Digest: Community Electric Ltd. v Royal & Sun Alliance Insurance Co. of Canada, 2018 SKQB319

• Date: November 20, 2018

Reported as: 2018 SKQB319

Docket Number: QB18316 , QBG 1674/16 JCS

Court: Court of Queen's Bench

Date: 2018-11-20

Judges:

• Currie

Subjects:

• Insurance � Actions on Policies

Digest: The plaintiff, an electrical contracting company, applied for summary judgment in its claim against the defendant insurance company for payment under an insurance policy. The plaintiff was engaged in electrical contracting work related to the construction of a facility owned by Cargill Ltd. The construction contract between the plaintiff and Cargill contained some provisions related to insurance, including that Cargill would self-insure or purchase property insurance on the work at the site. A fire broke out in the facility, caused by an error in the plaintiff�s work. The plaintiff agreed that Cargill should withhold $191,000 from its payments to it under their construction contract for the cost of labour and material to repair Cargill�s property and construction delay costs because it was responsible for the fire. It then sought payment of that amount from the defendant under the commercial general liability (CGL) insurance policy issued to it by the defendant. The defendant argued that the policy did not insure the loss. It denied that the plaintiff was legally obligated to pay any amount to Cargill as compensatory damages because the plaintiff had a complete defence to Cargill�s claim because Cargill was obliged under the construction contract to carry builder�s risk insurance that would cover this kind of loss. The defendant asserted that Cargill and the plaintiff intended the provisions of the construction contract, in accordance with industry practice and expectations, would be that the plaintiff�s policies would be primary only to the extent that the plaintiff contractually undertook. The plaintiff did not undertake to obtain builder�s risk insurance, but Cargill did.
HELD: The plaintiff was granted judgment for $189,100. The court found that it was an appropriate case for summary determination under Queen�s Bench rule 7-5(1)(b). It held that the plaintiff was legally obligated to pay Cargill for its loss arising from the fire caused by the plaintiff�s error. The CGL policy covered the loss. It expressly stated that the plaintiff�s policy would be primary. Regardless of the defendant�s argument regarding what the intentions of Cargill and the plaintiff were in the construction contract, Cargill had not in fact obtained...