ONTARIO
SUPERIOR COURT OF JUSTICE
CITATION: James v. Miller Group Inc., 2015 ONSC 3138
COURT FILE NO.: CV-12-182
DATE: 2015-05-15
B E T W E E N:
JIMMIE RAYMOND JAMES and BRENDA LEE JAMES
Robert E. Houston for the Plaintiffs
Plaintiffs
- and -
MILLER GROUP INC., SMITH CONSTRUCTION (division of The Miller Group)
Ryan D. Garrett, for the Defendants
Defendants
- and –
SERNOSKIE BROS. LIMITED and ALAN JOSEPH SERNOSKIE
Colin R. Dubeau, for the Defendants by Counterclaim
Defendants by Counterclaim
HEARD: May 11, 2015
reasons for decision
Lacelle, J
[1] This is a “mini-trial” pursuant to rule 20.04 (2.2) of the Rules of Civil Procedure to determine whether the defendant Miller Group Inc., and Smith Construction [hereinafter “the Miller Group”] have a contractual right of indemnity as against the defendants Sernoskie Bros. Ltd. and Alan Joseph Sernoskie [hereinafter “the Sernoskie Bros.”], in relation to work performed by the Sernoskie Bros. on August 22, 2007 on the property of the Miller Group. Jimmie Raymond James and Brenda Lee James [hereinafter “the James’”] are the plaintiffs in this matter.
Background
[2] The case arises from a fly rock incident on August 22, 2007, where blasting in a quarry owned by the Miller Group caused rock to strike the plaintiffs’ house and vehicle. The blasting work was performed by the Sernoskie Bros.
[3] The litigation arising from this incident commenced in 2008. In July 2012, the plaintiffs and the Sernoskie Bros. entered into a “Pierringer Agreement” and resolved the issues as between themselves. Their agreement includes the following terms:
And whereas the Plaintiffs and the settling Defendants agree that the final resolution of all issues between and among themselves shall result in the settling Defendants not participating as parties in the trial of this action;
THE PLAINTIFFS SHALL RECEIVE from the settling Defendants the sum of $30, 000.00 for all claims for damages against the settling Defendants. In addition the Plaintiffs shall receive from the settling Defendants the sum of $5, 000 for all claims for interest and costs against the settling Defendants.
THE PLAINTIFFS AND THE SETTLING DEFENDANTS AGREE AND CONSENT to the dismissal of the action commenced in the Superior Court of Justice at Ottawa under Court File No. 08-CV-42701 on a without costs basis as against the settling Defendants. It is understood and agreed that, should the Plaintiffs so choose, the Plaintiffs will continue to pursue their claims against the Defendants, Miller Group Inc. and Smith Construction (division of the Miller Group), solely with respect to the several liability, if any, of the Defendants, Miller Group Inc. and Smith Construction (division of the Miller Group).
THE RELEASORS CONFIRM AND AGREE to restrict their claims to those sums for which the Defendants, Miller Group Inc. and Smith Construction (division of the Miller Group), may be severally liable and for which the Defendants, Miller Group Inc. and Smith Construction (division of the Miller Group), cannot be held jointly liable with the settling Defendants, or either of them. This means that the Releasors confirm and agree to only pursue as against the Defendants, Miller Group Inc. and Smith Construction (division of the Miller Group), those claims for which the Defendants, Miller Group Inc. and Smith Construction (division of the Miller Group) shall have no basis to seek contribution, indemnity, relief over or relief by way of equitable subrogation, declaratory relief or otherwise against the settling Defendants.
[4] Subsequent to this agreement between the plaintiffs and the Sernoskie Bros., various motions were brought by the parties and were heard on June 3, 2013: James v. Miller Group Inc., [2013] ONSC 3266. The plaintiffs moved to amend their Statement of Claim to delete the Sernoskie Bros. from the title of the proceeding, and to remove any claims against them in the body of the statement of claim. They also sought to amend their claim against the Miller Group to delete their claims for negligence, leaving only the claim for nuisance.
[5] The Miller Group, for its part, moved for summary judgment to dismiss the plaintiffs’ claim on the ground that “the agreement between Sernoskie and the plaintiffs contains a term that they may not commence or continue proceedings against a party (such as Miller) who claims contribution or indemnity against them.”: James v. Miller Group Inc, supra at para 5. The position of the Miller Group was that this bar to action in the agreement constituted a waiver by the plaintiffs, and that the action against it by the plaintiffs should be dismissed. The Miller Group indicated that this claim for contribution and indemnity was based on an implied oral agreement between them and the Sernoskie Bros., and relied on an Affidavit from an employee of the Miller Group, Thomas Jones, in support of that claim.
[6] The motions judge agreed to amend the pleadings as requested by the plaintiffs. He held that the Miller Group’s motion failed. However, in order to protect the rights of the Miller Group, he ordered it should amend its statement of defence to seek a declaration for contribution and indemnity to replace its cross-claim against the Sernoskie Bros.
[7] The Miller Group appealed. The Court of Appeal held that the motion judge erred by failing to address the factual and substantive basis for the Miller Group’s claim for summary judgment dismissing the James’ claim: see James v. Miller Group Inc., [2014] ONCA 335. It held at paragraphs 9 and 11 that
[t]he combination of the terms of the settlement agreement and the assertion of an indemnity agreement between the Miller Group and the Sernoskies gives rise to a threshold question as to the Miller Group’s liability for the damages claimed by the James’s. The Miller Group brought a motion for summary judgment to have that threshold issue determined, but the motion judge failed to deal with it. …
… the Miller Group has raised a significant threshold issue as to its liability and in my view the Miller Group is entitled to have that threshold issue determined by way of summary judgment. The issue of whether the Miller Group can establish an implied oral agreement with the Sernoskies for indemnification is one that can and should be determined, if necessary pursuant to the procedure contemplated by rule 20.04 (2.2).
[8] Accordingly, the Court allowed the Miller Group’s appeal from the order dismissing its cross-claim and its motion for summary judgment to dismiss the James’ claim, and remitted the matter for determination of the issue whether the Miller Group has a contractual right of indemnity against the Sernoskies.
[9] In accordance with that direction, the hearing on that issue proceeded before me on May 11, 2015.
The evidence on the hearing
The evidence of Thomas Jones
[10] The Miller Group called Thomas Jones to give viva voce evidence. Mr. Jones has been employed by the Miller Group for approximately 35 years. Since 1997, he has been a property manager for the company. His responsibilities include administering various property files, which includes dealing with licensing and regulatory compliance issues. He confirmed the Miller Group engaged contractors to perform work on the properties he administered when the work required was beyond the expertise of the Miller Group. The Sernoskie Bros. had expertise in rock blasting, and were hired by the Miller Group for that purpose. In particular, the Sernoskie Bros. were hired to conduct blasting work at the Braeside Quarry, which was the location where the fly rock incident occurred in August of 2007.
[11] The evidence of Mr. Jones was that he had not met Alan Sernoskie until after the events giving rise to this litigation. His knowledge of the agreement he says the Miller Group had with the Sernoskie Bros. arises from information he was given from others about the history of the Sernoskie Bros. with the Miller Group. He was not more specific about the source of that information, other than to say that he got information from operating managers within the Miller Group for the purposes of presentations to municipalities because “pits and quarries attract a certain amount of attention”. He had also reviewed files in his capacity as the property manager for the Miller Group. He agreed, however, that the only document he was referencing in his reference to a file review was the quote of March 14, 2007, which was filed as Tab 2 in the Book of Documents of the Miller Group. Mr. Jones confirmed that the quote of March 14, 2007 was the only written documentation that existed to confirm the nature and scope of the work contracted by the Miller Group from the Sernoskie Bros.
[12] With respect to the work done by the Sernoskie Bros. for the Miller Group, Mr. Jones testified that the Sernoskie Bros. controlled all aspects of the blasting, including inspecting the rock face to determine where drilling might take place, designing the layout of the blast, building holes and loading the explosives for the blasts, and all inspections relating to this work. Employees from the Miller Group were only peripherally involved. The Sernoskie Bros. had contact with the quarry foreman to ensure the perimeter of the quarry was controlled and traffic control measures were in place during a blast, but all activity within the quarry and blast site relating to the blast was within the control of the Sernoskie Bros. None of this arrangement was described in writing, but was the product of a mutual understanding between the parties that had evolved over 25 years of doing business together.
[13] Mr. Jones gave evidence that Jason Roesner was the quarry manager on August 22, 2007. He retired from the Miller Group in 2014. At the time of his retirement, Mr. Roesner had been with the Miller Group for about 25 years. Mr. Roesner was the person from the Miller Group who had contact with Alan Sernoskie in the field. Mr. Jones believed that Mr. Roesner would have taken direction from his manager in his dealings with Mr. Sernoskie.
[14] Mr. Jones testified that it was his understanding that the Sernoskie Bros. would be responsible for any damages caused during the course of the work performed by them. He had the same understanding with respect to work done by any other contractors hired by the Miller Group at other quarries they owned. It was his understanding that the blast performed on August 22, 2007, was the responsibility of the Sernoskie Bros.
[15] According to Mr. Jones, the Sernoskie Bros. were hired by the Miller Group for about 25 years to perform blasting work. In either 2005 or 2006, the Miller Group hired another company for that purpose, but they hired the Sernoskie Bros. again subsequently. Mr. Jones did not believe this changed the nature of the expectations between the parties. It was customary in their business to ask for quotes from contractors every season, and then to hire based on those quotes. He was asked about any discussions about the terms of their relationship going forward, and indicated he was not aware of any discussions taking place.
[16] Mr. Jones testified he is familiar with the concept of indemnification. He was also aware of some of the business dealings of the Miller Group. In particular, he was aware that when the Miller Group purchased Smith Construction, that Smith Construction was involved in litigation at the time of the sale. He agreed that consequently, the Miller Group had entered into an agreement dated June 25, 1996, with Smith Construction, which addressed the Miller Group’s indemnification from future damages that might be awarded against Smith Construction. He understood that this was an effort on the part of the Miller Group to protect its interests, and believed this was the “normal” way to do purchase agreements. He was also generally aware of the contract that the Sernoskie Bros. and the Miller Group entered into after August 22, 2007, filed at Tab 5 of the Book of Documents of the Miller Group, which includes clauses addressing indemnification of the parties as between themselves and third parties.
The evidence of Alan Sernoskie
[17] Alan Sernoskie is the President and Director of the Sernoskie Bros. Limited. He held those positions in 2007. He was cross-examined during this hearing by both the Miller Group and the James’.
[18] Mr. Sernoskie has 38 years’ experience with blasting work. As of 2007, he had been contracted to perform blasting services at the Braeside Quarry for about 25 years. Prior to being hired by the Miller Group, he had performed blasting work at the quarry for Smith Construction. Between 1996 and 2007, he did blasting work for the Miller Group at the Braeside Quarry every year except 2006.
[19] Like Mr. Jones, Mr. Sernoskie testified that every year, he would provide a quote to the Miller Group which included some description of the work to be done and pricing. He agreed the quote did not detail the totality of the responsibilities the Sernoskie Bros. would assume. He described it “mainly as a price quote”. He agreed that if the Miller Group asked for a particular quantity of rock, the Sernoskie Bros. would control all aspects of the blasting work to be done, except for any flagging done outside the quarry, which was the responsibility of the Miller Group.
[20] Mr. Sernoskie indicated it was his understanding that all aspects of the blasting work were the responsibility of the Sernoskie Bros., from designing the blasting pattern, the drilling of holes, the blasting itself, and all inspections relating to the blasting process. He received no advice or input from the Miller Group in this regard. As Mr. Sernoskie explained it, they had no knowledge of blasting, and so could not advise him “how to go about it”. He understood that the Miller Group was relying on him entirely to carry out the blast properly. He confirmed that this understanding had been part of his agreements with them for the years worked between 1996 and 2007. This reflected the industry practice, and his understandings with other clients as well.
[21] Mr. Sernoskie explained that drilling in poor conditions was quoted at a higher price, because it cost more to drill in those conditions. He testified he would discuss poor conditions with the quarry foreman, who would also have been well aware of them. He surmised that this is why the Miller Group would agree to the higher price for such drilling.
[22] Mr. Sernoskie agreed it was the sole responsibility of the Sernoskie Bros. to ensure that blasting was conducted safely. This had been part of his understanding of his agreement with the Miller Group between 1996 and 2007. If any damage was caused to a neighbour during a blast, his understanding was that his insurance would pay the damage. In particular, he expected that the Sernoskie Bros. would be responsible for damage caused by fly rock, as well as other less common forms of damage arising from blasting activities. In the event of such an incident, he said he would not have sought payment from the Miller Group. He stated that all of those expectations reflected his understanding of his agreement with the Miller Group between 1996 and 2007.
[23] The blast on August 22, 2007 giving rise to this litigation took about 3 days to prepare. The Sernoskie Bros. were responsible for all the work done, up to and including shooting the blast. The Miller Group took care of flagging the perimeter, but nothing else. Mr. Sernoskie was not aware of any evidence that the Miller Group did anything to cause the fly rock incident in August of 2007. He said the incident was the responsibility of the Sernoskie Bros.
[24] With respect to the issue of indemnification, Mr. Sernoskie testified that he had never heard the word “indemnification” before this law suit was launched. He first became aware of the concept the first year he and the Miller Group entered into a formal contract which addressed the issue.
[25] Mr. Sernoskie indicated that prior to signing this contract, it was not his understanding that the Sernoskie Bros. would be responsible for anything that might go wrong during a blast, such as the alleged contamination of ground water. It was not his intention that the Sernoskie Bros. would pay the Miller Group for anything that went wrong.
The positions of the parties
[26] The position of the Miller Group is that there was an oral agreement between the Miller Group and the Sernoskie Bros., and that it included an agreement to indemnify the Miller Group from any damages arising from a situation in which fly rock damage was caused. It points to the evidence of Alan Sernoskie to the effect that the Sernoskie Bros. contemplated that it would be responsible for the damages arising from any blast, and that it would not have asked the Miller Group to pay for damages in the event they were caused by a number of scenarios relating to blasting, including fly rock damage. The Miller Group seeks a finding that the Sernoskie Bros. were contractually obliged to indemnify the Miller Group in their insurance policy. Alternatively, they submit that the Court should make a finding as to the several liability of the Miller Group, if any, as they maintain that all the evidence necessary to decide this issue is before the Court.
[27] The position of the James’ is that there was no agreement of indemnification made between the Miller Group and the Sernoskie Bros., either written or unwritten. They argue that there were only expectations, and this is entirely different than an agreement. They point out that the evidence of Alan Sernoskie is that he did not know what the term “indemnification” meant at the time of the events giving rise to this law suit, and argue that it is impossible to have an agreement on the issue of indemnification if one of the parties does not understand what this concept means. Moreover, they argue the Miller Group was a sophisticated business enterprise, and point to the very specific provisions contained in other contracts entered into by the Miller Group where the scope of the indemnification is addressed, including any limits on circumstances in which the indemnification is made, and any limited liability in those circumstances. They point out that an agreement for complete indemnification amounts to coverage for everything that can go wrong, and say that a sophisticated litigant cannot rely on an unwritten agreement for indemnification, particularly where one of the parties to the alleged agreement does not understand what the concept of indemnification means. They ask that the motion be dismissed and that the action proceed to trial on the issues, including the several liability of the Miller Group.
[28] The Sernoskie Bros. take the position that there is no reasonable basis to find that an oral indemnity agreement existed in this case. They suggest the Miller Group is alleging the existence of an agreement for indemnification in order to “piggyback” on the Pierringer agreement between the plaintiffs and the Sernoskie Bros. They argue that if any agreement existed, it was not in writing, and is alleged to have included an indemnification agreement that was so broad it would have included indemnification against the Miller Group’s acts or omissions. The evidence here is that the intention of the Sernoskie Bros. was to be responsible for their own operations, but not to indemnify the Miller Group for anything that might happen in the course of their work on the property of the Miller Group. They point out that even the written agreement they entered into after the fly rock incident does not go that far. They say that the argument made by the Miller Group confuses the concepts of indemnity and joint and several liability, and that the Miller Group is trying to argue that there is no basis for finding it is liable in this case. They argue this has nothing to do with whether an indemnification agreement existed between them. They indicate that there is no issue about their responsibility for their own damages, and suggest that the correct forum for the Miller Group to address its liability for any damages the plaintiffs may prove were caused by the Miller Group is at trial.
The Law
[29] The Court was referred to several authorities dealing with the issue of implied contractual terms, including M.J.B. Enterprises Ltd. v. Defence Construction (1951) Ltd, 1999 CanLII 677 (SCC), [1999] S.C.J. No. 17. In that case, the Supreme Court of Canada outlined at paragraph 27 the general principles for finding an implied contractual term, and confirmed that terms may be implied in a contract:
(1) Based on custom or usage;
(2) As the legal incidents of a particular class or kind of contract; or
(3) Based on the presumed intention of the parties where the implied term must be necessary “to give business efficacy to a contract or as otherwise meeting the “officious bystander” test as a term which the parties would say, if questioned, that they had obviously assumed”.
[30] Additional guidance on the question of when a term may be implied in a contract is provided in G. Ford Homes Ltd. v. Draft Masonry (York) Co. Ltd. (1983), 1983 CanLII 1719 (ON CA), 43 O.R. (2d) 401 (C.A.) at p. 2 (Q.L):
When may a term be implied in a contract? A court faced with that question must first take cognizance of some important and time-honoured cautions. For example, the courts will be cautious in their approach to implying the terms to contracts. Certainly a court will not rewrite a contract for the parties. As well, no term will be implied that is inconsistent with the contract. Implied terms are as a rule based upon the presumed intention of the parties and should be founded upon reason. The circumstances and background of the contract, together with its precise terms, should all be carefully regarded before a term is implied. As a result, it is clear that every case must be determined on its own particular facts. …
For almost a century it has been recognized that a term will be implied in a contract in order to give it business efficacy. …
[31] The facts of G. Ford Homes Ltd. involved a dispute relating to an oral agreement to supply and install two circular staircases for two homes which one of the parties was building. The issue on appeal was whether there was an implied term of the contract for the supply and installation of the staircases that they would comply with the requirements of the Ontario Building Code. The Court of Appeal held that there must of necessity be such an implied term, as there could be no business efficacy to the contract without it. As the court put it, “[t]o sanction the installation of such a staircase in contravention of the code would be tantamount to sanctioning an illegal contract” (p.5 Q.L.). The Court further held that an additional term should be implied that both the work and the materials will be reasonably fit for the purpose for which they were required.
[32] The more recent case of Sanofi Pasteur Ltd. v. UPS SCS, Inc., 2015 ONCA 88, [2015] O.J. No. 577 (C.A.) was also cited by the parties. The Miller Group points out that the Court in that case accepted that the parties to the agreement at issue had intended to extend the benefit of an Insurance Covenant to other defendants in the action. What is germane for the purposes of the issue before me is that the rationale of the Court of Appeal in doing so was that it was necessary to give business efficacy to the transaction, and because to do otherwise would subvert the allocation of risk established by the parties: see paragraphs 58-63. For their part, the James’ point to the case as an example of the need for a specific and precise indemnity provision to be drafted by the parties to an agreement, should they intend to have the protection of such a provision.
[33] Maher v. Great Atlantic & Pacific Co. of Canada Ltd., 2009 CanLII 724 (ON SC), [2009] O.J. No. 152 (S.C.J.) is a case where the Court considered the intention of the parties in interpreting the terms of several written provisions addressing indemnification between various parties. The case illustrates the disparity and complexity which may exist in agreements to indemnify. With respect to the broadest term contained in the various written agreements, the Court wrote at paragraph 15:
We have a provision which is a very far-reaching provision. It is a very onerous provision. It stipulates that A&P shall be indemnified even for claims which may have arisen because of acts of negligence on the part of A&P. One can understand why a contractor would find it difficult if not impossible to obtain insurance to protect itself with respect to a contractual obligation to reimburse someone for that other person’s own negligence. The commercial milieu within which the agreement was created is a factor to be considered when determining the interpretation of that agreement.
Ultimately, the Court ruled as follows at paragraphs 20 and 21 with respect to the intentions of the parties, as reflected in their written agreements and having considered the test in M.J.B. Enterprises Ltd.:
Applying the canons of construction to the interpretation of this agreement I conclude that the intention of the parties was that CBSG would 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, the “Contractor” including CBSG and Adis Cleaning Services Ltd. as its subcontractor. ...
This interpretation seems even more sensible when I consider what would have been the response had an officious bystander asked the parties “under this agreement, if A&P is sued as a result of its own negligence (e.g. for failure to provide non-slip floors) and no allegations of negligence are made against the contractor, would you expect the contractor to indemnify A&P for the costs of such an action?” I am satisfied that both parties would have turned to him and replied “oh, no, the contractor is liable only for those claims where the damages were caused or contributed by the contractor”.
[34] The Court was also directed to the case of Blair v. Willow Shores Resort (1980) Ltd., [1989] C.L.D. 426 (B.C.C.A.). While this case pre-dates M.J.B. Enterprises Ltd., it is of some assistance in the case at bar. In that case, the plaintiff Blair had been injured when she was a guest at Willow Shores, and a para-sailor struck her as he was in the process of taking off from the beach at the resort. Willow Shores and the company operating the para-sailing operation were both defendants in the law suit. The trial judge in the case found that Willow Shores and the para-sailing company had entered into an oral agreement. While the trial judge did not make any findings as to the nature and scope of the agreement, the Court of Appeal noted that it was not disputed that the two defendants had agreed that the para-sailing operation would be kept separate and distinct from the rest of the operation of the resort and that the para-sailing operation would be responsible for their operation and its safety. While the Court of Appeal agreed that there was “at least a contract for safety”, it declined to “read into the general terms of the oral contract specific undertakings of contribution and indemnity”, as that would be tantamount to making a new term of the contract.
Analysis and Conclusions
[35] The narrow issue I am deciding is whether the Miller Group has established that it has a contractual right of indemnity as against the Sernoskie Bros, based on an implied oral agreement entered into prior to August 22, 2007.
[36] I am not satisfied on the evidence led at the hearing that there was an agreement by the Sernoskie Bros. to indemnify the Miller Group. There is no evidence of any written agreement to that effect. Nor is there any evidence of any conversation or discussion between any officials of the Sernoskie Bros. and the Miller Group that could be said to be akin to an oral agreement, implied or otherwise, that would constitute a contractual right of indemnity.
[37] In that regard, I note that the only employee of the Miller Group called to testify at this hearing gave evidence that he had never had a conversation with Alan Sernoskie prior to the fly rock incident. His understanding of the Sernoskie Bros.’ history with the Miller Group and any agreements between them was based on hearsay. Even at that, he gave no evidence that suggested anyone employed by the two companies had ever had a discussion about the issue of indemnification, and how that protection might function in their business relationship.
[38] What the evidence does establish is that there is a long-standing business relationship between the Sernoskie Bros. and the Miller Group. The evidence establishes that both parties had expectations as to their roles and responsibilities in regard to blasting at the Braeside Quarry. It was common ground that the Sernoskie Bros. were responsible for all aspects of any blasting operation they were hired to perform by the Miller Group. The parties also had a common expectation that the Sernoskie Bros. were responsible for ensuring the blasting was conducted safely.
[39] There is also evidence that it was the expectation of both the Sernoskie Bros. and the Miller Group that if damage was caused during the course of operations for which the Sernoskie Bros. were responsible, for instance during a blast, then the Sernoskie Bros. would be liable for that damage. The Miller Group argues this expectation was an agreement which in effect indemnified the Miller Group in circumstances such as those alleged in this law suit.
[40] I am unable to conclude that this evidence establishes a contractual right of indemnity. The evidence is unequivocal that Alan Sernoskie was not familiar with the concept of indemnification at all material times he contracted with the Miller Group between 1996 and 2007, up to the point of the events on August 22, 2007. The concept of indemnification is complex. It may apply broadly to absolve a party of all responsibility for any damages that occur, or it may be specifically limited to certain circumstances. There is no evidence before me indicating that this issue was considered in any meaningful way by either party. To the extent that the parties considered what would happen in the event of a claim for damages arising from an event at the Braeside Quarry, the evidence is clear that insofar as Alan Sernoskie was concerned, he had no expectation that his agreement with the Miller Group would result in the Sernoskie Bros. being responsible for damages arising from all circumstances that might occur.
[41] The evidence is also unequivocal that the Miller Group was a sizeable company which by 2007 had approximately 3500 employees. It had a legal group. It had previously entered into an agreement with Smith Construction which addressed its indemnification with respect to outstanding lawsuits against Smith Construction. It subsequently entered into an agreement with the Sernoskie Bros. that specifically addressed indemnification. There is a reasonable basis to conclude that by August 22, 2007, the Miller Group was generally aware of the need to address the issue of indemnification with some specificity in order to protect its interests. Its subsequent agreement with the Sernoskie Bros. demonstrates the scope of the agreement to which both parties were prepared to accede. Both circumstances reinforce that whatever contractual agreement can be said to have existed between the Miller Group and the Sernoskie Bros. on August 22, 2007, it was silent on the terms relating to any indemnification between the parties.
[42] The Miller Group has not provided any authority to the Court where a term of indemnification has been read into a contract. While the case of Sanofi Pasteur Ltd. resulted in parties being added to an agreement which resulted in their indemnification from further liability, the unique facts of that case compelled that result in order to give effect to the business transaction, and to maintain the allocation of risk expressly established by the principal parties in the terms of a written agreement.
[43] There is no dispute that there is no written agreement here. As indicated above, I find that there is no evidence of any oral agreement with respect to indemnification. Reading in such a term to the implied contract between the parties cannot be said to be necessary for business efficacy: M.J.B. Enterprises Ltd., G. Ford Homes Ltd.. Having regard to the evidence and the factual findings above, I am also satisfied that applying the “officious bystander” test, the parties, if questioned, would not have agreed that their contract included a general term of indemnification by the Sernoskie Bros. to the benefit of the Miller Group.
[44] To the extent that the Miller Group is asking this Court to read in a specific indemnification agreement by the Sernoskie Bros. to indemnify the Miller Group for damages caused by the Sernoskie Bros. as a result of fly rock or other blasting damage, I find that this term is not necessary for business efficacy. Moreover, reading in this term would be tantamount to making a new term of the contract, and I decline to do so: Blair v. Willow Shores Resort. The Court must be cautious in implying the terms of a contract, and will not rewrite a contract for the parties: G. Ford Homes, supra.
[45] For the reasons given, I am not satisfied that the Miller Group has established that it has a contractual right of indemnity as against the Sernoskie Bros. The Miller Group’s claim for indemnification from the Sernoskie Bros. is dismissed.
[46] With respect to the Miller Group’s request for alternative relief, I am not satisfied that this mini-trial is the appropriate forum for addressing the Miller Group’s several liability. The plaintiffs and the Sernoskie Bros. oppose this request. Moreover, there was no suggestion in the decision of the Court of Appeal reviewing the original motion judge’s decision in this matter that the issue of several liability ought to be addressed in the mini-trial, nor was that suggestion made in the subsequent order of McNamara J. directing that this hearing be held. It is possible that additional evidence may be called on this issue, and the scheduling of this hearing did not contemplate this broader triable issue would be addressed. In the circumstances, I am not prepared to consider the issue of the several liability of the Miller Group.
[47] Accordingly, the action may proceed to trial for resolution of any remaining issues between the parties.
[48] The parties should contact the trial-coordinator in Pembroke to schedule the trial and any related court appearances.
[49] If the parties cannot agree on costs, they may make submissions of two pages or less within 30 days of receipt of these reasons. Those submissions should be directed to the Superior Court of Justice in Cornwall.
Justice Laurie Lacelle
Date: May 15, 2015
CITATION: James v. Miller Group Inc., 2015 ONSC 3138
COURT FILE NO.: CV-12-182
DATE: 2015-05-15
ONTARIO
SUPERIOR COURT OF JUSTICE
B E T W E E N:
JIMMIE RAYMOND JAMES and BRENDA LEE JAMES
Plaintiffs
- and –
MILLER GROUP INC., SMITH CONSTRUCTION (division of The Miller Group)
Defendants
- and –
SERNOSKIE BROS. LIMITED and ALAN JOSEPH SERNOSKIE
Defendants by Counterclaim
REASONS FOR DECISION
Madame Justice Laurie Lacelle
DECISION RELEASED: May 15, 2015