Eastway Tank's insurance broker defends itself against company's $14.4 million claim

Eastway Tank’s longtime insurance brokers says it provided business interruption coverage to the company based on financial information supplied by its officials.

Published Apr 01, 2024 • Last updated 9 hours ago • 3 minute read

Emergency crews work at Eastway Tank in Ottawa in January 2022. In a lawsuit, Eastway Tank contends the Gifford Carr Insurance Group failed to ensure the company was sufficiently insured for the two-year business interruption that followed a devastating explosion inside the firm’s Merivale Road plant. Photo by Tony Caldwell /Postmedia

Eastway Tank’s longtime insurance broker says it provided business interruption coverage to the company based on the financial information Eastway supplied.

In a statement issued Monday, Gifford Carr Insurance Group president Matthew Carr suggested any shortfall in Eastway’s business insurance coverage was the fault of the company itself.

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“Eastway’s business interruption insurance was calculated based on the financial information shared by the client,” Carr said. “Based on what was disclosed by Eastway, the client had sufficient business interruption coverage.”

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Carr issued his statement Monday after the firm’s lawyers filed a statement of defence in response to a $14.4 million lawsuit brought by Eastway Tank.

In that lawsuit, filed in January, Eastway Tank contends the Gifford Carr Insurance Group failed to ensure the company was sufficiently insured for the two-year business interruption that followed a devastating explosion inside the firm’s Merivale Road plant.

The Jan. 13, 2022 explosion killed six Eastway employees, and destroyed the plant where the company built, repaired and serviced tanker trucks. Some of those tanker trucks were used to carry fuel.

In his statement, Carr said the Gifford Carr Insurance Group is confident “that our team was diligent in the delivery of our professional services.”

“Eastway’s insurance coverage never lapsed,” Carr said, noting the company’s commercial insurance policy was renewed on Dec. 25, 2021 and was in place when the explosion tore apart the repair shop three weeks later.

In its lawsuit, Eastway said the firm lost $12.9 million because of what it alleges was the company’s “underinsurance” at the time of the workplace accident. Eastway said it only became aware of the problem when it began to file insurance claims after the explosion.

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The lawsuit contends the insurance broker’s agent, Kevin O’Donoghue, made no effort to warn Eastway about the “pervasive and serious problem” of underinsurance among commercial property owners.

The lawsuit alleges Eastway owner Neil Greene was in discussions with O’Donoghue about the company’s policy renewal when the explosion occurred. According to the lawsuit, the insurance renewal documents arrived by email one day later.

None of the allegations have been proven in a court of law.

Carr said that while Eastway’s insurance was renewed on Dec. 25, 2021, the paperwork was still being finalized in early January. Such an approach, he said, is “a typical process for these kinds of renewals.”

Carr expressed sympathy for the victims of the explosion and their friends, families and co-workers. “We regret that this legal proceeding has shifted focus away from the victims and their families who have endured so much as a result of this tragic event,” he said.

The latest development in the lawsuit comes as Greene is to appear in court Friday to answer to three provincial health and safety charges laid against the company and its owner.

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The charges were laid under Ontario’s Occupational Health and Safety Act (OHSA). OHSA charges are not criminal, but individuals charged under the act can be jailed for up to one year and fined as much as $100,000. Corporations can be fined up to $1.5 million.

Eastway employees were just resuming work after lunch when a tanker truck exploded in the main shop.

The blast triggered a massive fire that took four and a half hours for firefighters to bring under control and left six people dead: Matthew Kearney, 36, a service supervisor and calibration technician; electrician and airplane engineer Etienne Mabiala, 59; welder and Algonquin College graduate Kayla Ferguson, 26; electrician Danny Beale, 29; Russell McLellan, 43, Eastway’s plant manager; and Rick Bastien, 57, a mechanic and welder.

It was among the worst workplace accidents in Ontario during the past 50 years.

Andrew Duffy is a National Newspaper Award-winning reporter and long-form feature writer based in Ottawa. To support his work, including exclusive content for subscribers only, sign up here: ottawacitizen.com/subscribe

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