Court of Appeal for Ontario

Citation: Lionhead Investments Inc. v. Petro-Canada, 2007 ONCA 592

Date: 2007-09-04

Docket: C45651

Before: Sharpe, Cronk and Lang JJ.A.

Between:

Lionhead Investments Inc.

Appellant (Plaintiff)

and

Petro-Canada

Respondent (Defendant)

Counsel:

Warren H.O. Mueller, Q.C. for the appellant

Robert L. Falby, Q.C. for the respondent

Heard: August 29, 2007

On appeal from the judgment of Justice Edward Belobaba of the Superior Court of Justice dated June 15, 2006.

ENDORSEMENT

[1] The appellant’s predecessor in title, a related numbered company, purchased real property from North America at a reduced price because of contamination. Petro-Canada, the party responsible for the contamination, agreed to remediate the property to a specified standard. If the specified standard were achieved, the property would still carry some “contamination stigma”. Petro-Canada also agreed to indemnify the purchaser for any loss arising from the contamination. The benefit of the reduced price was passed on to the appellant, which in turn sold the property at a profit, but for less than it would have made had the property never been contaminated. The appellant now sues Petro-Canada under the indemnity for damages for the reduced profit attributable to contamination stigma, an amount that, on the trial judge’s finding, corresponds more or less to the amount saved on the original purchase price.

[2] The appellant’s claim rests entirely on the indemnity agreement. When viewed in the light of the circumstances that existed at the time it was given, Petro-Canada’s agreement to indemnify the appellant’s predecessor in title for any loss arising from the contamination cannot be fairly interpreted to cover any loss attributable to diminution in value to the property for “contamination stigma”. Simply put, and as the trial judge found, the appellant has suffered no loss. It saved an amount on the purchase price because of contamination stigma. The property was purchased on terms under which the appellant could have no reasonable expectation that the property would ever be remediated to the point where the contamination stigma would be removed. The “loss” it now claims, as quantified by the trial judge, corresponds closely to the amount it saved on the purchase price.

[3] We cannot accept the appellant’s submission that we should interpret the indemnity agreement as if it amounted to an assignment to it of North America’s cause of action against Petro-Canada for contamination damages. It is clear from the record that North America did not assign that cause of action: indeed, North America sued Petro-Canada for those damages shortly after it sold the property and that action was subsequently settled for an amount close to that now claimed by the appellant. To allow the appellant’s claim would be to compensate the appellant for a loss it did not suffer and, it would appear, to require Petro-Canada to pay the appellant an amount it has already paid to North America.

[4] Accordingly, the appeal is dismissed. The dismissal of the appeal renders the cross-appeal moot and it is accordingly dismissed. The respondent is entitled to costs of these proceedings fixed at $22,346.24 inclusive of disbursements and GST.

“Robert J. Sharpe J.A.”

“E.A. Cronk J.A.”

“S.E. Lang J.A.”