The Court found on a special case under Rule 9-3 that the insurer did not have a duty to defend the insureds with respect to claims for negligent acts occurring within the policy period when the resulting damage (i.e., a landslide) occurred several months after the policy expired
Insurance law – Homeowner’s insurance – Policies and insurance contracts – Duty to defend – Negligence of insured – Terms of policy – Expired policy
Canadian Northern Shield Insurance Co. v. Intact Insurance Co., [2015] B.C.J. No. 943, 2015 BCSC 767, British Columbia Supreme Court, May 11, 2015, B. Fisher J.
The insurer issued a homeowner’s policy to Hazel and Norman Sibson for a ten year period. The property was sold and the Sibsons later purchased a policy from Canadian Northern Shield Insurance Company (“CNS”). Approximately three months later, a landslide occurred at the Sibsons’ former residence. The slide resulted in damage to nearby lands and premises and injured Michael Kuttner and killed Eliza Kuttner. Mr. Kuttner and the Estate of Ms. Kuttner commenced separate actions against the Sibsons and others. In the actions, it was alleged that the Sibsons were negligent by adding debris to the top of an escarpment, failing to implement an adequate drainage system, altering and/or removing vegetation, installing a concrete pool at the top of the escarpment, and placing excessive loads on the escarpment.
The insurer refused to defend or indemnify the Sibsons in the actions.
CNS responded to the actions on behalf of the Sibsons and settled both actions. CNS subsequently commenced an action against the insurer for a declaration of entitlement to equitable restitution or contribution from the insurer towards defence and settlement costs.
The insurance policy noted as follows regarding liability coverage:
COVERAGES
This insurance applies:
1. to accidents or occurrences which take place during the period this policy is in force;
2. separately to each insured against whom claims are made or actions are brought.
PERSONAL LIABILITY
This is the part of the policy you look to for protection if you are sued.
We will pay all sums which you become legally liable to pay as compensatory damages because of unintentional personal injury or property damage arising out of:
1. your personal actions anywhere in the world;
2. your ownership, use or occupancy of the premises defined in the Additional Definitions.
The words “accidents” and “occurrences” were not defined in the policy.
At issue on the special case was whether the terms “accident” or “occurrence” as used in the policy applied to negligent acts or omissions of an insured occurring within the period of the policy in circumstances where damage or injury did not result from those acts or omissions until after the policy had expired.
CNS argued that the essence of the claims against the Sibsons was that their ongoing continuous negligent acts commenced and contributed to a process that caused damage such that the landslide was inextricably bound up with the negligent acts. The Court rejected this argument and found that the circumstances in this case involved two separate components: first, a series of acts by the Sibsons that may never have caused damage in normal weather conditions, and secondly, the landslide which actually caused the damage.
The Court agreed with the reasoning in Landry v. Fenton, [1994] B.C.J. No. 1472 (SC), because it involved the same issue in a similarly framed policy. The Court found that the words “accident” or “occurrence” meant the negligent acts which occurred during the policy and not the consequence. As a result, the Court found that the insurer did not have a duty to defend the Sibsons with respect to the claims against them in the actions and CNS’ action was dismissed.
This case was digested by Aaron D. Atkinson and edited by David W. Pilley of Harper Grey LLP. If you would like to discuss this case further, please feel free to contact them directly at aatkinson@harpergrey.com or dpilley@harpergrey.com or review their biographies at http://www.harpergrey.com.
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