ADDENDUM
This decision has been appealed. The notice of appeal was served on November 28, 2006. So, it appears that the Court of Appeal will be re-visiting the issue of waiver of subrogation in a builder’s risk context. The appeal will likely be heard in the first half of 2007. Our original post follows.
In Maple Reinders Construction Ltd. v. D.B. Mechanical Ltd., Madam Justice Cheryl Robertson granted summary judgment, dismissing the action. Our office acted for the successful moving party, D.B. Mechanical Ltd. Unfortunately, the reasons have not yet been posted on the CANLII site. We will post a link if and when there is one.
This was a subrogated action by Maple Reinders’ insurer, which had paid a substantial flood claim arinsing out of renovations being done at the Royal Military College in Kingston, in 2003 and 2004. Maple Reinders was the general contractor on the project. The defendant, D.B. Mechanical Ltd., was a subcontractor.
In both the prime contract (between Maple Reinders and the Department of National Defence) and in the subcontract with D.B. Mechanical, Maple Reinders had covenanted to take out builder’s risk property insurance coverage. D.B. Mechanical was obliged under the subcontract to obtain liability insurance. Both parties had gotten the insurance they had agreed to.
Although the builder’s risk coverage did not include an express waiver of subrogation, Justice Robertson accepted the defence argument, that D.B. Mechanical’s covenant to obtain property insurance amounted to an assumption of risk and resulted in a waiver of subrogation against D.B. Mechanical.