Edmonton (City) v. Protection Mutual Insurance Co., (1997) 197 A.R. 81 (QB)

JudgeLee, J.
CourtCourt of Queen's Bench of Alberta (Canada)
Case DateFebruary 14, 1997
Citations(1997), 197 A.R. 81 (QB)

Edmonton v. Protection Mutual (1997), 197 A.R. 81 (QB)

MLB headnote and full text

The City of Edmonton (plaintiff) v. Protection Mutual Insurance Company (defendant)

(Action No. 9303-18136)

Indexed As: Edmonton (City) v. Protection Mutual Insurance Co.

Alberta Court of Queen's Bench

Judicial District of Edmonton

Lee, J.

February 14, 1997.

Summary:

The City of Edmonton owned and operated the Clover Bar Generating Station, a thermal electricity-generating station. Two steam turbines commissioned respectively in 1970 (Unit 1) and 1973 (Unit 2) powered the electricity generators. The turbines were insured under a multi-peril insurance policy that provided different coverages for a num­ber of locations owned by the City. More particularly, the policy provided Boiler and Machinery coverage for the turbines and fire coverage for a water treatment plant. Cracks were discovered in Unit 1's intermediate pressure rotor in 1991. Similar cracks were found on Unit 2 in 1992. Both rotors had to be replaced. The probable cause of the rotors' failure was "high cycle fatigue crack initiation and propagation under the in­flu­ence of high mean stress and fretting caused by faulty design." The decision to replace Unit 1's intermediate pressure rotor was made on February 6, 1992. The decision respecting Unit 2 was made on April 23, 1992. The City claimed insurance proceeds from its insurer. The latter denied coverage. The City sued. The statement of claim was filed on September 7, 1993.

The Alberta Court of Queen's Bench dis­missed the action because it was barred by the one year limitation period under Statu­tory Condition 14 respecting fire coverage and made applicable by incorporation to Boiler and Machinery coverage.

Courts - Topic 102

Stare decisis - Authority of judicial deci­sions - English, American and foreign authorities - English decisions - The Alberta Court of Queen's Bench stated that it was bound only by Alberta Court of Appeal and Supreme Court of Canada decisions - Decisions of the Judicial Committee of the Privy Council, the House of Lords and the Appellate Courts of the other eight Common Law Canadian Pro­vinces tended to be strongly persuasive - Decisions of foreign courts with similar legal traditions had some persuasive value depending on their circumstances - See paragraph 161.

Courts - Topic 103

Stare decisis - Authority of judicial deci­sions - English, American and foreign authorities - American decisions - The Alberta Court of Queen's Bench stated: (1) there was a long Canadian jurisprudential tradition of accepting American authorities in insurance law and (2) American deci­sions respecting boiler and machinery insurance had precedential value "if they are factually somewhat on point and pri­marily because they involve insurance claims involving similarly worded in­s­urance policies" - See paragraphs 146 to 189.

Courts - Topic 126.1

Stare decisis - Authority of judicial deci­sions - Courts of superior jurisdiction - Supreme Court of Canada - General - [See Courts - Topic 102 ].

Courts - Topic 130

Stare decisis - Authority of judicial deci­sions - Courts of superior jurisdiction - In other provinces - [See Courts - Topic 102 ].

Evidence - Topic 6605

Parol evidence rule - Interpretation of a legal act - General principles - Admis­sibility of parol evidence - The Alberta Court of Queen's Bench held: "As with any contract interpretation, parol evidence is generally not admissible. There are no circumstances here for the admission of parol evidence. It is not permissible to use a contracting party's opinion of the mean­ing or purpose of contractual provisions or a contracting party's statement of what it intended as any evidence in resolving the dispute over interpretation." - See para­graphs 272 to 279.

Insurance - Topic 1851

The insurance contract - Interpretation of contract - General - The Alberta Court of Queen's Bench discussed the principles of interpretation of insurance contracts in­cluding the contra proferentem rule - See paragraphs 119 to 123.

Insurance - Topic 1861

The insurance contract - Interpretation of contract - Contra proferentem rule - Am­biguity construed against insurer - [See Insurance - Topic 1851 and Insurance - Topic 3355 ].

Insurance - Topic 3003

Payment of insurance proceeds - General principles - Deductible clauses - Two steam turbine rotors had to be replaced because of cracks - The probable cause of their failure was "high cycle fatigue crack initiation and propagation under the in­fluence of high mean stress and fretting caused by faulty design" - The insurance policy respecting the rotors provided cov­erage for loss from an "Accident" and applied a deductible "against the total loss or damage covered by this policy in any one occurrence" - The insured argued that only one deductible should be applied since what occurred here was a single occurrence - The Alberta Court of Queen's Bench disagreed and found that there were two "Accidents" hence two deductibles, notwithstanding that the accidents arose from the same cause - See paragraphs 350 to 358.

Insurance - Topic 3355

Payment of insurance proceeds - Limita­tion of actions - General - A multi-peril policy pro­vided Boiler and Machinery coverage for steam turbines and fire coverage for other prop­erty - The policy's first page con­t­ained an incorporation clause provi­ding that the policy was "made and ac­cepted subject to ... provisions and stipula­tions ... hereinafter stated including the statutory conditions of the Standard Fire Policy, which are hereby made a part of this poli­cy" - The statutory conditions respecting fire coverage provi­ded for a one year limitation period - The Alberta Court of Queen's Bench held that the incorpora­tion clause made this one year limitation period also applicable to Boiler and Ma­chinery coverage - The clause was unam­biguous - Proceeding to the next step in the interpre­tation process, including the contra prof­erentem rule, was not necessary - See paragraphs 236 to 347.

Insurance - Topic 3366

Payment of insurance proceeds - Limita­tion of actions - Waiver by insurer of limitation period - [See Limitation of Actions - Topic 1701 ].

Insurance - Topic 6746

Boiler and machinery insurance - Extent of coverage - Accident - Loss from - Defined - A policy provided coverage for loss from an "Accident" - The policy defined "Accident" as a "sudden and acci­dental occurrence" - The Alberta Court of Queen's Bench discussed Canadian autho­rities on the meaning of "sudden and acci­dental occurrence" - The court held that notwithstanding quite correct jurispruden­tial criticism of cases that con­verted the word "sudden" into nothing more than a synonym for "accident", Canadian cases in the context of boiler and machinery poli­cies tended to confirm that the phrase "sudden and accidental" meant "unex­pected and unforeseen event" in­corporating no temporal element to this phrase - See paragraphs 124 to 145.

Insurance - Topic 6746

Boiler and machinery insurance - Extent of coverage - Accident - Loss from - Defined - Cracks appeared in the interme­diate pressure rotors of two steam turbines used in an electricity generating station - The cracks appeared when the rotors "had only approximately reached half of their normal life expectancy" of 30 to 50 years - The rotors had to be replaced - The probable cause of their failure was "high cycle fatigue crack initiation and propaga­tion under the influence of high mean stress and fretting caused by faulty design" - The insurance policy respecting the rotors provided coverage for loss from an "Accident" - The policy defined "Acci­dent" as a "sudden and accidental occur­rence" - The Alberta Court of Queen's Bench held that the insured established coverage for the rotors - See paragraphs 103 to 118, 124 to 235.

Limitation of Actions - Topic 1701

Waiver - General - The insured sued the insurer for insurance coverage - The insu­rer invoked a one year limitation period provided by a statutory condition - The insured replied by invoking waiver re­sulting from settlement negotiations with the insurer - The Alberta Court of Queen's Bench found for the insurer: "... engaging in discussions of requesting or considering information before or after the one year limitation period expires are not unequiv­ocal acts of waiver. There is nothing in­consistent about the insurer agreeing to limit liability or negotiating or investiga­ting a claim and then relying on the provi­sions of the Statutory Condition. Even if there had been a waiver, there is no indi­cation that the plaintiff was ever lulled into or accepted such a waiver." - See para­graphs 256 to 271.

Limitation of Actions - Topic 2324

Actions in contract - Insurance contracts - When time begins to run - Cracks were discovered in two steam turbine rotors in 1991 and 1992 respectively - The decision to replace the two rotors were made on February 6 and April 23, 1992 respectively - The insurer denied coverage - The insured sued the insurer - The statement of claim was filed on September 7, 1993 - The insurer invoked a one year limitation to bar the action - Did the limitation period begin from the date of the physical occurrence of the damage or loss, or the date that the insured had knowledge of the problem? - The Alberta Court of Queen's Bench would have adopted the "discovera­bility" rule, held that the limitation period began to run certainly by April 23, 1992, and dismissed the action as untimely - See paragraphs 312 to 347.

Cases Noticed:

Consolidated-Bathurst Export Ltd. v. Mutual Boiler and Machinery Insurance Co., [1980] 1 S.C.R. 888; 32 N.R. 488; 112 D.L.R.(3d) 49, folld. [para. 105].

Trane Sales & Service Agency British Columbia v. Integrated Building Corp. (1987), 26 C.C.L.I. 36 (B.C.S.C.), consd. [para. 124].

Park Plaza Cleaners Ltd. v. Saskatchewan Government Insurance, [1983] I.L.R. 6157; 17 Sask.R. 1 (Q.B.), consd. [para. 129].

Regina Cold Storage Ltd. v. Gerling Glo­bal General Insurance Co. (1979), 4 Sask.R. 13; 102 D.L.R.(3d) 97 (C.A.), consd. [para. 135].

British Petroleum Canada Inc. v. Comco Service Station Construction & Mainte­nance Ltd. (1990), 73 O.R.(2d) 317 (H.C.), consd. [para. 136].

Federal Business Development Bank v. Continental Insurance Co. et al. (1991), 116 A.R. 26 (Q.B.), consd. [para. 150].

Partners Investments Ltd. v. Etobicoke (City) et al. (1981), 124 D.L.R.(3d) 125 (Ont. H.C.), consd. [para. 150].

United States of America and Washington Public Power Supply System v. Ark­wright-Boston Manufacturers Mutual Insurance Co. and Mutual Boiler and Machinery Insurance Co. (1982), C-76-155 (Dist. Ct. Wash.), consd. [para. 152].

Anderson and Middleton Lumber Co. v. Lumbermen's Mutual Casualty Co. (1959), 33 P.2d 938 (Wash. S.C.), refd to. [para. 167].

Cyclops Corp. v. Home Insurance Co. and Fischbach (V.) and Moore Inc. et al. (1973), 352 F.Supp. 931 (U.S. Dist. Ct.), refd to. [para. 168].

Metropolitan Waste Control Commission v. Protection Mutual Insurance Co., [1980] F.C.C.2d 1334 (Minn. D.C.), dist. [para. 169].

Central Louisiana Electric Co. v. Westing­house Electric Corp. (1991), 579 So.2d 981 (L.A.S.C.), consd. [para. 183].

Leontowicz v. Seaboard Life Insurance Co. (1984), 58 A.R. 66 (C.A.), refd to. [para. 198].

Columbia Cellulose Co. v. Continental Casualty Co., [1964] I.L.R. 581 (S.C.C.), affing. [1963] I.L.R. 489 (B.C.C.A.), refd to. [para. 199].

Smith v. British Pacific Life Insurance Co., [1965] S.C.R. 434, refd to. [para. 199].

Bubric v. Confederation Life Insurance Co. (1995), 175 A.R. 127 (Q.B.), refd to. [para. 200].

Schiffshypothekenbank Zu Luebeck A.G. v. Compton (Norman Philip), [1988] 1 Lloyd's Rep. 311 (C.A.), consd. [para. 203].

Ship Alexion Hope, Re - see Schiffshypo­thekenbank Zu Luebeck A.G. v. Comp­ton (Norman Philip).

Canadian Home Assurance Co. v. Genuine Auto Services Ltd. (1990), 2 C.C.L.I.(2d) 103 (Alta. C.A.), refd to. [para. 243].

Tri-Service Machine Ltd. et al. v. United States Fire Insurance Co. et al. (1994), 149 A.R. 379; 63 W.A.C. 379; 19 Alta. L.R.(3d) 163 (C.A.), refd to. [para. 243].

Andrews et al. v. General Accident As­surance Co. (1995), 165 A.R. 65; 89 W.A.C. 65 (C.A.), refd to. [para. 244].

Maracle v. Travellers Indemnity Co. of Canada, [1991] 2 S.C.R. 50; 125 N.R. 294; 47 O.A.C. 333; [1991] I.L.R. 1284, refd to. [para. 269].

Gillis v. Bourgard (1983), 41 O.R.(2d) 107 (C.A.), consd. [para. 270].

Bank of British Columbia v. Turbo Re­sources Ltd. (1983), 46 A.R. 22; 148 D.L.R.(3d) 598 (C.A.), consd. [para. 273].

Northwestern Mechanical Installations Ltd. v. Yukon Construction Ltd. (1982), 37 A.R. 132; 20 Alta. L.R.(2d) 156 (C.A.), consd. [para. 274].

St. Lawrence Petroleum v. Bailey Selburn Oil & Gas Ltd. (1963), 41 W.W.R.(N.S.) 210 (Alta. C.A.), consd. [para. 275].

St. Lawrence Petroleum v. Bailey Selburn Oil & Gas Ltd., [1963] S.C.R. 482; 45 W.W.R.(N.S.) 26; 41 D.L.R.(2d) 316, consd. [para. 277].

Anderson and Anderson v. Chaba and Chaba (1977), 7 A.R. 469; 81 D.L.R.(3d) 449 (C.A.), consd. [para. 278].

Ogilvie v. Grant (1906), 41 N.S.R. 1 (C.A.), refd to. [para. 278].

Demeyere (George A.) Tobacco Farms Ltd. v. Continental Insurance Co. (1984), 7 C.C.L.I. 38 (Ont. H.C.), consd. [para. 294].

Freesman v. Royal Insurance Co. of Cana­da (1986), 55 O.R.(2d) 562 (H.C.), consd. [para. 296].

Royal Bank of Canada v. Red River Val­ley Mutual Insurance Co. (1986), 42 Man.R.(2d) 124; 18 C.C.L.I. 75 (C.A.), consd. [para. 298].

Dressew Supply Ltd. v. Laurentian Pacific Insurance Co. (1991), 57 B.C.L.R.(2d) 198 (C.A.), consd. [para. 302].

Sever v. Economical Mutual Insurance Co. (1989), 66 O.R.(2d) 799 (C.A.), consd. [para. 303].

Statutes Noticed:

Limitation of Actions Act, R.S.A. 1980, c. L-15, sect. 4(c)(i) [para. 247].

Authors and Works Noticed:

Corpus Juris Secundum, vol. 21, s. 165, p. 201 [para. 159].

Metals Handbook, p. 5 [para. 191].

Counsel:

E.F. Macklin, Q.C., J. Hope, Q.C., and S. McLeod (Duncan & Craig), for the plaintiff;

E.P. Groody (Code Hunter Wittmann), and D. Smith (Guild Yule & Co.), for the defendant.

This action was heard by Lee, J., of the Alberta Court of Queen's Bench.

Lee, J., delivered the following decision on February 14, 1997.

To continue reading

Request your trial
10 practice notes
  • Court Of Appeal Summaries (August 30 ' September 3, 2021)
    • Canada
    • Mondaq Canada
    • September 7, 2021
    ...549, Zurich Insurance Co. v. 686234 Ontario Ltd. (2002), 62 O.R. (3d) 447 (C.A.), Edmonton (City) v. Protection Mutual Insurance Co. (1997), 197 A.R. 81 (Q.B.), Partners Investment Ltd. v. Etobicoke (City) (1981), 124 D.L.R. (3d) 125 (Ont. H.C.), Bettigole v. American Employers Ins. Co., 30......
  • Court Of Appeal Summaries (August 30 ' September 3, 2021)
    • Canada
    • Mondaq Canada
    • September 7, 2021
    ...549, Zurich Insurance Co. v. 686234 Ontario Ltd. (2002), 62 O.R. (3d) 447 (C.A.), Edmonton (City) v. Protection Mutual Insurance Co. (1997), 197 A.R. 81 (Q.B.), Partners Investment Ltd. v. Etobicoke (City) (1981), 124 D.L.R. (3d) 125 (Ont. H.C.), Bettigole v. American Employers Ins. Co., 30......
  • Wharton v. Smerychynski, (2000) 262 A.R. 73 (QB)
    • Canada
    • Court of Queen's Bench of Alberta (Canada)
    • December 2, 1999
    ...Group Ltd. (1987), 77 A.R. 378; 53 Alta. L.R.(2d) 107 (C.A.), refd to. [para. 10]. Edmonton (City) v. Protection Mutual Insurance Co. (1997), 197 A.R. 81 (Q.B.), affd. (1999), 250 A.R. 93; 213 W.A.C. 93 (C.A.), refd to. [para. 10]. Holt, Renfrew & Co. Ltd. v. Singer (Henry) Ltd., Pekars......
  • Lunenburg Industrial Foundry and Engineering Ltd. et al. v. Commercial Union Assurance Co. of Canada et al., 2005 NSSC 23
    • Canada
    • Nova Scotia Supreme Court of Nova Scotia (Canada)
    • December 1, 2004
    ...Co. et al. (1988), 30 O.A.C. 154; 1988 CarswellOnt 714 (C.A.), refd to. [para. 70]. Edmonton (City) v. Protection Mutual Insurance Co. (1997), 197 A.R. 81; 1997 CarswellAlta 141 (Q.B.), affd. (1999), 250 A.R. 93; 213 W.A.C. 93; 1999 CarswellAlta 560 (C.A.), refd to. [para. Regina Cold Stora......
  • Request a trial to view additional results
8 cases
  • Wharton v. Smerychynski, (2000) 262 A.R. 73 (QB)
    • Canada
    • Court of Queen's Bench of Alberta (Canada)
    • December 2, 1999
    ...Group Ltd. (1987), 77 A.R. 378; 53 Alta. L.R.(2d) 107 (C.A.), refd to. [para. 10]. Edmonton (City) v. Protection Mutual Insurance Co. (1997), 197 A.R. 81 (Q.B.), affd. (1999), 250 A.R. 93; 213 W.A.C. 93 (C.A.), refd to. [para. 10]. Holt, Renfrew & Co. Ltd. v. Singer (Henry) Ltd., Pekars......
  • Lunenburg Industrial Foundry and Engineering Ltd. et al. v. Commercial Union Assurance Co. of Canada et al., 2005 NSSC 23
    • Canada
    • Nova Scotia Supreme Court of Nova Scotia (Canada)
    • December 1, 2004
    ...Co. et al. (1988), 30 O.A.C. 154; 1988 CarswellOnt 714 (C.A.), refd to. [para. 70]. Edmonton (City) v. Protection Mutual Insurance Co. (1997), 197 A.R. 81; 1997 CarswellAlta 141 (Q.B.), affd. (1999), 250 A.R. 93; 213 W.A.C. 93; 1999 CarswellAlta 560 (C.A.), refd to. [para. Regina Cold Stora......
  • MDS Inc. v. Factory Mutual Insurance Company,
    • Canada
    • Court of Appeal (Ontario)
    • September 3, 2021
    ...is particularly true where the same contracts are used in multiple jurisdictions: Edmonton (City) v. Protection Mutual Insurance Co. (1997), 197 A.R. 81 (Q.B.), at para. 149, aff’d 1999 ABCA 6, 250 A.R. 93; Partners Investment Ltd. v. Etobicoke (City) (1981), 124 D.L.R. (3d) 125 (Ont......
  • Churchland et al. v. Gore Mutual Insurance Co., 2001 BCCA 470
    • Canada
    • British Columbia Court of Appeal (British Columbia)
    • July 25, 2001
    ...216; 35 C.C.L.I. 193 (S.C.), refd to. [paras. 36, 88]. Edmonton (City) v. Protection Mutual Insurance Co., [1997] 10 W.W.R. 11; 197 A.R. 81 (Q.B.), refd to. [para. Nahayowski v. Pearl Assurance Co. (1964), 45 W.W.R.(N.S.) 662 (Alta. Q.B.), refd to. [para. 62]. Hirst v. Commercial Union Assu......
  • Request a trial to view additional results
2 firm's commentaries
  • Court Of Appeal Summaries (August 30 ' September 3, 2021)
    • Canada
    • Mondaq Canada
    • September 7, 2021
    ...549, Zurich Insurance Co. v. 686234 Ontario Ltd. (2002), 62 O.R. (3d) 447 (C.A.), Edmonton (City) v. Protection Mutual Insurance Co. (1997), 197 A.R. 81 (Q.B.), Partners Investment Ltd. v. Etobicoke (City) (1981), 124 D.L.R. (3d) 125 (Ont. H.C.), Bettigole v. American Employers Ins. Co., 30......
  • Court Of Appeal Summaries (August 30 ' September 3, 2021)
    • Canada
    • Mondaq Canada
    • September 7, 2021
    ...549, Zurich Insurance Co. v. 686234 Ontario Ltd. (2002), 62 O.R. (3d) 447 (C.A.), Edmonton (City) v. Protection Mutual Insurance Co. (1997), 197 A.R. 81 (Q.B.), Partners Investment Ltd. v. Etobicoke (City) (1981), 124 D.L.R. (3d) 125 (Ont. H.C.), Bettigole v. American Employers Ins. Co., 30......

VLEX uses login cookies to provide you with a better browsing experience. If you click on 'Accept' or continue browsing this site we consider that you accept our cookie policy. ACCEPT