Foundation of Canada Engineering Corp. Ltd. v. Canadian Indemnity Co. et al.

by condition K, Employers agreed to treat every insured individually “to the same extent as if a separate policy had been issued to each” with the result that Employers, if otherwise responsible under the policy, is obliged to indemnify one insured against the claim of another insured;

by endorsement no. 6, dated April 1, 1964, Fenco was added as additional insured “but only with respect to the construction, erection and installation of a cement plant, in the Municipal District of Charleswood and Rosser, Manitoba.”

The Canadian Indemnity policy is also called a comprehensive general liability one. It was issued on April 1, 1965, directly to Fenco and to the companies of that financial group. Its insuring agreement and exclusions are similar to the ones found in the Employers policy. The following exclusion, however, is additional to the ones I have quoted from the Employers policy:

Defective designs, Plans or specification

D. This policy shall not apply to claims arising out of the liability

(A) imposed upon or assumed by Foundation of Canada Engineering Corporation Limited, or

(B) assumed by any other Insured covered by this policy as respects breach of professional duty of any Engineer, Consultant or Architect.

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Due to defective designs, plans or specifications, but this exclusion shall not be construed to apply:

(I) to bodily injury, sickness or disease including death at any time resulting therefrom, sustained by any person or persons not engaged to perform duties in respect to construction, erection or installation operations of any building, structure or other project which is the subject of a claim, because of a defect in designs, plans or specifications, providing such person at the time of an occurrence giving rise to a claim is not within or upon such building, structure or project;

(II) to damage to or destruction of property which does not form any part of or is not within or upon any building, structure or project which is the subject of a claim because of a defect in design, plans or specifications.

The trial judge, in his oral reasons, made the following findings:

1. Fenco “had a prime responsibility to Inland Cement for the production of a factory in which could be built cement”;

2. Fenco’s responsibility “was to insure to Inland Cement, the owner, that the work would be done properly”;

“…part of the basis for the contract between Inland and Fenco was the declaration in the documents that Inland was relying upon Fenco’s expertise in the matter of construction of a cement plant, and so it was Fenco’s responsibility throughout to check the work that was done and the material that was built into the plant”;

“Fenco had to satisfy itself, satisfy the owner, that Preco’s work was properly done”.

“The initial design was the responsibility of Fenco. Because of the change in the approach from the one form of concrete to another, there was to that extent a redesign, and it was the responsibility of Fenco to check the work which went into this alteration, and the proposed work.”