Quebec's insurers will have to be more specific and do so earlier.

The Quebec Court of Appeal has come down with an interesting decision in Lombard Canada Ltd. v. Ezeflow Inc., (decision in French only).

Ezeflow is a manufacturer of pipes for oil-drilling platforms and Lombard was its general commercial liability insurance provider. Flaws showed up in some installed Ezeflow pipes and that company made a claim on its insurance. Lombard refused on four grounds and later relied on another clause in the insurance agreement. The matter went to trial, Ezeflow won at trial and Lombard took the matter to the Court of Appeal, where the appeal was upheld. However it noted that Lombard could not use an exclusion which was not used as a reason for denial at the outset of the action. As Kelly Harris notes [infra], "Quebec courts do not recognize the doctrine of estoppel [fn1], which prevents new defences from being introduced once a case has begun." Jean-Charles René of Ogilvy, Renault notes,

In Quebec, the courts have refused to apply the doctrine of estoppel, but have recognized a similar concept in civil law, the "fin de non-recevoir" which bars an insurer from adding to its reasons for denial of coverage on the basis that it is deemed to have waived the right to do so. According to the case law, such a waiver does not need to have been expressly stated in writing, but may be tacit, provided it is unequivocal, i.e., there is no doubt as to the insurer's intention to waive a clause in the policy. Some writers have observed that it is harder to prove a "fin de non-recevoir" than to prove estoppel because the civil law concept requires proof that, by its representations, the insurer indicated its intention to modify its rights.

Ezeflow has now ended the insurers' practice of reserving a right to bring up any clause later on; they must now commit at the outset of the action. M. René:

[I]nsureds would be well advised to require their insurer to state its position precisely as soon as it is apprised of a situation that could trigger a claim, thereby forcing the insurer, so to speak, "to make its bed and lie in it".

Footnotes:

fn1 - Quebec is the only province which does not use a "common law" system (like that of England or America) for the resolution of non-criminal disputes; it uses a "civil law" system more akin to European models.]

Further Reading

The entry above is only a cursory examination of the case. I strongly recommend that any interested reader read these articles:

“Quebec Court Of Appeal Weighs In On Scope Of Coverage Under Cgl Policy For Costs Of Removing Insured’s Defective Products”. Nicholl Paskell-Mede, Lawyers.

“Quebec Court of Appeal Warns Insurers To Specify All the Reasons for Denial of Coverage.”
Jean-Charles René, Ogilvie Renault.

“Court tells insurers to lie in the bed they made.” Kelly Harris, Canadian Lawyer Magazine, February, 2009. [Note: Canadian Lawyer uses an unusual digital version of its magazine. You will have to go to the link and then flip the pages as if you were reading the magazine in its treeware format.]