COURT FILE NO.: 16-69456
DATE: 2018/05/10
ONTARIO
SUPERIOR COURT OF JUSTICE
BETWEEN:
NATIONAL ART GALLERY
Applicant
– and –
LAFLEUR DE LA CAPITALE INC.
– and –
INTACT INSURANCE COMPANY
Respondents
Mark O. Charron, for the Applicant
Kelly Hart, for the Respondent, Lafleur
HEARD at Ottawa: March 15, 2018
REASONS FOR JUDGMENT
KERSHMAN J.
Introduction
[1] This is an application under rule 14.05(3)(d) of the Rules of Civil Procedure, R.R.O. 1990, Reg. 194, to determine rights that depend on the interpretation of a contract.
Consent
[2] On consent, the parties agree that:
Extrinsic evidence should be admitted on the application, including the Service Contract between the National Gallery and Lafleur, as well as the pleadings from the Underlying Actions; and
No objection was taken to this matter proceeding as an application.
Factual Background
[3] The Applicant is the National Gallery of Canada (“National Gallery”). The Respondents are Lafleur de la Capitale Inc. (“Lafleur”) and Intact Insurance Company (“Intact”).
[4] This application relates to two Underlying Actions arising out of a fatal trip and fall accident that occurred on August 27, 2013, on the National Gallery’s premises.
[5] Conrad Lafrenière, an employee of Lafleur, was performing routine maintenance work, cleaning leaves and debris, near the entrance ramp to the National Gallery’s underground parking garage. As a vehicle approached to enter the garage, Mr. Lafrenière moved over to the edge of the entrance ramp, fell over a concrete ledge, and suffered fatal injuries.
[6] The Underlying Actions (“Underlying Actions”) against the National Gallery were commenced by:
Mr. Lafrenière’s widow, Ms. Arsenault, in Action No. 14-61065. The Workplace Safety and Insurance Board (“WSIB”) has a subrogated claim in relation to the claim made by Ms. Arsenault and payments made by the WSIB to her; and,
Mr. Lafrenière’s mother and siblings pursuant to a Family Law Act, R.S.O. 1990, c. F.3, claim in Action No. 14-60827.
[7] The National Gallery commenced two third party claims against Lafleur, claiming contribution and indemnity for all damages, costs, and interest arising out of the Underlying Actions.
[8] The National Gallery and Lafleur entered into a Service Contract dated January 26, 2010 (“Service Contract”), under which Lafleur was required to supply all labour and equipment to complete the interior and exterior maintenance throughout the premises at 380 Sussex Drive, Ottawa, Ontario. Lafleur was also required to properly train and supervise its employees, and ensure that all employees wore safety equipment and were safe while carrying out their work.
[9] Under the Service Contract, Lafleur also agreed to indemnify and save harmless the National Gallery from all claims, demands, losses, costs, damages, actions, suits, or proceedings arising out of or in connection with its work under the contract.
[10] Lafleur also agreed to obtain a comprehensive general liability insurance policy under which the National Gallery would be added as an additional named insured. The policy was issued to Lafleur by Intact.
Arsenault Action
[11] The Arsenault Action was commenced by the WSIB in the name of Line Arsenault, for its subrogated interest that it paid for a workplace injury, against the Attorney General of Canada, the National Gallery, in Court File No. 14-61065.
[12] The Plaintiff alleges:
The Government of Canada and/or the National Gallery were the owners and occupiers of the premises at 380 Sussex Drive, Ottawa, Ontario;
Lafleur had entered into a Service Contract with National Gallery to perform routine maintenance at 380 Sussex Drive;
On August 27, 2013, while performing his work, near the entrance to the underground parking garage, Mr. Lafrenière fell over a low, concrete ledge to the driveway and suffered fatal injuries.
[13] The Plaintiff claims that Mr. Lafrenière’s fall, and subsequent death, was caused by the negligence or breach of duty of the Defendants. The particulars of this negligence are set out in para. 8 of the Statement of Claim as follows:
(a) They failed to install a fence, railing or other protective barrier in the area where Mr. Lafrenière fell when they knew or ought to have known it was reasonable to do so and/or required by law;
(b) They knew or ought to have known that a fence, railing or other protective barrier was needed to make the area where the fall occurred reasonably safe;
(c) They knew or ought to have known that the sidewalk in the area where Mr. Lafrenière fell was unsafe and too narrow for pedestrians to walk or stand on safely;
(d) They allowed hazardous and unsafe conditions to exist on the premises and failed to adequately warn persons like Mr. Lafrenière of the hazardous and unsafe conditions;
(e) They knew or ought to have known that the premises generally and the area where the fall occurred failed to comply with applicable building code and other applicable safety requirements and legislation including the Occupational Health and Safety Act, R.S.O. 1990, c. O.1;
(f) They failed to take reasonable care in all of the circumstances to see that persons entering on the premises were reasonably safe;
(g) They failed to conduct or act on any risk management or safety study in connection with the premises generally and the area where the fall occurred;
(h) They hired incompetent or improperly trained employees or agents or failed to supervise such employees or agents properly or at all in relation to safety, risk management or the design and maintenance of the premises generally or the area where the fall occurred.
[14] The Plaintiff claims damages for the loss of guidance, care, and companionship.
[15] The Plaintiff also claims that she suffered a loss of pecuniary benefits that she would have received had Mr. Lafrenière survived.
[16] The Plaintiff also claims that she suffered from emotional trauma from Mr. Lafrenière’s death and seeks compensation pursuant to the Family Law Act.
[17] The National Gallery served a Statement of Defence in which it pled that Mr. Lafrenière was at all material times in the employment of Lafleur. The National Gallery commenced a third party claim against Lafleur for failure to properly train Mr. Lafrenière. It also claimed contribution and indemnity from Lafleur.
[18] The WSIB filed a subrogated claim in relation to this claim and the payments made by it to Mrs. Arsenault.
Lafrenière Action
[19] The Lafrenière Action was commenced by the mother and siblings of the late Mr. Lafrenière against the Attorney General of Canada and the National Gallery on May 12, 2014, as Court File No. 14-60827.
[20] The Statement of Claim alleges that the Defendants owed a duty to take reasonable care to ensure that persons, such as Mr. Lafrenière, were reasonably safe while on the property.
[21] At para. 8 of the Statement of Claim, the Plaintiffs make specific allegations of negligence against the National Gallery, as occupiers of the property, which are as follows:
(a) They failed to install a fence, railing or other protective barrier in the area where Conrad Lafrenière fell when they knew or ought to have known it would have prevented the fall and his death;
(b) They knew or ought to have known that a fence, railing or other protective barrier was needed to make the area where Conrad Lafrenière fell safe for persons like Conrad Lafrenière;
(c) They knew or ought to have known that the sidewalk in the area where Mr. Lafrenière fell was unsafe and too narrow for pedestrians to walk or stand on safely;
(d) They failed to properly control and/or direct the flow of pedestrian and vehicle traffic on the property so that persons like Conrad Lafrenière would be safe and not fall to his death;
(e) They allowed hazardous and unsafe conditions to exist on the property when they knew or ought to have known that it would and did cause Conrad Lafrenière’s fall and death;
(f) They failed to adequately warn persons like Conrad Lafrenière of the hazardous and unsafe conditions;
(g) They knew or ought to have known that the Property and the area where Conrad Lafrenière fell failed to comply with applicable building code and other applicable safety requirements and legislation;
(h) They failed to take reasonable care in all of the circumstances to see that persons like Conrad Lafrenière entering on the Property were reasonably safe while on the Property;
(i) They generally failed in the duties and duty of care they owed to Conrad Lafrenière and as owners and occupiers of the Property.
[22] The National Gallery commenced a third party action against Lafleur for, inter alia, the failure to properly train and supervise Mr. Lafrenière while in the course of employment. The National Gallery also claimed contribution and indemnity from Lafleur.
Intact Insurance
(i) Coverage
[23] Lafleur put in place a policy of insurance under a Commercial General Liability insurance policy (“CGL”) bearing Policy No. 501249523 issued by the Respondent, Intact Insurance Company (“Intact”), dated January 21, 2014.
[24] The National Gallery was named as an additional named insured under the Intact policy by way of an endorsement dated January 21, 2014.
[25] The insurance was effective from March 31, 2013, to March 31, 2014, with respect to the legal liability arising out of Lafleur’s operation under the Service Contract.
[26] The CGL was a policy that was intended to insure Lafleur. It would only cover the National Gallery if Lafleur was found to be liable, but not in any other case.
[27] In other words, the only time that the CGL would apply would be if a judgment was obtained against Lafleur and Lafleur would seek indemnity from the National Gallery because of a breach of its obligations to Lafleur. This was not the case.
(ii) Policy Exclusions
[28] The policy contained exclusions, which were set out under the heading of “Exclusions”. Those exclusions included:
Worker’s Compensation and Similar Laws
Any obligation of the Named Insured under a Worker’s Compensation, Disability Benefits or an Employment or an Employment Compensation Law or a similar law.
Employer’s Liability
“Bodily injury” to an “employee” of the Insured arising out of and in the course of:
Employment by the Insured; or
Performing Duties Related to the Conduct of the Insured’s business.
[29] A review of the CGL policy does not provide any exceptions to the Exclusions that would apply in this case.
The Service Contract Between the National Gallery and Lafleur
[30] The National Gallery and Lafleur entered into the Articles of Agreement – #09-C101 Exterior Landscaping Services on January 26, 2010 (“Service Contract”). Under this Service Contract, Lafleur was required to, inter alia, supply all labour and equipment to complete the interior and the exterior maintenance throughout the premises, properly train its employees, supervise its employees and ensure that all employees wore safety equipment and were safe while carrying out the work under the Service Contract. Appendix “E” outlines the specific provisions of the contract and sets out the scope of services; this appendix is Schedule “A” to this decision.
[31] Clause GC-5 of Schedule “A”, being Appendix “E” to the Service Contract, provides:
GC-5 Indemnification by Contractor
5.1. The Contractor shall indemnify and save the Museum harmless from and against all claims, demands, losses, costs, damages, actions, suits or proceedings by whosoever made, brought or prosecuted and in any manner based upon, arising out of, related to, occasioned by or attributable to the activities of the Contractor, the Contractor’s servants, agents, subcontractors and sub-subcontractors in performing the Work including an infringement or an alleged infringement of a patent of invention or any kind of intellectual property. (Emphasis added)
5.2 For the purpose of GC-5.1 “Activities” includes any act improperly carried out, any omission to carry out an act and any delay in carrying out an act.
[32] There is no allegation that Lafleur caused or contributed to the loss in either action.
Issues
[33] Whether Lafleur and Intact owe a duty to defend the claims against the National Gallery in the Underlying Arsenault and/or Lafrenière Actions.
Analysis
(i) Legal Principles
[34] Both counsel agree that Progressive Homes Ltd v. Lombard General Insurance Co. of Canada, 2010 SCC 33, is the leading case dealing with the duty to defend.
[35] In Progressive, the Supreme Court of Canada held that an insurer is required to defend a claim on behalf of an insured when the facts alleged in the pleadings, if proven to be true, would require the insurer to indemnify the insured for the claim (para. 19).
[36] In Nichols v. American Home Assurance Co., 1990 CanLII 144 (SCC), [1990] 1 S.C.R. 801, at para. 21, McLachlin J. stated:
[21] I conclude that considerations related to insurance law and practice, as well as the authorities, overwhelmingly support the view that the duty to defend should, unless the contract of insurance indicates otherwise, be confined to the defence of claims which may be argued to fall under the policy. That said, the widest latitude should be given to the allegations in the pleadings in determining whether they raise a claim within the policy. (Emphasis added)
[37] The duty to defend was raised in UPS Supply Chain Solutions Inc. v. Airon HVAC Services Ltd., 2015 ONSC 1734. At paras. 26 to 29, Matheson J. stated the following on the issue of the duty to defend the whole or part of the claim where there are multiple claims, or only some of them of which are potentially covered:
[26] The duty to defend is limited to defending claims that – if proven to be true – would fall within coverage under the policy: Papapetrou v. 1054422 Ontario Ltd. (2012), 111 O. R. (3d) 532, 2012 ONCA 506, at para. 41. It does not extend to the defence of independent claims. The court is required to assess the substance or the “true nature” of each claim contained within the pleadings to see if it falls within the scope of coverage: Papapetrou, at para. 44; Monenco, at paras. 29-35.
[27] Assessing the true nature of a particular claim is not an exercise to be undertaken in the abstract. It should be approached with a view to the specific limitations of the insurance coverage at issue: Papapetrou, at para. 47.
[28] Where there is an unqualified obligation to pay for the defence of claims covered by the policy, the insurer is required to pay all reasonable costs associated with the defence of those claims even if those costs further the defence of uncovered claims. The insurer is not, however, obliged to pay costs related solely to the defence of uncovered claims: Hanis v. Teevan, (2008), 92 O.R. (3d) 594, 2008 ONCA 678, at para. 2.
[29] As is illustrated by a series of “slip and fall” cases that confront this issue, the question of whether the duty to defend extends to the whole claim depends on the specific pleadings at issue and resulting determination of the true nature of the claims: e.g., Papapetrou; RioCan Real Estate Investment Trust v. Lombard General Insurance Co., 2008 CanLII 16073 (ON SC), [2008] O.J. No. 1449, 91 O.R. (3d) 63 (S.C.J.); Atlific Hotels and Resorts Ltd. v. Aviva Insurance Co. of Canada, 2009 CanLII 24634 (ON SC), [2009] O.J. No. 2005 (S.C.J.), 97 O.R. (3d) 233; Cadillac Fairview Corp. v. Olympia Sanitation Products Inc., 2010 ONSC 4309, 97 O.R. (3d) 233; Cadillac Fairview v. Jamesway Construction Ltd., 2011 ONSC 2633.
Arsenault Action
[38] The Arsenault Statement of Claim was commenced by the WSIB, in the name of Line Arsenault, for its subrogated interest that it paid for a workplace injury. The Plaintiff alleges that Mr. Lafrenière’s death was caused by the negligent breach of duty of National Gallery. These allegations are in para. 8 of the Statement of Claim, and have been described above.
[39] A review of the allegations in para. 8(a)-(h) clearly shows that the allegations relate to the occupier’s liability of the property.
[40] The nature of the claim is really of one of a subrogated workplace claim.
[41] The CGL coverage is set out under s. 1 Coverage “A”. It reads, in part, as follows:
1 (a) Insuring Agreement “A”, the Insurer will pay those sums of the Insured becomes legally obligated to pay as “compensatory damages” because of “bodily injury” or “property damage” to which the insurance applies. The Insurer will have the right and duty to defend the Insured against any “action” seeking those “compensatory damages”. However, the Insurer will have no duty to defend the Insured against any “action” seeking “compensatory damages” for “bodily injury” or “property damage” to which this insurance does not apply. The Insurer may, at the Insurer’s discretion investigate any “occurrence” and settle any claim or “action” that may result. But:
the amount the Insurer will pay for “compensatory damages” is limited as described in Section III – Limits of Insurance and is subject to the Deductible Clause shown in Section III – Limits of Insurance; and
the Insurer’s right and duty to defend and when the Insurer has used up all of the applicable limit of insurance in the payment of judgments or settlements under Coverages A, B or D or medical expenses under Coverage C.
[42] The CGL contains the following exclusions:
Worker’s Compensation and Similar Laws
Any obligation of the Named Insured under a workers’ compensation, disability benefits or an employment or an employment compensation law or any similar law.
Employer’s Liability
“Bodily Injury” to an “employee” of the Insured arising out of and in the course of:
Employment by the Insured; or
Performing duties related to the conduct of the Insured’s business.
[43] The Applicant argues that these exclusion clauses do not apply to the National Gallery because Mr. Lafrenière was not an employee of the National Gallery nor was he in the course of employment with the National Gallery at the time of the accident.
[44] The Service Contract made provisions that the National Gallery would be added as an additional Insured. It was not listed as the named Insured.
[45] The Certificate of Insurance dated January 21, 2014, identifies the named Insured as “Lafleur de la Capitale Inc.”. It does not name the National Gallery as the named Insured. An Endorsement is attached to the Certificate of Insurance in which the National Gallery is named as an “Additional Insured”. The Endorsement reads as follows:
“It is agreed the following is/are hereby added to the Policy as additional Insured, but only insofar as their Legal Liability arises vicariously out of the operations of the Named Insured in connection with the project/contract described below. (Emphasis Added)
[46] The exclusionary clauses contained in ss. 2(c),(d) of Coverage “A” specifically deal with workers employed by Lafleur, in this case Mr. Lafrenière. The exclusion specifically states that these exclusions relate to workers.
[47] Based on these exclusions, the Court finds that the policy of insurance does not cover any obligation of the named Insured because this was an obligation of Lafleur under a worker’s compensation, disability benefits or unemployment or employment compensation law or any similar law, which is specifically excluded under s. 1 Coverage “A”, at para. 2(c).
[48] Furthermore, the s. 2(d) exclusion would also apply for a bodily injury to Mr. Lafrenière arising out of his employment with Lafleur.
[49] The Court finds that National Gallery was an additional Insured and not the named Insured.
[50] Furthermore, the Court finds that the National Gallery would only be indemnified if Lafleur was found to be negligent based on the wording of the Endorsement. There are no allegations against Lafleur seeking damages in either Statement of Claim.
[51] The Court does not find that there are any exceptions to the exclusion.
[52] Therefore, based on the aforesaid analysis, the Court finds that the exclusions apply. In turn, the Court finds that there is no duty on Intact to defend the Arsenault Action.
Lafrenière Action
(i) Nature of the Claim
[53] In the Lafrenière Statement of Claim, the Plaintiff alleges that Mr. Lafrenière’s death was caused by the negligence of the National Gallery as an occupier. The allegations in the Statement of Claim are set out previously in this decision.
[54] The Applicant argues that the true nature of the pleadings in the Lafrenière Action relate to negligence of Lafleur, which was as a result of Mr. Lafrenière being permitted to walk/work in an area that was unsafe for users. The allegations with respect to safety, training and supervision of Mr. Lafrenière while he was conducting work on the premises relate directly to Lafleur’s obligations under the contract.
[55] The Respondents argue that the allegations of negligence relate to design and control of the building and the property, including the parking ramp and its safety, signage in areas of vehicular and pedestrian traffic. The Court has reviewed the allegations in the Statement of Claim and finds that they relate to the design of the building and property, as argued by the Respondents.
[56] The claims of negligence against National Gallery are for their own negligence. These clauses are unrelated to any claims against Lafleur. Lafleur is not a party to the Lafrenière Action.
[57] The Court finds that the allegations in the Statement of Claim relate to design issues of the building and the property.
(ii) Contractual Obligation to Insure
[58] GC-5 of the Service Contract has been set out above. The Court agrees with the Respondents’ argument that the indemnity provisions in GC-5 must be read in conjunction with the allegations set out in the Statement of Claim to trigger the duty to defend.
[59] The wording of the indemnity provision makes it clear that the indemnity is “based upon, arising out of, related to, occasioned by or attributable to the activities of the Contractor”.
[60] Lafleur is the Contractor and is not included as a party in the Lafrenière Statement of Claim. Accordingly, since there is no allegation in the Statement of Claim that alleges negligence or tortious activities on the part of Lafleur, no indemnification can be triggered.
[61] The allegations in the Statement of Claim relate to design and control by the National Gallery as occupier and are therefore not based upon, arising out of, related to or occasioned by or attributable to the activities of Lafleur since they had no control over these aspects of the property.
[62] The Court finds that the indemnity is limited to the situation where Lafleur or its servants are found to be negligent. The allegations in the Statement of Claim are about the negligence of the National Gallery independent of Lafleur.
[63] The Statement of Claim does not make any allegations that Lafleur was negligent or otherwise.
(iii) Does the CGL cover this situation?
[64] As stated previously, the Statement of Claim does not contain any allegations about Lafleur that would make the National Gallery vicariously liable or even include Lafleur as a party to the action. If there were allegations against Lafleur that would potentially trigger the indemnity agreement, it would then cover the National Gallery.
[65] On its face, the CGL would cover bodily injury and would be for the type of loss that was sustained. Therefore, the type of insurance coverage on its face would cover the loss. Having reviewed the policy, the Court does not find that any exclusions in the policy apply. Notwithstanding that none of the exclusions apply, which would exclude coverage under the policy, the major challenge is that the Statement of Claim falls outside of the indemnity agreement. That is clear from a review of GC-5.1. The language of the clause “indemnification by contractor” at 5.1 includes the following, “occasioned by or attributable to the activities of the Contractor, the Contractor’s servants, agents, subcontractors and subsubcontractors in performing the Work…” If the claim does not relate to the activities of the Contractor or its servants and it does not relate to the work that in turn means that there is no obligation on Lafleur to indemnify the National Gallery.
[66] The Claim against the National Gallery in negligence is independent of any claim against Lafleur.
[67] To reiterate, the Statement of Claim does not arise out of the activities of the Contractor. There are no allegations in the Statement of Claim that Lafleur or its servants did anything wrong. That is why the claim falls outside of the indemnity agreement.
[68] The Court finds that there are no allegations against the National Gallery that have any bearing on Lafleur. Therefore, based on this analysis, the Court finds that neither Lafleur nor Intact owe the National Gallery a duty to defend.
Conclusion
[69] For the reasons set out above, the Court finds that there is no duty on the insurer Intact nor is there any duty on Lafleur within the Arsenault Action or the Lafrenière Action as against the National Gallery.
[70] Therefore the application is dismissed.
Costs
[71] Both parties have submitted costs outlines. The parties shall be allowed 14 days to resolve the issue of costs. If they are unable to do so, they shall contact the trial coordinator and obtain a date and time to argue the issue of costs. Each party will have 15 minutes to argue the issue of costs. Costs Outlines and any rule 49 Offers to Settle shall be provided three days prior to the hearing of the costs argument.
[72] Order to issue accordingly.
Mr. Justice Stanley Kershman
Released: May 10, 2018
COURT FILE NO.: 16-69456
DATE: 2018/05/10
ONTARIO
SUPERIOR COURT OF JUSTICE
B E T W E E N:
NATIONAL ART GALLERY
Applicant
– and –
LAFLEUR DE LA CAPITALE INC.
– and –
INTACT INSURANCE COMPANY
Respondents
REASONS FOR JUDGMENT
KERSHMAN J.
Released: May 10, 2018