COURT OF APPEAL FOR ONTARIO

2014 ONCA 723

DATE: 20141021

DOCKET: C57122

Strathy C.J.O., Rouleau and Hourigan JJ.A.

BETWEEN

De Beers Canada Inc.

Plaintiff (Appellant)

and

Ootahpan Company Limited and 473464 Ontario Ltd., d.b.a. Topax Export Packaging Systems and R.L.P. Machine & Steel Fabrication Inc. and AMEC Americas Limited

Defendants (Respondents)

and

Firstbrook, Cassie & Anderson Limited, Ace Ina Insurance and

Aviva Canada Inc.

Third Parties (Respondents)

Shawn K. Faguy, for the appellant

Christopher R. Dunn and Joanna F. Reznick, for the respondents Ootahpan Company Limited and R.L.P. Machine & Steel Fabrication Inc.

Heard: October 9, 2014

On appeal from the judgment of Justice J. Patrick Moore of the Superior Court of Justice, dated April 30, 2013.

ENDORSEMENT

[1] The motion judge dismissed the appellant’s claims on summary judgment on alternate grounds: (a) the respondents could take advantage of the appellant’s insurance coverage as third party beneficiaries on the basis set out in London Drugs Ltd. V. Kuehne & Nagel International Ltd., 1992 CanLII 41 (SCC), [1992] 3 S.C.R. 299 and Fraser River Pile & Dredge v. Can-Dive Services Ltd., 1999 CanLII 654 (SCC), [1999] 3 S.C.R. 108; and (b) the contractual arrangements between the parties make it clear that the appellant’s policy of insurance was for the benefit of all those engaged in the appellant’s diamond mine project, on the principles expressed in Commonwealth Construction Co. v. Imperial Oil Ltd. Et al., 1976 CanLII 138 (SCC), [1978] 1 S.C.R. 317.

[2] We dismiss the appeal. In so doing, we do not find it necessary to address the third party beneficiary issue as the appeal can be addressed as a matter of contract interpretation and on settled authority.

[3] In interpreting the contractual arrangements between the parties, including their arrangements for insurance, we apply the principles of contract interpretation set out in Bell Canada v. The Plan Group, 2009 ONCA 548, 96 O.R. (3d) 81 at paras. 37-38. These include: (a) interpreting the contract as a whole, with a view to giving meaning to all its terms; (b) determining the intentions of the parties in accordance with the words they have used; (c) having regard to the factual matrix; and (d) interpreting the contract in a manner that accords with sound commercial principles and good business sense.

[4] The motion judge’s reasons demonstrate that he correctly applied these principles and his decision is entitled to deference: see Sattva Capital Corp. v. Creston Moly Corp., 2014 SCC 53, 373 D.L.R. (4th) 393.

[5] The contracts between the appellant and the respondents required the appellant to obtain insurance to protect it and its contractors and subcontractors against, among other things, risks of transportation in respect of property “whilst being transported on land”. The insurance was to include contractors and subcontractors as additional named insureds. It was also to include a waiver of subrogation against any entity connected with the project.

[6] These provisions can only be understood as an undertaking to obtain insurance for the benefit of the appellant’s contractors and subcontractors and a waiver of claims in respect of losses covered by such insurance: see St. Lawrence Cement Inc. v. Wakeham & Sons Ltd. (1995), 1995 CanLII 2482 (ON CA), 26 O.R. (3d) 321 (C.A.), leave to appeal to S.C.C. refused, [1995] S.C.C.A. No. 553. On their own, these provisions would be a defence to the claim advanced in this action, even if the appellant had not purchased the insurance.

[7] To complete the circle, the policy of insurance procured by the appellant, which underlies the subrogated claim being pursued here, provided that the insurer would acquire no rights of recovery expressly waived by the insured prior to the loss. This gave full effect to the appellant’s contractual undertaking.

[8] As the appellant has waived liability for losses covered by the policy of insurance, with the agreement of the insurer, the insurer has no right of subrogation.

[9] We do not accept the submission of the appellant that other provisions of the contract between the appellant and the respondents show a contrary intention. We agree with the motion judge that those provisions do not override the waiver of subrogation: see Fraser River, at para. 42. They are consistent with other responsibilities of the respondents, such as a duty of care in the performance of their work, a responsibility for liabilities not covered by the appellant’s insurance, and a responsibility for deductibles under the policies.

[10] Reading the contract as a whole, with a view to giving effect to all its terms and seeking harmony between those terms, the insurance and waiver provisions can be read in a manner consistent with the provisions referred to by the appellant. We agree with the respondents that the appellant’s interpretation of those provisions is unreasonable because it would strip the insurance and waiver provisions of all meaning. The interpretation advanced by the respondents and accepted by the motion judge promotes business efficacy and certainty in an important commercial project involving multiple parties. It is intended to avoid the sort of expensive, time-consuming and commercially disruptive litigation that has occurred here.

[11] For these reasons, the appeal is dismissed, with costs fixed at $14,000, all inclusive.

“G.R. Strathy C.J.O.”

“Paul Rouleau J.A.”

“C.W. Hourigan J.A.”```