Frasca-Judd v Golovina

A tenancy agreement must be construed as a whole to determine how landlord and tenant allocated the risk of damage caused by insured risks. A landlord’s covenant to insure, read with the other terms of the tenancy, may show that the insurance is for the benefit of both parties and that the landlord’s remedy is solely against the insurer. This may prevent recovery from the tenant both in negligence and for breach of covenant, even without an express exemption for negligence or a separate insurance rent. The result depends on construction: a covenant to insure is an important indicator, not an automatic rule.

The claimant landlord let a cottage to the defendant under a written residential tenancy. The property suffered extensive flood damage after water pipes froze. The insurer indemnified the landlord and brought a subrogated claim for the repair costs, contents and lost rent, alleging breach of a covenant requiring the tenant to maintain background heat and negligence.

The defendant applied for summary judgment or strike-out, arguing that the tenancy allocated insured risks to the landlord’s insurance and excluded any subrogated recovery. Master Leslie dismissed the application. The defendant appealed that decision, and the appeal was heard with the trial. The issues were whether the tenancy prevented recovery from the tenant and whether the claimant proved that the heating had been switched off.

1. Construction and risk allocation. The tenancy had to be construed as a whole to determine how the parties allocated risk. The landlord’s covenant to insure was an important indicator that the tenant need not insure against the covered risk and would not be liable for loss falling within the agreed insurance cover. The strength of that indicator depended on the other terms of the tenancy.
2. A separate insurance rent was not required. The tenant contributed to the landlord’s obligations through the ordinary rent and was also liable for increased premiums or expenses caused by conduct vitiating the insurance. Other relevant indicators included rent suspension, exclusions for insured risks and provisions dealing with reinstatement. None was an essential prerequisite.
3. The agreement showed a common intention that the landlord’s insurance benefited both parties and that losses caused by insured risks were to be recovered from the insurer, whether caused by negligence or breach of contract. Clause 2.3.12 did not displace that allocation. Clause 7.6, by contrast, illustrated that a specific contractual provision could preserve a direct claim for particular fire damage.
4. The Rowlands principle applied to the claims in negligence and contract. The pleaded losses fell within the landlord’s obligation to insure, so the subrogated claim could not succeed. The observations concerning justice, reasonableness and public policy were supportive but not essential; the decision rested on construction and established principle.
5. On the factual issue, the claimant bore the civil burden of proof. The screenshot recording a hearsay account that the heating had been switched off was weakened by its multiple-hearsay character, the absence of the relevant witnesses and the failure to refer to the account in contemporaneous correspondence. The defendant’s evidence was accepted, and the claimant failed to prove that she had turned off the heating.
6. The claim was dismissed. The appeal against Master Leslie’s costs order was also dismissed because, at the interlocutory stage, the legal issue was sufficiently arguable to justify refusal of summary judgment or strike-out.

• High Court (Queen’s Bench Division) — The defendant’s appeal from Master Leslie’s refusal of summary judgment or strike-out was dismissed. The substantive claim was dismissed.