CITATION: Maher v. Central Building Services Group Ltd., 2010 ONCA 415
DATE: 20100609
DOCKET: C50002
COURT OF APPEAL FOR ONTARIO
Feldman, Gillese and Armstrong JJ.A.
BETWEEN
Bonita Maher and Michael Maher
Plaintiffs
and
The Great Atlantic & Pacific Company of Canada, Limited
Defendant (Appellant)
and
Adis Cleaning Services Ltd. and Central Building Services Group Ltd.
Defendants (Respondent)
Geoffrey D.E. Adair, Q.C., for the appellant
Alan L. Rachlin, for the respondent
Heard: January 13, 2010
On appeal from the order of Justice John deP. Wright of the Superior Court of Justice dated January 12, 2009, with reasons reported at 2009 724 (ON SC), [2009] O.J. No. 152.
Gillese J.A.:
OVERVIEW
[1] On July 2, 2004, at approximately 11:30 p.m., Bonita Maher and her son were grocery shopping at their local A&P grocery store in Thunder Bay, Ontario (the “store” or the “Thunder Bay store”). An individual pushing a floor cleaning machine came directly toward them without slowing down or appearing likely to stop. Ms. Maher moved out of the way and then she and her son moved to the area that the cleaning machine had passed over. Virtually immediately, they both slipped and Ms. Maher fell to the floor.
[2] Ms. Maher sued the store owner, The Great Atlantic & Pacific Company of Canada, Limited (“A&P”), for damages for the injuries she suffered as a result of the fall. She also sued Central Building Services Group Ltd. (“CBSG”), the company that A&P had hired to provide floor cleaning services for a number of its stores in Ontario, including the one in question. CBSG had subcontracted its responsibilities for cleaning the floors of the Thunder Bay store to Adis Cleaning Services Ltd. (“Adis”). Adis was also named as a defendant in Ms. Maher’s lawsuit.
[3] Ms. Maher’s case rested primarily on the “slip and fall” allegation. However, the claim also contained independent allegations of negligence and/or breaches of the Occupier’s Liability Act, R.S.O. 1990, c. O.2, on the part of each of the three defendants.
[4] A&P crossclaimed against CBSG and Adis.
[5] The trial of the main action was conducted with a jury. The jury found that A&P, CBSG and Adis met their obligations to Ms. Maher and the action was dismissed.[^1]
[6] The trial judge then heard evidence on A&P’s crossclaim against CBSG. By judgment dated January 12, 2009 (the “Judgment”), the crossclaim was dismissed.
[7] A&P appeals from the dismissal of its crossclaim against CBSG. It contends that certain indemnification provisions in the agreements between it and CBSG render CBSG responsible for all the costs that it incurred in defending the lawsuit, irrespective of liability on the part of CBSG. It says that the trial judge erred in interpreting the indemnity provisions otherwise.
[8] For the reasons that follow, I would dismiss the appeal.
THE CONTRACTUAL RELATIONSHIP BETWEEN A&P AND CBSG
[9] CBSG agreed to provide floor cleaning services for a number of A&P stores in Ontario, including the Thunder Bay store.
[10] In accordance with its usual practice, A&P then sent to CBSG, for signature, a cover letter and three standard form documents, Forms “A”, “B” and “C”. Only Forms “A” and “B” are relevant to the present action.
[11] On June 17, 2003, CBSG signed and returned the cover letter and standard form documents. It understood that signing the documents was a requirement of doing business with A&P.
[12] At trial, in addition to Form “A” and Form “B”, A&P relied on the Floor Contractor Protocol (the “Protocol”), which had been prepared by its health and safety department. CBSG acknowledged that the Protocol was the subject of an oral agreement between it and A&P.
[13] Paragraph 10 is the relevant part of the Protocol. It is contained in the part of the Protocol that is entitled “Insurance and Claims Management Requirements”. It reads as follows:
- The Contractor will accept full responsibility for, indemnify, hold harmless and reimburse [A&P] forthwith for any and all damages, interest and/or costs incurred by [A&P] associated with the handling of any customer or employee accident claim which was caused or contributed to by the contractor.
[14] “Contractor” is defined in the Protocol to include any subcontractors retained to perform floor maintenance. Thus, when the word “contractor” is used below, it refers to both CBSG and Adis.
[15] Form "A" is entitled “Continuing Indemnity”. The relevant portion of Form “A” reads as follows:
In respect of each product … or … service … delivered on the order of [A&P], [CBSG] does hereby agree to indemnify and hold harmless A&P ... in connection with ... any and all actions, … demands or any other types of claims alleging liability for purported personal injury ... (including, but not limited to, lost wages, direct and consequential damages, medical expenses, insurance expenses, any other types of fees, costs, expenses and any other types of out-of-pocket expenditures), and any other liabilities of any kind whatsoever (collectively, the “Claims”), arising out of or relating or referring in any way to ... the provision of such services … (the “Claims Indemnification Obligation”) ... [CBSG] understands and expressly agrees that it shall be required to fully satisfy the Claims Indemnification Obligation whether or not any of the Claims result, in whole or in part, from the negligence of A&P …
… [I]n addition to satisfying the Claims Indemnification Obligation defined above, [CBSG] shall indemnify and hold harmless A&P ... in connection with all attorneys’ fees and costs incurred by A&P in attempting to protect or enforce its rights under this Indemnity (the “Attorneys’ Fees Indemnification Obligation”). [CBSG] shall immediately assume the obligation of investigating and/or defending, at its sole expense and in a timely manner, each one of the Claims. A&P expressly reserves the right to retain counsel of its choice to represent it in connection with [such claims.] A&P's retention of such counsel shall be paid by [CBSG] to A&P in accordance with [CBSG]'s Attorneys’ Fees Indemnification Obligation.
[16] Form "B" is entitled “Continuing Public Liability”. It provides that:
In the event [CBSG] representatives, personnel, employees or agents (“representatives”) ... visit any premises of [A&P] … or … place thereon equipment or personal property … [CBSG] ... agree[s] to indemnify and save A&P ... from any loss or liability arising in any manner out of the presence of such equipment, personal property, or representatives on any part of such premises.
[CBSG] further agree[s] that [it] will undertake at its sole cost and expense, the defense of any such claim ... regardless of by whom or against whom it is made, provided prompt notice is given by A&P ... .
[17] For ease of reference, I will refer to the provisions in para. 10 of the Protocol, Form “A” and Form “B” as the “indemnification provisions”.
[18] In accordance with its understanding of its contractual obligations to A&P, CBSG provided A&P with a certificate of insurance each year. The certificates of insurance named A&P as an additional insured but only insofar as A&P’s liability arose “vicariously out of the negligent operation of [CBSG]”. A&P never rejected the certificates or suggested that the insurance that CBSG had obtained was inadequate.
THE REASONS FOR JUDGMENT AT TRIAL
[19] At trial, the parties took the following positions. A&P argued that through the indemnification provisions, CBSG assumed all responsibility for claims arising from cleaning operations and, therefore, A&P was to be indemnified for its costs of defending the action, regardless of liability.
[20] CBSG made two different submissions in support of its contention that each party should bear its own costs. First, CBSG argued that because allocation of litigation expenses is a matter for the court’s discretion, the court had the discretion to decline to enforce the indemnification provisions. Second, it submitted that the intent of the indemnification provisions was that CBSG was to reimburse A&P for expenses incurred as a result of the negligence of CBSG or those for whom it was responsible. As the jury found that neither CBSG nor Adis had been negligent, CBSG was not responsible for A&P’s costs of defending the action.
[21] The trial judge rejected CBSG’s first submission, noting that the indemnification provisions were not limited to an agreement about costs between the parties. He then turned to a consideration of those provisions.
[22] The trial judge described Form “A” as “far-reaching” and “onerous”. He interpreted it as requiring CBSG to indemnify A&P for any expenses it incurred in defending an action, even if the action was based on A&P’s negligence. In his view, Form “A” made CBSG “become A&P’s insurer with respect to claims arising out of the provision of cleaning services.”
[23] He viewed paragraph 10 of the Protocol quite differently. He described it as “the more common provision” in which CBSG’s obligation to reimburse A&P was limited to “expenses associated with the handling of any customer or employee accident claim which was caused or contributed to by the contractor”.
[24] The trial judge said that “[b]oth provisions are contained in the same document”.
[25] The trial judge found the intention of the parties was that expressed in para. 10 of the Protocol. He noted that this was sensible given that the interpretation argued for by A&P made CBSG liable for all costs of an action even where A&P was sued for its own negligence and no allegations of negligence were made against CBSG or its subcontractor.
[26] Accordingly, the trial judge held that the broad wording of Forms “A” and “B” was limited by para. 10 of the Protocol. He noted that para. 10 provides that CBSG would accept full responsibility for “damages, interest and/or costs” incurred by A&P for claims that were caused or contributed to by CBSG as the contractor and Adis as the subcontractor. He observed that para. 10 did not say that CBSG would accept full responsibility for “any and all claims for” damages, interest and/or costs incurred by A&P for claims “which it is alleged” were caused or contributed to by the contractor.
[27] The trial judge concluded that, as the jury found that neither CBSG nor Adis had failed to take such care as was reasonable in the circumstances, the claims were not for damages that had been caused or contributed to by CBSG or Adis. Accordingly, he dismissed A&P’s crossclaim.
THE PARTIES’ POSITIONS ON APPEAL
[28] Both parties take essentially the same positions on appeal as they did below.
[29] A&P says that when the indemnification provisions are considered as a whole, they show that the parties’ real intention was that CSBG would indemnify A&P in respect of claims made against A&P arising from allegations relating to CBSG’s provision of cleaning services, regardless of whether the allegations were also advanced independently against A&P and regardless of the outcome of any such claim. This interpretation, A&P submits, treats para. 10 of the Protocol as reflecting general concepts that yield to the more particular and detailed Form “A”, thus giving effect to the entire document. Further, the proposed interpretation takes into account A&P’s aim in advancing the specific language in Form “A”, which had to be acknowledged by signature on the part of CBSG, whereas para. 10 was merely part of the more general document relating to the duties of CBSG.
[30] CBSG says that although this matter is framed as one of contractual interpretation, in reality it is an appeal of a costs award. It submits that the courts have the discretion to make a costs order irrespective of any “hold harmless” or indemnification provisions. On this submission, CBSG asks this court to treat the order under appeal as an exercise of the court’s discretion in respect of costs and to refuse to give leave to appeal the order or, alternatively, to dismiss it on the basis that the result constitutes a proper exercise of the trial judge’s discretion.
[31] Alternatively, if the order is based on the indemnification provisions, CBSG asks the court to dismiss the appeal on the basis that the trial judge read the contractual documents as a whole and his interpretation reflects the parties’ intentions.
THE ISSUES
[32] The main issue to be decided on this appeal is whether the trial judge erred in his interpretation of the indemnification provisions.
[33] Before turning to this question, however, I will briefly address CBSG’s submission that the order below is a costs award and should be treated as such.
IS THE ORDER UNDER APPEAL SIMPLY A COSTS AWARD?
[34] The short answer to this question is “no”. The trial judge disposed of A&P’s crossclaim based on his interpretation of the indemnification provisions. He did not simply make a costs order in respect of the trial of the main action.
[35] Furthermore, in my view, the trial judge was correct when he rejected CBSG’s submission that A&P’s crossclaim could be disposed of by treating it as a matter of costs. A&P’s crossclaim sought recovery based on the indemnification provisions. The trial judge was obliged to decide the case he had before him, namely, whether A&P was entitled to recover based on those provisions. Moreover, the trial judge could not have decided the crossclaim based on the usual rules that govern costs because the indemnification provisions demonstrated that the parties had agreed, in advance of the litigation, how the monetary aspects of a claim for personal injury (including costs) were to be resolved. Accordingly, the crossclaim fell to be decided based on the contractual provisions between the parties. In the circumstances, the trial judge could not have ignored the indemnification provisions and decided the crossclaim as if he were making a costs order in respect of the main action.
DID THE TRIAL JUDGE ERR IN HIS INTERPRETATION OF THE INDEMNIFICATION PROVISIONS?
[36] Based on his interpretation of the indemnification provisions, the trial judge dismissed A&P’s crossclaim. I agree with the result but for different reasons than those given by the trial judge.
[37] In my view, in the circumstances of this case, it is unnecessary to decide how para. 10 of the Protocol should be interpreted in relation to Form “A”. As I will explain, neither provision leads to the conclusion that CBSG must reimburse A&P for the costs incurred in defending the present action.
[38] If para. 10 of the Protocol applies, CBSG is liable to reimburse A&P only if the contractor caused or contributed to the accident claim. On the findings of the jury, neither CBSG nor Adis caused or contributed to the claim with the result that CBSG is not liable to indemnify A&P.
[39] Pursuant to Form “A”, CBSG must indemnify A&P for claims arising out of CBSG’s provision of cleaning services. In the present action, there were claims against A&P separate and apart from those related to CBSG’s provision of cleaning services, based on occupier’s liability and independent claims of negligence. An example of a claim made against A&P based on occupier’s liability can be found in para. 4 (e) of the Statement of Claim in which it is alleged that A&P failed “to inspect the premises to ensure that they were safe for use and free from hazards”. An example of a claim in negligence against A&P that is independent of CBSG’s provision of cleaning services can be found in para. 4(c) of the Statement of Claim in which it is alleged that A&P failed to “exercise reasonable care and attention for persons lawfully on the premises”.
[40] Even on the interpretation of Form “A” advocated for by A&P, these claims are not within its scope because they arise independently of the provision of cleaning services by CBSG. While it may be that an argument could be made that Form “A” required CBSG to bear responsibility for some part of the costs of A&P’s defence, that argument was not made in this court or below.
[41] I would add two further reasons as to why A&P’s crossclaim should be dismissed.
[42] The trial judge appears to have viewed the indemnification provision in Form “A” to be in conflict with para. 10 of the Protocol. He then appears to have preferred the language in para. 10 of the Protocol over that of Form “A”, in part because he viewed it as promoting a commercially reasonable result. To the extent that the trial judge followed an approach based on choosing between two apparently conflicting provisions, in my view, he fell into error.
[43] The jurisprudence makes it clear that where there are apparent inconsistencies in contractual provisions, the court should attempt to find an interpretation which can reasonably give meaning to each provision. In BG Checo International Ltd. v. British Columbia Hydro and Power Authority, [1993 145 (SCC)](https://www.minicounsel.ca/scc/1993/145), [1993] 1 S.C.R. 12 at p. 24, La Forest and McLachlin JJ., writing for the majority, stated:
Where there are apparent inconsistencies between different terms of a contract, the court should attempt to find an interpretation which can reasonably give meaning to each of the terms in question. Only if an interpretation giving reasonable consistency to the terms in question cannot be found will the court rule one clause or the other ineffective. In this process, the terms will, if reasonably possible, be reconciled by construing one term as a qualification of the other term. A frequent result of this kind of analysis will be that general terms of a contract will be seen to be qualified by specific terms - or, to put it another way, where there is apparent conflict between a general term and a specific term, the terms may be reconciled by taking the parties to have intended the scope of the general term to not extend to the subject-matter of the specific term. [citations omitted]
[44] On this approach, while at first blush the indemnification provisions appear to be in conflict, in my view, they can be interpreted as a whole rather than choosing between the two.
[45] I begin by considering the indemnification provisions in context. They exist as part of the agreement between A&P and CBSG under the terms of which CBSG agreed to provide floor cleaning services for A&P stores. Form “A” sets out, in general terms, CBSG’s obligation to indemnify A&P in respect of any claim that is referable to the cleaning services that CBSG (or Adis, as subcontractor) provides. The wording of para. 10 of the Protocol is more specific than that in Form “A”. Significantly, para. 10 limits CBSG’s indemnity obligation to claims that are “caused or contributed to” by the contractor.
[46] These two provisions can be read as being in conflict. However, following the approach mandated by BC Checo, they can be read together if the specific terms of para. 10 are seen as qualifying the general obligation that CBSG undertook by agreeing to Form “A”. Put another way, the two provisions can be reconciled by taking the parties to have intended that the scope of the general term in Form “A” is limited by the specific term in para. 10 of the Protocol. Thus, CBSG’s obligation to indemnify A&P for claims relating to the provision of floor cleaning services is limited to claims that were caused or contributed to by the contractor.
[47] Like the trial judge, I am of the view that this interpretation also best accords with commercial reality and provides a fair result because it leads to the conclusion that CBSG was liable only for its negligence and the negligence of those for whom it was legally responsible.
[48] Further, even if the indemnification provisions are found to conflict, A&P’s crossclaim should be dismissed.
[49] If the indemnification provisions are in conflict, they create an ambiguity in that they lead to two possible reasonable interpretations. Those two interpretations are the ones offered by the parties. On the one hand, A&P urges an interpretation that is largely based on Form “A”. That interpretation would lead to CBSG being responsible for all the costs and expenses incurred in defending the lawsuit, irrespective of liability. On the other hand, CBSG urges an interpretation that rests largely on para. 10 of the Protocol. On this interpretation, CBSG is liable to reimburse A&P for costs and expenses that A&P incurred in defending the action only if CBSG (or those for whom it was legally responsible) caused or contributed to the accident. As I have explained, I do not read the indemnification provisions to be in conflict but if they could not be read together, it seems to me that both of these interpretations are reasonably possible, thus creating an ambiguity.
[50] Where contractual provisions are found to be ambiguous, the court is entitled to consider extrinsic evidence to resolve the ambiguity: see Arthur Andersen Inc. v. Toronto-Dominion Bank (1994), [1994 729 (ON CA)](https://www.canlii.org/en/on/onca/doc/1994/1994canlii729/1994canlii729.html), 17 O.R. (3d) 363 (C.A.), at p. 372, leave to appeal to S.C.C. refused (1994), 19 O.R. (3d) xvi. In my view, the extrinsic evidence of the certificates of insurance provided by CBSG to A&P resolves the ambiguity in favour of the interpretation urged by CBSG. That evidence, it will be recalled, is that each year, CBSG gave A&P a certificate of insurance that named A&P as an additional insured but only insofar as A&P’s liability arose from CBSG’s negligence. The evidence further showed that A&P never rejected the certificates or suggested that the insurance was inadequate.
[51] Moreover, the indemnification provisions were standard forms that had been drafted by A&P. It will be recalled that Forms “A” and “B” were presented to CBSG for signature, as a condition of doing business. On the record, there was no opportunity for CBSG to modify the wording of those documents or the Protocol. Although the doctrine of contra proferentem is a doctrine of last resort,[^2] it is doctrine of general application that can apply to contracts authored by one party and which permitted the other party no opportunity to modify its wording.[^3] As A&P was the author of the documents in question, the doctrine of contra proferentem leads to the conclusion that the ambiguity created by the conflicting provisions is to be construed against A&P.
[52] As a final note, I see no significance in the fact that the trial judge described para. 10 of the Protocol as being in the “same document” as Form “A”. On a full reading of the reasons, it appears to me that the trial judge simply meant that both formed part of the agreement between CBSG and A&P. Understood in that way, the trial judge made no error.
DISPOSITION
[53] Accordingly, I would dismiss the appeal with costs to the respondent, CBSG, fixed at $5,000, inclusive of disbursements and G.S.T.
RELEASED: June 9, 2010 (“K.F.”)
“E.E. Gillese J.A.”
“I agree, K. Feldman J.A.”
“I agree, Rob P. Armstrong J.A.”
[^1]: The plaintiffs have appealed this decision in a separate appeal. [^2]: See Canadian National Railway Co. v. Royal and Sun Alliance Insurance Co. of Canada, 2008 SCC 66, [2008] 3 S.C.R. 453, at para. 33. [^3]: See Hillis Oil & Sales Ltd. v. Wynn’s Canada Ltd., [1968] 1 S.C.R. 57 at p.68.