Coverage – Policy Interpretation – Causation
In Green Rise Foods Inc. v. N.V. Hagelunie, 2026 ONCA 334 (CanLII),the Court of Appeal for Ontario considered a case involving a series of potential causes for an insured loss.
The Plaintiff, Green Rise Foods Inc., ran a commercial greenhouse operation. The greenhouses were heated by boilers. The boilers also produced carbon dioxide that was pumped into the greenhouse to speed up the growth of the tomatoes. There was a monitor to make sure that carbon monoxide levels coming from the boiler into the greenhouse were kept at a safe level. Both the boiler and the monitor malfunctioned.
The carbon monoxide levels spiked and the crop died. The insurer, N.G. Hagelunie, denied coverage and the motion judge upheld the denial on a Summary Judgment Motion, finding that the carbon monoxide was excluded as an “exhaust gas” or “pollution” under the policy, and in the alternative that the malfunction of the boiler and the monitor were also excluded as “machinery breakdowns”.
The Court of Appeal said that when there are multiple events in the chain of causation leading to a loss, or when there are several independent but concurrent potential causes of a loss, the Court must determine what, in substance, is the cause of the insured loss.
Although the language of “proximate cause” is used in some case law, this does not mean the last event, but the event that effectively caused the loss.
The Court held that it was factually necessary to determine the reasons for the malfunctions of both the boiler and the monitor and then determine whether those malfunctions, by themselves or concurrently with the carbon monoxide poisoning, were the effective cause or causes of the lost tomato crop.
The Court did not determine the effective cause because there were factual issues that needed to be determined at trial.
However, the Court said that the policy should be approached using this framework:
- Determine the effective cause or causes of the loss;
- Determine whether the losses fell within the grant of coverage;
- Then consider the exception to the grant of coverage for “machinery breakdown”;
- Then consider the exclusions for “exhaust gas” and “pollution”; and
- Then consider any exceptions to the exclusions.
There were many factual issues that needed to be determined on a more complete record, such as whether carbon monoxide could be an “exhaust gas” or a “pollutant” for the purposes of the policy. Therefore, the Court refused to grant summary judgment and said the matter needed to go to a trial.
This is an important case for any insurance professionals faced with possible concurrent causes of an insured loss and potentially overlapping exclusions.
This client update is provided for general information only and does not constitute legal advice. If you have any questions about the above, please contact the author, Tipper McEwan. Tipper is a partner in Stewart McKelvey’s advocacy group who practices in the areas of estate litigation, insurance, and commercial litigation.
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