Immeubles Stageline Inc. v. Distribution Tapico Inc., 2012 QCCS 6319

In this case, the Superior Court entertained aWellingtonmotion presented by Tapico Inc. (“Tapico”) against its insurer to force the insurer to defend it against an action brought by Immeubles Stageline Inc. (“Stageline”).  Tapico had contracted with Stageline to supply carpet adhesive that Tapico would then use to install a carpet supplied by Stageline.  More than three years after the work was completed, an unusual and unpleasant odour began to permeate the premises.  The expert that Stageline hired concluded that the odour was due to a faulty installation of the floor covering, more specifically the adhesive, which was breaking down and producing foul odours.  Stageline’s expert suggested completely removing the carpet and the adhesive by scraping it off the concrete slab and replacing the carpet.  Stageline was therefore suing Tapico for the costs of replacing the carpet and the adhesive.

The position initially taken by Tapico’s insurer was that the claim was for deficient installation, not loss of property as understood in the policy.  But in the court’s view, Stageline was claiming that it had suffered a loss of property because the solution involved replacing the carpet and scraping down the concrete slab, materials that had not been supplied by Tapico.

The insurer also raised a number of exclusions, including one for the insured’s work.  However, although it was not mentioned in the motion to institute proceedings, Tapico had subcontracted the work to another party.  The insurer claimed that the duty to defend should be determined solely on the basis of the allegations in the claim and the substantiating exhibits.  The court, basing itself in particular on the Monenco decision, found it necessary and in the interests of justice to allow extrinsic evidence, namely written documents from the insurer showing that the insurer knew that the work in question had been performed by a subcontractor.  Accordingly, although that fact was not mentioned in the action, the court considered this extrinsic evidence and found that the exclusion for “Your work” could not apply in this situation, since the work had been performed by one of Tapico’s subcontractors.