Leahy v. Canadian Northern Shield Insurance Co., 2000 BCCA 408

• Judge: Esson, Huddart and Saunders, JJ.A.
• Court: Court of Appeal (British Columbia)
• Case Date: March 17, 2000
• Jurisdiction: British Columbia
• Citations: 2000 BCCA 408;(2000), 140 B.C.A.C. 302 (CA)

Leahy v. Cdn. Northern Shield Ins. (2000), 140 B.C.A.C. 302 (CA);

    229 W.A.C. 302

MLB headnote and full text

Temp. Cite: [2000] B.C.A.C. TBEd. AU.032

Marin Barlaw Leahy and Margaret Theresa Leahy (plaintiffs/respondents/appellants by cross-appeal) v. Canadian Northern Shield Insurance Company (defendant/appellant/respondent by cross-appeal)

(CA025963; 2000 BCCA 408)

Indexed As: Leahy v. Canadian Northern Shield Insurance Co.

British Columbia Court of Appeal

Esson, Huddart and Saunders, JJ.A.

June 28, 2000.

Summary:

In 1995, the plaintiffs noticed cracks in the floor of their garage, which was not attached to their home. In September 1996, they noticed cracks in the ceiling of their home. The plaintiffs had a homeowner's insurance policy. In December 1996 or January 1997, they reported the damage to the insurer's agent, stating that a water leak from an irrigation system on a neighbouring property caused settlement damage to their home. The insurer's agent advised that the damage was excluded by the policy. The plaintiffs sub­sequently hired a lawyer who delivered an executed proof of loss form to the insurer on June 9, 1997. The form did not indicate the amount of the loss as the damage had not been assessed by an engineer and the insurer had proposed to retain an engineer to inspect the property. The insurer argued that the plaintiffs failed to comply with a statu­tory condition requiring that they give notice of the loss or damage forthwith and deliver a proof of loss form containing an inventory of the damage and cost. The insurer also relied on exclusion clauses in the policy which excluded damage caused by seepage or leakage above or below the ground or surface water. The plaintiffs commenced an action against the insurer on June 10, 1997, and subsequently applied under Supreme Court Rule 18A for an order declaring the insurer liable under the policy.

The British Columbia Supreme Court, in a decision reported in 12 B.C.T.C. 241, granted the declaration sought. With respect to the statutory conditions, it was not unrea­sonable for the plaintiffs to have given notice of the loss when they did or for them to await the outcome of the insurer's investi­gation before completing the proof of loss. Further, if necessary, the court would have granted relief from forfeiture when there was no prejudice to the insurer. The court also held that the one year limitation period for commencing the action started to run in the fall of 1996 when the ceiling cracks were noticed. With respect to the exclusion clauses, the insurer's expert found that there was a variety of sources for the water which caused the settlement and the court held that the policy language did not exclude damage caused indirectly, or contributed to or aggra­vated by, whatever source of water led to the damage in question. The insurer appealed on the issue of the exclusion clauses.

The British Columbia Court of Appeal allowed the appeal and dismissed the plain­tiffs' action.

Insurance - Topic 6633.1

Multi-peril property insurance - House­hold or homeowner's policies - Exclusions - Settling - Homeowners claimed damage resulting from settlement of their home's foundation and driveway, cracks in the garage floor, ceilings and walls and jam­ming of the interior doors and garage door - They claimed that the settling was caused by the escape of water from a neighbouring property or, alternatively, from an underground public sewer or public watermain - Their all-risk home­owner's policy excluded, inter alia, "settl­ing ... or cracking ..." - The British Colum­bia Court of Appeal held that the exclusion clause was not ambiguous or unclear - It clearly excluded the claim from coverage.

Cases Noticed:

Pavlovic et al. v. Economical Mutual Insurance Co. (1994), 52 B.C.A.C. 98; 86 W.A.C. 98; 99 B.C.L.R.(2d) 298 (C.A.), consd. [para. 12].

Kravetsky v. Dominion of Canada General Insurance Co. (1994), Man.R.(2d) 224 (Q.B.), affd. (1995), 100 Man.R.(2d) 46; 91 W.A.C. 46 (C.A.), consd. [para. 16].

Shepherd v. Wawanesa Mutual Insurance Co. et al. (1998), 236 A.R. 28 (Q.B.), consd. [para. 17].

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, refd to. [para. 21].

Counsel:

P. Pearson, for the appellant;

D.L. Polley, for the respondent.

This appeal was heard before Esson, Huddart and Saunders, JJ.A., of the British Columbia Court of Appeal, at Kelowna, British Columbia, on March 17, 2000. The decision of the court was delivered by Ess­on, J.A., on June 28, 2000, at Vancouver, British Columbia.