Petitioners providing certain professional services relating to a construction project were held to be insureds under the terms of a professional liability policy, despite not being identified by name in either the policy or the application for insurance
Insurance law – Liability insurance – Errors and omissions policy – Interpretation of policy – Notice
Surespan Structures Ltd. v. Lloyd’s Underwriters,  BCJ No. 1251, 2018 BCSC 1058, British Columbia Supreme Court, June 27, 2018, Winteringham, J.
The petitioners, Surespan Structures Ltd. (“Surespan”) and HGS Limited (“HGS”), sought a declaration that they were insureds under a professional liability policy.
Stantec Architecture Ltd. (“Stantec”) was retained by Graham Design Builders LP (“Graham”) to perform architectural services for a project which included two parkades. Stantec applied for an insurance policy for the project. On the application form, Stantec indicated its scope of work included the parkades. The application also indicated there would be structural engineering as part of the professional duties either performed by Stantec or on its behalf. Neither Surespan nor HGS were identified on the application. The insurer issued the policy, which did not identify Surespan or HGS by name.
Surespan then contracted directly with Graham to perform design (and construction) work regarding the two parkades. Surespan contracted with HGS to have HGS perform its engineering design services.
Subsequently, problems emerged with the parkades, which Graham alleged were the result of errors or omissions in the design by Surespan and/or HGS.
Surespan and HGS submitted that they were insureds by virtue of clause 3 in the policy. Clause 3 defined an insured as any other firm(s) which have or will have provided “PROFESSIONAL SERVICES” in regards to the project. The term “PROFESSIONAL SERVICES” was a defined term which related to the services described in the application.
The insurer took the position that clause 3 of the policy was a mistake and none of the parties contemplated it being included in the policy. The insurer argued clause 5 supported this position as clause 5 defined an insured as “any other firm(s) which have or will provide professional services in regard to the Project provided that such additional firms are reported and accepted by the Insurer along with details of the professional services to be provided, the date on which the firm is to commence the provision of services, and their professional fees.” The term professional services was not defined in the policy.
The court rejected the insurer’s position and found that clause 3 was unambiguous, and could be read harmoniously with clause 5. The court held that the petitioners were insureds based on clause 3 of the policy.
This case was digested by Kora V. Paciorek, and first published in the LexisNexis® Harper Grey Insurance Law Netletter and the Harper Grey Insurance Law Newsletter. If you would like to discuss this case further, please contact Kora V. Paciorek at firstname.lastname@example.org.
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