B.C.J. No. 2514
2010 BCSC 1796
British Columbia Supreme Court
P.M. Willcock J.
December 14, 2010
On September 1, 2006, Oldaker commenced action No. S065653 against the Insureds and others for, amongst other things, breach of duty to properly manage and administer a condominium common property and to promptly repair and maintain that property (the "Underlying Action"). Prior to commencing the Underlying Action, Oldaker had brought at least six actions against both the Strata Corporation and individual strata council members with respect to various breaches of duty relating to water ingress damage and other issues.
The Insureds sought coverage under a policy issued by the Insurer which afforded coverage to Strata Plan VR1008 and its officers and agents for the policy period from April 30, 2007 to April 30, 2008. The initial coverage date of the policy was January 31, 2006. Exclusion IV. C. (2) of the policy excluded claims made against "Any Insured based upon, arising out of, relating to . . . any Wrongful Act or any fact, circumstance or situation . . . which has been the subject of any Claim made prior to the effective date of this Policy . . . or any prior and or pending civil . . . proceeding initiated against any Insured as of the date stated in Item 8 of the Declarations [01-31-2006]."
On August 24, 2007 the Insureds gave notice to the Insurer of the Underlying Action. The Insurer acknowledged receipt of the notice of claim and admitted the existence of the policy. However, the Insurer declined coverage noting that Oldaker had commenced at least two other legal proceedings against strata council members against the building envelope remediation project at issue in the Underlying Action. The Insureds sought a declaration of coverage from the court.
The court noted that its task on the application was to determine whether the pleadings alleged acts or omissions which potentially might fall within the policy coverage by looking at the true nature and substance of the claim. If, having regard to the gravamen of the claim, there was no duty to indemnify because of an exclusion or other limiting condition, then there would be no duty to defend. With respect to the interpretation of the policy, the court noted that the court's objective should be to search for the intention of the parties as reflected in the document. Effect should be given to the plain meaning of the wording employed and the commercial context in which the policy was created. Any ambiguity should be resolved against the Insurer. The grant of coverage should be read broadly and exclusions and limiting conditions read narrowly, against the Insurer. The court referred to Jesuit Fathers of Upper Canada v. Guardian Insurance Co. of Canada 2006 SCC 21 where the Supreme Court of Canada clearly indicated that resort to secondary principles of interpretation, such as the rule that ambiguity should be resolved against the drafter of the contract, is only necessary where the parties' intentions are not clear on the face of the agreement.
In reviewing exclusion IV. C. (2), the court held that a plain reading of the exclusion led to the conclusion that any claims made against an insured during the policy period related to or arising directly or indirectly from claims previously made against Any Insured would be excluded. In the case at bar, this led to the conclusion that the Oldaker claims against the Insureds were excluded to the extent that they reiterated claims made in prior civil proceedings against the Strata Corporation or any other insured.
The court went on to review each of the allegations in the Underlying Action and found that each allegation of fault set out in the statement of claim except one was either a reiteration of claims made in civil proceedings against the Strata Corporation or members of its council initiated prior to January 31, 2006 or an allegation that the "misconduct" complained of continued to date. The sole claim that was not previously advanced in a different proceeding related to allegations of negligence and failing or refusing to do additional testing to monitor the east wall of the envelope at suite 504 after becoming aware of water ingress. However, the court found that this was also excluded as it clearly related to the claims at issue in the prior civil proceedings.
In the result, the court dismissed the Insureds' claim for a declaration that they were entitled to a defence.