Emily Paslawski

The court granted partial summary judgment in favour of Western Surety Company on its claim for exoneration against the defendants.

The decision reviews the legal principles underpinning exoneration clauses in surety indemnity agreements, the appropriateness of partial summary judgment, and the application of these principles to the facts.

The court found that the exoneration claim was discrete and severable from indemnification claims, that there was no genuine issue requiring a trial, and that the defendants were jointly and severally liable to exonerate Western in the amount of $3,990,000.

Following the dismissal of the plaintiffs' action at trial, the defendant sought costs on a full indemnity scale pursuant to a contractual provision in the parties' agreement.

The plaintiffs argued that the provision did not apply to declaratory relief and did not explicitly state 'full indemnity'.

The court held that the contractual language allowing recovery of 'all reasonable costs' entitled the defendant to full indemnity costs.

However, the court declined to award costs for the defendant's U.S. counsel, finding their involvement was not reasonably required for the Ontario litigation.

The court awarded the defendant its Canadian counsel's fees and disbursements in full, totaling $2,192,609.12, finding the amount reasonable and proportionate given the high stakes of the commercial dispute.

The applicant sought to set aside an arbitral award and a costs award, and for leave to appeal, under sections 45 and 46(1)6 of the Arbitration Act, 1991.

The application alleged procedural unfairness, exceeding jurisdiction by the arbitrator, and insufficient/non-independent reasons.

The court dismissed the application, finding that the arbitration process was fair, the parties had ample opportunity to present their cases, the arbitrator did not exceed jurisdiction by not conducting a mediation (as the parties had moved to adjudication), and the reasons for the award were adequate and independent.