COURT OF APPEAL FOR ONTARIO

DATE: 20000908

DOCKET: C29504

CARTHY, LASKIN and ROSENBERG JJ.A.

BETWEEN:

CANADIAN PREMIER HOLDINGS LTD. ) Alan L.W. D’Silva,

and CANADIAN PREMIER LIFE ) for the respondents

INSURANCE COMPANY )

Respondents )

• and - )

WINTERTHUR CANADA FINANCIAL ) Alexander D. Pettingill,

CORPORATION and THE CITADEL ) for the appellants

GENERAL ASSURANCE COMPANY )

Appellants )

) Heard: April 17, 2000

On appeal from the judgment of The Honourable Madam Justice Katherine E. Swinton dated March 10, 1998.

SUPPLEMENTARY REASONS

LASKIN J.A.:

[1] After the release of our decision, Mr. D’Silva, counsel for the respondents, wrote the court asking it to reconsider its decision. Mr. D’Silva stated that my reasons contained a “significant factual error” and contended that this error “goes to the heart of the Court’s reasons for decision”. The error is this: my reasons say that the insolvency of Les Coopérants Insurance Company took place after the closing of the share purchase agreement; in fact, the insolvency took place over two years before. I acknowledge having made this error in my reasons but it has no effect on my analysis or on the result.

[2] The trial judge held that s.4.2 of the agreement makes the appellants liable for all assessments calculated on premium income earned while The Citadel was in business. We disagreed with that interpretation. In this court’s opinion, the respondents are liable for all assessments for the years 1994, 1995 and, subsequently, whether or not those assessments were calculated on The Citadel’s premium income. As I said, at para. 12 of my reasons:

The CompCorp assessments are not a tax on previous income. They are levied to cover expenses in a particular year. The Citadel had no outstanding liability for assessments when the sale purchase agreement closed in January 1994.

The assessments levied in 1994 and 1995, even for the insolvency of Les Coopérants, were assessments to cover expenses in those years and are properly payable by the respondents.

[3] In our view, the wording of s.4.2 and the negotiations between counsel for the parties support this interpretation. Thus, the rationale for our decision is not affected by when the insolvency of Les Coopérants took place.

[4] Admittedly, para. 12 of my reasons contains the factual error referred to by counsel for the respondents. Paragraph 14 of my reasons says:

… the trial judge’s interpretation of s. 4.2 is not commercially reasonable because it fixes the appellants, who are no longer in the insurance business, with an ongoing and undetermined liability for five years in connection with insolvencies not known or contemplated at the time the agreement was made.

More accurately, the paragraph should have read:

… the trial judge’s interpretation of s.4.2 is not commercially reasonable because it fixes the appellants, who are no longer in the insurance business, with an undetermined liability for five years arising from insolvencies not known or contemplated at the time the agreement was made or arising from ongoing assessments for known insolvencies.

[5] As I indicated in para. 14, it makes commercial sense for the respondents, who are now in the business, to pay the ongoing assessments arising from the insolvencies of others in the industry. Indeed, the fact of the insolvency of Les Coopérants having taken place in 1991 strengthens the appellants’ position. The record shows that, in the negotiations toward the share purchase agreement, the respondents did not attempt to fix the appellants with liability for assessments in connection with the insolvency of Les Coopérants made after closing.

[6] I would not, therefore, change my May 11, 2000 decision.

Released: SEP 08 2000 Signed: “John Laskin J.A.”

JJC “I agree J.J. Carthy J.A.”

“I agree M. Rosenberg J.A.”