Insurers “justified in denying coverage” in multi-million pollution case
Insurers “justified in denying coverage” in multi-million pollution case | Insurance Business Canada
Insurance News
Insurers “justified in denying coverage” in multi-million pollution case
Alberta Court of Appeal sides with Chubb and others
Insurance News
By
Terry Gangcuangco
Chubb and other insurance companies have won their appeal against Paramount Resources in Calgary.
The Court of Appeal of Alberta – through Justice Bernette Ho, Justice Alice Woolley, and Justice Joshua Hawkes – sided with appellants Chubb Insurance Company of Canada, Lloyd’s underwriters, and Royal and Sun Alliance Insurance Company of Canada, who believe that the summary trial judge erred in granting judgment in favour of Paramount in the amount of $9.74 million plus costs and interest.
The main contention in the disputed insurance claim was whether the release of pollutants from a pipeline – for which Paramount sustained losses – was “detected by any person” within 720 hours after its commencement, which the parties agreed was on or about April 21, 2016.
Paramount had taken the position that the release was detected within the requisite time frame, while the insurers argued that detection requires that a person subjectively concludes or is actually aware that a release occurred or is occurring, as opposed to just observing or being aware of information indicative of a release.
Among other things, the appellants argued that the summary trial judge erred in attributing a meaning to “detected” that was contrary to the clear words of the insurance policies.
After hearing the appeal in June, the Court of Appeal ruled this month: “We conclude that based on the contract as a whole and the objective intent of the parties, the release was ‘detected’ on June 9, 2016.
“As a result, the appellants were justified in denying coverage to Paramount on the basis that a pollution incident, as defined in the endorsement, had not been established because the release was not detected by any person within 720 hours of its occurrence. Accordingly, the appeal is allowed.”
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