CITATION: Alitalia v. 1791949 Ontario Limited, 2015 ONSC 6890
DIVISIONAL COURT FILE NO.: 28/15 DATE: 20151109
ONTARIO SUPERIOR COURT OF JUSTICE DIVISIONAL COURT
BETWEEN:
ALITALIA – COMPAGNIA AEREA ITALIANA S.p.A. doing business as ALITALIA S.p.A.
Plaintiff by Defendant’s Claim/Appellant
– and –
1791949 ONTARIO LIMITED operating as TORONTO GROUND AIRPORT SERVICES
Defendant by Defendant’s Claim/Respondent
Andrew W. MacDonald, for the Appellant
Eric J. Adams, for the Respondent
HEARD at Toronto: October 2, 2015
M.A. SANDERSON J.
REASONS FOR DECISION
[1] Alitalia-Compagnia Aerea Italiana S.p.A. doing business as Alitalia S.p.A. (“Alitalia”) appeals from the judgment of the Small Claims Court dated December 19, 2014, dismissing its Claim against 1791949 Ontario Limited operating as Toronto Ground Airport Services (“TGA Services” or “TGA”).
The Parties
[2] The plaintiff Alitalia is an international commercial air carrier that is licensed to operate international flights in Canada, including at Pearson International Airport.
[3] The defendant TGA provides ground services, including exclusive wheelchair services for Alitalia, at Pearson International Airport.
Background
[4] The plaintiff Anna Spota (“Spota”) brought a claim in Small Claims Court against both Alitalia and TGA for damages that she alleged she suffered on August 28, 2011, in an accident involving a wheelchair at Pearson International Airport.
[5] The matter proceeded to trial.
[6] On the first day of the trial, Spota’s claim was dismissed on the consent of all parties on a without costs basis.
[7] Alitalia’s claim against TGA for damages amounting to the amount of Alitalia’s legal expenses of defending Spota’s claim proceeded. (Alitalia had waived the excess over $25,000 to stay within the jurisdiction of the Small Claims Court.)
[8] Alitalia claimed that under the provisions of its Services Agreement with TGA, TGA had contracted to pay Alitalia’s legal costs to defend Spota’s claim.
[9] The relevant provisions of the Services Agreement are as follows:
Subparagraph 1.3: Alitalia “shall not perform [any wheelchair services] using its own forces except in circumstances where [TGA] has failed to a material degree” in providing the Services “and then, only to the extent of that particular instance of failure and only to the extent required to comply with its legal obligations to [Alitalia’s] passengers”. [Emphasis added]
Subparagraph 5.3: Subject to Sub-Paragraph 5.5 below and Article 6.8 of the Main Agreement relating to the Carrier’s cargo, the Handling Company [TGA]shall defend, indemnify and save the Carrier harmless from and against all claims, demands, losses, costs, damages, actions, suits, or proceedings by whomever made, brought or prosecuted (including the Carrier) and to the extent arising out of or related to the performance or non-performance of the Services or any act or omission in relation to this Agreement, any breach of this Agreement, willful misconduct or negligent acts or omissions of the Handling Company, and any other person for whom the Handling Company is responsible at law, including any alleged infringement or violation of any intellectual property right and including any claims, demands, losses, costs, damages, actions, suits or proceedings alleging any of the foregoing, whether ultimately proven or note. [Emphasis added]
[10] At the trial, the parties filed an Agreed Statement of Facts and a joint document brief containing the following:
The Agreement
The Greater Toronto Airports Authority (“the GTAA”) is responsible for the management, operation and maintenance of Toronto Pearson International Airport.
In 2009, the GTAA selected TGA Services as the third party service provider authorized to provide wheelchair services and electric vehicle passenger surrey services to passengers of designated air carriers operating at Pearson Airport. The GTAA and TGA Services entered into a three-year agreement commencing May 1, 2009.
Pursuant to the GTAA-TGA Services agreement, TGA Services entered into “Carrier Agreements” with each carrier identified in a list of designated air carriers.
Alitalia was one of the carriers designated by the GTAA. Alitalia was required to enter into a Carrier Agreement with TGA Services.
The Agreement is a standard form of service agreement. Alitalia had no part in drafting and may not alter any of its provisions.
Spota’s Allegations
Spota travelled on Alitalia flight AZ651 on August 28, 2011 from Toronto to Italy.
Passenger receipts completed by TGA Services confirm that TGA Services provided wheelchair service to Ms. Spota in advance of her flight. These receipts indicate that Ms. Spota was picked up by a TGA Services employee at 15:45 and dropped off by another TGA Services employee at 16:40 [See Tab “D” – TGA Services Spota passenger receipts]
There were 227 passengers (and two infants) on flight AZ651. In addition to Spota, there were seven other passengers on the flight requiring the same wheelchair service as she received [See Tab “E” – Alitalia Flight Departure Report]
Spota claimed she was injured after falling from a wheelchair before boarding the aircraft.
Both Alitalia and TGA Services made inquiries into Spota’s allegations. No incident report was filed by Alitalia, TGA, the GTAA or any other organization.
[11] Spota’s evidence at trial included the following:
A: I was waiting to get to the airplane, a woman came towards me, she pushed me and I fell.
A: A woman came, she pushed me, I fall down. I fell down and a wheelchair landed on my shoulders.
Q: Okay. Just think back for one minute. The person who pushed you from the waiting area to the door of the airplane, was that the same person as the one that caused you to fall?
A: Yes. She was wearing a green jacket.
[12] At trial, Ms. Marsha Reid (“Reid”) of TGA gave evidence that TGA’s employee, Curtis, picked-up Spota at kiosk 4. TGA’s employee, Satveer, then dropped Spota off at the gate. No other TGA employee handled Spota.
[13] Reid said that in some circumstances airline employees have pushed wheelchair passengers from the gate onto the airplane without asking permission from TGA. Alitalia employees wear green jackets and that TGA employees wear black blazers.
[14] The trial judge made the following findings of fact:
[13] Based on such evidence I conclude that:
(a) The alleged incident in issue occurred on the ramp between the gate and the entrance door to the plane;
(b) The person manually guiding the wheelchair on the ramp was wearing a green jacket;
(c) TGA personnel performing the Services at TIA wear black jackets;
(d) Alitalia personnel at TIA wear green jackets;
(e) A member of Alitalia personnel was in control of the wheelchair at the time of the alleged incident;
(f) If the alleged injuries to Spota did occur, I find that they occurred when Alitalia personnel had control of the wheelchair.
[15] The trial judge held that Alitalia had the onus to prove its claim. He noted that Alitalia had not presented any viva voce evidence and had chosen to rely solely on the ASF and the Services Agreement in support of its position that TGA was contractually bound to defend, indemnify and save Alitalia harmless in respect of any claim arising out of wheelchair services.
[16] In his Reasons, the trial judge wrote:
[15]…Alitalia’s position ignores the words in 5.3 about a claim “arising out of or related to the performance or non-performance of the Services” by TGA.
[16] In my view TGA’s contractual obligation to defend, indemnify and save Alitalia harmless is only triggered in the case of a claim “to the extent arising out of or related to the performance or non-performance [by TGA] of the Services or any act or omission [by TGA] in relation to this Agreement…” (Emphasis added)
[17] There was also no evidence and nothing in the ASF that TGA otherwise breached the Services Agreement.
[19] Any reasonable interpretation of 5.3 triggering an obligation of TGA to defend, indemnify and save harmless must involve the performance or non-performance by TGA of the Services. These obligations of TGA are not triggered by the negligence of others, including the negligence of Alitalia or Alitalia’s breach of the Services Agreement. Alitalia is specifically prohibited from providing any wheelchair services by subparagraph 1.3, except under specific circumstances set out in that same paragraph, for which Alitalia failed to provide any evidence.
[20] In this case, since I have found that Spota’s alleged injuries, if they did occur, occurred when a member of Alitalia personnel was in control of the wheelchair, the Spota Claim does not relate to the performance or non-performance of the Services by TGA and therefore does not trigger any indemnity of Alitalia by TGA.
[21] In my view the intent of the Services Agreement – and more particularly 5.3 – was to protect Alitalia in situations where Alitalia is made a defendant without any misfeasance, negligence or breach of the Services Agreement on its part. I find that there is no obligation expressed in the Services Agreement, and certainly not in 5.3, to defend, indemnify and save Alitalia harmless in respect of its own negligence or breach of the Services Agreement.
[22] It is equally clear to me that 5.3 is a contractual indemnification provision in a commercial contract and is not to be interpreted as a duty to defend in an insurance contract. This is certainly not a case of Alitalia being a named or added insured on TGA’s liability insurance.
[23] If Alitalia’s position were to be accepted in this case it would mean that Alitalia would be indemnified even for its own negligence and its own breach of the Services Agreement. However, it is clear that 5.3 is not to be interpreted in this fashion, as it is not an absolute obligation to defend, indemnify or save harmless.
[24] I therefore conclude that TGA is not liable to indemnify Alitalia in the circumstances of this case pursuant to 5.3 and the Service Agreement.
The Basis of Alitalia’s Appeal
Alitalia’s Submissions
[17] Counsel for Alitalia submitted that given the agreed facts, sub-Paragraph 5.3 of the Services Agreement required TGA to provide and pay for Alitalia’s defence of Spota’s claim. Under sub-paragraph 5.3, TGA was required to defend, indemnify and save Alitalia harmless from and against all claims, actions, costs, etc. that arise out of or relate to the provision of wheelchair services at the airport.
[18] Counsel for Alitalia submitted that the trial judge erred in law in holding that the indemnity provision in the Services Agreement did not oblige TGA to indemnify Alitalia for Alitalia’s own negligence. Since TGA was the exclusive third party provider of wheelchair services at Pearson International Airport and had a monopoly on the provision of wheelchair services, TGA was exclusively responsible for any Alitalia passenger needing wheelchair service from the check-in counter to the seat of the aircraft.
[19] Only trained and certified TGA Services employees were to have access to and control over wheelchairs so that passengers needing wheelchair assistance would be handled safely.
[20] The Court below erred in failing to interpret sub-paragraph 5.3 of the Services Agreement to mean that TGA assumed all the associated risk.
[21] Counsel for Alitalia submitted that the trial judge erred in law in holding that the indemnity provision in the Services Agreement did not oblige TGA to indemnify Alitalia for Alitalia’s own negligence did not create “an absolute obligation to defend, indemnify or save harmless”.
TGA’s Submissions
[22] Counsel for TGA submitted that Spota’s allegations as against Alitalia were in relation to Alitalia’s negligence in providing wheelchair assistance to the Plaintiff.
[23] The onus of proof was on Alitalia. Alitalia did not prove and there was no evidence at trial that TGA caused Spota’s loss.
[24] The protection afforded by an indemnity provision in a commercial contract is not an unqualified promise. Indemnity-for-defence-cost provisions in commercial contracts are not subject to the same interpretive principles as principles applied to insurance policies.
[25] The Ontario Court of Appeal in Maher v. Central Building Services Group Ltd., 2010 ONCA 415 and in The Great Atlantic & Pacific Company of Canada Limited v. Economical, 2013 CarswellOnt 16638, has made it clear that the interpretive principles applying to an “additional insured” certificate in an insurance policy differ from those applicable to ordinary commercial contracts.
[26] Maher, supra, is directly analogous to the case at hand. In that case, the plaintiff claimed against A&P, its cleaning contractor, CBSG, and CBSG’s subcontractor, Adis. The jury held that none of the defendants were negligent. A&P had met its obligations as an occupier.
[27] Following the trial of the main action, A&P sought to recover its defence costs in the main action from CBSG, pursuant to indemnity clauses contained in its contract for cleaning services with CBSG.
[28] The Ontario Court of Appeal held that the indemnity provisions, including the obligation to investigate and defend claims at its expense, only applied, if CBSG had caused or contributed to the plaintiff’s loss. Since the jury had held that CBSG had not caused or contributed to the loss, the Court held the indemnity provision in the commercial contract was inapplicable. The Court did not require CBSG to pay A&P’s defence costs.
[29] After the Court of Appeal decision was released in Maher, A&P then looked to CBSG’s liability insurer, Economical, for payment of defence costs under its insurance policy pursuant to the terms of an “additional insured” certificate. Hennessey J. held that A&P was covered as an additional insured. Economical was ordered to compensate A&P for its defence costs.
[30] Hennessey J. wrote:
… This indemnification [under the insurance policy] should not be confused with the indemnification sought on the basis of the contract between the parties … which was the subject of final determination by the Court of Appeal [in Maher]…
[31] The decision of Hennessey J. was affirmed by the Court of Appeal.
[32] Counsel for TGA submitted that there are good reasons for distinguishing “indemnity-for-defence-cost” cases from “additional insured” cases.
[33] In insurance cases, courts are aware of the unequal bargaining power involved in the negotiation of an insurance contract. Coverage is interpreted broadly and exclusions on coverage are interpreted narrowly.
[34] In dealing with commercial contracts, courts are reluctant to permit parties to shift to others the consequences of their own negligence by contract, except in the clearest of cases.
[35] In Walters v. Whessoe Ltd and Shell Refining Co. Ltd. (1960), [1968] 2 All ER 816, the House of Lords held:
It is well established that indemnity will not lie in respect of loss due to a person’s own negligence or that of his servants unless adequate and clear words are used or unless the indemnity could have no reasonable meaning or application unless so applied… It is now well established that if a person obtains an indemnity against the consequences of certain acts, the indemnity is not to be construed so as to include the consequences of his own negligence unless those consequences are covered either expressly or by necessary implication.
[36] On a similar note, Myers J. noted in Neely v. MacDonald, 2014 CarswellOnt 6326:
[T]he law’s reluctance to allow a party to shift the consequence of its own negligence has found its way into indemnity cases such as Potvin v. Canadian Museum of Nature and others cited by Rady J. in Harris v. Memorial Boys’ & Girls Club Inc.
[37] In Potvin v. Canadian Museum of Nature, 2003 Carswell Ont 1932, the Court considered an “indemnity-for-defence-cost” provision. The Museum rented space under a rental agreement containing an indemnity provision. The indemnification clause in the rental agreement read as follows:
The Renter shall indemnify and save harmless the Museum from and against any and all claims, damages, suits and actions whatsoever, including any claims for any personal injury (including death resulting therefrom) or any loss of or damage to property which arise out of or in connection with the entry onto and use of the Museum’s facilities on the date(s) specified in this agreement or which arise out of said event. If the Museum is made party to any litigation commenced by or against the Renter, the latter shall promptly indemnify and hold harmless the Museum and shall pay to the Museum all costs and expenses incurred or paid by the Museum in connection with such litigation…
[38] The plaintiff sued the Museum for an injury suffered after leaving the dinner, when using the Museum’s marble stair case. The Museum then sued Royal LePage for indemnity pursuant to the terms of the rental agreement.
[39] The Court held that the accident was not sufficiently proximate to Royal’s use of the premises to trigger the indemnity provision:
[T]he mere fact that the plaintiff was present on the premises to participate in Royal’s special event when injured, but the injury was otherwise not connected in a casual sense to the activity of the event, is not a sufficient connection to invoke the indemnification provision. The connection must be more “proximate” to Royal’s activity. I use the term “proximate” in the sense that the Shorter Oxford English Dictionary gives, namely, 2. Coming next in a chain of causation, agency, reasoning, etc. Unless an agreement clearly expresses an intent to transfer all of the occupier’s negligence liability to a renter, the indemnity will apply only to negligence with a casual connection to the renter’s use and activity.
[40] In the case at bar, the trial judge did not err in construing the indemnity provision contained in section 5.3 and in finding that section 5.3 did not protect Alitalia against its own negligence.
[41] Section 5.3 does not (either expressly or by necessarily implication) provide that Alitalia has coverage for claims arising from its own negligence or breach of contract.
[42] In the present case, there was no evidence that Spota’s accident was proximately caused by any act or omission of TGA.
[43] The trial judge held that Alitalia had control of the wheelchair at the time of the loss.
The Standard of Review
[44] The standard of review for issues of law is correctness. Housen v Nikolaisen 2002 SCC 33; findings of fact are not to be reversed except where the trial judge has made a palpable and overriding error; review for findings of mixed law and fact is on a spectrum between correctness and palpable and overriding error.
The Law Relating to Interpretation of Commercial Contracts
[45] In Sattva Capital Corp. v Creston Moly Corp. 2014 SCC 53, the Supreme Court of Canada specified that service contracts are to be read as a whole, given their ordinary and grammatical meaning, consistent with the surrounding circumstances known to the parties at the time of the formation of the contract. The Court noted that the meaning of the words is often derived from a number of contextual factors, including the purpose of the agreement and the nature of the relationship created by the agreement.
[46] In Sattva, the Court wrote:
As mentioned above, the goal of contractual interpretation, to ascertain the objective intentions of the parties is inherently fact specific. The close relationship between the selection and application of principles of contractual interpretation and the construction ultimately given to the instrument means that the circumstances in which a question of law can be extricated from the interpretation process will be rare.
Conclusion
[47] The trial judge, in considering the complete factual matrix of the contract a commercial contract, correctly concluded that the indemnity provision in s5.3 of the Services Agreement was not triggered on the facts of this case.
[48] The trial judge’s factual conclusions were reasonable. In reaching his factual conclusions, he made no palpable and overriding errors. There was evidence on which the trial judge could find that at the time of the alleged incident, an Alitalia employee was pushing the wheelchair.
[49] Alitalia did not prove that TGA caused or contributed to Spota’s damages.
[50] As the appeal is being dismissed on liability grounds, there is no need for this Court to resolve the damages issues raised by the appellants.
[51] The parties may make written submissions on costs not to exceed 3 pages, on or before November 20, 2015.
___________________________ M.A. SANDERSON J.
Released: November 9, 2015
CITATION: Alitalia v. 1791949 Ontario Limited, 2015 ONSC 6890 DIVISIONAL COURT FILE NO.: 28/15 DATE: 20151109
ONTARIO
SUPERIOR COURT OF JUSTICE
DIVISIONAL COURT
BETWEEN:
ALITALIA – COMPAGNIA AEREA ITALIANA S.p.A. doing business as ALITALIA S.p.A.
Plaintiff by Defendant’s Claim/Appellant
– and –
1791949 ONTARIO LIMITED operating as TORONTO GROUND AIRPORT SERVICES
Defendant by Defendant’s Claim/Respondent
REASONS FOR DECISION
M.A. SANDERSON J.
Released: November 9, 2015