Unlooked for mishaps are covered by a CGL policy
The appellant insurance company was unsuccessful in its action against condominium owners whom they must indemnify for damages caused to the foundation of their building by the negligence of the insured general contractor.
York Region Condominium Corp. No. 722 v. Lombard Canada Ltd. April 14, 2008. Ontario Court of Appeal.
The general contractor building the condominium between 1988 and 1990 acted against the recommendations of a geotechnical consultant, and damaged the aquitard, which is a layer of clay that prevents waters of an aquifer from reaching into the layer of soil containing the foundation of the building. The general contractor negligently performed repairs on the aquitard, which over the years caused the soil to erode from the area, undermining the foundation of the building. Lombard, the appellant in this appeal, denied coverage throughout the initial action by the unit owners against the general contractor. The condo owners were successful in their action against the general contractor in excess of its policy limits. In order to recover the judgment the condo owners turned to Lombard for money up to the policy limits.
The trial judge found the foundations were originally constructed properly, and the damage was caused by the improper installation of the repairs to the aquitard dewatering system. The trial judge ruled the negligent installation of the dewatering system caused an "unlooked for mishap" which was caused by an occurrence that fell within the meaning of the commercial general liability policy. The Court of Appeal upheld her decision.