N.S.J. No. 617
2010 NSCA 96
Nova Scotia Court of Appeall
J.W.S. Saunders, J.E. Fichaud and P. Bryson JJ.A.
November 30, 2010
This was an appeal from a decision finding that coverage for damage to a wharf was excluded under a “Named Perils” policy of property insurance. The wharf was damaged due to an incident involving a motor vessel that was berthed at the wharf during a storm without the knowledge or consent of the insured. High winds arose which caused large waves to batter the vessel repeatedly against the wharf. An unidentified group of people decided to move the vessel to the other side of the wharf, as this was more sheltered from the wind. The group proceeded to untie the vessel and drag it around the wharf. As the vessel came around the front of the wharf it was swamped and sank. When the vessel resurfaced, the stern came up under the wharf and tore off the front section.
The insured filed a proof of loss for the damage to the wharf. The insurer denied the claim on the basis that the nature of the loss was an excluded peril. The parties applied to the court for an order determining whether the policy covered the loss. At issue was the following provision which excluded liability for loss or damage:
…2(i) directly or indirectly caused by any of the following whether driven by wind or due to wind storm or not:
…tidal wave, high water, …flood, waterborne objects, waves…
The trial judge reasoned that “waterborne object” was a very broad term. The intention gleaned from the policy was that any object borne on the water was to be included in the term “waterborne object”. The judge concluded that there was no ambiguity or limitation in the words of the exclusion which might trigger an application of the principle of contra proferentum. The judge concluded that the exclusion described by such a sweeping phrase as “waterborne object” was intended to effectively include vessels such as the boat which caused the damage at issue and held that there was no coverage for the loss under the policy.
On appeal, the court held that the exercise of discerning the meaning of certain words in an insurance contract required the judge to employ correct legal principles of interpretation and then apply those principles to a particular set of facts and was therefore a question of mixed fact and law. Accordingly, deference was owed to the trial judge and the court would not intervene unless there was palpable and overriding error. The court was of the view that the trial judge’s conclusion was based on a plain and ordinary reading of the language of the policy which led him to the conclusion that the vessel was a waterborne object that had caused the damage to the wharf. The court concluded that decision below did not result from any palpable and overriding error and dismissed the appeal.