This case was heard in the Supreme Court of Nova Scotia.

Breton Petroleum Limited sold an oil tank and installed it on a residential property. Roughly six years later, the residents noticed a fuel oil leak on the property, and an investigation determined that the leak was the result of a fractured “elbow” under the oil tank. The residents sued Breton Petroleum for breach of contract and negligence.

Harbour Petroleum was one of a number of underwriters of an environmental insurance policy that Breton Petroleum held with the Aviva Insurance Company ("Aviva"). The underwriters began by defending Breton Petroleum against the claims for breach of contract and negligence, but they brought an action against the Aviva, arguing that the company should reimburse the costs paid to date and defend Breton Petroleum from that point on. In turn, Aviva argued that its insurance policy with Breton included a clear and unambiguous exclusion of liability clause that excluded its liability for any pollution claims.

After considering whether the exclusion of liability clause applied to the equipment that fractured and caused the spill, the Court concluded that the insurance contract between Aviva and Breton was clear and unambiguous, and that because it was clearly intended to exclude all liability for pollution, Aviva could not be held liable in this case.

View the Decision on CanLII: https://www.canlii.org/en/ns/nssc/doc/2014/2014nssc200/2014nssc200.html

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