Duty To Defend Triggered: Ambiguous Pollution Exclusion Clause

• Published date: 03 August 2022
• Law Firm: Clark Wilson LLP
• Author: Mr Satinder Sidhu and Imroz S. Ali

A tragic workplace accident, resulting in the death of the insured, laid the background for the Ontario Court of Appeal's (the "ONCA") finding that a pollution exclusion clause was not triggered and the insurer owed the insured a duty to defend.

The Underlying Action

In Hemlow Estate v Co-operators General Insurance Company, 2021 ONCA 908 [Hemlow] the insured, Mr. Hemlow, was a sole proprietor whose business focused on the sampling and analysis of oil and other mechanical lubricants. In 2015, he was subcontracted by Wear-Check to provide oil sampling and analysis at the processing facilities of Rich Products of Canada Limited ("Rich Products").

While providing his services at the Rich Products facility, Mr. Hemlow opened a valve containing pressurized ammonia. The ammonia exposure killed Mr. Hemlow and caused significant property damage to Rich Products. Rich Products subsequently brought a claim against Wear-Check and Mr. Hemlow's estate (the "Estate") for negligence, nuisance, and breach of contract (the "Underlying Action").

During Mr. Hemlow's services at the Rich Products' facility, he maintained a Commercial General Liability policy (the "Policy") with Co-operators General Insurance Company ("Co-operators").

Co-operators denied it had a duty to defend the Estate. It stated Rich...