In a highly anticipated ruling, the Supreme Court of Canada has
held that a "faulty workmanship" exclusion in a
"Builder's Risk" insurance policy precludes from
coverage the cost of recleaning the windows of a building (held
excluded faulty work) but not the cost of replacing the damaged
windows (held covered resulting damage).
Importantly, the Supreme Court of Canada has rejected the Court
of Appeal's test of physical or systemic connectedness to
determine whether property damage is excluded as the cost of making
good faulty workmanship or covered as resulting damage.
Facts
The dispute in Ledcor Construction Limited et al. v.
Northbridge Indemnity Insurance Company et al. (2016 SCC
37) arose from the insurers' denial of coverage for damages
caused by the improper cleaning of windows of an office building
under construction. The subcontractor hired to clean the windows
scratched them by using inappropriate tools and cleaning methods.
The building's owner and
