A house which suffers water damage is not vacant, under the terms of standard property insure, if a tenant has control over the house, but resides at a different property

Mattock v. Saskatchewan Mutual Insurance Co., [2006] S.J. No. 423

Mr. Mattock owned a rental property in the Town of Leask (the “House”). The House was insured, along with several other rental properties, with Saskatchewan Mutual Insurance Co. (“SMI”). The House was rented to tenants. On December 31, 2002, the tenants moved out of the House. In January of 2003, Mr. Mattock found a new tenant. The new tenant agreed to pay rent of $350 per month, agreed to paint the interior of the house, and agreed that this would constitute his rent for the days remaining in the month of January. The tenant placed utilities in his name on January 23, 2003 and gained access to house on that date and began painting the interior. On January 24, 2003, the plaintiff discovered water leaking from the kitchen and into the basement. The water in the basement was level with the kitchen floor joints. The water was pumped out and a heater was placed in the basement. However, in March of 2003, the tenant began to experience difficulty with mould and moved out of the house. Mr. Mattock presented a claim for the resulting damage to SMI. SMI denied coverage on the basis that the house was vacant within the meaning of the policy.

Mr. Mattock commenced an action against SMI for a declaration that he was entitled to insurance proceeds for the damage to his house. The parties agreed that the damage was valued at $30,000. The following terms were defined in the insurance policy:

“A dwelling or unit is ‘vacant’ when it is not being used by anyone as their usual place of residence …

‘Vacant’ refers to circumstances where, regardless of the presence of furnishings, all occupants have moved out with no intention of returning and no occupant has taken up residence.”

The words “their usual place of residence” were replaced with the words “occupant has taken up residence” in the relevant version of the policy.

The policy provided that SMI would not insure loss or damage caused by water while the dwelling was under construction or vacant. Krueger, J determined that on January 23, 2003, the new tenant took possession of the house owned by Mr. Mattock. The tenant did so for the purposes of painting the interior and therefore occupied the house. Therefore, the only issue was whether, the tenant / occupant resided in the house. Unfortunately, “residence” was not defined in the policy. The change in the definition of “vacant” from the policy in place prior to the loss and the one in effect at the time of the loss, removed the requirement that the house or unit be the usual place of residence. This change permits more than one place of residence and does not require primary place of residence.

The policy required that residency be established at the time of the loss. The policy stated that sleeping and eating in the property were not required in order to have taken up residence. Furnishings were not necessary. Krueger J concluded that although the tenant had not yet abandoned any other residence, he had taken up residence in the house rented by Mr. Mattock. Krueger J. noted that taking up residence, as defined in the policy, requires more than mere possession; however the policy requires less than establishing that the property is the usual place of residence. In the circumstances, Krueger J determined that the tenant was resident and that the insurance coverage was valid.

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