Insured was liable to pay a 10% administrative fee levied by Nova Scotia Department of Transportation and Infrastructure Renewal for the repair of a culvert damaged by motor vehicle driven by an employee of the insured.
Nova Scotia (Attorney General) v. Jacques Home Town Dry Cleaners,  N.S.J. No. 4, January 3, 2013, Nova Scotia Court of Appeal, J.W.S. Saunders, L.L. Oland and J.E. Fichaud JJ.A.
The issue before the Nova Scotia Court of Appeal was whether the insured, Jacques Home Town Dry Cleaners, and therefore its insurer, were responsible for a 10% administration fee levied by the Nova Scotia Department of Transportation and Infrastructure Renewal (“NSDOTIR”) for overhead expenses relating to the repair of a culvert which was damaged by a vehicle driven by an employee of the insured. The culvert cost $669.40 to repair and added to this cost was a 10% administration/overhead fee of $66.94 which the insurer refused to pay.
The Nova Scotia Supreme Court had found that the 10% administration fee was reasonable, not arbitrary or artificial, was suitably linked to the damages claimed, and did not include any mark-up for potential profit. As a result, the court found that the insured was responsible to pay the fee.
The Court of Appeal considered it settled law that overhead expenses are recoverable as part of the cost of effecting repairs to damaged property. The issue is one of proof. In this case, there was no evidence as to why a 10% fee was charged. However, there was affidavit evidence that certain specific administrative tasks not otherwise budgeted for were in fact undertaken on account of the insured’s negligence and that an administrative fee was levied to offset these overhead expenditures which were an added expense to the NSDOTIR. The Court of Appeal inferred from this that an expense of $66.94 was actually incurred in having to oblige staff to oversee the repair of the culvert.
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