Insurers must pay HRM for diesel spill at Dartmouth transit garage

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 April2014.

It was determined that a valve on an old underground fuel system had come open, allowing the fuelto 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 the leak was accidental, they disputed it was suddenbecause 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 upheldWright'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 HRMbut awarded it costs of $2,500.