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Insurance - All-Risks (aka All-Perils) Policies. Lalani Properties International Inc. v. Intact Insurance Company
In Lalani Properties International Inc. v. Intact Insurance Company (Ont CA, 2024) the Ontario Court of Appeal dismisses an appeal of an insurance case, here involving the historic Empress Hotel in Toronto.
The court considered an 'all perils' policy, here were a wall collapsed:(3) The trial judge’s reasons
[34] The trial judge began her analysis by noting that it was Lalani’s burden to demonstrate that the collapse of the wall fell within the initial scope of coverage, at which point it would become Intact’s burden to show that it fell within one of the exclusions. The trial judge cited the proposition that “[i]t is implicit in an ‘all perils’ policy that acts that are not expressly excluded from coverage must be fortuitous in order to fall within the initial grant of coverage.” She relied on the Supreme Court of Canada’s definition of “fortuitous” in C.C.R. Fishing Ltd. v. British Reserve Insurance Co., 1990 CanLII 145 (SCC), [1990] 1 S.C.R. 814, at p. 822, to conclude that:Therefore Lalani must first establish that the wall collapse would not have happened but for the occurrence of an unexpected intervening act such as “negligence, or adverse or unusual conditions without which the loss would not have occurred”.
Put another way, if upon looking at all of the events giving rise to the wall collapse, the loss would not have occurred without an act or event that was not expected to occur in the ordinary course of things, then it is considered to be a fortuitous loss. [Emphasis in original; citations omitted.] [35] The trial judge accepted Mr. Holder’s opinion that the probable cause of the collapse was the failure of the clip bonds due to water seepage. She rejected Mr. Zucchi’s alternative suggestion that the wall had been weakened by vibrations from nearby construction sites. The trial judge explained:The initial burden of proof is on Lalani to demonstrate that a proximate cause of the wall collapse falls within the initial grant of coverage. To do so, Lalani had to prove that a proximate cause was a fortuitous event, which in turn, required Lalani to establish what proximate cause it was relying on. Lalani maintained that it was vibrations from the nearby construction projects that caused, or were a proximate cause of, the wall collapse.
The threshold on Lalani was low.
However, I was not persuaded by Mr. Zucchi’s last-minute statement that a proximate cause of the wall collapse was likely the vibrations caused by the Metropolis project and/or the Murray Demolition. Mr. Zucchi’s opinion in this respect was unreliable, as it was not supported by any objective evidence, and he did not express this opinion in either of his reports. ....
(5) Analysis
[42] For the following reasons, I would not give effect to Lalani’s main ground of appeal, and would uphold the trial judge’s conclusion that the wall collapse was not a fortuitous event that fell within the scope of the insurance policy. ....
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[52] The trial judge, having correctly instructed herself on the law as established by C.C.R. Fishing, was clearly aware that a finding of fortuity does not necessarily require a finding of negligence. ...
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[101] As Moldaver and Brown JJ. observed in their majority reasons in Trial Lawyers Association of British Columbia v. Royal & Sun Alliance Insurance Company of Canada, 2021 SCC 47, 163 O.R. (3d) 398, at para. 16:In the insurance context, estoppel arises most commonly where an insurer, having initially taken steps consistent with coverage, then denies coverage because of the insured’s breach of a policy term or its ineligibility for insurance in the first place. To prevent the insurer from denying coverage, the insured will attempt to show that the insurer is estopped from changing its coverage position based on its prior words or conduct. [102] As Sopinka J. explained in Maracle v. Travellers Indemnity Co. of Canada, 1991 CanLII 58 (SCC), [1991] 2 S.C.R. 50, at p. 57:The principles of promissory estoppel are well settled. The party relying on the doctrine must establish that the other party has, by words or conduct, made a promise or assurance which was intended to affect their legal relationship and to be acted on. Furthermore, the representee must establish that, in reliance on the representation, he acted on it or in some way changed his position. . SIR Corp. v. Aviva Insurance Company of Canada
In SIR Corp. v. Aviva Insurance Company of Canada (Ont CA, 2023) the Court of Appeal characterizes 'all-risk' insurance:[49] As the application judge noted, the parties agreed to an all-risk insurance policy, which is a form of property insurance. ... . MDS Inc. v. Factory Mutual Insurance Company
In MDS Inc. v. Factory Mutual Insurance Company (Ont CA, 2021) the Court of Appeal considered the interpretation of an 'all risks' insurance policy:[73] Although this is an all-risk policy that covers all claims save for those that are specifically excluded, this does not mean that the interpretation of clear terms should be changed. All-risk policies are, by their grant, limited to cover only fortuitous or unanticipated losses. The Supreme Court held in Canadian National Railway Co. v. Royal and Sun Alliance Insurance Co. of Canada, 2008 SCC 66, [2008] 3 S.C.R. 453, at para. 79, citing British and Foreign Marine Insurance Co. v. Gaunt, [1921] 2 A.C. 41 (H.L.), [1921] All E.R. Rep. 447, at pp. 46-47:These words [“all-risk”] cannot, of course, be held to cover all damage however caused, for such damage as is inevitable from ordinary wear and tear and inevitable depreciation is not within the policies.… Damage, in other words, if it is to be covered by [all-risk] policies such as these, must be due to some fortuitous circumstance or casualty.
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