Insurers must pay HRM for diesel spill at Dartmouth transit garage

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Halifax Regional Municipality has won its fight with three insurance companies over who should pay for a diesel oil spill in 2014 at a transit garage in Dartmouth, N.S. (CBC - image credit)
Halifax Regional Municipality has won its fight with three insurance companies over who should pay for a diesel oil spill in 2014 at a transit garage in Dartmouth, N.S. (CBC - image credit)

Halifax Regional Municipality has won its fight with three insurance companies over who should pay for a diesel oil spill at a transit garage in Dartmouth, N.S.

The leak was discovered in April, 2014.

It was determined that a valve on an old underground fuel system had come open, allowing the fuel to seep into the soil.

The cleanup cost hundreds of thousands of dollars.

The municipality was counting on the three insurers — Zurich, Royal & Sun Alliance and Arch Insurance — to pick up the tab.

Companies argued they were not liable

But the companies argued they were not liable.

The issue came down to words "sudden and accidental" in the policies. While the companies conceded that the leak was accidental, they disputed that it was sudden because the diesel had likely been seeping into the ground for months before it was discovered.

The dispute ended up in Nova Scotia Supreme Court, where Justice Robert Wright ruled in favour of the municipality.

The insurance companies appealed. But in a decision released Thursday, the Nova Scotia Court of Appeal upheld Wright's ruling.

"In my view, the reason for the use of both 'sudden' and 'accidental' in the decontamination coverage is to include the element of abruptness and to ensure the exclusion of intentional acts," Chief Justice Michael Wood wrote for the three-member appeal panel.

"The ordinary meaning of 'sudden and accidental' is something that is abrupt, unexpected and unintentional."

HRM also awarded costs

The justice went on to note: "The Insurers argue there is a temporal element to the phrase 'sudden and accidental' and coverage is limited to contamination which results from an event of short duration.

"They do not explain how long this must be but argue it would be brief and, in any event, not extend to the period between January and April 2014."

The court not only sided with HRM but awarded it costs of $2,500.

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