The Superior Court of Quebec has partially granted a Wellington application brought by Benoît Labrecque and Jennyfer Dubé-Boisvert. It ordered Beneva Insurance Company to defend them against the alternative claim in a lawsuit filed against them, valued at $464,500.

Justice Alexandre-Philippe Avard heard the matter in the judicial district of Longueuil on August 6, 2026. His decision, published in French, is dated September 28, 2026.

Tommy Gosselin, who purchased the defendants Labrecque and Dubé-Boisvert's former residence in Sainte-Julie, is suing them over various problems affecting the property's foundation and structural framing. His primary claim seeks the annulment of the sale and reimbursement of the $710,000 purchase price. The judgment does not specify when the transaction took place.

Alternatively, if the sale is not annulled, the plaintiff is seeking $464,500, broken down as follows: $50,000 for structural reinforcement and repairs to the framing, $200,000 for foundation repairs, $150,000 for finishing work, $15,000 for electrical, plumbing and ventilation work, and $49,500 for lost rental income.

An expert report prepared by Groupe Burex for the plaintiff identifies numerous deficiencies, including cracks and settlement of the foundation walls, irregularities in floor construction, the absence of a vapour barrier, inadequate bonding between the concrete slab and the foundation walls, and a defective connection involving the basement window well wall. The expert concludes that the situation approaches a total loss.

The plaintiff further alleges that the sellers had disclosed two cracks in the foundation walls, whereas the expert assessment revealed 12 additional cracks. The amount claimed is characterized simultaneously as a reduction in the sale price, damages and repair costs — three distinct legal characterizations with different consequences.

The defendants, insured under home insurance policies issued by SSQ Insurance, now Beneva, filed a Wellington application seeking an order requiring their insurer to defend them against the alternative portion of the lawsuit.

During oral arguments, they conceded that the $50,000 claim for structural reinforcement of the framing does not trigger the duty to defend, nor does the primary claim seeking annulment of the sale. The Wellington application therefore concerns only the remaining alternative claims.

Beneva denied all coverage, notably invoking the intentional fault exclusion, prompting the defendants to bring a warranty proceeding against the insurer.

The policies and their exclusions

Beneva's policies cover bodily injury or property damage unintentionally caused to third parties arising from activities of private life or the insured premises. Coverage is limited to compensatory damages.

Several exclusions apply, including the sale of a residential building containing more than six units, amounts that are not purely compensatory (fines, penalties and punitive damages), and consequences of intentional faults or criminal acts attributable to an insured. The latter exclusion, however, cannot be invoked against insureds who were neither perpetrators nor accomplices.

The policies contain no explicit exclusion for claims involving latent defects. Rather, the applicable exclusion in such cases arises from article 2465 of the Civil Code of Québec, which provides that an insurer is not required to indemnify damage resulting from the loss of property caused by an inherent defect.

The policies also distinguish between correcting defects or faulty workmanship and damage to insured property resulting from those defects.

The duty to defend

The duty to defend, which is distinct from the duty to indemnify, arises whenever a policy appears to cover the acts or omissions alleged against the insured, as provided under article 2503 of the Civil Code. The insured's burden is limited to demonstrating a "mere possibility" of coverage.

This analysis must not become "a trial within a trial," even if the actual facts differ from the allegations.

In this case, the court upheld Beneva's objection and excluded evidence submitted by the defendants, finding that it would be incongruous to determine the true nature of a claim because of an expert report produced by the opposing party. Any doubt concerning the characterization of the work and claims must benefit the defendants.

Latent defects or consequential damage?

Case law distinguishes between claims directly involving the correction of a latent defect, which are not covered, and claims for "consequential" damage arising from that defect — namely, damage to other parts of the building resulting from incidents caused by latent defects. This distinction can sometimes be subtle and may only be determined following a detailed examination at trial on the merits.

In cases involving latent defects, a seller may be held liable even if they were unaware of the defect. Actual or presumed knowledge of the defect is relevant only to determining the extent of the remedy, as provided under article 1728 of the Civil Code.

After reviewing the allegations and the Burex report, the court concluded that it could not entirely rule out the possibility that some of the work concerned consequential damage arising from the defects. Components of the ground floor — plumbing fixtures, cabinets, doors, windows and staircases — could have been affected by foundation settlement or problems with the load-bearing capacity of the framing. Their becoming unlevel could constitute collateral damage rather than the correction of the defects themselves.

The items described as "foundation repair work" ($200,000), "electrical, plumbing and ventilation work" ($15,000), and "lost rental income" ($49,500) are described only briefly, making it risky to rule out coverage entirely. Only a trial on the merits will allow the work and losses to be definitively characterized.

Moreover, the plaintiff's allegations do not require proof of bad faith on the part of the sellers for most of the alternative claim.

Intentional fault

Beneva invoked the intentional fault exclusion, relying on article 8 of the policies and article 2464 of the Civil Code. It argued that the defendants had deliberately failed to disclose information about the property and may even have concealed defects.

Intentional fault must be interpreted strictly: it involves conduct deliberately and voluntarily intended to cause harm, with the requisite intent applying not only to the act itself but also to its consequences. According to the court, there is a distinction between failing to disclose a defect and intending to cause damage.

The Burex report mentions a double floor in the garage, covered by carpeting, as evidence suggesting an attempt to conceal foundation settlement. However, it does not specify when this concealment may have occurred or whether it was attributable to the defendants or previous owners.

The lawsuit contains no specific factual allegations concerning the defendants' subjective state of mind or any alleged intention on their part to shift the burden of an almost complete reconstruction onto the buyer.

The court distinguished this case from the precedents cited by Beneva. In two of the judgments cited, the exclusion was upheld because the claims concerned only the repair of a latent defect. In a third decision submitted by the insurer, the sellers had also built the property. They had given false answers to questions about visible cracks. No comparable allegations have been made against the defendants in the present dispute.

Unable to rule out the possibility of a duty to indemnify despite the existence of the exclusion, the court concluded that the exclusion does not, at this stage, affect the duty to defend.

Conduct of the defence and dual representation

The defendants sought the right to select their own lawyers at Beneva's expense, citing a conflict of interest. The court found that the conflict amounted to no more than an apprehension: Beneva had merely invoked the intentional fault exclusion considering the allegations, and the factual issues underlying that exclusion appeared peripheral.

The court authorized Beneva to appoint counsel of its choice to defend the alternative claim — excluding Clyde & Co Canada, the firm that contested the Wellington application — while allowing the defendants' current lawyer to continue representing them with respect to the primary claims, the structural reinforcement and repair of the framing, and the warranty proceeding against Beneva.

The court reiterated that dual representation is not automatically warranted whenever part of a claim is not covered. Relevant factors include whether the claims arise from the same underlying facts, the significance of the uncovered issue and its connection to the rest of the dispute, the need for specific evidence, the proportion of the litigation devoted to that issue, and the risk of a conflict of interest.

The arrangement adopted is consistent with the fallback positions of both parties, keeps the matters handled by the two lawyers relatively distinct, and complies with the principles of proportionality and the sound administration of justice.

The lawyer appointed by Beneva must file a specific response limited to the alternative claim, excluding the portion concerning structural reinforcement and repairs to the framing.

The question of reimbursement of defence costs incurred before the judgment was rendered has been referred to the trial judge. The court noted that the defendants had submitted no evidence supporting either the amount or the reasonableness of their previous legal fees.

Some of those fees relate to preparing the Wellington application and the warranty proceeding based on the duty to indemnify. Such costs are generally not reimbursable, except in exceptional circumstances involving abusive conduct. The trial judge will be able to examine the claim and decide the issues arising from the duty to indemnify.