The Court, in holding that the insurer had a duty to defend, found that the alleged continuing corrosion was property damage to someone other than the insured. Furthermore, the plaintiff’s claim clearly included a claim for compensatory damages, for physical injury to tangible property, and for loss of use of that tangible property.

ING Insurance Co. of Canada v. A.M.L. Painting Ltd., [2006] N.S.J. No. 268, Nova Scotia Supreme Court

The plaintiff experienced corrosion of its facilities due to the alleged failure of a paint system. The plaintiff commenced an action against the suppliers and applicators of the paint system. The defendant, AML Painting Ltd. (“AML”), one of the applicators of the paint system, was insured under a CGL policy. The insurer sought an order that it did not owe a duty to defend or indemnify AML.

The Court was critical of the approach taken by the Ontario Court of Appeal in Alie v. Bertrand & Frere Construction Co., [2002] O.J. No. 4697, in its analysis of what constitutes “property damage”. The Court in Alie, supra, had stated, in discussing the insuring provision and definition of property damage, that CGL policies are not performance bonds or intended to cover the cost of repairing or replacing the insured’s defective work product. The Court in the case at bar stated that such a general proposition could only flow from an analysis of the entire policy, and was still subject to the actual wording of the individual policy.

The Court found that the alleged continuing corrosion was property damage to someone other than the insured. Furthermore, the plaintiff’s claim clearly included a claim for compensatory damages, for physical injury to tangible property, and for loss of use of that tangible property. The court held that the insurer had a duty to defend AML.

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