Appeal by the insured of a summary judgment dismissing its subrogated claim. The motion judge dismissed the action on the basis the defendants could take advantage of the insured's insurance coverage as third party beneficiaries, or alternatively, the parties' contractual arrangements made it clear that the insured's policy of insurance was for the benefit of all those engaged in the insured's project. The appeal was dismissed on the basis the contractual arrangement could only be understood as an undertaking to obtain insurance for the benefit of the insured's contractors and subcontractors and a waiver of claims in respect of losses covered by such insurance.

[2014] O.J. No. 4904

2014 ONCA 723

Ontario Court of Appeal

G.R. Strathy, P.S. Rouleau and C.W. Hourigan JJ.A.

October 21, 2014

The insured, a mining company, shipped a transformer to a yard for transfer onto a truck for delivery to its mine. The insured retained a company to provide logistics and personnel to help off‑load the transformer and another company to supply the crane operator for transferring the transformer. During transfer the transformer fell and caused significant property damage.

A subrogated action was commenced against the company that provided logistics and personnel and the company that supplied the crane operator.

The subrogated action was dismissed on summary judgment on the basis the defendants could take advantage of the insured's insurance coverage as third party beneficiaries and alternatively, the contractual arrangements between the parties made it clear the insured's policy of insurance was for the benefit of all those engaged in the insured's diamond mine project.

The insured appealed on the basis that other provisions in the contract between the insured and the defendants showed that the insured's policy of insurance was not for the benefit of all those engaged in the project.

The Court of Appeal dismissed the insured's appeal. The Court of Appeal did not find it necessary to address the third party beneficiary issue because the appeal could be addressed as a matter of contract interpretation and on settled authority. The Court of Appeal found that the contracts between the insured and the defendants required the insured to obtain insurance to protect it and its contractors and subcontractors against, among other things, risks of transportation in respect of property "whilst being transported on land". The insurance was to include contractors and subcontractors as additional named insureds and it also included a waiver of subrogation against any entity connected with the project. The Court of Appeal found that those provisions could only be understood as an undertaking to obtain insurance for the benefit of the insured's contractors and subcontractors and a waiver of claims in respect of losses covered by such insurance: St. Lawrence Cement Inc. v. Wakeham & Sons Ltd. (1995), 26 O.R. (3d) 321 (C.A.). The policy of insurance also stated that the insurer would acquire no rights of recovery expressly waived by the insured prior to the loss. Accordingly, the insurer had no right of subrogation.

The Court of Appeal did not accept the submission of the insured that other provisions of the contract showed a contrary intention. The other provisions were consistent with other responsibilities of the defendants, such as a duty of care in the performance of their work, a responsibility for liabilities not covered by the insured's insurance, and a responsibility for deductibles under the policies. The interpretation advanced by the insured would strip the insurance and waiver provisions of all meaning. As a result, the appeal was dismissed.