BROCK STOCK FARM LTD. PLAINTIFF - v. -, 2023 SKKB 119

KING’S BENCH FOR SASKATCHEWAN Citation: 2023 SKKB 119 Date: 2023 06 12 Docket: QBG-SA-00111-2017 Judicial Centre: Saskatoon ___________________________________________________________________________ BETWEEN: BROCK STOCK FARM LTD. PLAINTIFF - and - ECONOMICAL MUTUAL INSURANCE COMPANY, MUTUAL FIRE INSURANCE COMPANY OF BRITISH COLUMBIA, THE WAWANESA MUTUAL INSURANCE COMPANY and PEACE HILLS GENERAL INSURANCE COMPANY DEFENDANTS Counsel: Robert G. Kennedy, K.C. for the plaintiff Kaylea M. Dunn, K.C. and Sydney A.

Young for the defendants ___________________________________________________________________________ DECISION CROOKS J. June 12, 2023 ___________________________________________________________________________ Introduction [ 1 ] Brock Stock Farm Ltd. [Brock] was incorporated in August 2012 and owns and operates a hog farm near Brock, Saskatchewan. Robert Hamilton is a director and shareholder of Brock. One of Brock’s assets is a large agricultural complex which houses hogs and was constructed in approximately 1999 [Barn].

The Barn roof is made up of a truss system. [ 2 ] Brock carried insurance under a subscription policy [Policy] with four insurers, who each insured a percentage

of the Policy to a total of 100%. On December 21, 2015, Brock renewed the Policy with the defendant insurers [Insurers]. [ 3 ] The Policy provided insurance for Brock’s farm buildings, including the Barn, which is central to this litigation. The Policy confirms the property coverage limit for the Barn and contents was $4,819,000 with an annual premium of $36,150 for this coverage. [ 4 ] In December 2015, there was a partial collapse of the Barn roof. The ceiling area of the partial collapse was “shored up”.

No insurance claim was made for this partial collapse. [ 5 ] On February 10, 2016, an employee of Brock discovered that a portion of the roof of the Barn had collapsed. A claim was submitted for this collapse under the Policy. [ 6 ] Robert Hamilton contacted Brad Hamilton, who owned Discovery Management & Construction Services Inc. [Discovery], to determine the course of structural repair for the Barn roof. On February 17, 2016, Brad Hamilton attended the Barn with Rob Topping of Topping Engineering. Brad Hamilton observed that a portion of the north side of the Barn roof had collapsed. Mr.

Topping conducted a visual inspection and prepared a report on March 1, 2016 [Topping Report]. [ 7 ] In the Topping Report, Mr. Topping observed that the “top chord truss metal connection plates were found to be significantly corroded in the Grower/Finisher barn area”. Other areas in the Barn did not have the same degree of connection plate corrosion. The Topping Report concludes: … The roof very likely failed as a result of a significant wind load event. The failures appear to have originated at the truss connection #7.

The corrosion of metal truss connection plates is believed to be a contributing cause of the roof failure. … [ 8 ] Later in the process, Mr. Topping confirmed in his correspondence of July 14, 2016 that there was not “sufficient information to comment on the percentage loss of truss capacity resulting from the corroded roof truss plates except to offer the opinion that I believe it was a contributing factor in the roof failure.” [ 9 ] Based on the recommendations of Mr. Topping, Discovery commenced temporary fixes to the Barn roof in February and March 2016.

A permanent repair began in May 2016 by replacing the failed trusses and reinforcing others. A portion of the Barn roof was demolished and replaced. [ 10 ] On May 12, 2016, Jonathan Fast, the insurance adjuster, corresponded with Brad Hamilton regarding the invoicing for repairs and confirmed that coverage had not yet been determined. [ 11 ] On June 13, 2016, Brock was advised that the insurance claim was denied under the Policy. The letter from Mr.

Fast states, in part: Following our investigation of this loss and assessment by the engineers involved, we have determined that there was not a significant wind load event and that the cause was attributed to deterioration and corrosion of metal plates on the roof trusses. This allowed a weakness in the roof system and caused the collapse. After our review and subsequent review by your insurer(s), we have been instructed to deny your claim.

This denial is based on the exclusion of your policy which notes that “ wear and tear and deterioration is excluded from coverage ”. … [ 12 ] Due to the time between the collapse and denial of the claim, as well as the need to remediate the collapsed roof to allow for ongoing farming operations, the debris from the repair was largely disposed of. [ 13 ] In the days leading up to the collapse, Robert Hamilton observed significant windstorms in the area.

In Robert Hamilton’s evidence, he avers that on February 6 and 7, 2016, wind gusts reached 87 km/h and 75 km/h, respectively, at the Environment Canada Weather Station near Kindersley, Saskatchewan which is the nearest weather station to the Barn. [ 14 ] Both parties retained experts to opine on the cause of the collapse. Brock’s position is that wind was a necessary cause of the collapse. The Insurer’s position is that wind was not a cause of the collapse. Instead, they opine that the cause of the collapse was the wear and tear or gradual deterioration through rusting and corrosion of the metal truss plates.

These plates connect the wood members of the truss system which provide structure and support for the roof of the Barn. [ 15 ] Unfortunately, none of the experts visited the site of the collapse. This is largely because it was cleaned up before it was known that coverage under the Policy was in issue. [ 16 ] Brad Hamilton’s evidence is that he advised there may be truss specimens in the long grass near the Barn, where he and his employees had dragged some of the framing debris. Robert Hamilton was able to locate two truss specimens there.

The recovered truss plates were preserved and tested, but these were not the specific truss plates that failed. [ 17 ] Brock’s expert, Trevor Knoll, opined that the tested truss plates had approximately 60% of their remaining strength and would not have failed if not for significant wind forces acting on the Barn. [ 18 ] The Insurer’s experts did not perform any testing or observe the remnants of the collapsed portion of the Barn in person. They were limited to photographs in arriving at their opinion on causation.

[ 19 ] In addition to the costs of repairing the Barn, Brock also claims for business interruption losses under the Policy. [ 20 ] The application for

summary judgment requests an order granting the plaintiff judgment against the defendants in the amount of $342,703.65 along with pre-judgment interest and costs. Positions of the Parties [ 21 ] Brock’s overall position is that the Policy covers damage caused by wind. As wind was a primary or concurrent cause of the collapse, the loss is covered by the Policy. [ 22 ] Brock acknowledges that the photograph evidence indicates that some of the truss plates showed rust and corrosion, but their position is that there is no way to know how significant this was to the collapse.

They suggest the wind was a necessary cause and therefore the loss is covered by the Policy. [ 23 ] Alternatively, Brock suggests that if an exclusion clause is in play then the exception within the exclusion clause is operative, and Brock’s loss is covered. [ 24 ] Brock proposes that if either of the exclusion clauses are in play and the exceptions within those clauses do not apply, there is still coverage as the collapse was caused by a combination of an excluded cause and an insured cause. [ 25 ] The Insurers’ position is that both the December 2015 collapse and the February 2016 collapse were the result of wear and tear, gradual deterioration, rust or corrosion of a number of metal truss plates, which are integral to the roof’s support.

They invite the court to conclude these causes, whether direct or indirect, are excluded perils under the Policy and the loss is not insured. [ 26 ] In the defendants’ view, the plaintiff has failed to demonstrate that the loss was caused by the wind. Their position is that the cause of the collapse was rusted and corroded truss plates, and that the gradual deterioration caused both the December 2015 and February 2016 collapses. Ultimately, they suggest the Policy does not cover the loss. Issues [ 27 ] In the reasons that follow, I address the following issues: 1. Should this matter proceed by way of

summary judgment? 2. What was the cause of the collapse? 3. Should Brock’s loss of February 10, 2016 be covered by the Policy? 1. Should this matter proceed by way of

summary judgment? [ 28 ] The Queen's Bench Rules set out the procedure for an application for

summary judgment : 7-2 A party may apply, with supporting affidavit material or other evidence, for

summary judgment on all or some of the issues raised in the pleadings at any time after the defendant has filed a statement of defence but before the time and place for trial have been set. 7-3

(1) A response to an application for

summary judgment must not rely solely on the allegations or denials in the respondent's pleadings, but must set out, in affidavit material or other evidence, specific facts showing that there is a genuine issue requiring a trial. (2)The Court may draw an adverse inference from the failure of a party to cross-examine on an affidavit or to file responding or rebuttal evidence. (3)An affidavit for use on an application for

summary judgment may be made on information and belief as provided in rule 13-30, but, on the hearing of the application, the Court may draw an adverse inference from the failure of a party to provide the evidence of any person having personal knowledge of contested facts. [ 29 ] Rules 7-5(1) and (2) state when a court may grant a

summary judgment: 7-5

(1) The Court may grant

summary judgment if: (

a) the Court is satisfied that there is no genuine issue requiring a trial with respect to a claim or defence; or (

b) the parties agree to have all or part of the claim determined by

summary judgment and the Court is satisfied that it is appropriate to grant

summary judgment.

(2) In determining pursuant to clause (1)(

a) whether there is a genuine issue requiring a trial, the Court: (a )shall consider the evidence submitted by the parties; and (

b) may exercise any of the following powers for the purpose, unless it is in the interest of justice for those powers to be exercised only at a trial: (

i) weighing the evidence; (ii) evaluating the credibility of a deponent;

(iii) drawing any reasonable inference from the evidence. … [ 30 ] The evolution of the law in relation to

summary judgments began with the Supreme Court’s decision in Hryniak v Mauldin , 2014 SCC 7 , [2014] 1 SCR 87 [ Hryniak ], which made

summary relief more readily accessible. The Supreme Court of Canada determined that

summary judgment applications have a greater role to play in the administration of justice by moving the emphasis away from conventional trials. At para. 49, the court held: [49] There will be no genuine issue requiring a trial when the judge is able to reach a fair and just determination on the merits on a motion for

summary judgment. This will be the case when the process (1) allows the judge to make the necessary findings of fact, (2) allows the judge to apply the law to the facts, and (3) is a proportionate, more expeditious and less expensive means to achieve a just result. [ 31 ] The decision of Barrington-Foote J. (as he then was) in Tchozewski v Lamontagne , 2014 SKQB 71 , 440 Sask R 34 [ Tchozewski ], elaborated on the decision in Hryniak . At para. 30 of Tchozewski , Justice Barrington-Foote (as he then was) sets out the key elements and principles on a

summary judgment application and I remain mindful of the detailed considerations outlined in this decision. He notes that the central question is whether

summary judgment will achieve a “fair process that results in a just adjudication of the dispute before the court.” [ 32 ] In this case, the parties agree that

summary judgment is appropriate to bring final resolution to this matter. Cross-examination on affidavits has taken place and transcripts have been filed. Both parties have filed detailed expert evidence. It is doubtful the evidentiary record on the cause of the collapse or the

interpretation of the Policy would differ significantly at trial. [ 33 ] I agree there is a narrow issue between the parties that is primarily based on the

interpretation of the Policy and the expert evidence regarding the cause of the collapse. The issues between the parties are straightforward and well suited for a

summary judgment application. The parties would benefit from determining the factual cause of the collapse and knowing whether the loss is covered under the Policy. This would bring resolution of the issues between the parties.

The Shifting Onus [ 34 ] The Supreme Court of Canada in Ledcor Construction Ltd. v Northbridge Indemnity Insurance Co. , 2016 SCC 37 at para 52 , [2016] 2 SCR 23, set out a shifting onus in interpreting insurance policies: 52 It is also important to bear in mind this Court's guidance in Progressive Homes [2010 SCC 33 , [2010] 2 SCR 245] on the "generally advisable" order in which to interpret insurance policies (para. 28).

Although that case involved commercial general liability policies and not builders' risk policies, the two types of policies share a similar alternating structure: they set out the type of coverage followed by specific exclusions, with some exclusions containing exceptions. As such, the insured has the onus of first establishing that the damage or loss claimed falls within the initial grant of coverage. The parties in these appeals have conceded that this particular onus has been met: trial judge's reasons, at para. 9.

The onus then shifts to the insurer to establish that one of the exclusions to coverage applies. If the insurer is successful at this stage, the onus then shifts back to the insured to prove that an exception to the exclusion applies: see Progressive Homes , at paras. 26-29 and 51 . Contrary to the Court of Appeal's statement at para. 26 of its reasons that the exclusion and exception in this case must be interpreted "symbiotically", I see no reason to depart from the generally accepted order of

interpretation in analyzing the Policy and the Exclusion Clause. [ 35 ] To succeed in their claim, Brock must first establish that the loss claimed falls within the coverage set out in the terms of the Policy. The onus then shifts to the defendants to demonstrate that one or more of the exclusions in the Policy apply. [ 36 ] The Policy provided “broad form” coverage for the Barn. It is not disputed that the “broad form” coverage applies to all risks of direct physical loss or damage to insured property which is not otherwise excluded.

The focus then shifts to whether there are any applicable exclusions that limit coverage or any exceptions within those exclusions. [ 37 ] It is against this legal framework that the present application will be considered. Relevant Provisions in the Policy [ 38 ] The “Subscription Policy – Commercial Lines” document confirms that each of the defendants are subscribers to the Policy, in that each of them insures a percentage for a total of 100%.

The Declarations Page sets out each of the specific forms applicable to certain coverage under the Policy and confirms the Barn is covered under the “Broad Form” of insurance, and specifically Form 5696. Broad form perils specifically include “ all risks of direct physical loss or ‘damage to insured property’”. [ 39 ] The Policy provides the following coverage provisions:

PART 2 – PROPERTY INSURED Coverage E – Farm Buildings And Farm Contents This Form is extended to cover “farm buildings” and “farm contents” other than dwellings and personal property, as described on the “Declaration Page” for sudden and accidental loss or damage by the perils insured as stated on the “Declaration Page”. …

PART 5 – PERILS INSURED …

3. Broad Form Perils – (not applicable to farm livestock) If the term Broad Form is shown on the “Declaration Page” as being applicable to any coverage as defined under Coverage E, F or H , or referred to elsewhere within

Section II – Farm Property, this Form insures against all risks of direct physical loss or “damage to insured property” . [Emphasis added] [ 40 ] The Policy also includes the following exclusions: 4. Exclusions – Applicable to … 3. Broad form Perils … b. Perils Excluded This Form does not insure loss or damage caused directly or indirectly: …

(6) By dampness or dryness of atmosphere, changes of temperature, freezing, heating, shrinkage, evaporation, loss of weight, leakage of contents, exposure to light, contamination, pollution, change in colour or texture or finish, rust or corrosion , marring, scratching or crushing, but this exclusion does not apply to loss or damage caused directly by rupture of pipes or breakage of apparatus not otherwise excluded , theft or attempt thereat or accident to transporting conveyance. Damage to pipes caused by freezing is insured provided such pipes are not otherwise excluded; …

(15) By wear and tear, gradual deterioration , latent defect, inherent vice, or the cost of making good faulty or improper material, faulty or improper workmanship, faulty or improper design provided: however, to the extent otherwise insured and not otherwise excluded under this Form, resultant damage to the property is insured; [Emphasis added] [ 41 ] It is not disputed that the Policy provides broad form coverage, which applies to all direct physical loss and damage to the insured property.

As such, the loss claimed falls within the “all risk” coverage provided, and the collapse is insured unless an exclusion clause applies. As such, assessing the cause of the collapse is integral to the application. 2. What was the cause of the collapse? [ 42 ] Robert Hamilton deposed that in the days leading to February 10, 2016, he observed “significant windstorms” in the area.

As noted in his evidence, wind gusts on February 6 and 7, 2016 were recorded to be 87 km/h and 75 km/h, respectively. [ 43 ] Beyond these general observations, both parties tendered expert evidence on the significance of the wind in the Barn collapse. The Insurers tendered Jeff Udall of Caskanette Udall Consulting Engineers and Ron Hopkinson of Custom Climate Services Inc. while Brock has tendered Trevor Knoll with Robb Kullman Engineering LLP. [ 44 ] The affidavits and reports filed through these experts set out the areas in which the parties propose to qualify and tender their opinion evidence.

Each has provided evidence to support their qualification. The evidence tendered by each of these affiants is relevant and necessary to assist me in drawing the correct inference. [ 45 ] I am satisfied that the proposed expert evidence of Jeff Udall, Ron Hopkinson and Trevor Knoll meets the threshold requirements for admissibility. Neither party took exception to the qualifications of the proposed experts.

The considerations set out in White Burgess Langille Inman v Abbott and Haliburton Co. , 2015 SCC 23 , [2015] 2 SCR 182 , have been met and the evidence of these expert witnesses is accepted in the proposed areas of expertise. [ 46 ] One of the challenges in this case is assessing the competing expert opinions on the cause of the collapse. Each party suggests that their expert opinion should be preferred. I will review the evidence of each expert in turn. Brock’s Expert: Trevor Knoll [ 47 ] Brock relies on the expert opinion of Trevor Knoll, a licenced structural engineer.

His initial report of January 20, 2017 [Knoll Report] confirms that his opinion was largely focused on the strength of the metal truss plate joints, recovered from the grass near the Barn, which formed part of the structural system of the Barn roof. Mr. Knoll opines that corrosion of the truss plates was not the cause of the collapse. [ 48 ] Mr. Knoll avers that his work was directed toward reviewing the corrosion of the metal truss plates and determining whether the corrosion could have caused the Barn roof to fail under its own weight.

He examined the truss plates that were salvaged and noted they were visually corroded. He tested two recovered truss plates and concluded they retained approximately 67% to 91% of the manufacturer’s stated ultimate failure capacity. The strength testing resulted in the conclusion that “the current corroded state of the truss plates had not completely reduced their capacity to transmit loading within the truss assembly.” [ 49 ] In the Knoll Report at page 10, Mr. Knoll states: 7. Discussion of Roof Failure

The roof failure was discovered on February 10 th 2016 just a few days after some relatively high winds were recorded at the Environment Canada Weather Station near Kindersley. Average wind speeds on February 6 th 2016 were recorded to be 33 km/h with gusts to 87 km/h. Average wind speeds on February 7 th 2016 were recorded to be 25 km/h with gusts to 76 km/h. Based on the load testing completed on the two specimens provided to us, it is our considered opinion that the roof trusses did not fail under their own self weight due to corroded truss plates.

It is plausible that the high wind speeds caused the initial failure of the roof system by weakening one or more joints of several trusses. Weakening of even just one joint of a roof truss will lead to progressive failures throughout the remainder of the truss as well as adjacent trusses due to load redistribution. … The dead load of the roof structure accounts for only 23.7% of the total design loads. Based on the test results proving that the corroded truss plates still had at least 67% of their initial capacity, it is clear that dead load of roof alone was not the cause of the roof failure. 8.

Opinion on Cause of Loss Based on review of the corroded truss joint samples and photographs of the failed roof provided by the insured, it is our considered opinion that high wind speeds caused the roof truss failure which led to the collapse of a portion of the roof at this building. [ 50 ] Mr. Knoll prepared a Supplemental Report on July 8, 2019 [Knoll Supplemental Report] to address the impact of wind loading on the Barn. He acknowledged that wind speeds at the exact site of the Barn were not known but provided context for the impacts of wind pressures on a building. In that report, Mr.

Knoll accepted that while significant, the wind pressures that led to the roof truss failures were “likely less than the code minimum design pressures required by the Farm Building Code of Canada.” [ 51 ] In discussing the Barn roof failure, Mr.

Knoll states at page 4 of the Knoll Supplemental Report: … Based on the wind loading analysis, computer modelling of the truss, load testing completed on the two corroded truss plate specimens provided to us, it is our considered opinion that the roof trusses did not fail under their own self weight due to corroded truss plates but rather it was a combination of wind load and the partial weakening of the truss plates due to corrosion.

Based on information provided to us from the insured, we understand there is nothing specific or different about the location of the failure that would result in different levels of corrosion than the samples provided to us for testing. We did not review the failed trusses therefor we cannot comment on whether or not the samples tested were of similar condition to the truss plates in the area of the failure. The exact initial failure that started the

section of roof to partially collapsed is not known. Roof truss failures can be complicated to review due to the many number of connection points in a truss. Detailed study of the failed components was not completed at the time of the failure, however we cannot state that such detailed review could have concluded the exact starting point of the failure. … [ 52 ] In concluding on the cause of loss, Mr. Knoll provides at page 5 of the Knoll Supplemental Report: Our opinion on the cause of loss is that multiple factors played a role. The factors to be considered are corrosion of metal truss plates and wind loading.

Based on information made available to us, our analysis and our opinions, neither factor acting alone would have caused the failure, but rather the combination of both factors caused failures to occur in one or more truss components which led to partial collapse of a portion of the roof. We cannot determine which factor was more of a cause or if one was lesser based on the information we have.

Based on the testing that was performed on what we understand to be two representative samples of truss plates taken from the barn, the strength tested to be between 67% and 91% of the original (uncorroded) tensile strength. Truss plates with 67% of their original strength would be more than adequate to support the superimposed dead loads and self weight of the roof system. [ 53 ] Mr. Knoll averred to the following in his affidavit, deposed October 13, 2020: 14.

Wind pressures that are felt by buildings can be complex due to building geometry, location of openings in the building envelope, exact wind direction and localized gusts. For pitched roofs, as the barn has, roof surfaces experience uplift pressures on the leeward side of the roof ridge. 15. Wind loading on a building also causes pressures on interior surfaces of buildings. The magnitude of internal wind pressures depend greatly on the size and location of wall openings, roof/soffit vents, interior walls, and openings into attics. 16.

If wind speeds at the Brock Stock Farm were similar to those recorded at the Environment Canada Kindersley recording station,

this would have produced a design wind pressure of 0.38kPa (based on 87 km/hr winds). 17. My opinion is that a combination of external wind uplift and internal building pressure contributed to the cause of the roof collapse. The factors to be considered are corrosion of metal truss plates and wind loading. Based on information made available to me, my opinion is that neither factor acting alone would have caused the failure. Rather, the combination of both factors caused failures to occur in one or more truss components which led to partial collapse of a portion of the roof. 18.

I am unable to determine which factor was more of a cause. [ 54 ] Mr. Knoll confirmed that he was not aware of the December 2015 collapse or of the wind conditions on that day. He also acknowledged that the plates he tested could not conclusively be confirmed to represent the full range of truss plates in the Barn or the Barn’s remaining roof strength. Mr. Knoll also acknowledged that the plates he tested were intact while plates seen in the photographs of the collapse were not. [ 55 ] Ultimately, Mr.

Knoll’s opinion was that a combination of external wind uplift and internal building pressure contributed to the cause of the roof collapse. He also considered corrosion of the truss plates to be a factor in the collapse. According to him, both the wind and the corrosion were necessary causes of the collapse as neither the wind nor the corrosion acting alone would have caused the roof to fail. The Insurers’ Experts: Ron Hopkinson and Jeff Udall [ 56 ] The Insurers rely on the expert opinion of Ron Hopkinson, a meteorologist and climatologist. Mr.

Hopkinson was asked to opine on whether a windstorm occurred in December 2015 or February 2016 near Brock, Saskatchewan. Mr. Hopkinson prepared a report dated November 25, 2020 [ Hopkinson Report], which sets out the time frame for measuring wind speeds. [ 57 ] Mr. Hopkinson’s evidence, deposed on February 17, 2021, summarizes: 9. In my opinion, no windstorm or unusually strong winds occurred in the vicinity of Brock, Saskatchewan, in December 2015, or February 2016. … 12. The strongest sustained wind in early February 2016 occurred on February 6, 2016 and was 59 km/hour.

Those wind speeds would be seen in Brock, Saskatchewan on average approximately every two years. Winds equalling or exceeding those speeds were recorded on several occasions from 1998 to 2016 in the area. Those winds are not considered unusual, and do not meet the meteorological definition of a windstorm. 13. The sustained winds recorded for December 2015 and February 2016 were not of a force capable of causing damage to a structurally sound building according to meteorological measurements and particularly the Beaufort Scale, which measures wind speed relative to observed conditions. [ 58 ] Mr.

Hopkinson utilized the data from the closest three weather stations to the Barn as there is no site-specific data available. Relying on the Beaufort Scale, a meteorological tool to measure wind speed, he concluded that: “[T]he winds observed in December 2015 and February 2016 in the vicinity of Brock, SK were much less in magnitude than that required to cause structural damage to buildings.” Based on this evidence, the Insurers invite the court to conclude that a wind capable of causing direct damage to the Barn did not occur.

They point to historical data to demonstrate that the Barn had withstood many winds that were stronger than those observed in February 2016. [ 59 ] While Mr. Hopkinson concludes in the Hopkinson Report that there were no “damaging winds” in the area, he acknowledges there were “moderately strong” winds observed in that region on February 6 and 7, 2016, although his opinion was these were not significant enough to cause structural damage. [ 60 ] The Insurer also advanced the expert evidence of Jeff Udall, a professional civil and structural engineer who specializes in structural failure causation.

He provided his first review of the collapse in his report of May 26, 2016 [Udall Report], written in response to the Topping Report. He reviewed photographs of the Barn and observed that the plates were severely corroded in the area of the collapse. He states that the appearance of the gussets and the nature of damage indicate “the gussets were compromised through deterioration and unable to withstand the loads that the truss was originally designed to withstand.” [ 61 ] Mr.

Udall provided additional supplementary opinions in response to the Knoll Report and the Knoll Supplemental Report, specifically on March 10, 2017 [Udall Supplemental Report #1] and March 8, 2021 [Udall Supplemental Report #2]. [ 62 ] One of the issues raised by the Insurers with respect to the Knoll Report is the reliance on the strength tests conducted on the recovered plates in forming his conclusions. In Udall Supplemental Report #1, Mr.

Udall addresses this issue, noting that the plates tested were not those which actually failed, nor was the location of the plates within the Barn known relative to the collapse. As such, the load capacity of the truss plates that failed remains unknown. The Udall Supplemental Report #1 concludes with this: The [Knoll Report] indicates that the dead load alone accounted for “only” 23.7% of the total design load. It concludes, given that the specimens tested had “at least” 67% capacity, dead load alone was not a factor.

However, the gussets that actually failed during the collapse were not tested, so it is conceivable that some or even several gussets in this barn had capacities less than 23.7%. With only a sample size of 2, the [Knoll Report] cannot reasonably conclude that all gussets had “at least” 67% capacity. There may have been several gussets that had corroded completely through prior to the collapse event, which would offload some of the

roof weight to the adjacent trusses. This could have been determined by examining the fracture surfaces of the gussets to determine the mode of failure, be it from tensile loads or from complete through thickness corrosion. Offloading from one truss to another increases the load on the other trusses. Further corrosion or fracture of the gussets with the increased loading then further offsets loading to more trusses. This could result in a progressive collapse scenario where some trusses fail but the overall roof structure does not collapse.

Eventually enough trusses fail and offload to the others that the assembly cannot withstand even its own dead loads. In my opinion, the testing results do not support the conclusion that dead weight alone was not the cause of the collapse. The actual failed gussets were not analyzed for comparative corrosion loss and load capacity. The sample size is too small and the variance between the samples too large to have a reasonable conclusion that the entire roof assembly had any degree of remaining strength. [ 63 ] In Udall Supplemental Report #2, Mr.

Udall provides further opinion on the nature of wind damage and the cause of the Barn collapse. He comments on the building codes in effect at the time of construction, noting there are three main loads considered in truss design: wind load, snow load and dead load. The requirements can vary by geographical location and Mr. Udall advises that, under the National Farm Building Code of Canada, the wind speed that a building would need to withstand in the area of Kindersley, Saskatchewan is 0.45 kPa which converts to 95 km/h. [ 64 ] At pages 4 and 5 of the Udall Supplemental Report #2, Mr.

Udall states: Trusses with severely corroded gusset plates are subject to failure and collapse. When snow loads or wind speeds are below design limits, and the trusses are in good condition, any failures generally result in damage to other construction elements like the roof sheathing or wall structures. The gusset plates of a truss are generally stronger than the wood elements of the truss. This was also illustrated by the testing reported by [Trevor Knoll] where sample connections were pulled apart in tension. The gussets either pulled free from the wood or the wood member failed.

The gussets themselves did not fracture - even in their partially corroded condition. If the gusset plates have severely corroded, collapse becomes more likely even in cases where the winds or snow loads were significantly less than the original design limits. Winds alone generally do not cause inward collapse of the truss structure. The uplift forces pull building elements up and away from the structure. Engineered trusses are designed for uplift wind forces.

The Brock Stock Farm barn partially collapsed when the truss metal gusset plates were in a state of advanced corrosion. … … Ron Hopkinson reported that an 87 km/hr wind gust occurred in the days before the reported loss. This is less than the design wind speed of 95 km/hr. As discussed above, wind gusts are accounted for in the design process. The roof did not fail at this time. [ 65 ] Ultimately, Mr. Udall concluded that the cause of the collapse was deterioration of the truss plates. The photographs referenced in the Udall Supplemental Report #2 show significant corrosion and deterioration of the truss plates.

As Mr. Udall notes, the plates have “virtually no load resistance in this condition.” In fact, the photographed trusses from the collapse show fractures or shearing of the plate itself, which differs significantly from the specimens salvaged and tested as these resulted in breakage of the connected wood members rather than breakage of the plates. [ 66 ] At page 8 of the Udall Supplemental Report #2, Mr. Udall opines on the effect of deterioration of the capacity of the Barn: A truss roof should last for many years if maintained in good condition.

As reported by others, trusses on hog barns are commonly damaged by corrosive gases from operations in the barn. The gusset plates will corrode and have reduced strength until the plates have completely deteriorated or the roof collapses. Throughout its lifespan, the trusses will be subjected to various loads from wind and snow. If these loads are less than the original design loads, and the trusses are in good condition, the roof should remain intact and function as intended.

As the roof ages and the truss plates deteriorate, the trusses’ ability to resist day-to-day snow and wind loads is also reduced. … At some point, the strength is reduced to such a point that it will collapse from the smallest loads and even its own weight. [ 67 ] In his affidavit, deposed March 17, 2021, Mr. Udall summarizes: 12. To summarize, it is my view that the roof of the Hog Barn collapsed in February 2016, because of the severely corroded and deteriorated state of the metal gusset plate connectors joining the wooden roof trusses.

Because of the corroded and deteriorated state of the gusset plates, the Hog Barn was not structurally sound, and could have collapsed at any time, regardless of wind conditions. 13. In my opinion, the collapse would not have occurred if the gusset plates were not corroded and deteriorated. Buildings, including the Hog Barn, are designed to withstand winds within a specified range.

The loads imposed on the structure by the winds in December 2015 and February 2016, were not significant enough to cause structural damage to a structurally sound building, without corroded or deteriorated components such as metal gusset plate connectors. Weighing the Expert Evidence [ 68 ] To begin, I have tailored my analysis to the contribution of corrosion as opposed to rust, wear and tear, or gradual deterioration.

Each of the experts discusses the impact of corrosion and, while the other three terms are specified in the exclusion clauses and often used interchangeably, in my view the primary issue in the declining strength of the truss plates is corrosion. [ 69 ] One of the issues underlying Mr. Hopkinson’s evidence is that there was initially a misconception by the Insurers as to the nature of the coverage under the Policy. The initial affidavit of Sam Charman, deposed March 18, 2021, approached

the Policy as a “named peril” policy. While Mr. Charman subsequently clarified in his affidavit of July 7, 2021 that it is, in fact, a “broad form” policy, the Hopkinson Report was prepared well in advance of the clarification and prior to Mr. Charman’s initial affidavit. This explains why the Hopkinson Report focussed on whether the winds in the area constituted a “windstorm”, as this was a named peril. [ 70 ] As the Hopkinson Report was prepared under this misconception, I have relied on Mr.

Hopkinson’s evidence for the purpose of understanding the measurements and nature of the wind leading to the time of the collapse. Robert Hamilton also provided first-hand evidence of significant windstorms in the area in early February 2016. There is no other eyewitness evidence of wind in the area. Robert Hamilton was not cross-examined on his affidavit evidence and his observations were unchallenged. [ 71 ] Mr. Udall’s and Mr. Knoll’s evidence address the impacts of that wind in the context of the structural integrity of the Barn.

In my view their evidence supports the conclusion that both the wind load and the corrosion of the metal plates were causes of the collapse. [ 72 ] One of the challenges in fully accepting the evidence of Mr. Udall is that it is based on the presumption the Barn was “structurally sound”. Mr. Udall’s evidence initially concluded the Barn could have collapsed at any time, regardless of wind conditions.

He concludes in his evidence that the loads imposed by the winds were not significant enough to cause structural damage to a structurally sound building, without corroded or deteriorated components such as the metal truss plate connectors. [ 73 ] The Udall Supplemental Report #1 states: There may have been several gussets that had corroded completely through prior to the collapse event, which would offload some of the roof weight to the adjacent trusses.

This could have been determined by examining the fracture surfaces of the gussets to determine the mode of failure, be it from tensile loads or from complete through thickness corrosion. Offloading from one truss to another increases the load on the other trusses. Further corrosion or fracture of the gussets with the increased loading then further offsets loading to more trusses. This could result in a progressive collapse scenario where some trusses fail but the overall roof structure does not collapse.

Eventually enough trusses fail and offload to the others that the assembly cannot withstand even its own dead loads. [ 74 ] Despite acknowledging the impacts of offloading and the potential for a progressive collapse scenario, Mr. Udall opines that dead weight alone was not the cause of the collapse based on the lack of comparison of the tested truss plates and the small sample size available.

However, in my view, that does not preclude the conclusion that there was strength remaining in the roof that would or could withstand the dead weight it carried. [ 75 ] The photograph evidence confirms the truss plates were corroded from their original state. This would make them more susceptible to the impacts of wind load, even if that wind load was lesser than what the Barn was initially designed to withstand. The load redistribution that would result from the breakage or deterioration of one or more truss plates would have had an impact on the remaining trusses.

Further, the corrosion would have reduced the ability of the trusses to withstand the loads they were originally designed to withstand. Notably, the salvaged specimens failed as a result of the metal teeth pulling out of the wood, not from breakage or failure of the plate itself which is what appears to have occurred in the Barn. This suggests to me that the tested specimens were less corroded or deteriorated than those which failed and caused the collapse. [ 76 ] As pointed out by the Udall Report, the photos of the damaged roof trusses show that the plates themselves pulled apart. In Mr.

Udall’s opinion, overloading of a truss when the truss plates have full capacity results in the “teeth” pulling from the wood or twisting and fracturing of the wood members. In fact, this is what happened with the plates that Mr. Knoll tested. The physical breakage of the truss plates indicates that the plate itself was so corroded that it was unable to withstand the load for which it was designed. [ 77 ] But simply because there is corrosion or weakening of structural components over time does not presumptively exclude a structure from use or insurability.

While the winds may have been below the original speeds the Barn was designed to endure, my view from the evidence is that even these reduced windspeeds would have had a negative impact on the ability of the Barn to bear its own weight given the corrosion of the truss plates, even if it were able to carry this dead load in more pristine conditions.

At the time this wind event occurred, the Barn was still an intact and viable structure even though elements of the internal framework were weakening over time and due to environmental factors. [ 78 ] The Udall Supplemental Report #2 subsequently recognized the Barn roof may be susceptible to damage with “less than the original design” wind speeds as its ability to resist the winds decreases. Mr. Udall comments on the impacts of deterioration on capacity: Throughout its lifespan, the trusses will be subjected to various loads from wind and snow.

If these loads are less than the original design loads, and the trusses are in good condition, the roof should remain intact and function as intended. As the roof ages and the truss plates deteriorate, the trusses’ ability to resist day-to-day snow and wind loads is also reduced. […] At some point, the strength is reduced to such a point that it will collapse from the smallest loads and even its own weight. [ 79 ] The Knoll Supplemental Report comments on the impacts of stress reversal caused by wind and the tension that the opposite force of wind “uplift” create in structures.

The Udall Supplemental Report #2 also comments on the effect of stress reversal, but discounts this as the typical result of a wind is for a

section of the roof to separate and be thrown away from the building. Mr. Udall states: Winds alone generally do not cause inward collapse of the truss structure. The uplift forces pull building elements up and away from the structure. Engineered trusses are designed for uplift wind forces. [ 80 ] Yet both experts recognize the weakening of one truss plate has the potential to lead to progressive failures in the remainder of the truss plates and can extend to adjacent trusses due to load redistribution. [ 81 ] I recognize that Mr. Knoll was not aware of the December 2015 collapse. However, the fact that there was a

previous collapse does not necessarily suggest that the truss plates were a cause of that collapse, either solely or concurrently. There is noevidence as to other potential causes, such as snow load or wind load in December 2015. [82] The December 2015 collapse effectively provides limited context regarding the cause of the February 2016collapse. It is entirely possible that the sole cause was rust or corrosion in that specific area of the Barn. It is also possible that there wassnow load or another contributing factor in that collapse.

While it may be indicative of an underlying problem with the structural integrityof the Barn, the cause of the December 2015 collapse is not definitively known and provides little assistance in assessing the cause of theFebruary 2016 collapse. [83] Mr. Knoll was aware of the limitations resulting from testing only the two plates presented to him. Heacknowledged that he did not know the extent of the corrosion in the failed truss plates and noted the limitations on testing due to thelimited number of recovered plates available. While Mr.

Knoll’s evidence indicates that there was residual strength in the plates, I notethis testing involved a limited number of intact plates from unknown locations within the Barn. There is no question that the truss plateswhich did ultimately fail were either somewhat or significantly weakened from corrosion. [84] Ultimately, the precise degree of corrosion of the failed truss plates remains unknown. What is evident is thatwithout the corrosion and ongoing deterioration of the truss plates, this collapse would not have occurred.

Similarly, without the windload on this weakened structure, this collapse would not have occurred. [85] I find that the truss plates were unable to withstand the combined dead load and wind load for which they wereinitially designed. I am of the view that the Barn was not entirely structurally sound due to the corrosion that had already occurred to thetruss plates.

Even though the wind that occurred at the approximate time of the collapse was less than what the Barn was initiallydesigned to withstand, the combination of corrosion and this wind event operated in tandem to cause the collapse. [86] That is not to say that further corrosion or deterioration of the truss plates may have eventually resulted in acollapse solely from the dead load of the roof.

However, given the evidence of the wind at the relevant time coupled with the expertevidence and testing of the surviving truss plates, I am satisfied that for the collapse to have occurred at this particular time, it was due toa combination of wind and corrosion. [87] None of the parties were able to conclusively state what the windspeeds would have been at the specificlocation of the Barn in early February 2016 or what the precise wind force would have been on the Barn. In my view, the evidencesupports that the truss plates were weakened due to time and environment.

When the strong winds occurred in the days before thecollapse, this resulted in a load redistribution among the trusses and a subsequent progressive failure in the adjacent trusses. [88] I do not accept that the Barn would have collapsed at the relevant time without an additional factor happeningconcurrently, such as the wind. I am satisfied from the evidence and on a balance of probabilities that it was corrosion of the truss platesin combination with the wind that caused the collapse. 3.

Should Brock’s loss of February 10, 2016 be covered by the Policy? [89] Determining the cause of the loss is necessary to interpret the terms of the Policy. Given I have determined boththe wind and corrosion of the truss plates to be concurrent causes, the question then becomes whether this concurrent causation precludescoverage under the Policy. [90] As Brock has demonstrated there is coverage, the onus shifts to the insurer to establish the application of anyexclusion clause.

a) The Exclusion Clause [91] Brock suggests that if there are concurrent causes with one cause covered under an insurance policy and theother excluded, the loss is covered. The Insurers take the position that the loss is not covered, given the wording of the exclusion clause. [92] In Derksen v 539938 Ontario Ltd., 2001 SCC 72, [2001] 3 SCR 398 [Derksen], the Supreme Court of Canadaconcluded the applicability of an exclusion clause is a matter of contractual

interpretation. At paras. 46 to 49, the Court stated: 46 On review of the analysis in Wayne Tank [[1973] 3 All ER 825], which had its roots in the field of maritime law, there is nocompelling reason to favour exclusion of coverage where there are two concurrent causes, one of which is excluded from coverage.

Apresumption that coverage is excluded is inconsistent with the well-established principle in Canadian jurisprudence that exclusionclauses in insurance policies are to be interpreted narrowly and generally in favour of the insured in case of ambiguity in the wording(contra proferentem). 47 Separate from the shortcomings in the analysis in Wayne Tank, another compelling reason for rejecting the presumptive propositionadvocated by the appellants is the fact that insurers have language available to them that would remove all ambiguity from the meaningof an exclusion clause in the event of concurrent causes.

This can be accomplished by the insurer clearly specifying that if a loss isproduced by an excluded peril, all coverage is ousted despite the fact that the loss may also have been caused by another, covered peril.Examples [page417] from case law indicate that insurers have in fact successfully used enforceable exculpatory language. See Ford,supra, [ (SCC), [1959] SCR 539] and Pavlovic v.

Economical Mutual Insurance Co. (1994), (BCCA), 28 C.C.L.I. (2d) 314, at p. 320, per Finch J.A. of the British Columbia Court of Appeal: Applied to the circumstances of this case, the meaning of exclusion [clause] (12) is, at best, ambiguous. It leaves open the questionwhether the loss is excluded where seepage or leakage is a "contributing cause", as opposed to the only cause. Apt language to achievethe end argued for by the insurer is seen in the policies considered in some other cases.

Similar exclusion clauses have used languagesuch as "cause directly or indirectly", or "caused by, resulting from, contributed to or aggravated by". One exclusion clause read:

We do not insure for such loss regardless of the cause of the excluded event, other causes of the loss, or whether other causes actedconcurrently or in any sequence with the excluded event to produce the loss ... These examples simply show that it was possible for the insurer to choose language which would not have left the meaning of theexclusion clause open to doubt. 48 For the foregoing reasons, I decline to adopt the presumption that where there are concurrent causes, all coverage is ousted if one ofthe concurrent causes is an excluded peril.

If an insurer wishes to oust coverage in cases where covered perils operate concurrently withexcluded perils, all it has to do is expressly state it in the insurance policy. 49 Whether an exclusion clause applies in a particular case of concurrent causes is a matter of

interpretation. This

interpretation must bein accordance with the general principles of

interpretation of insurance policies. These principles include, but are not limited to: (1) the contra proferentem rule; (2) the principle that coverage provisions should be construed broadly and exclusion clauses narrowly; and (3) the desirability, at least where the policy is ambiguous, of giving effect to the reasonable expectations of the parties. (Reid Crowther & Partners Ltd. v. Simcoe & Erie General Insurance Co., (SCC), [1993] 1 S.C.R. 252, at p. 269) [93] Concurrent causes describes a scenario in which two distinct perils have caused the loss.

For example,in Derksen damage was caused by the negligent clean-up of a work site and the negligent operation of a motor vehicle. The Courtdetermined there was no “dominant” cause and the loss would not have happened without both causes.

The Supreme Court of Canadafound that coverage could not be ousted by an exclusion clause that only excluded one of the two concurrent sources of liability, absentexpress language to the contrary in the agreement. [94] The Supreme Court of Canada went on to state in Derksen that the remedy for removing ambiguity from anexclusion clause is to use specific language, such as “caused directly or indirectly”. The relevant exclusion clause in the Policy uses thetype of language recommended in Derksen: This Form does not insure loss or damage caused directly or indirectly: …

(6) By dampness or dryness of atmosphere, changes of temperature, freezing, heating, shrinkage, evaporation, loss of weight, leakage ofcontents, exposure to light, contamination, pollution, change in colour or texture or finish, rust or corrosion, marring, scratching orcrushing, but this exclusion does not apply to loss or damage caused directly by rupture of pipes or breakage of apparatus not otherwiseexcluded, theft or attempt thereat or accident to transporting conveyance.

Damage to pipes caused by freezing is insured provided suchpipes are not otherwise excluded; [Emphasis added] [95] This is consistent with the approach suggested in the comments of the Saskatchewan Court of Appeal in B & BOptical Management Ltd. v Bast, 2003 SKQB 242, 235 Sask R 141: 41 In Derksen, supra, the Supreme Court of Canada declined to adopt the presumption that where there are concurrent causes, allcoverage is ousted if one of the concurrent causes is an excluded peril.

The court stated that "if an insurer wishes to oust coverage incases where covered perils operate concurrently with excluded perils, all it has do to is expressly state it in the insurance policy". Thecourt further stated that whether an exclusion clause applies in a particular case of concurrent causes is a matter of

interpretation, inaccordance with the general principles of

interpretation of insurance policies. This includes the application of: the contra proferentumrule; the principle that coverage provisions should be construed broadly and exclusion clauses construed narrowly; and the desirability,at least where the policy is ambiguous, of giving effect to the reasonable expectations of the parties. 42 Certainly the electrical contractor was in the chain of causation. But to say that it was not the high voltage electrical current whichcaused the loss, is to ignore the obvious chain of causation.

There was negligence in the connecting of the electrical outlet but it waselectrical current that damaged the machine. 43 It is clear that both the electricity and the negligence of the contractor were causes of the damage; in the absence of either, therewould have been no loss. Therefore, we have a case of two concurrent causes of the loss, and must examine the exclusion clauses inaccordance with the principles enunciated in Derksen, supra. … 52 In my view there was a relevant chain of causation leading to a single event of damage to property as occurred similarly in Derksen,supra.

Given that the exclusion clause 6A(

c) does not include the words "directly or indirectly" then the loss is not clearly excluded bythe language of the exclusion clause.

Given there is an ambiguity it is fair to conclude that the parties would reasonably have expecteddamage to covered property caused by excess electrical voltage caused by negligent installation of the electrical outlet, to be covered bythe terms of the policy. [96] Similarly, in Minox Equities Ltd. v Sovereign General Insurance Co., 2010 MBCA 63, 258 Man R (2d) 24, theManitoba Court of Appeal concluded: 51 The case of Derksen v. 539938 Ontario Ltd., 2001 SCC 72, [2001] 3 S.C.R. 398, also mentions the phrase "directly or indirectlycauses" with respect to loss caused by concurrent causes.

In that case, Major J. for the court stated that if an insurer wishes to exclude

coverage where there are concurrent causes (one of which is covered and the other which is excluded), it can use appropriate language todo so. Major J. then referred, at para. 47, to the Pavlovic [(1994), (BC CA), 28 CCLI (2d) 314 (BCCA)] case whereinFinch J.A. indicated, at p. 320, that the use of the phrase "caused directly or indirectly" would exclude coverage where there areconcurrent causes.

This therefore confirms, in my view, the correctness of Sovereign's argument that the judge was in error in relying onthe decisions of Pavlovic and Rivard [2002 MBCA 70] because of the very different wording of the exclusion clauses in those decisions. 52 Thus, in this case, even if the mould was the result of concurrent causes, the use of the phrase "directly or indirectly caused" in theexclusion clauses, allows the exclusion clauses to apply.

So, in the present case, even though the evidence indicated that the righttemperature, adequate food and mould spores needed to be present, the evidence also established that moisture was a prerequisite formould growth. 53 Therefore, in my view, it is clear that the seepage, rain and humidity problems within the Complex contributed at least indirectly tothe growth of mould within the Complex and consequently, the exclusion clauses would apply.

As a result, Sovereign is not liable toMinox to cover the costs of mould remediation and prevention. [97] The express language in this Policy ousts coverage when an excluded cause, such as corrosion, is a “concurrentcause” of the loss. This effectively remedies the problem faced in Derksen.

In this case the Insurers utilized clear words in the exclusionclause which left no ambiguity. [98] Under the specific terms of the Policy, there is no coverage where the associated loss is directly or indirectlycaused by rust, corrosion, wear and tear or gradual deterioration, unless an exception applies. [99] While this resolves the issue of whether the exclusions clauses apply and the application of the law to that issue,my view is that the core of this case centres on the exceptions within the exclusion clauses.

b) The Exceptions [100] As the insurer has demonstrated there are exclusion clauses which apply, the onus then shifts back to Brock toestablish the loss falls within any exception to an exclusion clause.

i) Apparatus [101] Brock asserts that the truss plates were part of an “apparatus not otherwise excluded” such that this exceptionapplies, and the loss is insured under the Policy. Specifically, the exclusion does not apply to loss or damage caused directly by “…breakage of apparatus not otherwise excluded …”. The Insurers take the position the truss system is not an “apparatus” and therefore theexclusion clause applies. [102] Again, the relevant portion of the exclusion clause provides: This Form does not insure loss or damage caused directly or indirectly: …

(6) By dampness or dryness of atmosphere, changes of temperature, freezing, heating, shrinkage, evaporation, loss of weight, leakage ofcontents, exposure to light, contamination, pollution, change in colour or texture or finish, rust or corrosion, marring, scratching orcrushing, but this exclusion does not apply to loss or damage caused directly by rupture of pipes or breakage of apparatus not otherwiseexcluded, theft or attempt thereat or accident to transporting conveyance.

Damage to pipes caused by freezing is insured provided suchpipes are not otherwise excluded; … [Emphasis added] [103] The definition for “apparatus” in the Oxford English Dictionary includes: apparatus: The things collectively necessary for the performance of some activity or function; the equipment used in doingsomething; a machine, a device. … [104] Also found in the Oxford English Dictionary is the architectural definition of a “truss”: truss: … 3 ARCHITECTURE … b A framework, esp. of rafters, posts, and struts, supporting a roof, bridge, etc. … … [105] The Insurers propose that the truss is not an apparatus, but rather is part of the Barn.

They point to the definitionof “farm buildings”, which is defined in the Policy at “Part 9 –

Definitions”: 8. “Farm Buildings” means the building(

s) other than dwelling building(

s) located on the “premises” and as described on the“Declaration Page”, including: a. Fixed structures pertaining to the building(s);

b. Additions and extensions communicating and in contact with the building(s); c. Permanent fittings and fixtures that normally form part of a building(s); d. Materials and supplies on the “premises” for maintenance of, normal repairs and minor alterations to the building, or for building services; e. Signs, hydro poles and lines, to a maximum of $2,000 in all; f. Silos and silo unloaders, but only if described specifically on the “Declaration Page”; g.

Machinery that is permanently attached within the building(s). [ 106 ] However, simply because the truss forms part of the Barn does not preclude it from also being an “apparatus”. The truss is a collectively necessary group of parts for the function of supporting the roof, which is consistent with the definition of an apparatus. [ 107 ] In Pillar Construction Ltd. v Canada (Minister of National Revenue – M.N.R.) , [1990] CITT No 58 (QL), the Canadian International Trade Tribunal considered the meaning of an “apparatus” in the absence of a definition within the Excise Tax Act , RSC, 1985, c E-15 .

In that decision, the Tribunal commented: Paragraph 1(j),

Part XIII,

Schedule III to the Act, exempts "machinery and apparatus ... for use in exploration for or discovery or development of petroleum, natural gas or minerals." To benefit from this exemption, the appellant must first show that the culverts in issue are either a machinery or apparatus within the meaning of that paragraph. The Tribunal does not believe that the appellant is trying to argue that they are machinery. It is the Tribunal's view that the issue is whether they are apparatus or not. The Act provides no definition of the term " apparatus ." Consequently, it is useful to refer to dictionary

definitions to derive its ordinary meaning . The Webster's Third New International Dictionary [G. & C. Merriam Company, Springfield, 1968] defines " apparatus " as follows: 2 a: a collection or set of materials, instruments, appliances, or machinery designed for a particular use … b: any compound instrument or appliance designed for a specific mechanical or chemical action or operation: MACHINERY, MECHANISM. The Funk and Wagnalls New Standard Dictionary [Funk & Wagnalls, New York, 1963] defines "apparatus" as: 1.

Any complex device or machine designed or prepared for the accomplishment of a special purpose; Both parties relied on the above-noted Consolidated Denison case [(1963-66) 3 T.B.R. 34] to support their views. In that case, the Exchequer Court referred to the Funk and Wagnalls' dictionary definition of the word " apparatus " and stated that the word "complex" does not necessarily mean that a thing is complicated, but that it consists of parts. In the Consolidated Denison case, the rock bolts in issue had three different parts and the Court held that they were apparatus as well as machinery.

The evidence shows in the present case that the culverts are pieces of corrugated galvanized metal pipe, varying in lengths from three to seven meters, that are coupled together with a metal sleeve to obtain the length required. The culverts do not, in the Tribunal's view, consist of parts; they are simply put together to obtain a longer culvert. To be an apparatus, they would have to consist of a number of interrelated parts, each having a definite function. In this case, all the culverts have the same function when pieced together; they provide drainage and prevent backup of water on the roads.

Furthermore, the function of the culverts is not to perform a mechanical or other operation as such. They simply allow the passage of water under a road. They perform the function of bridges. No one would argue that bridges are instruments or appliances. Therefore, the Tribunal concludes that the culverts in issue do not fall within the ordinary meaning of the word " apparatus ." [ 108 ] The Insurers note that the term “apparatus” is utilized seven times throughout the Policy in a manner which references pipe systems, electric systems, and machinery/equipment.

It is the Insurers’ position that the use of this term in the Policy provides context for the reasonable expectations of the parties. [ 109 ] The Insurers also point to the inclusion of “apparatus” in the definition of “pressure vessel” under

section 8 - 5 of The Insurance Regulations , RRS c I-9.11 Reg 1 , as an indication it applies in conjunction with pipes as opposed to structural components. The relevant definition in that

section reads: 8-5

(1) In this section: … “pressure vessel” means any boiler, vessel or apparatus and their connected pipes while under pressure or while in use or operation, but does not include any tank with an internal diameter of 610 mm or less used for storage of hot water or any vessel if the maximum internal working pressure of the vessel does not exceed 103 kilopascals above atmospheric pressure; … [ 110 ] In my view, this comparison does not support the Insurer’s position beyond the purpose set out in that

section of The Insurance Regulations . The use of “apparatus” in the related definition of “pressure vessel” is specific only to that

section of The Insurance Regulations and is not incorporated into the Policy, nor does the text of the Policy suggest that extrapolating this narrow definition into the Policy was a reasonable expectation of either party.

[111] In Saskatchewan Government Insurance v Patricia Hotel

(1973) Ltd., 2011 SKCA 70, 334 DLR (4th) 740, theSaskatchewan Court of Appeal confirmed the approach to the interpretive process for insurance policies: 23 Having reviewed the nature of the claim against the Pat, the next step in the analysis is to consider the terms of the Policy anddetermine if the claim falls within its scope. The principles of contract

interpretation that should be brought to bear in this regard havebeen extensively canvassed by the Supreme Court. They were summarized as follows by the Court in Progressive Homes [2010 SCC 33,[2010] 2 SCR 245]: [22] The primary interpretive principle is that when the language of the policy is unambiguous, the court should give effect to clearlanguage, reading the contract as a whole (Scalera [2000 SCC 24, [2000] 1 SCR 551], at para. 71). [23] Where the language of the insurance policy is ambiguous, the courts rely on general rules of contract construction (Consolidated-Bathurst, (SCC), [1980] 1 S.C.R. 888, at pp. 900-902). For example, courts should prefer

interpretations that areconsistent with the reasonable expectations of the parties (Gibbens, 2009 SCC 59 , [2009] 3 S.C.R. 605, at para. 26; Scalera, atpara. 71; Consolidated-Bathurst, at p. 901), so long as such an

interpretation can be supported by the text of the policy. Courts shouldavoid

interpretations that would give rise to an unrealistic result or that would not have been in the contemplation of the parties at thetime the policy was concluded (Scalera, at para. 71; Consolidated-Bathurst, at p. 901). Courts should also strive to ensure that similarinsurance policies are construed consistently (Gibbens, at para. 27). These rules of construction are applied to resolve ambiguity.

They donot operate to create ambiguity where there is none in the first place. [24] When these rules of construction fail to resolve the ambiguity, courts will construe the policy contra proferentem - against theinsurer (Gibbens, at para. 25; Scalera, at para. 70; Consolidated-Bathurst, at pp. 899-901). One corollary of the contra proferentem ruleis that coverage provisions are interpreted broadly, and exclusion clauses narrowly (Jesuit Fathers [2006 SCC 21, [2006] 1 SCR 744], atpara. 28). [112] Reading the Policy as a whole, there is ambiguity in the language used.

If it was the Insurers’ intention to limitthe meaning of an “apparatus”, it was open to them to include a similar limitation in the Policy. The truss is a framework of structuralelements that rely on the combination of parts for the function of carrying and supporting the load of the roof. This meets the definitionof an apparatus.

When this apparatus failed, the loss fell within the exception under the exclusion clause. [113] In considering that coverage provisions should be construed broadly and exclusion clauses narrowly and inapplying the principle of contra proferentum, I am satisfied the loss falls within the exception and is subject to coverage under thePolicy. ii) Wear and Tear [114] While I have largely focussed on the corrosion of the plates, counsel for Brock suggests that truss plates are notused in a manner where they are subject to “wear and tear” or “gradual deterioration”.

Brock also suggests that the exclusion clauserelating to “wear and tear” or “gradual deterioration” should not apply as any damage caused by rust or corrosion is more appropriatelyconsidered under the specific exclusion clause which references losses related to these causes. [115] Again, the relevant portion of the exclusion clause provides: This Form does not insure loss or damage caused directly or indirectly: …

(15) By wear and tear, gradual deterioration, latent defect, inherent vice, or the cost of making good faulty or improper material, faultyor improper workmanship, faulty or improper design provided: however, to the extent otherwise insured and not otherwise excludedunder this Form, resultant damage to the property is insured; [Emphasis added] [116] Even if corrosion of the truss plates were classified as “wear and tear” or “gradual deterioration”, the resultantdamage to the Barn would be insured under the stated exception as it is otherwise insured.

c) Costs to Repair the Barn [117] Robert Hamilton provides evidence of the costs incurred by Brock to provide both temporary and permanentrepairs for the Barn roof to allow ongoing farm operations. [118] The total cost of the temporary work, required to lift the Barn roof and minimize exposure to the elements, was$48,395.81. Permanent repairs had a total cost of $237,907.84. Invoices have been provided setting out the details of these costs. There isno evidence refuting these expenses. [119] In my view, the total amount of $286,303.65 is an appropriate valuation of the expense of the repairs, bothtemporary and permanent.

d) Business Interruption [120] Brock also suffered loss of income as a direct result of the collapse of the Barn roof. The Policy provides for

business interruption loss pursuant to Form 5632, Business Interruption – Standard Form, under the following provisions: 1. INDEMNITY AGREEMENT We agree to indemnify you for an amount not exceeding the limit of insurance as stated on the “Declaration Page”, against “farm earnings” and “business earnings” loss directly arising from the destruction or damage to buildings , structures, machinery, equipment, stock, farm outbuildings, silos, metal feed or grain storage binds [ sic ], grain dryers, implements, harvested produce and destruction of livestock by an insured peril . 2.

MEASURE OF RECOVERY The measure of recovery in the event of loss hereunder shall be the reduction in “farm earnings” and “business earnings” directly resulting from such interruption of business less charges and expenses which do not necessarily continue during the interruption of business, for not exceeding such length of time as would be required with the exercise of due diligence and dispatch to rebuild, repair or replace such part of the described property as has been destroyed or damaged commencing with the date of such destruction or damage and not limited by the date of expiration of this policy, but not exceeding the actual loss sustained by you resulting from such interruption of business.

Due consideration shall be given to the continuation of “normal” charges, expenses including payroll and “extra expenses” to the extent necessary to resume your operations with the same quality of service which existed immediately preceding the destruction or damage by the perils insured against. … 10. EXCLUSIONS We shall not be liable for: (

a) more than 25 percent of the amount specified on the “Declaration Page” in any thirty (30) consecutive calendar days; (

b) any increase of loss directly or indirectly, approximately or remotely, resulting from, or contributed to by, the operations of any by- law, ordinance or law regulating zoning or demolition, repair or construction of buildings or structures, unless the liability is otherwise specifically assumed by endorsement hereon; (

c) any increase of loss due to interference at the described premises by strikers or other persons, with rebuilding, repairing or replacing the property, or with the resumption or continuation of the farming operation; (

d) loss due to fines or damages for breach of contract for late or non-completion of orders, or for any penalties of whatever nature; (

e) loss due to the suspension, lapse or cancellation of any lease or license, contract or order, which may affect your earnings after the period following any loss during which indemnity is payable, but this exclusion shall not apply to temporary suspension of: (

i) dairy quota authorized by Dairy Farmers of Ontario; (ii) quota authorized by any other similar marketing board; or (iii) any other consequential loss or remote loss; (

f) veterinary fees, loss in value of any livestock, harvested produce or farm machinery and equipment; (

g) the cost of compiling books of account, abstracts, drawings, card index systems or other records. [Emphasis added] [ 121 ] Brock has provided evidence of a loss of farm income directly arising from the collapse of the Barn roof.

I have determined that this loss is directly arising from damage caused by an insured peril. [ 122 ] The affidavit of John Beckton, Financial Manager and Accountant for Brock, deposes that there was lost revenue as a result of the collapse and both he and Robert Hamilton provided evidence setting out details of the loss. [ 123 ] Immediately following the collapse, Brock was forced to sell 606 hogs at a reduced rate as they were located in rooms directly impacted by the collapsed roof. Mr.

Beckton’s evidence is this sale was necessary due to the cold temperature, debris and an inability to feed the hogs which were located in the impacted areas of the Barn. He also deposes that Brock had to pay their employees additional wages and overtime to remove the hogs from the area. [ 124 ] In my view, the loss resulting from the forced immediate sale of 606 hogs is an insured loss. These hogs would not have been sold at that specific time and there was urgency in removing the hogs and ensuring they were sold immediately. Mr.

Beckton avers that these hogs were sold the day of the collapse so they would not be underfed or harmed by the debris or cold temperatures. He provides historical data for hog prices at the relevant time as well as an invoice confirming sale. I am satisfied that the lost revenue is $33,793.26 as set out in the evidence. [ 125 ] I note this loss is also contemplated under the Broad Form coverage. Clause 5 of

Part 7 in Form 5696 specifies the valuation of farm livestock is based on “fair market value” and that valuation is supported by the evidence. [ 126 ] Additionally, I accept there were wages incurred to immediately move and sell these 606 hogs and to feed the

remaining 600 hogs. There would also be additional non-typical labour expenses due to the necessity of manually feeding the hogs due to damage of the automated feed system (4 hours/day for 60 days), repairing the feeding system (100 hours) and cleaning up debris from the collapse to prevent injury to the animals (20 hours). These costs have been assessed at a rate of $22.50 per hour for a further loss of $8,100. [ 127 ] The evidence of Mr. Beckton and Robert Hamilton also confirms that the collapse also impacted the remaining 600 hogs as the automated feeding system could no longer function.

This resulted in a change to the feed amounts and disruption to feeding times. Additionally, the loss of space due to the collapsed roof resulted in cramped quarters for the remaining hogs while Brock attempted to continue their regular operations. The overall impact was a delay in hog growth as well as an increase in food and labour to feed these hogs.

Brock suggests these additional expenses resulted in lost revenue of approximately $30 per hog, or a cost of $18,000 for the 600 remaining hogs. [ 128 ] In my view, this estimation includes double counting of labour amounts to feed the hogs and is largely speculative. There is insufficient evidence to establish this loss, such as evidence of delayed sales, evidence of increased feed expenses (aside from labour) or decreased revenue.

I do not allow this claimed amount as a business interruption loss. [ 129 ] While the exclusions limit the recoverable amount to 25 percent in any thirty (30) consecutive calendar days, or $35,062.50, given the delays in assessing the claim and the rejection of the claimed loss by the Insurers, the impacts on Brock went well beyond thirty days. [ 130 ] As I have assessed above, the business interruption loss is $41,893.26.

e) Costs [ 131 ] Brock has been the successful party on the application and is presumptively entitled to costs. I fix costs of the application at $5,000. 4. Conclusion [ 132 ] I am satisfied there is no genuine issue requiring a trial. I am able to make the necessary findings of fact and apply the law to the facts. In this case and on the evidence provided,

summary judgment will achieve a fair process that results in a just adjudication of the dispute before the court. It is unlikely that better evidence would be available at trial. [ 133 ] The Policy is an all risk, broad form policy. There are concurrent causes to the Barn collapse: the wind and the corrosion of the truss plates. The wording of the exclusion clause excludes coverage where the loss is caused “directly or indirectly” by one of the exclusions listed.

As corrosion is an excluded loss and was either a direct or indirect cause, the loss is excluded from coverage. [ 134 ] However, Brock has demonstrated that the exceptions under the exclusion clauses apply and result in the loss being insured under the Policy. [ 135 ] As such, I order: a. The application for

summary judgment is granted. b. I award judgment to Brock Stock Farm Ltd. in the amount of $328,196.91. c. Pre-judgment interest pursuant to the provisions of The Pre-judgment Interest Act , SS 1984-85-86, c P-22.2 ; and d. Costs in the amount of $5,000 payable by the defendants, jointly and severally, to the plainti

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