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PROPERTY INSURANCE - Business policies - Risk or perils

Friday, September 20, 2019 @ 6:21 AM  


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Appeal by the plaintiffs from a judgment that dismissed the entirety of their first action and part of their second action for insurance coverage. Cross-appeal by the respondent from the trial decision permitting the appellants’ business interruption claim to proceed in part. The appellants’ commercial insurance policy issued by the respondent covered direct loss from any peril, including business interruption loss and loss of property due to theft or wrongful handling. In the first action, the appellants sought indemnification for lost rental income and a bonus of $950,000 alleged to be owing to the appellant Parravano consequent to a moth infestation in a plant operated by affiliates of the appellants. The second action sought indemnification for the alleged theft or wrongful handling of certain equipment and related business interruption losses that occurred 23 months prior to the commencement of the action. With respect to the first action, the trial judge found the infestation was the covered peril and that the losses claimed for the affiliates’ failure to meet their financial obligations were indirect losses and therefore not covered by the policy. The trial judge dismissed the property claim in the second action as being time-barred by the one-year limitation period in the policy but permitted the business interruption claim to proceed in part on the basis it was an ongoing claim.

HELD: Appeal dismissed; cross-appeal allowed. The trial judge correctly found that the claims in the first action were not for direct losses covered by the policy. Her finding that the losses in the first action were the result of the failure of the affiliates to meet their financial obligations and not the infestation was amply supported by the record. The trial judge correctly dismissed the property claim in the second action as time-barred by the terms of the policy. The trial judge erred in finding the business interruption claim was subject to a rolling limitation period. She erred in focusing her analysis on whether the appellants were continuing to suffer damages rather than on whether the respondent had a recurring contractual obligation. It was not a proper case for the application of a rolling limitation period.

Marvelous Mario's Inc. v. St. Paul Fire and Marine Insurance Co., [2019] O.J. No. 4005, Ontario Court of Appeal, C.W. Hourigan, D. Paciocco and J.M. Fairburn JJ.A., July 31, 2019. Digest No. TLD-September162019015