Hipperson Construction Co. (1996) Ltd. v. H.J.H. Steel Erectors Inc., (2006) 290 Sask.R. 146 (QB)

• Judge: Ball, J.
• Court: Court of Queen's Bench of Saskatchewan (Canada)
• Case Date: December 08, 2006
• Jurisdiction: Saskatchewan
• Citations: (2006), 290 Sask.R. 146 (QB);2006 SKQB 518

Hipperson Constr. Co. v. HJH Steel (2006), 290 Sask.R. 146 (QB)

MLB headnote and full text

Temp. Cite: [2006] Sask.R. TBEd. DE.034

Hipperson Construction (1996) Ltd. (plaintiff) v. H.J.H. Steel Erectors Inc. (defendant) and Aviva Insurance Company of Canada (third party)

(2005 Q.B.G. No. 59; 2006 SKQB 518)

Indexed As: Hipperson Construction Co. (1996) Ltd. v. H.J.H. Steel Erectors Inc.

Saskatchewan Court of Queen's Bench

Judicial Centre of Regina

Ball, J.

December 8, 2006.

Summary:

The plaintiff contracted with the defendant to install a pre-engineered metal building. Two steel support rafters installed by the defendant collapsed. The plaintiff brought a negligence action for damages against the defendant. The defendant applied for a declaration that its insurer (third party Aviva) had an obligation to defend on the defendant's behalf under the terms of its Commercial General Liability Policy. The insurer denied having a duty to defend, submitting that all but a small portion of the plaintiff's claim was excluded under the policy.

The Saskatchewan Court of Queen's Bench held that the insurer had a duty to defend the claim. The relied upon exclusions did not apply.

Insurance - Topic 725

Insurers - Duties - Duty to defend - The plaintiff contracted with the defendant to install a pre-engineered metal building - The defendant supplied no components - Two steel support rafters installed by the defendant collapsed - The building was damaged, resulting in repair costs - The plaintiff sued the defendant in negligence - The defendant sought a declaration that its insurer was obligated to defend under the "property damage" coverage of its Commercial General Liability Policy - The insurer denied a duty to defend, submitting that all but a small portion of the plaintiff's claim was excluded under the "your work" or "your product" exclusions - The Saskatchewan Court of Queen's Bench declared that the insurer was obligated to defend - The "your work" and "your product" exclusions were included because the policy was not intended to be a performance bond - If the defendant had supplied the rafters, the "your product" exclusion would require it to repair or replace the rafters at its own expense and the "your work" exclusion would obligate it to carry out proper modifications on the rafters at its own expense - However, the defendant did not supply the rafters, so the two exclusions did not apply where the defendant provided only a service without creating or modifying the rafters - The insurer's interpretation would render the coverage nugatory and illusory by excluding the very risk one would expect to be insured - See paragraphs 1 to 29.

Insurance - Topic 1865

The insurance contract - Interpretation - Construction in case of ambiguity - The Saskatchewan Court of Queen's Bench stated that "the general principles of insurance policy interpretation are ... '(1) the objective in construing the policies' coverage of liability must be to give effect to the policies' dominant purpose of indemnity; (2) ambiguity in an insurance contract must be construed in favour of the insured; (3) the court should ordinarily strive to give effect to the objectively reasonable expectations of the insured.'" - See paragraph 9.

Insurance - Topic 1869

The insurance contract - Interpretation - Reasonable expectations principle - [See Insurance - Topic 1865 ].

Insurance - Topic 6878

Liability insurance - Business - Comprehensive policy - Duty to defend - [See Insurance - Topic 725 ].

Insurance - Topic 6909

Liability insurance - Business - Comprehensive policy - Exclusions - Property worked on by insured - [See Insurance - Topic 725 ].

Insurance - Topic 6910

Liability insurance - Business - Comprehensive policy - Exclusions - Property damage to product arising out of product - [See Insurance - Topic 725 ].

Cases Noticed:

Monenco Ltd. et al. v. Commonwealth Insurance Co. et al., [2001] 2 S.C.R. 699; 274 N.R. 84; 155 B.C.A.C. 161; 254 W.A.C. 161, refd to. [para. 7].

Westridge Construction Ltd. v. Zurich Insurance Co. et al., [2006] 4 W.W.R. 437; 269 Sask.R. 1; 357 W.A.C. 1; 2005 SKCA 81, refd to. [para. 8].

Swagger Construction Ltd. v. ING Insurance Co. of Canada et al., [2005] B.C.T.C. 1269; 29 C.C.L.I.(4th) 295; 2005 BCSC 1269, refd to. [para. 8].

Reid Crowther & Partners Ltd. v. Simcoe & Erie General Insurance Co., [1993] 1 S.C.R. 252; 147 N.R. 44; 83 Man.R.(2d) 81; 36 W.A.C. 81, refd to. [para. 10].

Privest Properties Ltd. v. Foundation Co. of Canada (1991), 6 C.C.L.I.(2d) 23 (B.C.S.C.), refd to. [para. 16].

International Radiography and Inspection Services (1976) Ltd. v. General Accident Assurance Co. of Canada, [1997] 4 W.W.R. 115; 193 A.R. 1; 135 W.A.C. 1 (C.A.), refd to. [para. 22].

B.C. Master Blasters Inc. v. Aviva Insurance Co. of Canada, 2006 BCSC 1488, refd to. [para. 24].

Ultramar Ltd. v. Rancur Petroleum Services Ltd. et al. (2005), 246 Nfld. & P.E.I.R. 106; 731 A.P.R. 106; 20 C.C.L.I.(4th) 89; 2005 NLTD 59, refd to. [para. 28].

Authors and Works Noticed:

Brown, Craig, and Menezes, Julio, Insurance Law in Canada (4th Ed. 2002) (2006 Looseleaf Update - Release 1), p. 18-86 [para. 18].

Couch , G.J., Cyclopedia of Insurance Law (2nd Rev. Ed. 1983), vol. 2, paras. 15:14, 15:16, 15:41, 15:74 [para. 9].

Hilliker, Gordon, Liability Insurance Law in Canada (3rd Ed. 2001), p. 186 [para. 17].

Counsel:

James G. Garden, for the plaintiff;

Garry D. Johnson, for the defendant;

David A. Gerrand, Q.C., for the third party.

This application was heard before Ball, J., of the Saskatchewan Court of Queen's Bench, Judicial Centre of Regina, who delivered the following judgment on December 8, 2006.