On April 26, 2011, the Ontario Court of Appeal rendered
its decision in ING Insurance Company of Canada vs.
Miracle, overturning the lower court and adopting a contextual
approach to its interpretation of the application of the absolute
In Miracle, ING appealed the application judge's
decision finding that its Commercial General Liability
(CGL) policy was liable to respond to a claim for
damages from the migration of gasoline from a retail fuel service
station, as reported in our Spring, 2011 newsletter. The
neighbouring property owner had brought a claim for $1.85 million
against the insured, the party that installed the fuel facilities
and the fuel supplier. In the Statement of Claim, the plaintiffs
alleged that the escape of petroleum hydrocarbons in and onto its
land required it to incur expenses in investigating, testing,
monitoring and rectifying the contamination. The claims were
brought in strict liability, nuisance and negligence.
The application judge interpreted the Court of Appeal's
earlier decision in Zurich v. 686234 Ontario Limited
(2002) as standing for the principle that the absolute pollution
exclusion did not apply to cases where negligence was pleaded and
the insured was not in the business of active industrial pollution.
The application judge further held that a reasonable insured would
expect the exclusion to apply to industrial pollution and not to a
gas leak from a retail service station.
The Zurich decision pertained to a leak of carbon
monoxide from a malfunctioning furnace in a residential apartment
building. Although the Court of Appeal in that case had cautioned
against an overly literal approach to coverage, its comments that
the absolute pollution exclusion applied only to active industrial
polluters had been applied literally by counsel and courts.
The Court of Appeal in Miracle clarified that the
Zurich decision had to be read in its context. In
Miracle, the insured was engaged in an activity that
carried an obvious and well-known risk of pollution and
environmental damage. Regardless of the allegations of negligence,
the damages claimed were based on harm to the natural environment
due to contamination of soil. The court explained that the claim
fit entirely within the historical purpose of the pollution
exclusion which was to preclude coverage for the cost of government
mandated environmental clean up.
Significantly, the court did not accept that "active
industrial polluter of the natural environment" should be read
to apply only to activities that necessarily result in pollution as
those insureds would already be excluded from coverage because of
the fortuity principle. The court reasoned that such an
interpretation, if correct, would render the absolute pollution
exclusion without meaning.
The court further rejected the distinction between active versus
passive polluters of the environment. It was noted that a majority
of courts in the U.S. have held that claims against gas stations
for damages caused by leaking gasoline are unambiguously excluded
by the standard "absolute pollution exclusion."
Finally, the court rejected the argument that applying the
exclusion would effectively nullify coverage since there were a
variety of risks that would still be covered by the CGL policy.
While the court's decision requires a fact based approach to
the activity in question, it provides direction for a more sensible
approach to application of the absolute pollution exclusion.
Automobile drivers, like fine wine, tend to get better with age. Older drivers can draw on a wealth of experience from their years on the road to assist them when faced by a variety of dangerous conditions.
Under B.C.'s former and current Limitation Act, the limitation period for a Plaintiff's claim can be extended on the basis of a Defendant having acknowledged in writing some liability for the cause of action.
The insurance industry will be interested in Ledcor Construction Ltd v. Northbridge Indemnity Insurance Co because of principles the Supreme Court of Canada applied to the "faulty workmanship" exclusion in a Builders' Risk policy.
The recent Preliminary Issue decision in Walsh and Echelon (FSCO A15-007448, August 31, 2016) confirms that an economic loss does not need to be demonstrated in order to be entitled to attendant care benefits.
For the first time in BC, a Court has decided that an insured is entitled to special costs, rather than the lower tariff costs, solely because they were successful in a coverage action against their insurer.
Policyholders recently won a key victory at the Supreme Court of Canada in Ledcor Construction Ltd. v. Northbridge Indemnity Insurance Co. as the Supreme Court clarified the interpretation of a standard form...
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