Case - Clark Wilson LLP

Kruger Products Limited v. First Choice Logistics Inc. Page 30
[60] With respect, it appears the trial judge erred in failing to apply the trilogy and
North Newton, among other authorities, to the WMA. Paragraph 17A, like the
insurance clauses in those cases, went much farther than the terms of the receipt,
which contained no relevant covenants regarding insurance. Paragraph 17A
required Scott to maintain “insurance of its property and inventory within the
warehouse” and to name FCL as an additional insured under this “primary
coverage”. The terms of the agreement itself were to prevail over those in Appendix
C in the event of a conflict.
[61] Assuming that the question remains one of interpretation, I acknowledge
that some of the decided cases are difficult to reconcile on the question of
what wording is necessary for the “covenant to insure” principle to result in
the barring of a subrogated claim. (See the online article by Mr. Nigel Kent,
Tort Immunity: Covenants to Insure and Waivers of Subrogation,
www.cwilson.com/publication/insurance/tort-immunity.pdf.) Mr. Kent notes in
particular a short oral judgment of this court delivered in April 1980 in Leung
v. Takatsu and reported at [1992] 3 W.W.R. 129. The better view seems to be,
however, that the insertion of a covenant to insure (which was not present in Rose
v. Borisko) on the part of a bailor or landlord is generally regarded as intended for
the benefit of the bailee or tenant. The wording of para. 17A in this case is not
identical to that of any of the cases to which we were referred, but is clearly
analogous to the wording in cases in which subrogated claims were disallowed. As
the Court stated in North Newton, “where there is in a lease a covenant by a landlord
[in this case bailor] to insure, the tenant [in this case warehouser] should benefit
from it unless there is something inconsistent with such a result contained in the
lease document [here the WMA].” (At para. 33.)
2013 BCCA 3 (CanLII)
[62] I see no inconsistent wording in the WMA, and indeed the parties’ express
acknowledgement that insurance obtained under para. 17A would “respond as
primary coverage” strengthens the case for tort immunity on FCL’s part. I conclude
that Scott’s obligations under para. 17A were clearly intended for the benefit of FCL.