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Kruger Products Limited v. First Choice Logistics Inc. Page 26 [53] These comments are consistent with many venerable English and American cases. The locus classicus is Waters et al. v. Monarch Fire and Life Assurance Co. [1843-60] All E.R. Rep 654 (Q.B.), where it was held that two insurance policies taken out by the plaintiff warehousers were not limited to the amount of their charges (for which they had a lien on the goods) but extended to the “whole amount of the loss.” The majority relied on an analogy to trust, given that the goods had been ‘entrusted’ to the bailee. Waters was adopted by the U.S. Supreme Court in Phoenix Insurance Co. v. Eerie and Western Transportation Co. 117 U.S. 873 (1886). More recently, the principle was affirmed in England in Hepburn v. A. Tomlinson (Hauliers) Ltd. [1966] 1 All E.R. 418 (H.L.), at 421 and in Petrofina (U.K.) Ltd. v. Magnaload Ltd. [1983] 3 All E.R. 35 (Q.B.), at 40-3, where the Court cited and agreed with Commonwealth. See also Nicholas Legh-Jones, John Birds, David C. Owen, eds., MacGillivray On Insurance Law, (10th ed., 2003) at §1-137; Norman Palmer, Palmer on Bailment (3d ed., 2009) at §1-060 and ch. 39 generally; and ch. 4 of N. Palmer and E. McKendrick, Interests in Goods (2 nd ed., 1998), by John Birds. 2013 BCCA 3 (CanLII) [54] Obviously in this case, the warehouser was subject to the “possibility of liability” under the WMA. I conclude that the trial judge erred in ruling that FCL did not or could not be said to have an insurable interest in the property that was destroyed by the fire. [55] Even if it were otherwise, this court has already held that the absence of an insurable interest given to a tenant under the landlord’s insurance policy is not determinative of the question of tort immunity. In North Newton, the lease in question provided expressly that no insurable interest would be conferred on the tenant under the policies of insurance to be carried by the landlord, and further that the landlord’s insurance would not cover any of the tenant’s property. Hall J.A. for the Court stated: In my opinion, the fact that no insurable interest is given to the tenant under the landlord's policy is not determinative. That issue was considered in the case of Amexon Realty Inc. v. Comcheq Services Ltd. (1998), 37 O.R. (3d) 573, 155 D.L.R. (4th) 661 (C.A.). That was a case in which, as in the case at bar, the landlord was required to insure and the tenant was obliged to
Kruger Products Limited v. First Choice Logistics Inc. Page 27 contribute to the premiums. The Ontario Court of Appeal held that the insurer could not pursue a subrogated claim against the tenant. Reference was made to the Supreme Court of Canada trilogy. On the question of insurable interest, Goudge J.A. said this at 576: It is true that the lease provides that the tenant has no insurable interest under the landlord's policy. While this provision would presumably preclude the tenant from asserting a claim for his own loss under that policy, it does not speak to the claim asserted by the appellant in this case. It is the bargain I have referred to rather than the tenant having an insurable interest under the landlord's policy that is the basis upon which this action is precluded. I agree with this reasoning. It does not appear to me that the clause stating the insurance of the landlord is not to cover property of the tenant has much relevance in the circumstances of this case. This case is concerned with damage to the building. [At paras. 36-7; emphasis added.] 2013 BCCA 3 (CanLII) I know of no reason in principle why similar reasoning would not extend to the bailment context or to the case at bar. Impairment of Standard of Care? [56] With respect to the trial judge’s policy concerns regarding the warehouser’s obligation to indemnify Scott for negligent acts, I must also, with the greatest of respect, disagree. First, I do not see any conflict between a general covenant to indemnify given by a warehouser (in this case, by FCL at para. 12 of the WMA), and insurance provisions such as para. 17A. Indeed one may see insurance covenants as a means of strengthening indemnification obligations, which alone are only as strong as the indemnifier’s particular financial circumstances. Furthermore, the obligation of a negligent warehouser to indemnify its bailor for breaches of its duty of care arises even without a provision such as para. 12. It would make no commercial sense to permit an indemnity provision to overwhelm or supersede an insurance provision such as para. 17A ‒ the “supervening covenant” discussed in T. Eaton. As was stated in Economical Mutual Insurance Co. v. 1072871 Ontario Ltd. [1998] 20 R.P.R. (3d) 154 (Ont. Ct. J. (Gen. Div.)), aff’d (1999) 9 C.C.L.I. (3d) 224: Counsel for the plaintiff further seeks to distinguish the T. Eaton case on the basis that para. 8(1) of the lease before me contains a provision requiring the
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