Leaky Condo Court Ruling
If a condominium building leaks because of defective workmanship done by subcontractors, could the original contractor's insurance coverage cover some of the costs of repair?
Owners of leaky condominiums have reason to be hopeful thanks to a precedent setting Supreme Court of Canada decision concerning liability coverage for construction contractors.
On November 23, 2010, Canada's top court ruled that an insurer is legally obligated to pay a contractor because of property damage resulting from work performed by a subcontractor.
The case began in 2004 when BC Housing Management Commission (BC Housing) hired Progressive Homes Ltd. (Progressive) as the general contractor to build four affordable housing cooperatives: Burlington Heights, Hyland Park, Terra Nova Housing and West Coast Community Homes.
BC Housing in the provincial Crown agency that develops, manages and administers a wide range of subsidized housing options.
After completion, BC Housing sued Progressive for a breach of contract and negligence because of improper and incomplete installation and construction of framing, stucco walls, vinyl siding, windows, flashings, ventilation, gutters, balcony decks, railings, and roofs and patio doors, which caused water to leak into suites.
Progressive expected its insurer, Lombard General Insurance Company of Canada (Lombard) to provide coverage for the defective work done by subcontractors. Lombard had provided Progressive with commercial general liability insurance policies since 1987. But Lombard denied coverage for the BC Housing claim.
In 2007, Progressive filed a petition to have a BC Supreme Court judge rule on whether the claim fell within insurance coverage. The judge concluded that it did not.
Progressive appealed this decision to the BC Court of Appeal and in 2009 the court found in favour of Lombard, upholding the lower court decision and dismissing the appeal.
Progressive then appealed to the Supreme Court of Canada. In its November 2010 decision that Court overturned the two lower courts, and ruled in favour of Progressive, finding the claims fell within the insurance coverage.
What does this mean for owners of leaky condominiums??
Leaky condominium owners could potentially consider the option of making a claim against a general contractors' insurance policy to pay for defective work done by subcontractors. Given the number of remaining leaky condominiums in BC, this decision could have significant implications.
Owners of leaky condominiums have reason to be hopeful thanks to a precedent setting Supreme Court of Canada decision concerning liability coverage for construction contractors.
On November 23, 2010, Canada's top court ruled that an insurer is legally obligated to pay a contractor because of property damage resulting from work performed by a subcontractor.
The case began in 2004 when BC Housing Management Commission (BC Housing) hired Progressive Homes Ltd. (Progressive) as the general contractor to build four affordable housing cooperatives: Burlington Heights, Hyland Park, Terra Nova Housing and West Coast Community Homes.
BC Housing in the provincial Crown agency that develops, manages and administers a wide range of subsidized housing options.
After completion, BC Housing sued Progressive for a breach of contract and negligence because of improper and incomplete installation and construction of framing, stucco walls, vinyl siding, windows, flashings, ventilation, gutters, balcony decks, railings, and roofs and patio doors, which caused water to leak into suites.
Progressive expected its insurer, Lombard General Insurance Company of Canada (Lombard) to provide coverage for the defective work done by subcontractors. Lombard had provided Progressive with commercial general liability insurance policies since 1987. But Lombard denied coverage for the BC Housing claim.
In 2007, Progressive filed a petition to have a BC Supreme Court judge rule on whether the claim fell within insurance coverage. The judge concluded that it did not.
Progressive appealed this decision to the BC Court of Appeal and in 2009 the court found in favour of Lombard, upholding the lower court decision and dismissing the appeal.
Progressive then appealed to the Supreme Court of Canada. In its November 2010 decision that Court overturned the two lower courts, and ruled in favour of Progressive, finding the claims fell within the insurance coverage.
What does this mean for owners of leaky condominiums??
Leaky condominium owners could potentially consider the option of making a claim against a general contractors' insurance policy to pay for defective work done by subcontractors. Given the number of remaining leaky condominiums in BC, this decision could have significant implications.