In the recent decision Weber v. Société d'assurance Beneva inc., 2024 QCCS 622, the Superior Court reiterated the principles applicable in a dispute over the application of an insurance policy and its exclusions.
Brian Weber and Fiona Buell were suing their insurer, Société d'assurance Beneva inc. ("Beneva"), asking that Beneva indemnify them for damage to their home. They are also suing the contractor, Construction Morival Ltée ("Morival"), on the grounds that it is liable for the damage to the plaintiffs' home caused by work performed by Morival.
Beneva also filed an action in warranty against Morival, seeking to have Morival indemnify Beneva against any judgment that might be rendered against it, arguing that if damage had indeed been caused to the plaintiffs' building and was covered by the insurance policy, Morival should be held liable, since it would necessarily have exceeded the vibration thresholds.
The facts
In September 2000, the plaintiffs purchased a townhouse in the City of Westmount ("the City").
Seventeen years later, Morival was mandated by the City to perform emergency work and maintenance on its sewage and water system.
Early in the morning of September 5, 2017, Morival began its work to replace a water supply pipe located on a property adjacent to the plaintiffs' property. On that date, plaintiff Fional Buell was working from home. For nearly two (2) hours, she heard and felt vibrations generated by Morival's work, and more specifically by the equipment it was using to carry out the work. Around 9 a.m., plaintiff Buell noticed the appearance of several cracks in the walls and ceilings of her residence.
Two (2) days later, plaintiff Brian Weber noticed a large crack in the concrete slab of the basement, which extended to the entire length of the residence and went up into the foundation wall. He also noticed new cracks in the brick cladding on the front of the house.
The plaintiffs informed their insurer, Beneva, of the damage they had suffered. As part of its investigation, Beneva hired an engineer to determine whether Morival's work was the cause of the damage suffered by the plaintiffs. We would later learn that this engineer concluded that the damage suffered was due to a collapse of the foundations of the common wall between the plaintiffs' residence and their neighbour. According to the engineer, since the basement slab was redone in 2012, the ground movement would have occurred between 2012 and 2017. However, the engineer mentioned that a geotechnical study would be required to confirm the hypothesis of subsidence of the common wall.
At the same time, the plaintiffs sent a formal notice to Morival. Morival never responded to this letter.
During the winter of 2018, the plaintiffs noticed that cold air was seeping through the cracks discovered in autumn 2017. At the end of January 2018, Beneva informed the plaintiffs that the investigation was still ongoing and that, at this stage, it was not possible to establish a link between Morival's work and the damage suffered.
The plaintiffs called in an engineer to determine whether there was a causal link between the damage suffered and the work carried out by Morival. The engineer concluded that the damage to the plaintiffs' home was most likely the result of Morival's work.
At the end of March 2019, Beneva advised the plaintiffs that its investigation was complete and that their claim would not be pursued.
The claims
The plaintiffs claim that the collapse of the common wall was caused by Morival's work, and they believe they are entitled to compensation from their insurer.
Beneva acknowledged that the damage suffered was the result of subsidence. However, Beneva claimed that the damage resulted from natural subsidence of the ground, so that the damage would be excluded from insurance coverage because of the "natural movements of the ground" exclusion found in the insurance policy.
As for Morival, it claims that it committed no fault in carrying out its work.
The decision
The Court first addressed the issue of the exclusion alleged by Beneva. It recalled the rules applicable in a dispute over the application of an insurance policy. First, the insured must demonstrate, a priori, that he or she is entitled to compensation. Subsequently, it is up to the insurer to demonstrate, by a preponderance of evidence, that an exclusion applies. The Court also noted that exclusions must be interpreted restrictively.
In this case, the Court determined that the plaintiffs had proven, a priori, that they were entitled to an indemnity, since the loss for which they submitted a claim to the insurer occurred during the coverage period. As for the burden on the insurer to apply the exclusion, the Court concluded that Beneva was unable to demonstrate that the alleged exclusion applied.
The Court noted that the evidence contradicted Beneva's expert. According to the Court, it was indeed on September 5, 2017 that all the damage to the plaintiffs building suddenly appeared. In addition, Beneva's expert acknowledged, during the trial and after hearing the various testimonies, that it was likely that the subsidence of the common wall was caused by the vibrations generated by Morival's work.
Consequently, the Court concluded that Beneva had not been able to demonstrate that the collapse of the common wall had occurred naturally. In these circumstances, it is clear that the "natural earth movements" exclusion does not apply.
As for Morival's liability, the Court emphasized that it could only be held extra-contractually liable if it could be shown that it had failed to comply with the rules of the trade, usage and the law.
In this case, the evidence adduced at the hearing did not allow Morival to be held liable. According to the Court, Morival could not reasonably foresee that its equipment and work methods were likely to cause the common wall to collapse.
The plaintiffs' claim was therefore partially upheld, but only against Beneva.
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