{"id":17288,"date":"2021-06-08T09:59:18","date_gmt":"2021-06-08T14:59:18","guid":{"rendered":"https:\/\/www.rsslex.com\/publications\/a-wellington-application-first-requires-a-covered-loss\/"},"modified":"2022-01-12T17:11:21","modified_gmt":"2022-01-12T22:11:21","slug":"20210608_a-wellington-application-first-requires-a-covered-loss","status":"publish","type":"post","link":"https:\/\/www.rsslex.com\/en\/bulletins-en\/20210608_a-wellington-application-first-requires-a-covered-loss\/","title":{"rendered":"A Wellington Application First Requires a Covered Loss"},"content":{"rendered":"

<\/p>\n

In Construction Placo inc. c. Kingspan Insulated Panels Ltd.<\/i>, 2021 QCCS 1230<\/strong><\/a>, rendered on March 18, 2021, Construction Placo inc. [Placo], as cross-defendant, sought an order from the Court requesting Soci\u00e9t\u00e9 d\u2019assurance g\u00e9n\u00e9rale Northbridge [Northbridge] to assume its defence and to pay all costs associated with its defence within the scope of the cross-claim.<\/p>\n

In April 2016 within the scope of the construction of the aquatic complex at Havre-Saint-Pierre, C\u00e9gerco inc., as general contractor, retained the services of Placo, as subcontractor, for the installation of the exterior cladding. The subcontract awarded to Placo provided that the exterior cladding would be comprised of metallic insulated panels manufactured by Kingspan Insulated Panels Ltd. [Kingspan]. In virtue of the contract, the work had to be carried out between October 15, 2016, and December 15, 2016. According to C\u00e9gerco, Placo failed to respect its obligations and failed to follow the schedule, which caused lengthy delays. Given that Placo advised C\u00e9gerco that it was not in a position to deliver the panels before January 2017, C\u00e9gerco took temporary measures to protect the work including closing the exterior envelope of the building. In January 2017, when the panels were delivered by Placo, C\u00e9gerco maintained that the panels delivered did not meet the specified requirements and, consequently, refused them. This led to different steps being taken to try to find a solution to the problem although without success. On May 24, 2017, C\u00e9gerco proceeded to the resiliation of Placo\u2019s contract. It obtained the panels directly from Kingspan and hired a third party to finish the work.<\/p>\n

Placo instituted legal proceedings against Kingspan to recover the deposit for the manufacturing of the panels and then against C\u00e9gerco for damages flowing from the resiliation of the contract. In its defence, Kingspan took a cross-claim for transportation costs. In October 2019, C\u00e9gerco also took a cross-claim against Placo requesting $1,783,252 corresponding to the damages allegedly sustained as a result of Placo\u2019s faulty execution, which caused numerous delays and additional costs.<\/p>\n

Northbridge concluded that there were no covered material damages within the meaning of the liability policy, given that the allegations were essentially related to the inexecution of contractual obligations or redoing work as well as the delays resulting from same.<\/p>\n

The Court\u2019s analysis<\/h1>\n

The Court analyzed the principles applicable to a Wellington motion and noted that, as a general rule, liability policies provide three cumulative conditions for the insured to benefit from the insurance, namely:<\/p>\n