Court of Appeal insurance ruling could be relevant to COVID-19 cases, says lawyer

When is a flood not a flood?

In the age of climate change and COVID-19, the Ontario Court of Appeal recently answered that critical insurance question in a case involving a Mississauga wedding and convention centre that was significantly damaged by the biggest rainstorm in the region’s recorded history. The July 2013 storm dropped more than 90 millimetres of water on some parts of the Greater Toronto Area in less than two hours, according to Environment Canada records.

In its July 29 decision in Le Treport Wedding & Convention Centre Ltd. v. Co-operators General Insurance Company 2020 ONCA 487, the three-judge panel comprised of Justices Peter Lauwers, Kathryn Feldman and Grant Huscroft found that the trial judge, Superior Court Justice Douglas Gray, partially erred in May 2019 by finding that a flood endorsement under an “all-risks” policy did not apply. The appeal by the wedding and convention centre was allowed in part and the Appeal Court awarded about $429,000 for flood damage, including pre-judgment interest and costs.

But in an aspect of the ruling welcomed by Co-operators, the Court of Appeal upheld the trial judge’s finding that the policy’s sewer backup endorsement applied, that the insurer had fully paid out the policy limit of $500,000, and that the appellant was not eligible for additional insurance
compensation for extra-contractual damages due to delays or business interruption losses under a profits endorsement form. The appellant was also denied compensation for professional fees incurred to establish the extent of the business interruption loss under the commercial plus endorsement form.

Co-operators representatives met with Le Treport about a week after the storm in July 2013 to discuss the damage and sent a letter the next day detailing the steps the wedding hall should take to mitigate losses, including shutting down the business to allow for repairs. Days later, the appellant got a quote for emergency repairs of just over $46,000, which the insurer paid. In late September, the insurer’s contractor estimated the full-replacement cost to be paid after repairs were completed at just over $105,500 and Co-operators informed Le Treport in a letter.

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