John R. Singleton

The appellants appealed a decision regarding the liability of an amalgamated corporation for the remediation of a contaminated site caused by the pre-amalgamation activities of one of its predecessor corporations.

The Supreme Court of Canada allowed the appeal, adopting the dissenting reasons of Rowles J.A. in the British Columbia Court of Appeal, holding that the wording of the amalgamation agreement did not limit the liability of the amalgamated corporation.

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.