Liverpool & London & Globe Insurance v. Canadian General Electric Ltd.

Liverpool & London & Globe Insurance v. Canadian General Electric Ltd.

The trial judge correctly found on the evidence that no "explosion" occurred in the ordinary meaning of the policy term and that no operating imminent peril of explosion existed when avertive steps were taken; the loss was caused substantially by an uninsured chemical reaction and phenol corrosion, not by an insured peril or by justified avertive measures, so the insurer was not liable; appellate court erred in ordering a new trial on these issues.

Citation
[1981] 1 SCR 600
Parties
Defendants Respondents Appellants: Liverpool & London & Globe Insurance Co. Ltd.; Aetna Casualty & Surety Co.; Aetna Insurance Co. of Hartford; Canadian Indemnity Co.; Canadian Surety Co.; Commonwealth Insurance Company; Continental Insurance Company; Dominion of Canada General Ins. Co.; Eagle Star Insurance Company (of Canada); Employers’ Liability Assurance Corp. Ltd.; Federal Insurance Co. of New Jersey; Fireman’s Fund Insurance Co.; The General Accident Assurance Co. of Canada; General Security Insurance Co. of Canada; Glens Falls Insurance Co.; Great American Insurance Co., New York; Hartford Fire Insurance Company; Home Insurance Company; Insurance Company of North America; Maryland Casualty Company; National Employers’ Mutual General Insurance Assoc. Ltd.; Norwich Union Fire Insurance Society Ltd.; Orion Insurance Co. Ltd.; Pearl Assurance Co. Ltd.; Phoenix Assurance Co. Ltd. of London; Prudential Assurance Co. Ltd.; Reliance Insurance Co. of Philadelphia; Royal Exchange Assurance; St. Paul Fire & Marine Ins. Co.; Scottish & York Insurance Co. Ltd.; Simcoe & Erie General Insurance Co.; Sun Insurance Office Ltd.; The Travelers; United Provinces Insurance Co.; United States Fidelity & Guaranty Co.; United States Fire Insurance Co.; Zurich Insurance Company; Plaintiff Appellant Respondent: Canadian General Electric Company Limited
Court
Supreme Court of Canada
Jurisdiction
Canada
Judgment Date
11 May 1981
Procedural Posture
Insurance Appeal / Appeal to the Supreme Court of Canada From the Court of Appeal for Ontario; Final Judgment on Appeal
Outcome
Appeal allowed; order of trial judge restored; costs to appellants
Legal Topics
Policy Interpretation, Imminent Peril Doctrine, Definition of Explosion, Causation and Proximate Cause, Agency of Emergency Responders
Source Language
English
Insurance Law Contract Interpretation Civil Procedure Policy Interpretation Imminent Peril Doctrine Definition of Explosion Causation and Proximate Cause Agency of Emergency Responders

Case Brief

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Parties

Liverpool & London & Globe Insurance Co. Ltd.; Aetna Casualty & Surety Co.; Aetna Insurance Co. of Hartford; Canadian Indemnity Co.; Canadian Surety Co.; Commonwealth Insurance Company; Continental Insurance Company; Dominion of Canada General Ins. Co.; Eagle Star Insurance Company (of Canada); Employers’ Liability Assurance Corp. Ltd.; Federal Insurance Co. of New Jersey; Fireman’s Fund Insurance Co.; The General Accident Assurance Co. of Canada; General Security Insurance Co. of Canada; Glens Falls Insurance Co.; Great American Insurance Co., New York; Hartford Fire Insurance Company; Home Insurance Company; Insurance Company of North America; Maryland Casualty Company; National Employers’ Mutual General Insurance Assoc. Ltd.; Norwich Union Fire Insurance Society Ltd.; Orion Insurance Co. Ltd.; Pearl Assurance Co. Ltd.; Phoenix Assurance Co. Ltd. of London; Prudential Assurance Co. Ltd.; Reliance Insurance Co. of Philadelphia; Royal Exchange Assurance; St. Paul Fire & Marine Ins. Co.; Scottish & York Insurance Co. Ltd.; Simcoe & Erie General Insurance Co.; Sun Insurance Office Ltd.; The Travelers; United Provinces Insurance Co.; United States Fidelity & Guaranty Co.; United States Fire Insurance Co.; Zurich Insurance Company

Defendants Respondents Appellants

Canadian General Electric Company Limited

Plaintiff Appellant Respondent

Procedural Posture

Insurance Appeal / Appeal to the Supreme Court of Canada From the Court of Appeal for Ontario; Final Judgment on Appeal

Legal Issues

  1. 1 Whether the events constituted an "explosion" within the ordinary meaning of the policy term
  2. 2 Whether an "imminent peril" of explosion existed such that avertive actions by the insured produced recoverable damage
  3. 3 Whether damage was caused by an insured peril or by an uninsured chemical reaction and consequential corrosion

Ratio Decidendi

The trial judge correctly found on the evidence that no "explosion" occurred in the ordinary meaning of the policy term and that no operating imminent peril of explosion existed when avertive steps were taken; the loss was caused substantially by an uninsured chemical reaction and phenol corrosion, not by an insured peril or by justified avertive measures, so the insurer was not liable; appellate court erred in ordering a new trial on these issues.

Court Disposition

Appeal allowed; order of trial judge restored; costs to appellants

Orders

  • Appeal allowed
  • Order of the trial judge restored (Court of Appeal order for new trial set aside)