A Case Comment on I.C.B.C. v. General Accident
In I.C.B.C. v. General Accident Assurance Co. of Canada, 2002 BCSC 1589, Mr. Justice Henderson of the B.C. Supreme Court brought clarity to the meaning of the “care, custody and control” CGL exclusion. The exclusion in question is typical of most CGL policies, and excluded coverage for property damage to personal property in the insured’s care, custody or control. The court held that the phrase “personal property” refers to all chattels, and not property actually owned by the insured. This decision expressly refused to follow a 1987 decision of the Newfoundland Court of Appeal which had cast doubt on what the phrase “personal property” meant.
The facts of the case are straightforward. Several individuals left their industrial vehicles and equipment with Terrace Truck and Diesel for the purpose of having repair work done. One morning around 4:00 a.m., a fire broke out at one end of the shop, spreading through the shop and damaging the vehicles and equipment. The owners of the vehicles and equipment brought an action against Terrace Truck alleging negligence, breach of duty as a bailee and breach of contract. ICBC began defending Terrace Truck in the action pursuant to a Garage Automobile Policy. As the action progressed, ICBC brought a Petition seeking contribution to defence costs from General Accident who insured Terrace Truck under a CGL policy. General Accident denied coverage on the basis that the vehicles and equipment were “personal property in the insured’s care, custody or control.”
General Accident argued that the phrase “personal property” was used in its legal sense to mean all chattels. When that meaning is applied to the traditional test for “care, custody or control” as set out in cases such as Indemnity Insurance Co. v. Excel Cleaning Service, [1954] 2 D.L.R. 721 (S.C.C.), Sumitomo Canada Ltd. v. Canadian Indemnity Co. (1982), 138 D.L.R. (3d) 173 (B.C.C.A.) and Neil’s Trailer & Equipment Ltd. v. Butler, Maveety & Meldrum Ltd. (1977), 75 D.L.R. (3d) 151 (Alta. S.C.T.D.), the proper interpretation of the exclusion is that it excludes cover for property damage to all chattels over which the insured exercised a degree of responsibility in respect of the preservation, safekeeping, protection, direction or domination of those chattels. Because the vehicles and equipment were securely contained in Terrace Truck’s repair shop, it was exercising the necessary degree of control and thus the exclusion applied.
ICBC took the position that the phrase “personal property” was ambiguous and the interpretation most favourable to the insured should be adopted, namely that the phrase means property which is actually owned by the insured, rather than “personal property” as that term is used in a legal sense to describe property other than “real property”. ICBC relied upon the Newfoundland Court of Appeal case Day & Ross (Nfld.) Ltd. v. Insurance Corp. of Newfoundland Ltd. (1987), 29 C.C.L.I. 112.
