A dispute arose over the application of an indemnity clause in a contract between a golf tournament host and golf course owner. The plaintiff was injured in a golf cart accident. When the indemnity clause was read as a whole, it obliged the golf tournament host to indemnify the golf course owner for the golf course owner's own negligence.

[2014] O.J. No. 2285

2014 ONSC 2866

Ontario Superior Court of Justice

F.L. Myers J.

May 12, 2014

The plaintiff was a guest at a golf tournament hosted by Canadian Litigation Counsel Inc. ("CLCI"). The plaintiff was allegedly injured when the driver of the golf cart in which the plaintiff was a passenger lost control while driving down a steep hill. The driver and the plaintiff jumped out of the golf cart resulting in plaintiff's injury. The plaintiff commenced an action against the driver and the golf course owner in negligence. The golf course owner claimed over against CLCI seeking to be indemnified under the terms of the agreement by which CLCI booked the tournament. The relevant clauses of the contract are as follows:

CUSTOMER IS LIABLE FOR ALL DAMAGE CAUSED BY CUSTOMER AND/OR THEIR GUEST(S)

The Customer and/or their guest(s) agree to hold Clublink Corporation and its officers and employees free and harmless from any damage or claims of any nature that may arise from or through the use of a golf cart.

It is the Customer/s and/or their guest(s) responsibility to fully understand the safe operating instructions of the golf cart and to return it immediately following completion of the round of golf in as good condition as was received.

CLCI argued that the indemnity clause only applied only to damage to the golf course owner's property by CLCI and its guests, particularly damage to golf carts. However, the Court found that the indemnity clause was very broadly drafted and by its express terms, it applied to more than just damage caused by guests to the golf course owner's property. The Court found that if all that was encompassed by the indemnity clause was CLCI paying for damage caused to golf carts, then the words "or claims" would be surplusage. Further, damage caused "from or through the use of a golf cart" grammatically means more than just damage to the golf cart itself. All of the words used in the agreement must be considered to determine the intention of the parties. Accordingly, the Court concluded that the indemnity clause obliged CLCI to indemnify the golf course owner for claims by third parties (i.e., guests) for personal injury associated with driving and use of golf carts.

In the alternative, CLCI argued that the indemnity clause could not require CLCI to indemnify the golf course owner for its own negligence without expressly saying so. CLCI relied on ITO-Int'l Terminal Operators v. Miida Electronics, [1986] 1 S.C.R. 752, for the proposition that a clause exempting a person from liability will not be held to include an exemption from claims of negligence unless negligence is expressly mentioned in the clause or there is no other possible interpretation of the clause. The Court found that ITO-Int'l does not require that exemption clauses must always be interpreted to exclude negligence unless there is no other possible interpretation. Instead, ITO-Int'l prescribes an approach or presumption to guide interpretation when the intentions of the parties from the words they have used are in doubt. The Court found that the intentions of the parties in this case were not in doubt. According to the indemnity clause, CLCI undertook to indemnify the golf course owner from any "claims of any nature that may arise from or through the use of a golf cart." The most obvious claims are personal injury claims arising out of accidents in which the golf course owner's liability is necessarily tortious. The Court noted that while the title of the indemnity clause could be seen to suggest a limitation of liability to damage caused by guests, the wording actually used carries with it claims made against the golf course owner in tort in connection with the use of the golf cart. To hold otherwise would undermine the business rationale of the indemnity clause to allocate the risk of safe operation of golf carts to CLCI by excluding the dominant type of claims one would expect to see arise from or through the use of a golf cart and leave the indemnity clause with virtually no application. As a rseult, the golf course owner was granted summary judgment in the third party claims.