"Arising Out Of": Adding Another Definition To Your Contractual Terms Dictionary

In Sky Clean Energy Ltd. (Sky Solar (Canada) Ltd.) v. Economical Mutual Insurance Company,¹ the Ontario Court of Appeal analysed a common feature of insurance arrangements in development projects - the extension of insurance coverage to additional insureds. The Court of Appeal provided clarity regarding the meaning of "arising out of the operations" as part of an additional insured clause, a common phrase in many commercial agreements and contracts.

Factual Background

The appellant, Sky Clean Energy Ltd. ("Sky"), is a solar energy project developer. Sky contracted with Marnoch Electrical Services ("Marnoch") to have Marnoch install Sky's solar power system in two construction projects. Under their contract, Marnoch was only responsible for installing the solar power system that Sky designed, but it did help Sky with sourcing a new transformer supplier, Marcus Transformers of Canada ("Marcus"), when Sky's original supplier delivered the wrong type of transformer.