The appellant insurers appealed an order finding they had a duty to contribute to the defence costs of the defendant in a property damage action.
The underlying claim alleged that damage by pyrolisis commenced when a fireplace was first used in 1988 and continued until actual combustion in 1997, after the relevant insurance policies had expired.
The Court of Appeal dismissed the appeal, agreeing with the motions judge that there was a possibility of coverage based on the pleadings, as consequential losses manifesting after a policy expires may still be covered if the damage occurred during the coverage period.
The court also rejected the argument that the pleadings were manipulated to trigger the duty to defend.
