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Date: |
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Docket: |
S77713 |
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Registry: New Westminster |
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IN THE SUPREME COURT OF BRITISH COLUMBIA |
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Oral Reasons for Judgment |
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BETWEEN: |
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CHRISTOPHER JORDON AND SUSAN LOUISE JORDON |
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PLAINTIFFS |
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AND: |
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CGU INSURANCE COMPANY OF CANADA, WALTER TORU UEGAMA AND CAROL-ANNE SHERAN UEGAMA |
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DEFENDANTS |
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Counsel for the Plaintiffs: |
B.T. Martyniuk |
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Counsel for Defendant, CGU Insurance Company of Canada:
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[1] THE COURT: The parties seek a ruling by way of Rule 18A on the issue of whether a homeowner’s comprehensive policy of insurance in effect from July 26, 2001, to July 2002, covers the damages claimed by the plaintiff in the Statement of Claim.
[2] Briefly, the Statement of Claim sets out that roots originating from the plaintiffs’ neighbour’s property have been growing onto the plaintiffs’ property and have impeded the drainage on the property. These same roots have clogged a sump system on the property and constricted the flow of water draining from the plaintiffs’ property. They have also clogged and damaged the perimeter drainage system surrounding the home on the property and constricted the flow of water draining from the property.
[3] Particulars of the damages claimed by the plaintiffs are:
(a) damage to the exterior drainage sump;
(b) damage to perimeter foundation drainage system;
(c) differential settlement of concrete slabs and foundation;
(d) cracking and heaving of concrete slabs and foundation due to differential settlement;
(e) widening of existing cracks and development of new cracks in exterior swimming pool and surrounding concrete slabs;
(f) complete deterioration and corrosion of below slab heating system of home;
(g) increased heating bills;
(h) increased cost of insurance; and
(i) decreased market value and saleability.
[4] There is no real dispute that the affidavit evidence supports the recitation of facts in the Statement of Claim except that the plaintiffs are no longer claiming damages for the exterior drainage sump or foundation drainage system.
[5] The defendant concedes that the policy is an all risk insurance policy and, unless there is an applicable exclusion, the plaintiffs should be covered for damages arising during the policy period.
[6] The plaintiff submits that it is protected by a sewer backup endorsement, which nullifies the exclusions upon which the defendant relies.
[7] The defendant relies on three exclusions. For reasons that will become obvious, I do not need to deal with exclusion 27 on page 15 of the policy, and I make no finding in that regard. I will, however, deal with exclusions 13 and 17.
[8] Exclusion 13 on page 14 of the policy states:
We do not insure:
13. wear and tear, deterioration, defect, design fault or mechanical breakdown, rust or corrosion, extremes of temperature, wet or dry rot or mould, and contamination except that resulting damage by an insured peril is covered.
[9] Exclusion 17 on page 14 of the policy states:
We do not insure:
17. settling, expansion, contraction, moving, bulging, buckling or cracking of pavements, patios, foundations, walls, floors, roofs or ceilings, except resulting damage to building glass.
[10] The defendant submits that these two exclusions, 13 and 17, cover the very damage that is pleaded by the plaintiffs, that is, settling, cracking, corrosion and deterioration and therefore, these exclusions are a complete defence to the plaintiffs’ claim.
[11] The plaintiffs submit in essence, with respect to these exclusions, that they do not apply because the sewer backup endorsement overrides them.
[12] The plaintiffs submit that in keeping with general principles of interpretation of insurance contracts all coverage clauses should be given a broad and not restrictive interpretation: Derksen v. 539938 Ontario Ltd., [2001] 3 S.C.R. 398. I agree that I should approach the endorsement with this principle in mind.
[13] The endorsement states:
If ‘Sewer Back-Up’ is shown as an additional coverage for any location, the form insuring that location is extended to insure, at that location, against direct loss or damage caused by --
And I emphasize the words “caused by”
--the backing up or escape of water from a sewer or drain, sump, septic tank, eavestrough or downspout.
Coverage under this endorsement is subject to the deductible and all other terms and conditions of the form it extends.
All the statutory and additional conditions of the policy also apply to this endorsement.
[14] There is no doubt that this endorsement includes sewer backup as an insured peril under the policy. Without the endorsement, exclusion 34(ii) on page 16, which states, “We do not insure loss or damage caused by backing up or escape of water from a sewer, sump or sceptic tank”, would apply. The issue is whether the endorsement, which is coverage for an added peril, is subject to exclusions 13 and 17 of the policy.
[15] The British Columbia Court of Appeal in Leahy v. Canadian Northern Shield Insurance Co. (2000), 77 B.C.L.R. (3d) 44 (C.A.), considered an almost identically worded exclusion as number 17 in the subject policy. In Leahy, the Court of Appeal distinguished between provisions that exclude specific types of damage that are not in any way cause related, from provisions that exclude damages from a specific cause regardless of their type. Esson, J.A. found that the exclusion in Leahy was clearly of the former category and unconnected to how the loss was caused.
[16] Applying the reasoning of Leahy to the case at bar, I find that exclusions 13 and 17 refer to types of damage incurred, regardless of the cause. These exclusion clauses are unaffected by the endorsement, which relates to loss or damage from a certain cause, namely sewer backup. The endorsement may serve to nullify the cause related exclusion under paragraph 34 of the policy, but I do not see how it can affect the type of damage exclusions in paragraphs 1 through 17 of the policy.
[17] The plaintiffs submit that Leahy is distinguishable because it deals with an exclusion, not an endorsement. With respect, I see no difference in how the Court of Appeal approached the coverage issue in Leahy and how I must approach it here. The onus is on the defendant to prove that exclusions 13 and 17 apply and they have done so.
[18] Applying a broad interpretation of the endorsement does not change its plain meaning that it is still subject to the other terms and conditions of the policy. I take the word “other” to mean “other than terms or conditions regarding loss or damage caused by sewer backup”.
[19] The rules of interpreting insurance contracts do not require me to always interpret coverage in favour of an insured. The contra preferentum rule arises only when there appears to be an ambiguity, and I find none here: Consolidated-Bathurst Export Ltd. v. Mutual Boiler and Machinery Insurance Co., [1980] 1 S.C.R. 888.
[20] Therefore, the defendant shall have its declaration that the policy does not apply to the damages claimed in the Statement of Claim and, accordingly, the action shall be dismissed.
[21] MR. VAMPLEW: My Lady, in fairness to my friend, he does, I believe, still have claims against the individual defendants, and I just wanted to make sure that was clear in the order.
[22] THE COURT: Thank you for pointing that out. I was looking at your Notice of Motion, which asks for the action to be dismissed, but obviously the action shall be dismissed only as against the defendant, CGU Insurance Company of Canada.
“D.A. Satanove,
J.”
The Honourable Madam Justice D.A. Satanove