To obtain summary judgment, one must show that there are no facts in dispute and the claim has no chance of success

Unsuccessful application by two Insureds for summary judgment, partial summary judgment or an order limiting the Plaintiff’s damages to losses not covered by a builder’s all-risk policy that had been issued to the Plaintiff.  The court determined that the Plaintiff had satisfied the onus of establishing that the claim had a real chance of success.

Sable Offshore Energy Inc. v. Ameron International Corp., [2008] N.S.J. No. 356, Nova Scotia Supreme Court, S.M. Hood J., August 27, 2008

A paint applicator (AML) and a structural steel fabricator and erector (RKO) applied for summary judgment or alternative remedies in litigation commenced by the Plaintiff for damages arising from paint failures at a project involving on and off shore facilities for the production of natural gas.  The Plaintiff alleged that there had been “widespread and premature failure” of the paint used on the facilities.  The Plaintiff had purchased a Builder’s All-Risk insurance policy from the Insurer in respect of the project.

RKO sought summary judgment dismissing the Plaintiff’s claim, or, alternatively, an order that the Plaintiff defend it in the action on the basis that RKO was covered by the Builder’s All-Risk policy in accordance with the terms of its contracts.  AML also sought summary judgment dismissing the Plaintiff’s claim against it, or, alternatively, an order limiting damages to the loss not covered by the Builder’s All-Risk policy.

The Court stated that the appropriate test to be applied on a motion for summary judgment was that the applicants must satisfy the Court that no material facts are in dispute, after which the Court can consider whether summary judgment should be granted.  The respondent then has the onus of showing that its claim has a “real chance of success”.  The Court found that there were no issues of material fact in dispute and that the issues of what coverage was to be provided under the Builder’s All-Risk policy and the intent of the parties with respect to insurance and indemnity could be resolved by looking at the contract wording.  These issues, the Court noted, were questions of law and not questions of fact.  Accordingly the Court was entitled to consider whether summary judgment should be granted and the onus shifted to the Plaintiff to show that its claim had a reasonable chance of success.

With respect to RKO’s application for summary judgment, the Court considered the two contracts between RKO and the Plaintiff, one for steel erection and one for steel fabrication.  The Court held that only the steel erection contract contained insurance provisions for the benefit of RKO and that the insurance and indemnification provisions in that contract did not bar a claim against the Plaintiff. RKO’s application for summary judgment was therefore dismissed.

With respect to AML’s application for summary judgment, the Court considered the provisions in the contract between AML and the Plaintiff and the provisions in the Builder’s All-Risk policy and found that there was no provision in the contract barring the Plaintiff from claiming against AML for breach of its representations, warranties and guarantees.  The Court further held that if the Plaintiff could establish that it had suffered loss and damage as a result of AML’s defective workmanship, there was a “real chance of success” given that the Builder’s All-Risk insurance excluded coverage for defective workmanship on the part of the Insured.

In the result, the Court dismissed both RKO and AML’s applications with costs to the Plaintiff.

This case was originally summarized by Shanti Davies and originally edited by David W. Pilley.

To stay current with the new case law and emerging legal issues in this area, subscribe here.