Background
During construction of a six-storey mixed-use development in Vancouver, a fire separation wall collapsed, causing property damage and project delays. The developer, GMC Projects (450 Gore) Inc., held a builders risk insurance policy that paid out approximately $3.4 million in insured losses. On a subrogated basis, GMC then sued the project’s architect, Gair Williamson Architect Inc. (GWA), and its structural engineering consultant, Read Jones Christoffersen Ltd. (RJC), along with other defendants, alleging negligence and breach of contract caused the collapse. Two neighbouring property owners brought related actions arising from the same event, and all three actions were consolidated for a 59-day trial scheduled for September 2026.
GWA and RJC each moved to have GMC’s subrogated claim dismissed before trial. Their core argument was that, as unnamed insureds under the builders risk policy with an insurable interest in the project, they were protected by the policy’s waiver of subrogation clause, which should bar GMC’s action against them. GWA applied for summary judgment under Rule 9-6 of the Supreme Court Civil Rules; RJC applied for summary trial under Rule 9-7. The chambers judge dismissed both applications, concluding that GWA’s application raised a triable issue of fact and that RJC’s summary trial was unsuitable for determination, principally because of the risks of inconsistent findings and the limited benefit to the overall litigation of deciding the issue in advance of trial.
The novel legal question underlying both applications was whether design and engineering consultants — as distinct from contractors and trades — can hold an insurable interest in a construction project and qualify as unnamed insureds under a builders risk policy. It is established that contractors and trades may hold such interests (following the Supreme Court of Canada’s decision in Commonwealth Construction Co. Ltd. v. Imperial Oil Ltd., [1978] 1 SCR 317), but no British Columbia court had addressed whether the same protection extends to professional consultants. The only known authority was a 1998 Alberta Queen’s Bench decision, Trizec Equities Ltd. v. Ellis-Don Management Services Ltd., which held that consultants do not have an insurable interest in projects with which they are associated.
The Court’s Holding
The Court of Appeal, in reasons by Harris J.A. (Horsman and Edelmann JJ.A. concurring), dismissed both appeals. On GWA’s summary judgment appeal, the court found no reversible error: the chambers judge correctly identified a triable issue because determining whether GWA was an unnamed insured required factual findings about the nature and extent of GWA’s connection to the project, which the evidentiary record did not allow the court to make on a summary basis. The judge also properly exercised his discretion to decline to resolve the underlying question of law — whether consultants can in principle be unnamed insureds — on the ground that the issue was not authoritatively settled and that the risks of litigating in slices counselled against doing so before trial.
On RJC’s summary trial appeal, the court affirmed that Rule 9-7(15)(a) provides two disjunctive grounds on which to decline summary determination: inability to find the necessary facts, and injustice in deciding the issues summarily. The judge’s concern was primarily the second ground. The court found no legal error in his conclusion that deciding the waiver of subrogation issue on a summary basis would be unjust: it would not significantly shorten the trial, it carried a risk of inconsistent factual findings between the RJC and GWA positions, and GMC’s uninsured claims would proceed to trial in any event. Deference to this kind of trial management decision was appropriate in the absence of a clear error of principle.
The court also expressly declined the appellants’ invitation to decide the threshold contractual interpretation question itself. It identified two independent reasons. First, appellate courts are generally reluctant to act as courts of first instance on novel and important questions of law without the benefit of reasoned trial court findings. Second, even if it were otherwise appropriate, the record was insufficient: proper interpretation of a standard form builders risk policy likely requires broader factual matrix evidence — such as expert opinion and evidence of industry practice and understanding — regarding whether the insurance industry objectively treats consultants as capable of holding insurable interests in construction projects. The court noted it was “peculiar” that, if this is an issue of national importance arising regularly in practice, it had generated so little litigation and only one reported decision.
Key Takeaways
- Whether architects, engineers, and other design consultants can be unnamed insureds with an insurable interest under a builders risk policy remains an open and unsettled question in British Columbia and across Canada, with only one contrary Alberta authority (Trizec) on the books.
- A chambers judge has broad discretion to decline summary trial or summary judgment even where the underlying facts are largely uncontested, if deciding a novel or unsettled legal issue piecemeal before trial would be unjust or risk inconsistent findings — and the Court of Appeal will show considerable deference to that exercise of case-management discretion.
- Under Rule 9-7(15)(a), the two grounds for refusing summary trial (inability to find facts; injustice in deciding the issues) are disjunctive: a judge may decline on the injustice ground alone, without first being compelled to conduct a full factual analysis.
- Interpretation of a standard form builders risk policy, even if nominally a question of law, may require broader industry-context evidence (expert testimony, market practice) before an appellate court should undertake it for the first time on appeal.
- The question of consultant insurable interest is now headed to a full 59-day trial in September 2026 alongside the related third-party claims, meaning a definitive answer from the British Columbia Supreme Court — and potentially this same Court of Appeal — may follow within the next few years.
Why It Matters
The outcome has significant practical implications for how construction projects are insured and how liability is allocated among owners, contractors, and professional consultants across Canada. If consultants such as architects and structural engineers can qualify as unnamed insureds under builders risk policies, the developer’s insurer cannot recover against them through subrogation for losses arising from design or supervision errors — a result that would substantially limit the litigation exposure of design professionals on large projects, shift risk back to insurers, and potentially affect premium structures and the interplay between builders risk coverage and professional liability insurance.
By declining to resolve the question itself, the Court of Appeal has kept the issue alive for authoritative determination at trial with a full evidentiary record, including the industry-context evidence the court identified as potentially dispositive. Given the court’s observation that the issue has national importance and broad implications for the insurance and construction industries, the eventual trial decision — and any further appeal — will be closely watched by developers, design professionals, insurers, and coverage counsel throughout Canada.