structural integrity to the parkade; in other words, the risk of structural collapse.
In essence, Aviva’s broad reading of the exclusion clause would exclude the cost of making good the consequences of faulty workmanship.