Cadillac Fairview Corp. v. Olympia Sanitation Products Inc.

[2010] O.J. No. 3306

2010 ONSC 4309

Ontario Superior Court of Justice

G.P. DiTomaso

August 3, 2010

Cadillac Fairview operated the Promenade Mall. Olympia ran a cleaning service for the mall. On March 3, 2008 an individual named Divin slipped and fell at the mall. A statement of claim was issued in a slip and fall action on December 30, 2009 naming both Cadillac Fairview and Olympia (the "Action"). Cadillac Fairview requested that Olympia indemnify and assume the defence of Cadillac Fairview in the Action. Cadillac Fairview then brought an application for summary judgment against Olympia. The sole issue was whether Olympia was obligated to indemnify and assume the defence of Cadillac Fairview in the Action based on the terms of the contract between the parties.

Section 3.2.1(ii) of the cleaning contract required Olympia to maintain comprehensive general liability coverage to cover all losses arising from Olympia's execution of its obligations under the contract and further required that Cadillac Fairview be added as an additional insured under the insurance policy. Section 3.2.6 of the contract stipulated that Olympia must hold harmless and indemnify Cadillac Fairview for losses arising from Olympia's duties at the mall within the scope of the contract.

Cadillac Fairview argued that the thrust of the plaintiff's claim was that she slipped and fell due to Olympia's negligence in failing to clean, maintain and inspect the mall as obliged pursuant to the contract. Olympia submitted that it was not contractually obligated to insure or indemnify Cadillac Fairview for Cadillac Fairview's own negligence. Olympia further submitted that the statement of claim alleged facts which, if proved, would provide a basis for the Court to find Cadillac Fairview was liable, independently from Olympia.

The Court reviewed the pleadings and rejected Cadillac Fairview's argument that the underlying and true nature of the claim fell within the scope of the contract. The Court noted that there were allegations related to negligent design constituting an unusual danger and further allegations relating to disrepair which would not fall within the scope of the cleaning contract. The Court followed and adopted the reasoning of Belobaba J. in Atlific Hotels and Resorts Ltd. v. Aviva Insurance Co. of Canada, [2009] O.J. No. 2005 where the Court held that if the pleadings alleged facts which, if true, could possibly require the insurer to indemnify the insured on a particular claim set out in the pleadings, then the insurer is obliged to defend that particular claim. As a number of the allegations in the statement of claim in the case at bar fell outside the scope of the contract, the Court concluded that Olympia would not be obliged to assume the defence of Cadillac Fairview in the entire action. The Court noted that it was possible that the plaintiff's injuries occurred in manner that was totally unconnected to Olympia's responsibilities.

In the result, the Court dismissed Cadillac Fairview's motion for summary judgment and its cross claim against Olympia for defence and indemnity.