Ontario Court of Appeal Outlines the Requirements of Causation Analysis in Denial of Coverage Scenarios
Green Rise Foods Inc. v. N.V. Hagelunie, 2026 ONCA 334
Reading time: 5 minutes (approx.)
By: Hayley Gardner
Green Rise Foods Inc., the Plaintiff / Appellant in this action, is an agricultural company that grows greenhouse tomatoes. After purchasing a large operation in 2021, Green Rise took out a greenhouse horticultural policy of insurance issued by the Respondent Insurer, N.V. Hagelunie. In these greenhouse operations, boiler machines are used to produce heat and carbon dioxide for the crops. The boilers also produce carbon monoxide as a byproduct, so they are equipped with a monitor to detect if the carbon monoxide levels exceed acceptable limits within the greenhouse.
Shortly after purchasing the greenhouse operation, Green Rise observed signs of damage to its tomato crops. Upon investigation, it was determined that excessive amounts of carbon monoxide were being released into the greenhouse by a malfunctioning boiler. The high levels of gas had not been detected earlier because the boiler’s monitor had also malfunctioned. As a result, Green Rise lost 23 acres of poisoned tomato plants.
Green Rise made a claim to the Insurer for the loss of the tomato plants. In the greenhouse horticultural insurance policy, there was a coverage exception for loss caused by “machinery breakdown”, which was defined as “accidental loss as a result of inherent vice and / or any other internal cause” to any machine or equipment. The policy also contained standalone exclusions for loss caused by machinery breakdown, and loss caused by exhaust gas or other pollution. The Insurer denied Green Rise’s claim, citing the machinery breakdown exception and the exhaust gas exclusion. Green Rise subsequently launched an action for damages arising from the Insurer’s denial, then brought a motion for partial summary judgement.
The motion judge concluded that loss was caused by the excessive carbon monoxide levels, which in turn was caused by the boiler malfunction and had gone undetected due to the broken monitor. He concluded that the loss was excluded by the exhaust gas exclusion or, in the alternative, the machinery breakdown exception, and the motion was dismissed. The Ontario Court of Appeal, however, found that the motion judge’s analysis contained several major flaws.
First, the motion judge erred by declaring the carbon monoxide levels to be the “direct cause” of the loss without completing a proper causation analysis. Justice Roberts explained that, because there were a series of potentially causal events, the motion judge was required to determine what was the actual effective cause or causes of the loss by employing a chain of causation or concurrent cause analytical framework. The motion judge had erroneously focused on the cause that was closest in time, rather than the “proximate cause”, or the actual, effective cause of the loss.
Second, he erred by failing to properly address the issue of who bore the onus of proof at each step in the coverage analysis. The motion judge had discussed and analyzed the machinery breakdown and exhaust gas exclusions without ever directly addressing the issue of which party bore the onus of proving that the exclusions did or did not apply.
Finally, the motion judge also failed to make the necessary factual findings about what actually caused the greenhouse’s boiler and monitor to malfunction. Even having determined that carbon monoxide was the cause of the loss of the plants, it was still relevant to the operation of the exclusion clauses to determine what had actually caused the boiler and monitor to malfunction in the first place. This was a factual determination that the motion judge failed to address.
The Court of Appeal ultimately concluded that the causation analysis constituted a genuine triable issue, and the action was remitted for a new trial.
Link: 2026 ONCA 334 (CanLII) | Green Rise Foods Inc. v. N.V. Hagelunie | CanLII
