[ 4 ] This is an appeal of a judgment of the Superior Court
[1] which dismissed the appellant's action for more than $ 23,000,000.00 under the terms of the claim. The amount of damage is approximately $ 1.3 million and the loss of revenue due to the interruption of operations (approximately $ 22 million). The appellant submits that the trial judge erred in the interpretation and application of the exclusion clause.
Context [ 5 ] In 2012 the appellant began to convert its plant at Cap-Chat in order to produce high-purity alumina ("
HPA "). HPA is produced in three phases:
I. Production of aluminum chloride hexahydrate ("
ACH ") from a base of aluminum hydroxide;
II. Transformation of ACH in HPA, in which ACH passes through the decomposer oven and later calcination oven;
III. Finishing and packaging of the HPA.
[ 6 ] According to the design for the plant's operations, the transformation of ACH into HPA at the second phase requires that ceramic tubes be used in the decomposer oven to conduct electrical elements and to protect them from other substances or gases in the ovens.
[ 7 ] The insurance policy came out in this appeal concerning the appellant's operations in effect on September 30, 2016. At this time, phase II was not in operation and it was not entirely clear operations in phase II had begun. It is clear that between December 2016 and February 2017 there were three incidents in which ceramic tubes broke and caused interruptions of the appellant's operations: December 15, 2016 (5 tubes); 5 and 7 January 2017 (10 tubes); February 21, 2017 (16 tubes). The interruption of operations was time-consuming because it was used by many people.
[ 8 ] According to the evidence, ACH was first used in phase II of the appellant's operations on 13 December 2016 and at the time of each of the three incidents between December 2016 and February 2017. During preliminary tests, notably in the summer of 2016, smelter- alumina grade ("
SGA ") (not ACH) was used in this process. SGA resembles ACH but has completely different chemical properties. Thus, before the insurance policy entered into effect on 30 September 2016, there was no evidence that the appellant had tested its tubes with ACH, which was the product specifically intended for the production of HPA in the converted plant.
[ 9 ] In a report dated 8 October 2016 Agnes von Garnier of Outotec, a German company involved in the design of the conversion, wrote that SGA was not designed for the use of SGA:
Outotec was only informed in July 2016 that common industrial SGA should be used as a test material for commissioning and start-up of the furnace section.
During the entire plant design and the elaboration of the operation and start-up procedures, it was discussed for alumina produced from alumina chloride hexahydrate (ACH) for the start-up. The plant was designed for ACH / HPA. These two materials have a
significant difference in density (bulk and fluidized density), and they have a positive impact on the operation of the plant with regard to fluidization and transport behavior.
This requires changes to the alarms and set points for safe operation. [...]
During cold tests conducted in Q2 / 2016, orbite had experienced transport resistances and blockages in the seal pot 1, which is considered specific to the operation with SGA, especially at cold conditions.
[2] [ 10 ] She continued in her report to specify the adjustments that were required to take over from SGA to ACH.
[ 11 ] On March 31, 2017, following the three incidents, the appellant stopped operations under the
Bankruptcy and Insolvency Act .
[3] Protection of the Appellant has continued since 1 May 2017 under the
Companies' Creditors Arrangement Act .
[4] [ 12 ] The term of the insurance contract is the result of this issue; loss due to interruptions; and compensation for incurring costs as a result of interruptions. These three elements were subject to the following exclusion clause:
This Policy does not apply: [...] (c) to loss: [...] (x) from an
Accident to any
Object has been fully
tested ,
tested and contractually accepted by the Insured.
[5] [ 13 ] In the Superior Court, the parties made only a limited number of questions in the future. The parties agreed that the breaking of the ceramic tubes was an
accident causing loss of an
object and that these objects had been completely installed and accepted by the appellant. They agreed that the tubes were objects but that the ovens were not.
[6] There is also no dispute that the exclusion clause, if it applies, would apply to both aspects of the appellant 's claim - damage to equipment and the loss of revenue from the interruption of operations.
[7] The only question was therefore tested and, if so, when and how.
Judgment
[ 14 ] The trial judge concluded that the appellant's claims were clearly excluded by the clause because there was no evidence that the tubes had been adequately tested with ACH before the three incidents that occurred between December 2016 and February 2017:
[134] In light of the comments under 2 above,
the Tribunal is of the view that the Tube Testing was not done properly prior to the First incident , even though it was not necessary to decide whether the term "completely" in section 2.0 (c) (x) of the RSA-2 Policy also applies to the term "tested".
[135] In any event,
this article can only refer to a properly performed "Testing" . This does not mean that it has to be 100% complete, but what has not been done must be minor.
[136] The Tribunal is of the view that the text of Exclusion-Bris is unambiguous in this regard.
[137] Thus, the Tribunal is of the opinion that an adequate "Testing" of the Tubes must necessarily include a supply of Ovens with the ACH Product, namely that provided for the current operation of the ovens, especially in the light of the known differences. between the SGA product and the ACH Product, and comments made by Ms. Garnier from Outotec in this regard.
[8] [ 15 ] These conclusions by the trial judge
[ 138 ] In his testimony, Expert Geoffroy filed a comparison table between the SGA Product and the ACH Product, including, among other things, the following:
| | SGA Product | ACH product |
| Approximate density (powder) | 0.95 g / ml | 0.7 g / ml |
| Hygroscopic (absorbs moisture from the air) | No | Yes |
| Chemical reactivity | Stable | Corrosive |
| Flow property | Good | Bad (agglomeration) |
[ 139 ] Moreover, since the Factory Phase II was unique in the world, there was no reference for comparison and, no doubt, special attention should be paid to the "Testing" of the Tubes, in order to verify their reaction to the ACH Product.
[ 140 ] This was not the case for Phase I, as its transformation process from aluminum hydroxide to ACH was not foreign to Orbite, as it had already experimented with it in the past and knew that the product SGA could be used for this purpose.
[ 141 ] Also, in his report of December 22, 2017 (the "
Geoffroy Report "), the expert Geoffroy specifies the following:
Commissioning of production plants is always done before they go live. The intention is to make sure that all of the phases of a process of operation, not only individually, but not only to the testing of temporary pace, but rather to emulating a commercial production line.
As of today [December 22, 2017],
at least for the pyrometallurgical section of the plant [Phase II],
Orbite Technologies has not been able, in our view, to complete with most of these stages .
Furthermore,
Orbit refers to the motion to cold commissioning, but it is important to understand that the final step is
a hot commissioning . In this case, the commissioning process is only one of the processes in which the operational systems are completed with inert material.
Hot commissioning corresponds to the process during which the material is used in production, ACH, is fed to the ovens (decomposer and calcinatory) .
Moreover, especially for the case of the decomposer and calcinator, it is obvious that
Orbite Technologies was, at best, at the testing phase as described in Articles 64, 66, 70, 74 and 75 of the motion presented to the Court.
If it had been constructed by an independent third-party contractor and had to be contracted to an owner-operator such as
Orbite ,
it would have passed the tests required to be handed over . In other words,
this plant could have been considered to be part of a third party .
[9] (the Court
points out )
[ 142 ] During his testimony, the Expert Geoffroy was adamant: it was not appropriate to do the "Testing" of Tubes with the SGA Product instead of the ACH Product.
[ 143 ] The Tribunal retains the testimony of this expert who was able to popularize the subject; he was very clear in his explanations and his answers to the questions of the Tribunal.
[ 144 ] Also, as mentioned in paragraph [36] of this judgment, Ms. Garnier d'Outotec made it clear in the Outotec Report that she was surprised that Orbite was using the SGA Product for the purposes of "Testing" Ovens, and therefore also Tubes.
[ 145 ] In addition, Mr. Kelly testified that Orbite was not in a position, at that time, to purchase the ACH Product, as no competitor was willing to accommodate Orbite.
[ 16 ] Mr. Kelly was a representative of the appellant who testified that it could not be obtained before the insurance policy came into effect. It should be repeated that ACH was not used before 13 December 2016.
[ 17 ] The judge observes that it was necessary to verify that the testing of the ceramic tubes had been adequate and that it was necessary to delimit the risk by the insurer. Thus the judge repeats his central conclusions in the clearest terms:
[152 ] Even though the "Testing" with the SGA Product was finished, the fact remains that this "Testing" was not done with the right product and Orbite engineers were aware of it.
[ 153 ] It is, in the circumstances, a major element of an adequate "Testing", not a minor element.
[ 18 ] The judge then concludes that the appellant's claim is excluded by the clause recited above and dismisses the appellant's action with the legal costs.
Grounds of appeal [ 19 ] The appellant submits two questions to this Court:
Did the judge err in law in concluding that the exclusion clause was clear while adding words to make the clause consistent with the interpretation he wished to obtain?
If the clause is ambiguous, did the Judge err in law by failing to apply the many recognized principles regarding the interpretation of insurance contracts?
[ 20 ] If this Court finds that the decision was made that the exclusion clause was unambiguous and must be applied, the Court need not address the second question.
Discussion [ 21 ] It is settled law in the interpretation of an insurance policy, as with other contracts, that an unambiguous clause must be applied according to its plain meaning without further interpretation.
[10] In this case the judge concluded that the clause had an unambiguous meaning and he applied it. It is also settled law that a short name must be given to this conclusion in the absence of palpable and overriding error by the trial judge. This Court and others may have been identified as such and may be clearly identified and demonstrably decisive.
[11] [ 22 ] The trial judge concluded that the appellant's claim was excluded because of testing with SGA in 2016 before the policy was ineffective. It was inadequate because of SGA rather than ACH was not a testing of the tubes in conformity with the design of the operation of the plant during the term of the policy. The judge's use of the word "adequately" adds nothing to the terms of the exclusion clause and serves only the purpose of being tested. and the manner in which they would be used in the execution of the design for operations of the appellant's converted plant.
[ 23 ] By using the ceramic tubes with SGA before 30 September 2016, and until 13 December 2016, the caller did not test them with ACH as was their intended use. The caller affirms that testing was completed by 30 September 2016 but there is nothing to show that the tubes had been tested with ACH before ACH was first used on 13 December 2016 or after the first incident in December 2016. It is impossible to say that that The trial judge commits the palpable and overriding error in concluding that the tubes were not tested for their use with ACH when the policy went into effect. It is self-evident that the purpose of the exclusion clause is to relieve the insurer of liability for risks that have not been tested, which means tested according to the design.
[12] [ 24 ] In short, the judge concluded that there was no test. The contract makes clear that the respondent would not have used the name of the appellant's operations. The tubes were intended for use in the production of HPA with ACH. To repeat, the first use of ACH occurred on December 13, 2016 and the appellant produced no evidence that the tubes were tested with ACH before that date. The first use of ACH at that time was also in fact the first test, which is precisely what the parties intended to exclude from the policy.
[ 25 ] Moreover, the judge added no elements to the exclusion clause that could adversely affect the appellant. On the contrary, the conclusion that the tubes were not adequately tested was, if anything, more likely to ,
[13] in the name of the appellant's operations. There was evidence that the tubes were tested with SGA. There is no evidence that, when or how the tubes were tested with ACH before 13 December 2016. The appellant has shown that it is not palpable and overriding error by the trial judge.
[ 26 ] No ambiguity in the exclusion clause, and the need for it to be determined.
[ 27 ] The appellant advances two further points to conclude that the respondent can not rely on the exclusion clause. The first is that the respondent can not rely on the clause by virtue of the principle of reasonable expectations, as it is known in the law of Quebec. The second is that the respondent waives its right to rely on the exclusion clause. Both submissions must be mentioned.
Reasonable expectations [ 28 ] In the absence of ambiguity in the language of an insurance policy, it must be applied according to its plain terms. It follows that the ambiguity of the ambiguity of the ambiguity of the ambiguity of the ambiguity. This point is made by the Supreme Court in
Ferme Vi-Ber Inc .:
[ 65 ] We are of the view that in Quebec law, that is, only where there is ambiguity. The
Civil Code of Quebec contains a series of rules for resolving difficulties in the interpretation of contracts. The provisions of the Code of Conduct, but only for the interpretation of an ambiguous clause and for the purpose of identifying the common intention of the parties (
article 1425 CCQ ).
[14] [ 29 ] In the present case, the trial judge has been unambiguous with respect to the testing of the tubes. That conclusion discloses no palpable and overriding error that would justify the intervention of this court. In the absence of ambiguity in the policy, and in the absence of error in the first instance judgment, this Court need not embark any further exercise of textual interpretation.
Waiver [ 30 ] In a contract of insurance, the term "insurance waiver" refers to the term "insurance policy", which refers to the term "insurance policy". It also refers to the insurer's decision to make sure that the incident is covered. It also has a full connotation, as explained by Pag:
The "waiver" is neither more nor less than the English word used in the insurance industry to signify waiver.
A waiver occurs when a party intentionally abandons a known and existing right or
acts in such a way as to make it clear that it is so for the benefit of another party .
This concept of waiver, in Quebec civil law, is not only related to insurance law but holds an important place in particular because of the contractual dynamics of its own.
This concept, which is not codified in Quebec insurance law, should not be confused with the concept of
estoppel .
Estoppel is a concept of English law and common law that our courts have always refused to import.
Estoppel does not quite correspond to the waiver in that in particular it does not include any element of intention or will.
The concept currently recognized in civil law, which is probably the closest to estoppel, is that of the
end of inadmissibility .
[15] [ 31 ] Waiver must be pleaded by the party Further, waiver must refer to a contractual right existing at the time of the alleged waiver and it must be, among other things, unequivocal.
[16] [ 32 ] The judgment of the Superior Court contains no discussion of a claim and the issue does not appear before the trial judge. The notice of appeal in this case makes no reference to the appellant's factum in a single paragraph:
56. The case law recognizes that an insurer who issues an insurance policy may not later invoke facts that he knew or ought to have known at the time the policy was issued in order to deny coverage. In such a case, the insurer is deemed to have waived the condition or exclusion to which those facts could have given rise.
[ 33 ] This assertion was otherwise undeveloped in English and elsewhere in Canada.
[ 34 ] At the hearing of the appeal the appellant did not express the opinion that the question of waiver and the respondent stoutly denied any suggestion that it had been waived in any manner of application of the exclusion clause. Moreover, the trial judge has only recently been made aware of the fact that it has not been possible to all operations except those in phase III.
[ 35 ] By definition the appellant's argument concerning waiver can not succeed in the absence of a finding of the respondent knowingly undertook to cover the appellant's operations in the absence of an adequate test or decision to deny coverage for another reason. There is no such finding of fact. There are, however, findings that have been actively pursued and diligently pursued before the date of receipt of the complaint. for phases I and II. In his reasons the trial judge
[61] Then, on September 28, 2016, Mrs. Mercado sent the following email to Mr. Borja d'Aon:
"Following our conversation yesterday, Mr. Arguin confirmed to our engineer [Mr. Demers] that production will start during the coming weekend; he says it will be done when they have a shutdown. "
[62] At the same time, on September 28, 2016, Ms. Hon d'Aon wrote to Mr. Bdard and Mr. Marchand d'Orbite the following:
"[...] 2. Discussions with RSA and the other insurers for the operational part are going well. RSA yesterday called Denis [Arguin of Orbit] who confirmed to them that the operations were actually starting on 30 [September] and that
the testing and commissioning would be completed . This means that
the police force is coming to an end , that the intact police is also ending and that everything will be in the operational program as well as the machine breakdown for September 30th [...] "
(the Court
points out )
[63] Mr. Bdard d'Orbite then asks Ms. Hon d'Aon:
"What is the conclusion of RSA that the police will be effective Sept. 30" [
sic ]
[64] What Ms. Hon answers:
"Yes, the 30th, and there will be little testing [Phase III] that will remain and that it is not critical or major (however the machine or component that will be tested after the 30th will not be covered [
sic ] but the the fire that follows would be).
I understand that you are valid with Denis [Arguin d'Orbite]. "
[65] Indeed, on September 28, 2016, Charles Taschereau ("
Mr. Taschereau ") of Orbite confirms the following to Ms. Hon:
"As discussed on the phone at the end of September, the remaining work at the Cap-Chat HPA plant will be the connection (piping) of the 'HP60' equipment, which represents the crushing and packaging section of the final product. [Phase III]. [...] [43]
[66] It is therefore clear from the evidence that the answers given by Orbite, following RSA's "Testing" questions, clearly suggest that the only remaining "Testing" was Phase III [44]. under construction, and not Phase II, with RSA assuming that the Phase II Testing, and therefore the Ovens and Tubes, was completed, following the information received to this effect, among others , Mr. Arguin, Mr. Bibeau and Mr. Taschereau d'Orbite.
[17] [ 36 ] In this case, the appellant's appellant's operations are in the absence of a test of the tubes. The insured could not reasonably expect to assume the risk of being tested.
[ 37 ] Accordingly, the appellant may not rely on the principles of reasonable expectation of exclusion that the exclusion clause is inapplicable in the present case.
[ 38 ] For these reasons I propose to dismiss the appeal with costs of justice to the respondent.