Insurance law – Property insurance – Strata corporations – Damages – Deductible – Remediation – Loss of income – Homeowner’s insurance – Exclusions
Louie v. Strata Plan VR-1323,  B.C.J. No. 2186, 2015 BCSC 1832, British Columbia Supreme Court, October 8, 2015, B.M. Greyell J.
The insured’s strata unit was badly damaged from a fire caused by a methamphetamine/ecstasy laboratory operated by the insured’s tenant. The unit was marked as “Not Safe to Occupy” by the city and the insured was informed that the unit required a special inspection. The strata insurer agreed to cover the loss, subject to the $50,000 deductible and the excluded term concerning the removal of contents from the unit. The unit remained unrepaired and unoccupied due to a disagreement between the insured, the insurers and the strata as to who should pay for the remediation work, or at least cover the deductible. The insured brought an action against her homeowner insurer, the strata insurer and the strata for remediation costs and $125,000 in lost rental income. The strata counterclaimed for the costs associated with the investigation and repair of the common property. The strata insurer took the position that the losses were below the deductible and that the plaintiff had failed to mitigate her losses.
The claims against the homeowner insurer, who had denied the claim based on a clandestine drug processing exclusion, were dismissed by consent at trial. As a preliminary issue, the insured challenged the reasonableness of the deductible. The strata had regularly reported on insurance coverage at its AGM’s. Though the insured did not attend the AGM’s, her agent had read the minutes and was deemed wilfully blind to the deductible value if the agent was not otherwise aware. In addition, the court noted that the insured was obligated to be aware of the contents of the strata’s policy. It was significant that the building structural plans were not discovered until trial where it was revealed that the duct system within the unit was actually located in the ceiling and did not connect to any other unit. Thus, the court held that the duct system was limited common property and therefore the insured’s responsibility to repair. The court also rejected the insured’s argument that the strata was obligated to commence repairs and pay the deductible before seeking recompense from a unit owner. Instead, the court held that there is nothing in s. 158 of the Strata Property Act, S.B.C. 1998, c.43 which imposes a mandatory obligation on the strata to pay the deductible in every event of a claim under the policy. In this case, the damage occurred to the insured’s unit only, apart from some damage to a hallway carpet, and the court dismissed the claim against the strata.
As against the strata insurers, the court held that the plaintiff’s losses fell below the value of the deductible and dismissed the claim. Remediation costs were set at $24,000. However, the insured’s failure to accept any responsibility for the loss and refusal to pay the deductible meant that her damages for lost rental income were reduced to $12,000. Finally, the strata was granted their counterclaim for their costs of investigating the damage.
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