Case - Clark Wilson LLP

More documents

Recommendations

Info

Kruger Products Limited v. First Choice Logistics Inc. Page 28 tenant to keep the Landlord indemnified with respect to any damage to the premises occasioned by the negligence of the tenant ... whereas there is no such provision in the leases in the T. Eaton case. I do not accept this submission. In my view para. 8(2) does not impose upon the tenant any greater liability for fire caused by its negligence than exists in the absence of such a provision ... ... This [omitted quotation from T. Eaton at 428] clearly indicates that even in the absence of a specific provision requiring the tenant to indemnify for damage caused by its negligence, there is no doubt as to the liability of the tenant for a fire caused by its negligence. I therefore cannot see how the presence of a provision such as para. 8(2) changes the effect of the landlord’s obligation to insure. I note that para. 8(2) does not ... purport to override the operation of the para. 8(1) [i.e., the covenant to insure]. In my view the practical effect of the T. Eaton case is that the presence in a lease of a covenant on the part of the landlord to insure for fire, unless a clear intention to the contrary is expressed, will result in the tenant being protected from liability for negligently caused fires. I do not regard para. 8(2) as expressing such a contrary intention. [At paras. 11-3; emphasis added.] 2013 BCCA 3 (CanLII) [57] Nor can I agree on a more general level that the application of the “covenant to insure” defence in the case at bar would “make meaningless” the warehouser’s obligation to maintain the warehouse premises to the standard specified in the Warehouse Receipt Act, or “impair” the duty of care owed to Scott as the owner of the goods. A similar argument was raised and rejected in Evans Products v. Crest Warehousing [1980] 1 S.C.R. 83. It did not involve insurance but concerned the validity of a clause in a bail agreement that limited the warehouser’s liability for loss or damage of the stored goods to $50 per package unless a higher value was declared by the owner. The warehouser’s negligence caused a fire that damaged the goods and the warehouser sought to rely on the limitation on its liability as a defence to the owner’s claim for damages. The owner argued that giving effect to this limitation of liability would “engender carelessness” on the warehouser’s part, thus contravening what was then s. 3(4)(b) of the Warehouse Receipt Act. (See now s. 2(4)(b).) Various American authorities were referred to in this regard, but the majority, per Mr. Justice MacIntyre, did not find them persuasive. In his words: It is clear, in my opinion, that a contractual limitation of liability does not impair the obligations to take care declared in s. 14 of the Act. That obligation is statutory and not subject to modification by private contract. Even if a limitation of liability did have the effect of inducing carelessness on
Kruger Products Limited v. First Choice Logistics Inc. Page 29 the part of the warehousemen it would not impair the obligation. It might very well impair performance but the obligation remains untouched and in the event of loss whatever the consequential damage the responsibility of the warehouseman must depend upon whether or not he met the obligation fixed upon him in s. 14. [At 93; emphasis added.] [58] In my view, the argument that an insurance clause such as para. 17A of the WMA would “impair” the warehouser’s standard of care contrary to s. 2(4) of the Warehouse Receipt Act is even weaker than the argument with respect to the limitation of liability clause discussed in Evans, given the specificity and importance of the insurance provisions. As well, as FCL argues in its factum, if the trial judge were correct, similar reasoning could apply in any case where a party was obliged to insure for its own negligence. I know of no authority that would suggest such a requirement should be regarded as contrary to public policy because it might encourage carelessness on the insured’s part. 2013 BCCA 3 (CanLII) Construction of Insurance Provisions and “Benefit” [59] Finally, I turn to the wording of para. 17A and the issue of “benefit”. I note that at para. 201 of his reasons, the trial judge acknowledged that the trilogy is generally recognized as standing for the proposition that in the context of a commercial lease, “a covenant to insure by a landlord should flow to the benefit of a tenant unless that result would be inconsistent with something in the lease itself.” (North Newton and Madison were cited for this principle.) The trial judge appeared to adopt, however, Scott’s contention that there was no language in the WMA suggesting an intention that the property insurance taken out by Scott should benefit FCL. (Para. 202.) In doing so, he focussed on the stipulation in the form of warehouse receipt that the warehouser was not an insurer of the goods and that it was the owner’s obligation to obtain insurance. Such clauses, he reasoned, are “simply a means of stipulating that the warehouser does not accept the risk of loss to goods which may arise other than as a result of its own fault.” As seen above, he cited Rose v. Borisko for the proposition that a “special relationship” must exist between the parties before the tort immunity principle will apply.
Page 1 and 2: COURT OF APPEAL FOR BRITISH COLUMBI
Page 3 and 4: Kruger Products Limited v. First Ch
Page 27: Kruger Products Limited v. First Ch
Page 31: Kruger Products Limited v. First Ch

Case - Clark Wilson LLP

Create successful ePaper yourself

Delete template?

Save as template?