Poor Workmanship Or Resulting Damage?

Poor Workmanship Or Resulting Damage?

Alberta Court of Appeal Explores Boundary Between Faulty Workmanship and Resulting Damage (By Carmen Tham and Glen Boswall) - In the recent case of Ledcor Construction Limited v. Northbridge Indemnity Insurance Company, the Alberta Court of Appeal was asked to decide whether a construction project "All Risks" property insurance policy covered damage caused by one trade contractor improperly cleaning windows provided by another trade. In particular, the issue was whether the window damage was excluded as "poor workmanship" or covered as "resulting damage."

Facts

Station Lands Ltd. ("Station Lands") retained Ledcor Construction Ltd. ("Ledcor") as construction manager and a number of other trades for the construction of the EPCOR Tower in Edmonton.

Station Lands obtained an "All Risks" policy (the "Policy") from Northbridge Indemnity Insurance Company and other insurers (the "Insurers") for the project. The Policy covered all "direct physical loss or damage except as hereinafter provided", with Station Lands and Ledcor as named insureds. Contractors, subcontractors, architects, engineers and all entities providing services or materials were additional insureds. The Policy contained the following exclusion (the "Exclusion"):

This policy section does not insure:

The cost of making good faulty workmanship, construction materials or design unless physical damage not otherwise excluded by this policy results, in which event this policy shall insure such resulting damage. Near completion of the tower, a trade contractor named Bristol Cleaning ("Bristol") was retained by Station Lands to do a "construction clean" of the building's exterior, including the windows that had concrete splatter, paint specks and other construction dirt. In carrying out its work, Bristol caused damage to the windows by using dull or inappropriate blades to scrape off dirt, failing to properly clean the blades during the process, and failing to follow the manufacturer's cleaning instructions. As a result, the glass had to be replaced. The Insurers claimed the Exclusion applied to the loss. Ledcor and Station Lands sued for coverage.

Trial

At trial, Ledcor and Station Lands argued that the Exclusion only removed coverage for the cost of having to re-do the cleaning with proper methods and tools. The damage to the windows was "physical damage not otherwise excluded" and therefore covered. The Insurers argued that "work" and "workmanship" did not just apply to the labour of the task but also the materials being worked on. The trial judge concluded that both interpretations were plausible and that prior case law on the subject was inconclusive and inconsistent. Having found the Policy to be ambiguous, the judge applied the doctrine of contra proferentum to reach the conclusion that the damage to the windows was covered. The Insurers appealed.

Appeal

In interpreting the Policy, the Alberta Court of Appeal noted that the base coverage was for "physical loss" and therefore the exclusion for the "cost of making good faulty workmanship" must exclude some physical loss or else the exclusion would be redundant. However, the Exclusion includes a proviso that "resulting damage" that is "physical damage not otherwise excluded" is nonetheless covered. Therefore, the Court of Appeal recognized it must determine the line between physical loss that is excluded because it is the "cost of making good" faulty workmanship, materials or design and the physical loss that is covered because it is "resulting damage".

The Court of Appeal determined that the proper test for application of the Exclusion is a test of connectedness between the work, the damage, and the physical object or system being worked on. Although the application of the test will depend on the facts of each case, the Court of Appeal set out the following primary considerations:

The extent or degree to which the damage was to a portion of the project actually being worked on at the time, or was collateral damage to other areas. The test will be relatively easy to apply when the damage is caused directly by the work to the very object being worked on. There may be cases where several parts of the project work together as one system. Work on one part of the system may cause damage to another part, but repairing that damage might still properly be characterized as the cost of making good faulty workmanship if there is sufficient systemic connectedness;

The nature of the work being done, how the damage related to the way that work is normally done, and the extent to which the damage is a natural or foreseeable consequence of the work itself. If the damage is a foreseeable consequence of an error in the ordinary incidents of the work, then it presumptively results from bad workmanship; and whether the damage was within the purview of normal risks of poor workmanship, or whether it is unexpected and fortuitous.

The Court of Appeal recognized that this physical or systemic connectedness test could lead to extreme results in extreme cases where, for example, an entire building that is burnt down by a cleaner working on the entire building would not be covered by insurance. However, the Court of Appeal noted that such extreme cases might call for a separate test or an exception to the connectedness test but the court declined to explore this issue further.

Here, the damage to the windows was caused directly by the cleaning carried out by Bristol. The scraping and wiping motions that caused the damage were the actual "work" and because the scraping and wiping forces were intentionally applied, the damage was not accidental or fortuitous. Repairing the resulting damage would be "making good the faulty workmanship" that caused the damage and therefore the cost of repairing the windows was excluded. The Court of Appeal therefore overturned the trial decision and ruled in favour of the Insurers.

Conclusion

There can be little doubt that the Court of Appeal's "systematic connectedness" test will be further analyzed in future cases. When arranging their insurance, insureds seeking greater certainty of wider coverage might press for addition of the more specific "particular part" language to restrict the scope of the faulty workmanship and materials exclusion. Conversely, insurers wanting to provide narrower coverage might resist addition of "particular part" language and see how far the systematic connectedness test goes.

The Court of Appeal may have re-opened a can of worms by adding the finding that the scraping and wiping forces were intentionally applied and so the foreseeable damage was not accidental or fortuitous. That is an insuring agreement issue which, if true, would put the loss outside coverage without any exclusion coming into play. The Supreme Court of Canada's 2010 decision in Progressive Homes v. Lombard Insurance was thought to have put an end to this debate, at least in the context of a CGL policy. The SCC noted there that it was simply not correct to say defective workmanship was not an "accident".

No Pay-Out For Window Cleaner

Jury: "SDG&E Not Liable For Window Washer's Injuries" - Jurors Wednesday ruled against a local man who sued San Diego Gas & Electric after losing parts of his arms in an accident. Shane Cahill was severely injured in 2008 while washing windows on top of a Mission Bay condominium. About 12,000 volts of electricity rushed through his body when the metal pole he was using touched an SDG&E power line. Cahill sued the utility for medical expenses that could range into the millions of dollars. After a nearly three-week trial, the jury sided with the utility, voting 10-2 that the company was not liable for Cahill's injuries. "This was not a safe condition," Cahill's attorney, Todd Macaluso, said Tuesday in closing arguments. "This was an accident waiting to happen." SDG&E's attorney, William Calders, countered, "It's a good story and it reads well, but it isn't supported by the facts."

Macaluso said the power company knew those lines were too low and still did nothing to fix them. He added the company did not meet a certain standard and called it "negligence." Calders argued Cahill was negligent because Cahill himself testified he never saw the power lines that were only feet away. Macaluso said at best his client is only 20 percent responsible for the accident, leaving SDG&E responsible for 80 percent of the injuries that left Cahill with two prosthetic forearms.

SDG&E issued the following statement Wednesday afternoon regarding the verdict: What happened to Mr. Cahill is a tragedy. SDG&E is deeply sympathetic for the injuries he suffered as a result of contact with our facilities. We appreciate the jury's thoughtful and thorough review of the facts and their conclusion that SDG&E was not negligent and that what happened to Mr. Cahill was an accident.

SDG&E cleared in window cleaner accident - A jury cleared San Diego Gas & Electric Co. of any liability in the case of a window washer who lost both arms in an electrocution accident in 2008, the worker's attorney said Wednesday. Shane Cahill was shocked by 12,000 volts while he cleaned windows at a Mission Bay condominium. He lost both of his arms and faces medical bills that could run into the millions of dollars, said his attorney, Carlsbad-based Todd Macaluso. In 2009, Cahill sued the utility for medical expenses.  Macaluso said he had great respect for the jury. "We believe the law needs to be changed," Macaluso said in a written statement. "What happened to Mr. Cahill is a tragedy," SDG&E said in a written statement. "SDG&E is deeply sympathetic for the injuries he suffered as a result of contact with our facilities. We appreciate the jury's thoughtful and thorough review of the facts and their conclusion that SDG&E was not negligent and that what happened to Mr. Cahill was an accident."

Trial For Window Cleaner Who Lost Arms Goes To Jury

Former Window Washer's Suit Against SDG&E Goes To Jury -Shane Cahill Lost Part Of Arms When Pole He Was Using To Wash Windows Hit 12,000 Volt Power Line: A jury will now decide who is responsible for the accident that left a San Diego man without part of his arms. Closing arguments wrapped up Tuesday afternoon in the case of Shane Cahill. He is suing San Diego Gas and Electric for medical expenses that could range into the millions of dollars. 

Cahill's attorney and SDG&E's attorney spoke one final time in front of the jury. "This was not a safe condition," said Cahill's attorney Todd Macaluso. "This was an accident waiting to happen." SDG&E's attorney, William Calders, said, "It's a good story and it reads well, but it isn't supported by the facts." Cahill lost part of his arms four years ago while washing windows on top of a Mission Bay condo. About 12,000 volts of electricity rushed through his body when the metal pole he was using touched an SDG&E power line.

Macaluso said the power company knew those lines were too low and still did nothing to fix them. "They should have met the 25-foot standard and they didn't," said Macaluso. "Ladies and gentlemen, that is negligence." Calders argued it was Cahill who was negligent because Cahill testified he never saw the power lines that were only feet away. "He had 16 opportunities in the three-hour period of time to see electrical lines," said Calders. "How many times did he see the lines? None."

Macaluso said at best his client is only 20 percent responsible for the accident, leaving SDG&E responsible for 80 percent of the injuries that left Cahill with two prosthetic forearms. "I think that's fair," said Macaluso. "I think that's reasonable."

Calders asked the jury to remove compassion from their minds and only focus on the facts. "You can't take concern for Mr. Cahill, who is a very nice gentleman, who has had a serious event, and I will agree to that," said Calders. "But you can't take that into your deliberations." The jury will begin deliberations Wednesday morning. 

Former Window Washer Testifies Against SDG&E: The local window washer who lost part of his arms in an accident testified Monday morning in his lawsuit against San Diego Gas & Electric. Shane Cahill spoke softly as he talked about the moments immediately after 12,000 volts of electricity shot through a metal pole and into his body. "My body just tensing up, tensing," he said. "It seemed to get tighter and tighter. I couldn't move much."

Four years ago, Cahill was cleaning the windows on top of a condo in Mission Bay. He was shocked when his equipment hit a power line. Cahill's attorneys argue that SDG&E's power lines were too close to the condo. Cahill said he could not remember how long it took for someone to come help him. "I was pretty stressed out, so I'm not really sure how long," he said. Cahill lost both of his hands and part of his forearms. Using prosthetics, he demonstrated for his attorney and the jury how the metal window washing pole was set up at the time of the accident.

On cross-examination, SDG&E's attorneys said the power lines were in compliance and tried painting a picture that Cahill himself was negligent. One attorney for SDG&E showed Cahill another version of the same metal pole and asked him what was written on the side of the pole. "Watch for wires," answered Cahill.

The defense also kept track of how many times Cahill walked in and out of the condo without noticing the power poles and power lines next to the condo. "Did you happen to notice that there were electrical lines, or guidelines or communications lines outside of the windows?" a defense attorney asked. "No," answered Cahill. "Never saw them?" asked the attorney. "No, I did not," Cahill said.

The tally got up to 14 times before the judge called it a day. Cahill's attorneys previously argued that those wires should have been at least 25 feet away. They were only 12 feet away from the condo when Cahill touched one with the metal pole. When asked if he thought he was going to die, Cahill said, "I thought I was, yes." Cahill will wrap up his testimony Tuesday morning. He is suing for unspecified damages that could total in the tens of millions of dollars.

Window Cleaning Wars - Second & Final Round

York crown court.

Window cleaning boss is sentenced: A window cleaning boss has been cleared of three charges arising out of a dispute with a former employee. A jury at York Crown Court yesterday found Philip Jones, 44, not guilty on the direction of the judge of charges of burglary, intimidation and criminal damage. The verdict came at the end of the prosecution case which alleged Jones had entered the home of John Massheder and his partner as a burglar, and removed window cleaning equipment. It was also alleged that on another occasion he had intimidated Mr Massheder by stating that he ought to be careful up his ladder in case some one knocked him off it. The third allegation was that he kicked and dented Mr Massheder’s vehicle in the street. 

Judge Colin Burn told the jury the evidence had not come up to scratch and in those circumstances the Crown were offering no further evidence and he would direct them to return not guilty verdicts. However, father-of-four Jones, of Kirkdale, Kirkbymoorside, was then sentenced on two previously admitted charges of sending an offensive or menacing text message to Mr Massheder on September 6 2010, and misuse of a computer. Jones admitted sending a text stating Mr Massheder was “a dead man”. He also admitted that after entering Mr Massheder’s home by a first floor window by use of a ladder on September 4 2010, he had wiped a programme off the couple’s computer.

The court heard that Jones had been after equipment he believed was his and had decided once in the house to wipe the business programme, which he had originally installed himself, off the computer. The jury had been told the two former friends had fallen out after Mr Massheder decided to start up on his own, allegedly taking with him some of Jones’ customers and business. Mitigating, David Dixon said his client was a hard-working man who in 17 years had built up a window cleaning business covering much of Scarborough, Malton and Pickering areas.

Passing sentence, the judge said the fact Jones had entered someone else’s home in order to get at the computer was an aggravating feature. For the text message offence Jones was fined £485 and ordered to pay a £15 victim surcharge. The computer offence led to Jones being ordered to complete 100 hours of unpaid work. The judge also imposed a five-year restraining order preventing Jones contacting Mr Massheder and his partner.

Window Cleaning Wars - Round 1

Window Cleaner, Maple Drive, Scarbororough.

Window cleaners’ row ends in court: A row between two Scarborough window cleaners which started when one of the men tried to start his own business ended up in court yesterday. Philip Jones, 44, is accused of entering the home of John Massheder, in Maple Drive, through a bathroom window and stealing window cleaning equipment which he claimed belonged to him. Jones is also charged with later intimidating Mr Massheder by implying he would knock him off his window cleaning ladder and saying he would “pound” him, as well as kicking and damaging the van which he used for his business.

Jones, of Kirkdale, Kirkbymoorside, denies charges of burglary, witness intimidation and criminal damage. Mr Massheder also alleged that Jones had punched him in the face and told him he had paid for someone to break his legs as the feud escalated. Robert Galley, prosecuting on the first day of the trial at York Crown Court, said: “This can be summed up in a few simple words – it’s a conflict between two window cleaners and their ability to do their rounds.” The jury were told that Mr Massheder had worked for Jones as a franchisee of his Scarborough window cleaning business for around 18 months before he had decided to set up on his own after a disagreement.

Mr Galley added: “Mr Massheder went to a scooter rally in Wakefield. That day he received a text saying ‘your conservatory door was wide open so I got the stuff back’ from Mr Jones. “When he returned home the conservatory was insecure and all of his window cleaning equipment had been removed.” The court heard that information on Mr Massheder’s computer, giving details of his customers, had also been deleted by Jones.

Mr Galley said that although he had initially denied entering Mr Massheder’s home, Jones later accepted he had done so when a footprint was found but maintained he had the right to do so because he said the items belonged to him. Mr Massheder, who says his home was locked at the time of the alleged burglary, claims he had purchased the allegedly stolen items - a box, a belt, a ‘bucket on a belt’ and window cleaning rubbers and pouches - from Jones or obtained them independently.

Giving evidence, Mr Massheder said that Jones had been unhappy when he told him he planned on starting a rival business and that he gradually became more abusive after a series of rows. “He said ‘you watch nobody knocks you off them ladders’. I thought ‘I can’t be doing with this all the time’. I felt under threat.” He said that Jones had bought some equipment for him, because he could get a better price, but that he always reimbursed him in full. The trial continues.