Overview:
Kelly Panteluk Construction Ltd. (KPCL) appealed the summary dismissal of its application seeking a declaration that Lloyd’s Underwriters owed it a duty to defend under a course-of-construction liability insurance policy. The case arose from a $41 million lawsuit by Canadian Pacific Railway Company (CP Rail) against KPCL and others after a railway embankment project failure.

Legal Issues and Arguments:
KPCL argued that the trial judge:

• Misapplied legal principles by not assuming CP Rail’s allegations were true.

• Misapprehended the pleadings, failing to separate components of the embankment.

• Incorrectly shifted the burden onto KPCL to disprove policy exclusions.
  The insurer relied on policy exclusions, particularly the “Operations Exclusion” and “Project Damage Exclusion,” arguing the claims against KPCL were excluded.

Court Findings:
The Saskatchewan Court of Appeal dismissed the appeal. The court held that the exclusions barred coverage for claims relating to damage to the embankment and foundation soils, which were integral to the project. It found no error in the trial judge's interpretation of the insurance policy, the exclusions, or the pleadings.

Costs Awarded:
The court ordered costs in favor of Lloyd’s Underwriters but did not specify the exact amount in the judgment.