Alberta court denies request for a split trial in builders risk policy case

Alberta’s Court of Queen’s Bench has upheld that exceptional circumstances are required to split a trial under Rule 221 of the Civil Rules of Procedure.
In Inland Concrete Limited v. Commonwealth Insurance Company, 2008, Inland wanted a split trial in order to settle whether their insurer was required to cover their settlement costs.
Commonwealth Insurance, Inland’s insurer, submitted that the details of the trial were too complicated to warrant a split trial under Rule 221.
Inland Concrete had been subcontracted to provide concrete products and related services for the construction of a penthouse, parkade and information communications technology centre at the Northern Alberta Institute of Technology (NAIT).
The primary contractor on the site was PCL-Maxam, which subcontracted with Central Caissons Ltd., which in turn contracted Inland.
Under the subcontract, 602 concrete piles were installed at the project by Inland.
Engineering consultants involved in the project subsequently determined approximately 212 piles were defective and directed Central Caissons to repair or replace them.
PCL-Maxam filed an action against Central Caissons and Inland seeking damages of $3 million “which damages included, but were not limited to the costs of piling investigation and piling remedial work, additional testing costs, project delay costs, general expenses, concrete foreman expenses, extra administration and overhead,” Justice J.J. Gill wrote in his decision.
The claim was settled through mediation. Inland’s contribution to the settlement included an immediate payment of Cdn$575,000, abandonment of its claim for payment for concrete supplied (Cdn$345,701.30), and deferred discount pricing to PCL on future purchases of a defined volume of concrete to a maximum value of Cdn$300,000.
Inland seeks a declaration that Commonwealth is obligated to provide coverage under its builders risk policy for the settlement contribution and costs.
Commonwealth denied coverage, arguing, among other things, that Inland’s Rule 221 application would not fully address liability coverage issues for Inland’s consequential damage claim “as there is no evidence in this regard.”
The court sided with Commonwealth. “Inland seeks to conclude a Rule 221 application without an appropriate evidentiary base,” Justice Gill wrote. “This could cause some injustice for Commonwealth in terms of not being able to properly explore and challenge whether or not the claimed amounts fit within the coverage of the policy, or fit with an exclusion clause of the policy or an exception to the exclusion. All of these issues appear to require substantially more evidence than has been gathered.”