TransCanada Pipelines Limited sued Potter Station Power Limited Partnership for damages to its compressor station caused by land subsidence, relying on an indemnity provision in their agreement.
Potter Power's insurer, Commonwealth Insurance Company, brought a summary judgment motion arguing the indemnity only covered third-party claims, not first-party losses.
The motion judge dismissed the motion, finding the indemnity language covered direct damages.
On appeal, Commonwealth argued the judge failed to apply contra proferentem and failed to find the indemnity ambiguous.
The Court of Appeal dismissed the appeal, holding that the indemnity was unambiguous and clearly extended to direct damages suffered by TransCanada, making contra proferentem inapplicable.