The respondent manufacturer suffered damage from phenolic corrosion after an exothermic chemical process occurred in an epoxy resin storage tank.
The respondent claimed under its insurance policy for damage caused by 'fire, lightning, explosion', arguing an explosion occurred or, alternatively, that damages resulted from actions taken to avert an imminent explosion.
The trial judge dismissed the action, finding no explosion occurred and no imminent peril existed.
The Court of Appeal reversed this decision.
The Supreme Court of Canada allowed the insurers' appeal and restored the trial judgment, holding that the trial judge made no error in finding that the event was an 'eruption' rather than an 'explosion' within the meaning of the policy, and that no imminent peril of explosion existed when the avertive actions were taken.
