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A pollution exclusion clause did not negate an insurer's duty to defend a negligence claim.
The Estate of John Hemlow sought a declaration that Co-operators General Insurance Company had a duty to defend an action against the Estate arising from a workplace accident involving an ammonia leak.
Co-operators denied coverage based on a "Total Pollution Exclusion" clause in Hemlow's Commercial General Liability (CGL) policy.
The application judge found a duty to defend, concluding the exclusion was ambiguous and applied only to environmental pollution.
On appeal, the Court of Appeal for Ontario upheld the duty to defend, finding that the claim against the Estate was for negligence and breach of contract, which falls within the CGL policy's coverage, and the pollution exclusion did not apply as the claim was not for environmental pollution or government-mandated cleanup costs.
Insurer ordered to defend estate; Total Pollution Exclusion found ambiguous regarding indoor accidental ammonia leak.
The applicant estate sought a declaration that the respondent insurer had a duty to defend it in an underlying action arising from a fatal ammonia leak.
The insurer denied coverage, relying on a 'Total Pollution Exclusion' in the commercial general liability policy.
The court found the exclusion clause ambiguous, as it failed to define 'pollution' and could reasonably be interpreted by the insured as applying only to traditional environmental pollution, not an accidental indoor leak of ammonia during routine mechanical work.
The application was granted, and the insurer was ordered to defend the estate.
Substantial indemnity costs denied; court fixed reasonable global costs award after dismissed action.
Following summary judgment dismissing the action against one defendant, the court determined the appropriate costs award.
The successful defendant sought substantial indemnity costs for both the summary judgment motion and the defence of the action, arguing the claim should never have been brought and that the plaintiffs’ conduct prolonged the litigation unnecessarily.
The court reviewed the governing principles under Rule 57.01(1) of the Rules of Civil Procedure and authorities addressing elevated costs and fairness in fixing costs awards.
While the court found that the plaintiff’s conduct increased the complexity and expense of the litigation, it did not rise to the level of reprehensible conduct required for substantial indemnity costs.
The court instead fixed a global costs award payable to the successful defendant.
