The appellants sought a declaration that their comprehensive general liability insurer owed a duty to defend them in an underlying action arising from a fire at a tar sands plant.
The insurer denied coverage based on a 'turnkey exclusion' and a 'professional services exclusion'.
The Supreme Court of Canada held that the pleadings rule governs the duty to defend, but courts may consider extrinsic evidence explicitly referred to in the pleadings to determine the true nature of the claims.
The Court concluded that the claims against both appellants fell squarely within the turnkey exclusion, relieving the insurer of its duty to defend.
