Canadian Underwriter

Pollution exclusion means no coverage for this dry cleaner defendant

January 16, 2020   by Greg Meckbach

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A British Columbia court ruling in favour of Intact Insurance Company and Economical Mutual Insurance Company is now final.

A Vancouver-based dry cleaners that wanted to make a pollution-related claim with the two insurers, under commercial general liability policies, cannot appeal the coverage dispute to the Supreme Court of Canada, the top court announced Thursday.

In West Van Holdings Ltd. v. Economical Mutual Insurance Company, released April 5, the B.C. Court of Appeal overturned a 2017 ruling in the coverage dispute.

West Van Holdings is the corporate owner of West Van Lions Gate Cleaners Ltd., which has been in business since 1976.

Neighbouring property owners filed a lawsuit in 2014 against West Van alleging that dry-cleaning chemicals and petroleum products entered groundwater and soil. An auto repair business has been on the same site until 1999. Allegations against West Van have not been proven in court.

The outcome of Thursday’s Supreme Court of Canada decision not to hear an appeal mean that neither Economical nor Intact have to cover West Van’s liability claim.

West Van had liability coverage from Intact from 1998 through 2002 and from Economical from 2002 through 2012. Intact’s pollution exclusion was worded one way until 1999 and then a different way from 1999 through 2002. Economical was worded one way from 2002 through 2006 and another from 2006 through 2012. All four wordings were similar.

CGL policies from both insurers exclude liability for bodily injury or property damage “arising out of the actual, alleged or threatened discharge, dispersal, release or escape of pollutants … at or from premises owned, rented or occupied by an Insured.”

Despite the wording, the B.C. Supreme Court originally sided with the client in the coverage dispute.

Justice Joyce DeWitt-Van Oosten found that the wording does not make it clear that coverage is excluded for liability arising from pollutants that were used before West Van and Lions Gate owned the land or operated the businesses.

But the B.C. Court of Appeal found the policies unambiguously excluded the pollution liability that West Van was exposed to.

On July 4, 2019, West Van filed for leave to appeal to the Supreme Court of Canada. All material on leave filing were in by Dec. 12.

Decisions on leave applications normally do not include reasons and this was the case for West Van.

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