Perennial Manufacturing Inc. carried on a foundry business in premises leased from Sharbo

Investments Ltd. Perennial arranged a contract of fire insurance with the Commonwealth Insurance Co. The insurance covered equipment, business interruption, and the value of the building. At the time when the insurance was arranged, Vandervelde was the controlling shareholder of both Perennial and Sharbo. He later sold his shares in Perennial and no longer had an interest in that corporation.

The building burned down. Perennial claimed on the insurance policy, and Commonwealth paid out $700 000 for the loss of stock and equipment, business interruption, and extra expenses. It refused to make any payments for the loss of the building on the ground that the building was not owned by Perennial. (It was not insured by Sharbo.)

Is that a valid defence to the claim?