It seems that the Supreme Court’s decision in Progressive Homes Ltd. v. Lom- bard General Insurance Co. of Canada,  2 S.C.R. 245 is bringing signiﬁcant changes to the traditional interpretati on of coverage oﬀered under “standard” CGL insurance policies.
The Quebec Court of Appeal’s decision in Velan inc. c. GCAN Insurance Com- pany, 2012 QCCA 1490 and subsequent decisions (, 2013 QCCA 679) led to be- lieve that Toitures et construction Robi- taille (1985) inc. c. Liberty Mutual Insurance Company the Supreme Court’s obiter comments would have a limited impact on the noti ons of “property damage” and “occurrence”. However, a recent decision of the Quebec Court of appeal could be the ﬁrst step towards changing the current legal trend.
On August 8, 2014 an appeal was ﬁled against the judgment of the Quebec Court of Appeal. In Intact, compagnie d'assurances c. Constructions GSS Gauthier 2000 inc., 2014 QCCA 991, the owners of a cottage had given the insured a contract for the construction of the roof. When water leaks occurred inside the cottage because of the faulty design and construction of the roof, the owners brought an action against the contractor and his insurer.
The insurer agreed to take up the insured’s defense for the damages to the building resulting from the leak, but denied coverage for the costs of repairs to the roof itself.
The insurer took the position that the defects in the roof neither consti tuted an “occurrence” nor “property da- mage” under the CGL policy.
The Quebec Court of appeal, quoting Progressive Homes, disagreed. A three judge panel ruled that the defects in the roof themselves can constitute an an “occurrence” or “property damage”, in certain circumstances.
The Court conﬁrmed the judgement rendered by the trial judge that the defects constituted an event covered by the policy since the insured did not intend or expect them.
Although the cost to repair the defects in the roof were arguably excluded by the standard “Insured’s Work” exclusion, the Court found that the presence of an excepti on for the “Products/Completed operations” risk found in another exclusion created an ambiguity in the coverage that must be interpreted in favour of the insured.
It is unclear, to say the least, whether this decision can be reconciled with previous case law, such as Ve- lan and Toitures et construction Ro- bitaille.
Should the Supreme Court of Canada conﬁrm this judgment or refuse to hear the appeal, liability insurers who do not wish to cover their insured’s faulty workmanship would do well to review the wording of their CGL policy in order to specify that faulty execution of the insured’s work does not constitute a “property damage” and to limit or remove ex- isting exceptions to exclusions based on the insured’s product and work.