The Corporation of the Town of Lincoln v. AIG Insurance Company of Canada

[Indexed as: Lincoln (Town) v. AIG Insurance Co. of Canada]

Ontario Reports Ontario Superior Court of Justice Perell J. March 10, 2020 149 O.R. (3d) 740 | 2020 ONSC 1456

Case Summary

Insurance — Exclusion clauses — Pollution — Town one of several defendants in a negligence action arising from flow of sewage onto plaintiffs' land — Liability insurer denying coverage due to pollution exclusion clause — Claim against town consisting of two branches, one not derivative if the other and concerning a different wrongdoing and source of liability — Town might have been liable under the branch not subject to pollution exclusion, so there was a duty to defend.

Insurance — Insurer's duty to defend — Exclusion clauses — Town one of several defendants in a negligence action arising from flow of sewage onto plaintiffs' land — Liability insurer denying coverage due to pollution exclusion clause — Claim against town consisting of two branches, one not derivative if the other and concerning a different wrongdoing and source of liability — Town might have been liable under the branch not subject to pollution exclusion, so there was a duty to defend.

Insurance — Liability insurance — Duty to defend — Exclusions — Pollution exclusion — Town one of several defendants in a negligence action arising from flow of sewage onto plaintiffs' land — Liability insurer denying coverage due to pollution exclusion clause — Claim against town consisting of two branches, one not derivative if the other and concerning a different wrongdoing and source of liability — Town might have been liable under the branch not subject to pollution exclusion, so there was a duty to defend.

The respondent issued a public entity insurance policy to the applicant. The applicant was one of the defendants named in a negligence action. In that action the plaintiffs alleged that a temporary pipe being used by a contractor ruptured and caused an uncontained flow of sewage from a pumping station to escape onto the plaintiffs' property. The plaintiffs further alleged that they reported the incident to the respondent, who refused to stop the flow of sewage, thereby causing damage to the plaintiffs' property. The plaintiffs also alleged that a nearby storm sewer maintained by the respondent was in a state of disrepair causing further sewage backup due to improper drainage, and that the area around the pumping station was graded in such a way as to direct water flow towards the plaintiffs' property. The respondent denied coverage under the public entity insurance policy on the ground that the plaintiffs' allegations were excluded pursuant to a pollution exclusion clause in the policy. The applicant sought a declaration that the respondent was under an obligation to defend.

Held, the application should be allowed.

The pleadings alleged facts which, if true, would require the respondent to indemnify, so the respondent had a duty to defend. There were two branches to the claim against the applicant. One was a claim brought jointly against the applicant and the regional municipality with respect to the pumping station and the sewage flood emanating from it. The second branch was a claim exclusively against the applicant with respect to the storm sewers. Having regard to the language of the pollution exclusion, the storm sewers and the lands around the pumping station were not premises owned by the applicant at which the escape of pollutants occurred; they were not premises used for handling, storage, disposal processing or treatment of waste; and they were not premises on which the applicant performed operations on pollutants. Reading the pleading as a whole, there was the possibility that the applicant and the Regional Municipality might be liable for the flow of sewage from the pump station, but there was also the possibility that the applicant might not be liable on the first branch of the claim but liable on the second branch. The second branch was not derivative of the first and concerned a different wrongdoing and source of liability.

Monenco Ltd. v. Commonwealth Insurance Co., [2001] 2 S.C.R. 699, [2001] S.C.J. No. 50, 2001 SCC 49, 204 D.L.R. (4th) 14, 274 N.R. 84, [2002] 2 W.W.R. 438, J.E. 2001-1712, 155 B.C.A.C. 161, 97 B.C.L.R. (3d) 191, 32 C.C.L.I. (3d) 165, [2001] I.L.R. I-3993, 108 A.C.W.S. (3d) 159, consd

ING Insurance Co. of Canada v. Miracle (c.o.b. Mohawk Imperial Sales) (2011), 105 O.R. (3d) 241, [2011] O.J. No. 1837, 2011 ONCA 321, 334 D.L.R. (4th) 150, 283 O.A.C. 79, 94 C.C.L.I. (4th) 1, 58 C.E.L.R. (3d) 36, [2011] I.L.R. I-5143, 201 A.C.W.S. (3d) 516, EYB 2011-190801 (C.A.), distd

Other cases referred to

1540039 Ontario Ltd. v. Farmers' Mutual Insurance Co. (Lindsay) (2012), 110 O.R. (3d) 116, [2012] O.J. No. 1380, 2012 ONCA 210, 291 O.A.C. 16, 10 C.C.L.I. (5th) 215, 213 A.C.W.S. (3d) 192 (C.A.); Bacon (Guardian ad litem of) v. McBride, [1984] B.C.J. No. 2813, 6 D.L.R. (4th) 96, 51 B.C.L.R. 228, 5 C.C.L.I. 146, [1984] I.L.R. para. 1-1776 at 6844, 25 A.C.W.S. (2d) 13 (S.C.); Hanis v. University of Western Ontario (2008), 92 O.R. (3d) 594, [2008] O.J. No. 3909, 2008 ONCA 678, 241 O.A.C. 303, 69 C.C.E.L. (3d) 86, 67 C.C.L.I. (4th) 196, [2008] I.L.R. I-4748, 169 A.C.W.S. (3d) 970 (C.A.); Nichols v. American Home Assurance Co., [1990] 1 S.C.R. 801, [1990] S.C.J. No. 33, 68 D.L.R. (4th) 321, 107 N.R. 321, J.E. 90-643, 39 O.A.C. 63, 45 C.C.L.I. 153, [1990] I.L.R. para. 1 -2583, 20 A.C.W.S. (3d) 699; Non-Marine Underwriters, Lloyd's of London v. Scalera, [2000] 1 S.C.R. 551, [2000] S.C.J. No. 26, 2000 SCC 24, 185 D.L.R. (4th) 1, 253 N.R. 1, [2000] 5 W.W.R. 465, J.E. 2000-935, 135 B.C.A.C. 161, 75 B.C.L.R. (3d) 1, 18 C.C.L.I. (3d) 1, 50 C.C.L.T. (2d) 1, [2000] I.L.R. I-3810, 96 A.C.W.S. (3d) 479, REJB 2000-17997; Progressive Homes Ltd. v. Lombard General Insurance Co. of Canada, [2010] 2 S.C.R. 245, [2010] S.C.J. No. 33, 2010 SCC 33, 323 D.L.R. (4th) 513, 406 N.R. 182, [2010] 10 W.W.R. 573, J.E. 2010-1683, 293 B.C.A.C. 1, 9 B.C.L.R. (5th) 1, 73 B.L.R. (4th) 163, 89 C.C.L.I. (4th) 161, 93 C.L.R. (3d) 1, [2010] I.L.R. I-5051, 193 A.C.W.S. (3d) 1292, EYB 2010-179515, 2010EXP-3049; Rylands v. Fletcher (1868), L.R. 3 H.L. 330, [1861-73] All E.R. Rep. 1, 19 L.T. 220 (H.L.); Tedford v. TD Insurance Meloche Monnex (2012), 112 O.R. (3d) 144, [2012] O.J. No. 2821, 2012 ONCA 429, 292 O.A.C. 374, 9 C.C.L.I. (5th) 15, 216 A.C.W.S. (3d) 227, [2012] I..LR. I-5302, 351 D.L.R. (4th) 239 (C.A.)

APPEAL from an arbitrator's decision in an insurance priority dispute.

PERELL J.: --

A. Introduction

[1] The applicant, the Corporation of the Town of Lincoln, seeks a declaration that the respondent, AIG Insurance Company of Canada has a duty to defend the Town under a Public Entity General Insurance Policy. For the reasons that follow, the Town's application is granted.

B. Facts

[2] AIG issued a Public Entity Insurance Policy to the Town. The pertinent terms of the policy are set out below:

INSURANCE POLICY DECLARATIONS

The Underwriters in return for the payment of the premium by or on behalf or the insured and subject to the terms, definitions, limits of insurance, exclusions and conditions of this policy agree to provide the insurance as stated in this policy.

MUNICIPAL LIABILITY

Policy Section A — Public Entity General Liability

Bodily Injury and Property Damage Limits - $5,000,000 Any one Occurrence

POLICY SECTION A — PUBLIC ENTITY GENERAL LIABILITY

SECTION 1 — COVERAGES

COVERAGE A - BODILY INJURY and PROPERTY DAMAGE LIABILITY

1. Insuring Agreement

a. We will pay those sums that the insured becomes legally obligated to pay as "damages" because of "bodily injury" or "property damage" to which this insurance applies. Wewill have the right and duty to defend the insured against any "action" seeking those "damages". However, we will have no duty to defend the insured against any "action" seeking "damages" for "bodily injury" or "property damage" to which this insurance does not apply. We may, at our discretion, investigate any "occurrence" and settle any claim or "action" that may result. But:

(1) The amount we will pay for "damages" is limited as described in Section Ill - Limits of Insurance; and

(2) Our right and duty to defend ends when we have used up the applicable limit of insurance as described in Section Ill - Limits of Insurance in the payment of:

(i) Judgments or settlements under Coverage A, B or D; or

No other obligation or liability to pay sums or perform acts or services is covered unless explicitly provided for under Supplementary Payments - Coverage A, B and D.

b. This insurance applies to "bodily injury" and "property damage" only if:

(1) The "bodily injury" or "property damage" is caused by an "occurrence" that takes place in the "coverage territory"; and

(2) The "bodily injury" or "property damage" occurs during the policy period;

EXCLUSIONS COMMON TO COVERAGES A, B, C AND D

This insurance does not apply to:

4. Pollution

(1) "Bodily injury", "property damage" or "personal and advertising injury" arising out of the actual, alleged or threatened spill discharge emission, dispersal seepage, leakage, migration, release or escape of "pollutants":

(a) At or from any premises, site or location which is or was at any time owned or occupied by or rented or loaned to, any insured. However, this subparagraph does not apply to:

(i) "Bodily injury" if sustained within a building and caused by smoke, fumes, vapour or soot from equipment used to heat, cool or dehumidify the building, or equipment that is used to heat water for personal use, by the building's occupants or their guests;

(ii) "Bodily injury" or "property damage" for which you may be held liable, if you are a contractor and the owner or lessee of such premises, site or location has been added to your policy as an additional insured with respect to your ongoing operations performed for that additional insured at that premises, site or location and such premises, site or location is not and never was owned or occupied by, or rented or loaned to, any insured, other than that additional insured; or

(iii) "Bodily injury" or "property damage" arising out of heat, smoke or fumes from a "hostile fire";

(b) At or from any premises site or location which is or was at any time used by or for any insured or others for the handling, storage, disposal, processing or treatment of waste:

(c) Which are or were at any time transported, handled, stored, treated, disposed of or processed as waste by or for:

(i) Any insured; or

(ii) Any person or organization for whom you may be legally responsible; or

(d) At or from any premises, site or location on which any insured or any contractors or subcontractors working directly or indirectly on any insured's behalf are performing operations if the "pollutants" are brought on or to the premises, site or location in connection with such operations by such insured, contractor or subcontractor. However, this subparagraph does not apply to:

(i) "Bodily injury" or "property damage" arising out of the escape of fuels, lubricants or other operating fluids which are needed to perform the normal electrical, hydraulic or mechanical functions necessary for the operation of mobile equipment or its parts, if such fuels, lubricants or other operating fluids escape from a vehicle part designed to hold, store or receive them. This exception does not apply if the "bodily injury" or "property damage" arises out of the intentional discharge, dispersal or release of the fuels, lubricants or other operating fluids, or if such fuels, lubricants or other operating fluids are brought on or to the premises, site or location with the intent that they be discharged, dispersed or released as part of the operations being performed by such insured, contractor or subcontractor;

(ii) "Bodily injury" or "property damage" sustained within a building and caused by the release of gases, fumes, or vapours from materials brought into that building in connection with operations being performed by you or on your behalf by a contractor or subcontractor; or

(iii) "Bodily injury" or "property damage" arising out of heat, smoke or fumes from a "hostile fire".

(e) At or from any premises, site or location on which any insured or any contractors or subcontractors working directly or indirectly on any insured's behalf are performing operations if the operations are to test for, monitor, clean up, remove, contain, treat, detoxify or neutralize, or in any way respond to, or assess the effects of, "pollutants".

(2) Any loss, cost or expense arising out of any:

(a) Request, demand, order or statutory or regulatory requirement that any insured or others test for, monitor, clean up, remove, contain, treat, detoxify or neutralize, or in any way respond to, or assess the effects of, "pollutants"; or

(b) Claim or "action" by or on behalf of a governmental authority for "damages" because of monitoring, cleaning up, removing, treating, detoxifying or neutralizing, or responding to or assessing the pollutants.

However, this Section (2) does not apply to liability for "damages" because of "property damage" that the insured would have in the absence of such request, demand, order or statutory or regulatory requirement, or such claim or "action" by or on behalf of a governmental authority.

DEFINITIONS COMMON TO POLICY SECTIONS A AND B

1. " Action(s) "

Means a civil proceeding in which:

a. "Damages" because of "bodily injury", "property damage", . . . or by reason of a "wrongful act" to which this insurance applies are alleged; or

b. . . .

27. " Pollutants "

Mean any solid, liquid, gaseous or thermal irritant or contaminant, including smoke, odour, vapour, soot, fumes, acids, alkalis, chemicals and waste. Waste includes materials to be recycled, reconditioned or reclaimed.

29. " Property damage "

Means:

a. Physical injury to tangible property, including all resulting loss of use of that property. All such loss of use shall be deemed to occur at the time of the physical injury that caused it; or

b. Loss of use of tangible property that is not physically injured. All such loss of use shall be deemed to occur at the time of the occurrence that caused it.

[3] On February 21, 2017, Lizak Niagara Ltd. operating as Legends Estate Winery and Ted Lizak commenced an action seeking damages from the Town and others for damages to their property located in Beamsville, Ontario.

[4] The pertinent paragraphs from their statement of claim are set out below:

CLAIM

1. The Plaintiffs claim,

(a) As against the defendants jointly and severally:

(b) damages in the amount of $1,000,000,00, or such further and other amounts as may be proven at trial;

(b) As against the defendant, the Regional Municipality of Niagara a.k,a. Niagara Region:

(c) punitive damages in the amount of $100,000.00,

The Parties

2. The Plaintiff, Ted Lizak, is an owner of the land located at 4888 Ontario Street, Beamsville, Ontario (the "Property").

3. The Plaintiff, Lizak Niagara Ltd. o/a Legends Estate Winery, is an Ontario incorporated entity which operates a commercial winery located on the Property (the "Winery"). The Winery is wholly owned by Ted Lizak and Diane Lizak.

4. The Defendant, The Corporation of the Town of Lincoln, is an elected local government body having corporate status and designated to provide municipal and civil services, including municipal water and sewer services, to the town of Lincoln ("Lincoln").

The Incident

7. The Property and the Winery are located within the jurisdictions of Lincoln and the Region.

8. On or around June 27, 2015, Superior was engaged in the repair and/or upgrade work of the Pumping Station, which involved the use of a temporary pipe to pump sewage (the "Pipe"). While being operated by Superior in conducting the repair work, the Pipe sustained a burst or leak at the weld, join or another portion of the Pipe, which caused an uncontained flow of sewage from the Pumping Station to escape onto the Property (the "Incident"),

9. Superior made no attempts to repair the Pipe, however it contacted a welder to attend at the Pumping Station to repair the Pipe, which took approximately four hours.

10. Immediately or soon after, the Plaintiffs reported the Incident to the Defendants Lincoln and the Region and requested that the Defendants to stop the flow of sewage from the Pumping Station while the Pipe was being repaired. The Defendants refused to stop the flow of sewage, which permitted the additional sewage to flood the Pumping Station and flow onto the Property for approximately four hours, further exacerbating the damage to the Property and the Plaintiffs.

11. In addition, the nearby storm sewer maintained by Lincoln and/or the Region was in a state of disrepair, causing the sewage to be further backed up due to the improper drainage.

12. As a result of the Incident, the Winery, including its physical premises, equipment and contents, the Property and the Plaintiffs sustained loss and damages. The Winery further sustained business losses.

13. The area immediately adjacent to the Pumping Station is graded away from the Pumping Station and towards the Property. As a result of this manner of grading, all water flow in the area immediately adjacent to the Pumping Station is directed away from the Pumping Station and onto the Property. No preventative work was ever done by the Region to alter the manner of grading surrounding the Pumping Station or drainage from the Pumping Station despite requests made by the Plaintiffs to the Region.

Negligence

16. The Plaintiffs states that the Incident, the escape of water and sewage from the Pumping Station and the resulting damages as sustained by the Plaintiffs, were the result of the negligence of the Defendants, their contractors, subcontractors, agents, employees, and/or servants for whom in law the Defendants are liable, the particulars of which are as follows:

(a) they failed to perform the repair work on the Pumping Station in a safe and prudent manner;

(b) they caused or permitted circumstances to exist that allowed the improper flow of sewage and water onto the Property;

(c) they failed to maintain and take all reasonable precautions to safeguard against a flooding in all the circumstances;

(d) they allowed a hazard to exist when they knew or ought to have known of the associated dangers and risks of flooding;

(e) they failed to design, build, maintain and inspect the Pumping Station and the drainage system to ensure that any excess water and/or sewage could properly drain;

(p) they failed to integrate any landscaping or grading around the pumping station property, which could have contained any leaks or otherwise direct any spilled sewage from the pumping station away from the Property.

Damages

17. As a result of the negligence of the Defendants, their employees, agents, contractors, and subcontractors, the Plaintiffs Property, and/or chattels were damaged and/or destroyed.

18. The Plaintiff has suffered loss and damage including but not limited to:

(a) property damage to the Winery, including its physical structure, its equipment and its contents;

21. The Plaintiffs plead, in the alternative, that the actions and/or inactions of the Defendants Lincoln and the Region, as described above, caused damages to the Plaintiffs and the Property, and the natural environment, and caused sewage to enter upon the Property, and to enter public waterways, and so are in breach of local and provincial statutes and regulations, and which breaches caused damage to the Plaintiffs.

22. The Plaintiffs plead, in the alternative, that through the actions and/or inactions of the Defendants Lincoln and the Region, as described above, the Plaintiffs have suffered personal injury, loss or use or enjoyment of property and pecuniary loss, including loss of business income. As a result, and pursuant to provincial statute and regulation, including the Environmental Protection Act, the Plaintiffs have a right to compensation.

[5] On March 1, 2017, the Town reported the action to AIG and requested that AIG provide coverage and defence.

[6] On May 3, 2017, AIG sent a letter to the Town advising of its decision to deny coverage and defence in respect of the action on the basis that the allegations contained in the statement of claim are excluded pursuant to a "Pollution Exclusion" clause contained in the Policy.

[7] The Town and AIG exchanged further correspondence regarding AIG's refusal to defend the Town, and AIG maintained its refusal to cover and defend to the Town.

[8] On March 7, 2019, the Town brought this application for a declaration that the insured is under an obligation to defend the Town in the action.

C. Discussion and Analysis

[9] The parties are in agreement about the legal principles that govern a contract interpretation dispute about whether an insurer has a duty to defend its insured. The principles are as follows:

(a) The insurer has a duty to defend if the pleadings filed against the insured allege facts which, if true, would require the insurer to indemnify the insured. [See Note 1 below]

(b) The court must determine whether the factual allegations, if true, could possibly support the plaintiff's legal claims. [See Note 2 below]

(c) The pleadings govern the duty to defend, not the insurer's view of the validity or nature of the claim nor by the possible outcome of the litigation. [See Note 3 below]

(d) In a duty to defend application, the court must determine the substance and true nature of the claims based on the allegations in the pleadings taking the entire pleading into account and without engaging in a fanciful reading of the statement of claim for the purpose of requiring the insurer to defend. [See Note 4 below]

(e) If there is any possibility that the claim falls within the liability coverage, the insurer must defend. [See Note 5 below]

(f) The court must look beyond the labels used by the plaintiff to ascertain the substance and true nature of the claims. [See Note 6 below]

(g) If there is a claim that is outside or excluded from insurance coverage and a claim within insurance coverage, but the covered claim is entirely derivative of the uncovered claim, which is to say that the claims arise from the same actions and cause the same harm, then the derivative claim will not trigger a duty to defend. [See Note 7 below]

(h) If the pleadings are not sufficiently precise to determine whether the claims would be covered by the policy, the insurer's obligation to defend will be triggered where, on a reasonable reading of the pleadings, a claim within coverage can be inferred. [See Note 8 below]

(i) In determining whether the policy would cover the claim, the usual principles governing the construction of insurance contracts apply, namely, (a) the contra proferentem rule; (b) the principle that coverage clauses should be construed broadly and exclusion clauses narrowly; and (c) where the policy is ambiguous, effect should be given to the reasonable expectations of the parties. [See Note 9 below]

(j) Extrinsic evidence that has been explicitly referred to in the pleadings may be considered to determine the substance and true nature of the allegations. [See Note 10 below]

(k) In the insurance policy contains an unqualified obligation to defend in respect of covered claims, the insurer is required to defend the entire claim; where there is an unqualified obligation to defend, the insurer is required to pay all reasonable costs associated with the defence of those claims, even if those costs further the defence of uncovered claims. [See Note 11 below]

[10] In the immediate case, the insurer, AIG Insurance, relies on the pollution exception in the policy to negate the duty to defend. It is conceded that but for the pollution exception, there would be a duty to defend in the immediate case.

[11] The problem, however for AIG Insurance is that the claim against the Town is two-branched, only one branch of which would be subject to the pollution exclusion; namely, the claim associated with the pump station.

[12] The claim against the Town is a two branched. One branch is the claim brought jointly against the Town and the Regional Municipality with respect to the pumping station and the sewage flood that emanated from the pumping station. The second branch is a claim exclusively against the Town with respect to the storm sewers. That claim is essentially set out in paras. 11 and 16 of the statement of claim, which, to repeat, states:

11. In addition, the nearby storm sewer maintained by Lincoln and/or the Region was in a state of disrepair, causing the sewage to be further backed up due to the improper drainage.

The Plaintiffs states that the Incident, the escape of water and sewage from the Pumping Station and the resulting damages as sustained by the Plaintiffs, were the result of the negligence of the Defendants, . . . the particulars of which are as follows:

(b) they caused or permitted circumstances to exist that allowed the improper flow of sewage and water onto the Property;

(c) they failed to maintain and take all reasonable precautions to safeguard against a flooding in all the circumstances;

(d) they allowed a hazard to exist when they knew or ought to have known of the associated dangers and risks of flooding;

(e) they failed to design, build, maintain and inspect the Pumping Station and the drainage system to ensure that any excess water and/or sewage could properly drain;

(p) they failed to integrate any landscaping or grading around the pumping station property, which could have contained any leaks or otherwise direct any spilled sewage from the pumping station away from the Property.

[13] The second branch of the claim against the Town does not specifically relate to the pumping station that is the source of the pollution. Rather, the second branch concerns a storm sewer, which is the run-off for rainwater and melting snow. It concerns an allegation that the storm sewer was in a state of disrepair. The second branch also concerns a failure to grade properly the lands around the pumping station.

[14] Having regard to the language of the pollution exclusion: (a) the storm sewer and the lands around the pumping station are not premises owned by the Town at which the escape of pollutants occurred; (b) they are not premises used for the handling, storage, disposal, processing or treatment of waste; and (c) they are not premises on which the Town performed operations on pollutants.

[15] Moreover, as the Town submits, in any event, if there is any possibility that the claim falls within the liability coverage, the insurer should defend.

[16] Reading the pleading as a whole, there is the possibility that both the Town and the Region might be liable for the flow of sewage from the pump station, but there is also the possibility that the Town might not be liable on the first branch of the claim but be liable on the second branch causing damage because the storm sewer was in a state of disrepair and the lands were not properly graded. Although there is a common linkage of damage, the second branch of the claim is not derivative of the first branch and concerns a different wrongdoing and source of liability for the damages.

[17] In a submission, with which I agree, AIG Insurance submits that the Supreme Court of Canada's decision in Monenco Ltd. v. Commonwealth Insurance Co., 12 stands for the principle that in a duty to defend application the court must determine the substance and true nature of the claims based on the allegations in the pleadings taking the entire pleading into account and without engaging in a fanciful reading of the statement of claim for the purpose of requiring the insurer to defend.

[18] While I agree with the submission, I disagree that my reading of the Statement of Claim as a two-branched claim is a fanciful reading of the statement of claim.

[19] AIG Insurance is not assisted by ING Insurance Co. of Canada v. Miracle (c.o.b. Mohawk Imperial Sales). 13 That case involved the escape of gasoline from an underground storage tank at a gas station with the gasoline migrating to adjoining lands. In the immediate case, there is no escape, use of, or treatment of sewage at the storm sewers. The failure to keep a storm sewer in repair and to grade lands does not involve the principles of Reynolds v. Fletcher 14 or of the tort of nuisance and apart from its activities at the pumping station, if any, the Town was not engaging in activity that carries a known risk of damages from a pollutant.

D. Conclusion

[20] For the above reasons, the application is granted. If the parties cannot agree about the matter of costs, they may make submissions in writing beginning with the Town's submissions within 20 days of the release of these reasons for decision followed by AIG Insurance's submissions within a further 20 days.

Appeal dismissed.

Notes

Timothy J. Hill and Brian Chung, for applicant.

Ramon V. Andal, for respondent.

1 Tedford v. TD Insurance Meloche Monnex (2012), 112 O.R. (3d) 144, [2012] O.J. No. 2821, 2012 ONCA 429 (C.A.), at para. 14; Progressive Homes Ltd. v. Lombard General Insurance Co. of Canada, [2010] 2 S.C.R. 245, [2010] S.C.J. No. 33, 2010 SCC 33, at para. 19; Monenco Ltd. v. Commonwealth Insurance Co., [2001] 2 S.C.R. 699, [2001] S.C.J. No. 50, 2001 SCC 49, at para. 28.

2 Tedford v. TD Insurance Meloche Monnex, ibid., at para. 14; Monenco Ltd. v. Commonwealth Insurance Co., ibid., at paras. 34-35; Non-Marine Underwriters, Lloyd's of London v. Scalera, [2000] 1 S.C.R. 551, [2000] S.C.J. No. 26, 2000 SCC 24, at para. 79.

3 Monenco Ltd. v. Commonwealth Insurance Co., ibid., at para. 28; Bacon (Guardian ad litem of) v. McBride, [1984] B.C.J. No. 2813, 6 D.L.R. (4th) 96 (S.C.).

4 Monenco Ltd. v. Commonwealth Insurance Co., ibid.

5 Tedford v. TD Insurance Meloche Monnex, supra, note 1, at para. 14; Nichols v. American Home Assurance Co., [1990] 1 S.C.R. 801, [1990] S.C.J. No. 33, at p. 810 S.C.R.

6 Tedford v. TD Insurance Meloche Monnex, ibid., at para. 14; Progressive Homes Ltd. v. Lombard General Insurance Co. of Canada, supra, note 1, at para. 20.

7 Tedford v. TD Insurance Meloche Monnex, ibid., at para. 14; Non-Marine Underwriters, Lloyd's London v. Scalera, supra, note 2.

8 Tedford v. TD Insurance Meloche Monnex, ibid., at para. 14; Monenco Ltd. v. Commonwealth Insurance Co., supra, note 1, at paras. 34-35.

9 Tedford v. TD Insurance Meloche Monnex, ibid., at para. 14; Monenco Ltd. v. Commonwealth Insurance Co., ibid., at para. 31; Non-Marine Underwriters, Lloyd's of London v. Scalera, supra, note 2, at paras. 70-71.

10 Tedford v. TD Insurance Meloche Monnex, ibid., at para. 14; Monenco Ltd. v. Commonwealth Insurance Co., ibid., at para. 36; 1540039 Ontario Ltd. v. Farmers' Mutual Insurance Co. (Lindsay) (2012), 110 O.R. (3d) 116, [2012] O.J. No. 1380, 2012 ONCA 210 (C.A.).

11 Hanis v. University of Western Ontario (2008), 92 O.R. (3d) 594, [2008] O.J. No. 3909, 2008 ONCA 678 (C.A.).

12 Supra, note 1.

13 (2011), 105 O.R. (3d) 241, [2011] O.J. No. 1837, 2011 ONCA 321 (C.A.).

14 (1868), L.R. 3 H.L. 330, [1861- 1873] All E.R. Rep. 1 (H.L.).

End of Document