The defendants, Toronto Hydro and the City of Toronto, sought leave to issue third-party claims against the plaintiffs (a building owner and two tenants) and various former owners and property managers for contribution and indemnity following a fire in a hydro vault.
The plaintiffs opposed the motions, arguing that covenants to insure in their leases shielded them from liability to each other, rendering the third-party claims legally untenable under the Supreme Court's decisions in T. Eaton Co. and Giffels.
The court granted leave in part, allowing claims against parties in capacities not shielded by the insurance covenants (e.g., former owners, property managers), but dismissed the motions regarding claims against the landlord and tenant in their capacities governed by the leases.
The court also rejected the argument that covenants to insure should be treated as exclusion clauses subject to public policy exceptions.