The plaintiffs, who process and sell medical radioisotopes produced at the Chalk River nuclear reactor, claimed US$25 million under the Contingent Time Element coverage of their all-risks insurance policy after a heavy water leak forced a 15-month shutdown of the reactor.
The defendant insurer denied coverage, relying on exclusions for corrosion and nuclear radiation.
The court found that the leak was caused by fortuitous pitting corrosion, not anticipated generalized corrosion, and therefore the corrosion exclusion did not apply.
Even if it did, the resulting physical damage exception would apply because the leak rendered the reactor unusable.
The court also rejected the application of the idle period and nuclear radiation exclusions.
The plaintiffs were awarded the policy limit of US$25 million, plus compound prejudgment interest based on their actual cost of borrowing, as the court exercised its discretion under the Courts of Justice Act to fully compensate the plaintiffs for the insurer's wrongful withholding of funds.
