The Court held that the only cause of damage was a continuous leak and the mould caused by that leak. The loss was clearly excluded by the explicit terms of the contract.
Chandra v. Canadian Northern Shield Insurance Co., [2006] B.C.J. No. 1017, British Columbia Supreme Court
The Insureds were advised in October 2003, during repairs with respect to a previous loss, that there was continuous and repeated seepage or leakage of water from the basement of their house. The drain tile system was subsequently replaced by a contractor in about February or March 2004. In November 2004, the Insureds reported a new claim to their Insurer with respect to water ingress into the residence basement. The Insurer took the position that the loss was not covered.
The policy contained an exclusion for loss or damage caused by wet or dry rot, fungi, spores or mould. Furthermore, loss or damage caused by continuous or repeated seepage of water was excluded.
The Insureds took the position that the flood in the basement resulted from the contractor’s misplacement of the drain tile system. The Insureds submitted that the cause of the water ingress into the basement was due to “faulty design material workmanship”. The Insureds submitted that as the policy did not exclude the peril of “faulty design, material or workmanship”, the loss should be covered. The Insureds further submitted that where there are two or more causes of a loss, and one of those causes is not excluded, then the loss is covered under the policy.
The Court held that Derksen v. 539938, 2001 SCC 72, did not stand for the proposition that an exclusion cannot operate in the face of two or more concurrent causes of loss. The Court also noted that the continuous leak was not a fortuitous loss. The Court found that the only cause of the damages sustained was the continuous leak and the mould caused by that leak. The loss was clearly excluded by the explicit terms of the policy.
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