The Court held that damage to shipments of laminated truck flooring was not caused by “inherent vice or nature of the subject matter insured”, which was an excluded peril under the policy

Nelson Marketing International Inc. v. Royal & Sun Alliance Insurance Co. of Canada, [2005] B.C.J. No. 1235, British Columbia Supreme Court

The Plaintiff made three shipments of laminated truck flooring, which were insured for their declared value. The Plaintiff had an “all risks” policy with the insurer. The insurer denied coverage on the basis that the loss was caused by “inherent vice or nature of the subject matter insured”, which was an excluded peril.

The Court noted that it was not necessary to consider the question of the burden and onus of proof because the cause of damage was ascertainable.

The Court found that the proximate cause of the damage leading to the loss complained of was the extreme heat and moisture content of the holds in the feeder vessels where the cargo was stowed. As such, the situation was distinguishable from the situation in the English Court of Appeal decision in T.M. Noten B.V. v. Harding, [1990] 2 Lloyd’s Rep. 283, where the gloves, having absorbed some moisture prior to transport, simply interacted with the surrounding natural environments to which they were exposed in the normal course of their voyage.

The Court held that the damage leading to the loss claimed was not due to the inherent vice or nature of the cargo, but rather was caused by the fortuity of being put in holds which substantially altered the normal environment to which the cargo would be exposed. As such, the Court held that the three shipments fell within the scope of the policy coverage.

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