Supreme Court of Canada

Consumers’ Gas v. Peterborough, [1981] 2 S.C.R. 613

Date: 1981-12-17

The Consumers’ Gas Company (Defendant) Appellant;

and

The Corporation of the City of Peterborough and Peterborough Utilities Commission (Defendants—Third-Parties) Respondents;

and

Gerard Fenn, Sandra Fenn, Candice Ann Fenn, by her next friend John Fenn, and the said John Fenn personally (Plaintiffs).

1981: December 10; 1981: December 17.

Present: Martland, Ritchie, Estey, Mclntyre and Lamer JJ.

ON APPEAL FROM THE COURT OF APPEAL FOR ONTARIO.

Negligence—Contribution and indemnification—Appellant 25 per cent and respondents 75 per cent at fault—Appellant claiming full indemnification for liability as to damages from respondents—Appellant owing duty of care to Commission—No contractual provision for provision of indemnification for own negligence—Appeal dismissed—The Negligence Act, R.S.O. 1970, c. 296, s. 2(1).

At trial, Consumers’ and the Utilities Commission were found to be negligent with respect to a gas line rupture and explosion following work in the vicinity of the main. The action against the City was dismissed. On appeal, the City was also found to be liable. The Court of Appeal apportioned fault as to 75 per cent against the Commission and the City and as to 25 per cent against Consumers’ and denied Consumers’ claim for full indemnity from the Commission and the City in respect of any damages it was required to pay. Both courts below found that Consumers’ owed a duty of care to the Commission. There was no evidence of any contract between the parties providing for one party’s being indemnified for its own negligence by the other. The sole issue before this Court was Consumers’ claim for full indemnity.

Held: The appeal should be dismissed.

The bar to recovery by Consumers’ was its own negligence to the plaintiffs, independent of anyone else’s negligence, and it could not recover indemnity from the

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Commission beyond that allowed by The Negligence Act. The mere fact that the parties were members of an informal committee did not establish mutual contractual obligations and would not support a claim for indemnity arising out of claimant’s own negligence. An indemnity clause spelling out this obligation on the other party must be in the clearest terms.

APPEAL from a judgment of the Ontario Court of Appeal[^1], dismissing an appeal from a judgment of R.E. Holland J. dismissing a claim to full indemnity for damages awarded. Appeal dismissed.

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

John Fitzpatrick, Q.C., for the respondents.

The judgment of the Court was delivered by

MARTLAND J.—As a result of a natural gas explosion and subsequent fire at the residence leased by the plaintiffs Gerard Fenn and Sandra Fenn, the plaintiff Sandra Fenn was severely injured, three children of Gerard Fenn and Sandra Fenn died and the plaintiff Candice Ann Fenn was injured.

The plaintiffs brought action against the appellant The Consumers’ Gas Company (“Consumers’ ”), the respondent Peterborough Utilities Commission (“the Commission”) and the respondent The Corporation of the City of Peterborough (“the City”).

The natural gas which, upon ignition, exploded had escaped from a fracture in a four-inch wrought iron gas main owned and operated by Consumers’. The trial judge found that the fracture occurred because of strains placed upon the gas main as a result of lack of support or blocking following an excavation in the vicinity of the gas main by the Commission and as a result of inadequate and improper backfilling by the Commission. The trial judge also held that there had been negligence on the part of Consumers’ in that the senior officers of Consumers’ should have made clear, in some institutional way, the extreme danger of excavating in the vicinity of wrought iron mains. Furthermore, in the circumstances that existed, an employee of Consumers’ should have

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inspected the site of the excavation on a regular basis and arrangements should have been made so that an inspection could be carried out before any backfilling occurred.

The trial judge awarded damages, as varied by the Court of Appeal, to Sandra Fenn in the amount of $773,179.43, to Gerard Fenn in the amount of $52,470.29 and to Candice Fenn in the amount of $6,526.55 as against Consumers’ and the Commission. The action against the City was dismissed. As between Consumers’ and the Commission, responsibility was apportioned 25 per cent against Consumers’ and 75 per cent against the Commission. With respect to the right of Consumers’ to indemnity, it was ordered that:

…the Defendant, The Consumers’ Gas Company, is entitled to contribution and indemnity from Peterborough Utilities Commission for any amount the Defendant, The Consumers’ Gas Company, is required to pay to the Plaintiff in respect of judgment and costs hereunder in excess of 25 per cent thereof.

On appeal, the Court of Appeal held the City liable as well as the Commission. The Court sustained the findings of negligence made by the trial judge as against Consumers’ and the Commission. The apportionment of fault was not varied, the Commission and the City being held responsible as to 75 per cent and Consumers’ as to 25 per cent.

Consumers’ claimed full indemnity from the Commission and the City in respect of any damages which it was required to pay. This claim failed both at trial and in the Court of Appeal. Consumers’ appealed, with leave, to this Court. The sole issue before this Court is as to Consumers’ claim for full indemnity.

Subsection (1) of s. 2 of The Negligence Act, R.S.O. 1970, c. 296, provides as follows:

2.—(1) Where damages have been caused or contributed to by the fault or neglect of two or more persons, the court shall determine the degree in which each of such persons is at fault or negligent, and, except as provided by subsections 2, 3 and 4, where two or more persons are found at fault or negligent, they are jointly and severally liable to the person suffering loss or damage for such fault or negligence, but as between themselves, in the absence of any contract express or

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implied, each is liable to make contribution and indemnify each other in the degree in which they are respectively found to be at fault or negligent.

The judgment of the Court of Appeal dealt with Consumers’ claim to full indemnity in the following passage:

As we have agreed with the trial judge in his finding that Consumers owed a duty of care, not only to the plaintiffs but also to the Commission, we know of no authority which allows a party to be indemnified for its own negligence in the absence of a contractual right thereto and we were referred to none.

The authorities to which we were referred were not similar to the instant case in that in none of the cases cited was there found to be negligence by the one claiming indemnity towards the one from whom indemnity was claimed. Further, in most of the cases cited, there were contractual warranties between the parties and damages were being claimed for breach of such warranties. The evidence here does not establish that, by the mere fact of being members of an informal Committee, the parties had contractual obligations one to the other. If one is to be protected against and indemnified for one’s own negligence there would have to be an indemnity clause spelling out this obligation on the other party in the clearest terms. In our view there is nothing in the relationship between the parties arising out of their membership in the Co-ordinating Committee which would support a claim for indemnity for loss occasioned by the claimant’s own negligence (Canada Steamship Lines Ltd. v. The King, 1952 UKJCPC 260, [1952] A.C. 192; Smith and others v. South Wales Switchgear Ltd., [1978] 1 All E.R. 18). The bar to recovery of indemnity by Consumers is its negligence to the plaintiffs, independent of anyone else’s negligence, and it cannot recover indemnity from the Commission beyond the 75 per cent allowed by The Negligence Act, R.S.O. 1970, c. 296.

I am in agreement with these reasons and, accordingly, I would dismiss the appeal with costs.

Appeal dismissed with costs.

Solicitors for the appellant: Outerbridge, Thomas, Mueller and Betts, Toronto.

Solicitors for the respondents: Fitzpatrick and Poss, Toronto.

[^1]: (1979), 1979 ONCA 77, 104 D.L.R. (3d) 174.