Executive Summary: Key Legal and Evidentiary Issues

• The court was asked to interpret whether the removal of a fuel storage tank was a “voluntary removal” under a policy exclusion clause.

• The insurance policy excluded coverage for pollution incidents discovered during any voluntary removal of an underground tank.

• The plaintiff argued the removal was contractual and thus involuntary; the court disagreed, finding it was a freely assumed obligation.

• The policy’s wording was found unambiguous, negating the need to apply the contra proferentem principle.

• Removal pursuant to a commercial lease was deemed voluntary since it was not compelled by law or a governmental order.

• The court emphasized that voluntary contractual obligations are still voluntary for the purposes of policy interpretation.

Background and insurance coverage
Fleetway Fuels Inc. operated a refuelling station and held an environmental liability insurance policy with Liberty Mutual Insurance Company. The policy covered pollution incidents related to underground storage tanks (USTs), including cleanup and corrective action following confirmed releases of pollutants. However, the policy also contained Endorsement No. 10, an exclusion clause denying coverage for pollution incidents discovered during the "voluntary removal" of a UST.

In 2021, Fleetway entered into a commercial lease with the purchaser of its business. A condition of the lease required Fleetway, as landlord, to remove a 50,000-litre underground diesel tank. During removal of the tank, suspected hydrocarbons were discovered, leading to environmental remediation work. Fleetway subsequently filed a claim with Liberty Mutual for cleanup costs under the policy.

Insurer’s denial and the core legal dispute
Liberty Mutual denied the claim, relying on Endorsement No. 10, arguing the removal of the tank was voluntary and therefore excluded from coverage. Fleetway brought the matter before the Ontario Superior Court of Justice, seeking a determination under Rule 22 on whether the tank removal constituted a "voluntary removal" as contemplated by the exclusion.

Fleetway argued the removal was not voluntary because it was contractually required under the commercial lease. They contended the exclusion was ambiguous, and any ambiguity should be resolved in their favour using the principle of contra proferentem. Liberty Mutual countered that contractual obligations are still voluntary unless imposed by law or government directive, and that the policy’s wording clearly excluded coverage in this scenario.

Judicial analysis and policy interpretation
Justice MacNeil ruled in favour of Liberty Mutual. The court found that the term “voluntary removal” was not ambiguous. By entering into a lease that included an obligation to remove the tank, Fleetway undertook that responsibility of its own free will. The judge emphasized that there was no governmental or legal compulsion to remove the tank, and thus the act was indeed voluntary within the meaning of the policy exclusion.

The court also rejected Fleetway’s attempt to apply the contra proferentem principle, holding that the exclusion clause was clear and unambiguous. It stated that allowing insured parties to create obligations through private contracts and then claim them as involuntary for insurance purposes would undermine the plain meaning of policy exclusions and be commercially unreasonable.

Conclusion
The court held that the removal of the underground tank by Fleetway Fuels Inc. was a “voluntary removal” under Endorsement No. 10 of the policy, thereby excluding the pollution incident from coverage. The insurer’s denial of the claim was upheld. Fleetway’s action failed, and the parties were invited to make submissions on costs if they could not resolve the issue themselves.