GE unsuccessfully sought a declaration that its insurers had a
duty to defend GE in respect of a request by the Ontario Ministry
of the Environment ("MOE") to delineate contaminated
groundwater near an industrial property once owned by GE. GE
argued that the costs it incurred in response to the MOE were
"defence costs" under its relevant insurance
policies. with the respondents.
" The property in issue is located in Toronto ... 224
Wallace Street. GE owned the property from 1903 to 1980... During
at least some of this period of time, it used the chemical
trichloroethylene ("TCE") as a degreasing agent.
 On February 11, 2004, the MOE wrote to GE and three other
former owners of the property advising that it was reviewing
potential TCE contamination of the groundwater ... The February
letter requested the assistance and co-operation of GE and the
other recipients of the letter asking them to provide any
environmental assessments that they had in their possession.
 On April 16, 2004, the MOE sent a second letter to GE. This
letter requested further information concerning the potential TCE
contamination and required GE to take certain action. The letter in
On February 15, 2004 you received further information in regards
to the TTC subsurface investigation in the area of 224 Wallace and
south of this property. The data appears to support a TCE plume
migrating from/ through the former GE property located at 224
As discussed you will be required to take action in delineating
the source area on your former property. The delineation
investigations are to determine the current levels and the full
vertical and horizontal extent of all contamination within the soil
and groundwater which are on site location. The delineation report
shall include at minimum the following:
At this time the ministry is willing to enter into an agreement
with GE to pursue the required action items voluntarily. If at any
time the ministry determines there is unsatisfactory progress a
Director's Order will be issued to resolve the matter.
GE claims that by April 2009, responding to the MOE request had
resulted in out-of-pocket expenses of $2.1 million for
investigation costs, $1.86 million for remedial costs and $750,000
for legal costs.
The court ruled that these were "compliance" costs,
not "defence" costs, and therefore did not trigger a duty
to defend by the insurance companies:
...the only evidence of a "claim" by the MOE in the
April letter is the request, or requirement if you will, that GE
take action in delineating the source of the TCE contamination.
GE did not oppose, defend or investigate that request.
GE, as it was invited to do in the letter, voluntarily
complied with the request of the MOE. It cannot be said that
it has suffered any defence or investigation costs recoverable
under its insurance policies. As the application judge
concluded, the costs incurred were compliance costs – not
The moral: alleged polluters with possible insurance claims
should not voluntarily investigate or cleanup pollution, or risk
losing the benefit of their insurance policies.
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