The case of Bartoline v Royal & Sun Alliance provides clarification of the legal meaning of the term "damages" in the context of insurance policies.
Facts
Pollutants entered two watercourses as a consequence of a fire at Bartoline’s premises. The Environment Agency used its statutory powers under the Water Resources Act 1991 to carry out emergency clean-up works to the watercourses, and sought to recover the cost of these works from Bartoline under the same statute. In addition, it served a works notice on Bartoline, obliging it to undertake certain clean-up works itself.
Bartoline made a claim under its public liability (PL) policy for its liability for the expenses incurred by the Environment Agency. Royal and Sun Alliance (RSA), Bartoline’s PL insurers, refused indemnity, stating that the expenses incurred did not fall within the scope of the insuring clause in the PL policy, which provided coverage for "legal liability for damages in respect of …damage to property… nuisance
