Nova Scotia Court of Appeal Ruling Highlights Impact of Wrap-Up Insurance in Halifax Crane Collapse Case

Case: APA Inc. Experts Conseils/Consultants and Forgeron Engineering Limited v. Fares Construction Ltd., 2025 NSCA 42

Overview
In September 2019, during Hurricane Dorian, a tower crane in Halifax collapsed. The collapse damaged buildings, shut down several active construction sites, and caused multiple businesses to evacuate premises.  Extensive litigation ensued involving dozens of parties across multiple legal proceedings.

During the course of the litigation, it was discovered that a wrap up liability policy of insurance (the “Policy”) had been secured in respect of the project on which the collapsed crane had been erected (the “Project”). In response, two defendant parties sought to amend their defence pleadings to plead that they were insureds under the Policy and that, as such, certain claims against them (alleged to be subrogated claims in nature) were legally barred either pursuant to the Policy contract itself, or at common law, or both. The Nova Scotia Court of Appeal (NSCA) issued a decision on June 10, 2025, which reversed the Chambers decision below and allowed such defence amendments.   

What is a Wrap-Up Policy?
A wrap-up liability insurance policy is a project-specific policy of liability insurance commonly placed to insure larger, more complex construction projects involving multiple design professionals and contractors/trades. Generally, such policies are intended to “wrap up” and insure all project participants (though the definition of who is an “insured” may vary from policy to policy), and be primary insurance against liability claims arising in connection with the project work, thus expediting the handling of claims and avoiding delays that may result from individual project participants, and their respective CGL policy underwriters, pointing fingers at each other when a claim arises.

What is “Subrogation”
Subrogation refers to an insurer’s right to step into the shoes of its insured and, in the insured’s name, pursue recovery against an at-fault party for amounts paid by the insurer in the course of providing coverage to its insured. When the right of subrogation arises at common law can differ from when the right of subrogation arises under the terms of a specific policy.  Where the same policy insures multiple people (such as a typical wrap-up policy), generally the insurer cannot subrogate (in the name of one co-insured) against another co-insured who may be considered to be the at-fault party (again, the terms and conditions of a specific policy may alter this general rule).

Background Facts
APA Inc. Experts Conseils/Consultants (“APA”) was an engineering firm engaged in connection with the Project. Following the crane collapse, numerous contractors and design professionals associated with the Project, including APA, were sued by various plaintiffs. Many defendant parties further crossclaimed against each other.

During litigation disclosure processes, the existence of the Policy came to light, with associated documentation seeming to suggest that certain co-defendant parties (who had instituted crossclaims against APA) were being defended pursuant to the Policy.

APA brought a motion in Chambers seeking leave to amend its defence pleadings to allege that it was an insured under the Policy and that certain crossclaims against it were subrogated claims which were barred either at common law or under the terms of the Policy.

The Policy insurer opposed APA’s motion, arguing inter alia that APA had not proven that any of the crossclaims in question were in fact “subrogated” claims in nature.      

NSCA Decision – Amendments Allowed
In Nova Scotia, a proposed pleadings amendment is to be permitted if it raises a “justiciable issue”, is proposed in good faith, and if allowing the amendment would not cause to the other party serious prejudice that is non-compensable in costs.

In the Supreme Court of Nova Scotia, the Learned Motion Judge dismissed APA’s motion and denied leave to amend on the basis that the proposed amendments did not raise a “justiciable issue” as there was insufficient evidence presented on the motion that the crossclaims in question were “subrogated” claims.

The Court of Appeal disagreed, allowed APA’s appeal and granted leave for APA to amend its defences as proposed. In doing so, the Court of Appeal provided helpful and important guidance regarding the test to amend pleadings in Nova Scotia and in particular the “justiciable issue” part of that test. The Court of Appeal held:

• On a motion to amend, the moving party does not need to prove the merits of the proposed amendments. Rather the proposed pleadings are to be accepted “on their face” (i.e. assumed to be true), and the Court hearing an amendment motion “neither hears evidence on the underlying merits, nor decides a contested fact pertaining to the merits, nor forecasts merits-related evidence and potential findings”. APA had “no evidentiary onus to prove the merits of its proposed pleading” on the amendment motion.
• The flexibility to amend pleadings is a particularly important consideration in complex multi-party litigation proceedings as evidence is often possessed by opposing parties and can be inaccessible to other parties until the production and discovery phase of litigation.
• Whether the crossclaims in question were “subrogated” claims are complex questions requiring, inter alia, interpretation of the Policy, and which are better decided at Trial and “cannot be determined summarily and in the abstract, without evidence or context, on a motion to amend the pleadings”.

APA was accordingly granted leave to amend its defence pleadings.       

Key Takeaways
The Court of Appeal has helpfully clarified that a moving party on a motion for leave to amend pleadings has no evidentiary onus in relation to the substantive merits of the desired amendments.

Insurance issues, particularly in relation to large-scale multi-party construction projects or disputes, can be complex and can require careful analysis. If you are involved in such a construction project, or litigation proceeding, raise questions early regarding the possible existence and terms of project-specific policies of insurance. The possibility of being captured as an “insured” under any such policy may have a significant bearing upon your position in any resultant litigation.

Michael P. Blades and Grace Levy of Pink Larkin were proud to represent APA in these proceedings.       

Disclosure:
The information provided here does not constitute legal advice and is based on details available at time of writing. Perspectives and interpretations around this information will vary depending on the individual circumstances to which they may apply. Consult legal counsel for information and advice relevant to your individual circumstances.