
Publication
Trademark tussles just got spicier: Canada now offers costs awards
Costs awards in trademark opposition proceedings have been long anticipated in Canada.
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Canada | Publication | June 4, 2021
In recent years, Quebec courts have more often than not granted "Wellington" type applications aimed at compelling an insurer to assume the defence of its insured at the preliminary stage of a dispute. The main trend emerging from the courts is that the burden of proof to be met by the insured in order to obtain this type of application is relatively low and that the courts cannot rely on extrinsic evidence in their analysis (i.e., take into account elements other than strictly the procedures, exhibits and insurance policy in question)1.
The decision in Placo Inc. v Kingspan Insulated Panels Ltd.2 rendered on March 18 by the Superior Court of Quebec is noteworthy because, despite the judge’s rigorous analysis of insurance coverage in a construction dispute involving several different types of claims, the judge nonetheless rejected a Wellington-type application on the basis that there was simply no insurance coverage available to the insured.
In this case, plaintiff and cross-defendant Construction Placo Inc. (Placo) asked the court to order its insurer to ensure its defence and assume its costs and judicial fees in the two counterclaims directed against it.
This case related to the contract awarded to Placo by general contractor Cegerco in connection with the construction of the Complexe aquatique de la Minganie, in Havre-Saint-Pierre. More specifically, Placo was supposed to supply and install metal wall panels manufactured by Kingspan Insulated Panels Ltd (Kingspan), which formed the exterior cladding of the building.
In fact, Placo forced Cegerco to put in place measures to protect the structure from the cold by delivering the panels late. The panels were subsequently rejected by Cegerco, because they were not in accordance with the plans and specifications, and Cegerco terminated its contract with Placo.
In its principal application, Placo brought an action against Kingspan to recover the deposit paid to remanufacture the panels and against Cegerco to obtain damages resulting from terminating the contract.
In its counterclaims, Kingspan was seeking recovery of the transportation costs from Placo, and Cegerco was claiming damages for the delays and the nonconformity of the work performed.
The court recalled at the outset that, in determining whether Placo is entitled to coverage under the policy, it must assess whether the proceedings and exhibits demonstrate a possibility of property damage or personal injury resulting from loss as defined in the policy. It also emphasized that the allegations in the pleadings must be given the widest scope possible in order to determine whether the allegations constitute a claim under the policy.
Thus, the court examined the insurance policy covering Placo’s civil liability, and carefully analyzed the terms “material damage” and “loss.”
Regarding Kingspan’s counterclaim to recover transportation costs, the court concluded that the counterclaim did not meet any of the essential conditions for insurance coverage because there was no property damage or loss.
With respect to Cegerco’s counterclaim, the court also concluded that there was no coverage because the damages claimed did not constitute property damage in regard to the policy. Based on a claim prepared by Cegerco, the court found that the claim was for loss of productivity and economic consequences suffered by Cegerco as a result of Placo’s defective performance. Thus, the damages claimed were not property damages in regard to the insurance policy because there was no deterioration or destruction of tangible property.
The insurance coverage does not cover economic losses related to a defective or nonconforming product that is not incorporated into the building. Without material damage resulting from a loss as defined in the policy, the court concluded there is no justification for Placo’s insurer to assume its defence.
Publication
Costs awards in trademark opposition proceedings have been long anticipated in Canada.
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