Court File and Parties

COURT FILE NO.: CV-22-0089-00A1 DATE: 2024-12-06

ONTARIO

SUPERIOR COURT OF JUSTICE

B E T W E E N:

Breaking Ground Drilling and Blasting Inc. Plaintiff

E. Juurakko, for the Plaintiff

• and -

A.D. Hanslip Excavating & Demolition now known as A.D. Hanslip Ltd., Allan Hanslip, Her Majesty the Queen in Right of Ontario represented by The Ministry of Transportation for the Province of Ontario, and Niiwin Wendaanimok Construction Limited Partnership by its general partner Niiwin Wendaanimok Construction Inc. Defendants

C. Abarca, for the Defendants

-and-

Lloyd’s of London Limited, and Intact Insurance Company Third Parties

J. Tam, T. Crljenica, for the Third Party, Lloyd’s of London Limited

HEARD: October 28, 2024, at Thunder Bay, Ontario

Mr. Justice S.J. Wojciechowski

Reasons On Motion

Introduction

[1] The plaintiff, Breaking Ground Drilling and Blasting Inc. (“Breaking Ground”), is in the business of providing construction and demolition services.

[2] The defendant, A.D. Hanslip Excavating & Demolition, now known as A.D. Hanslip Ltd. (“Hanslip Demolition”), also operates a construction and demolition business. The defendant, Allan Hanslip (“Hanslip”), owns Hanslip Demolition.

[3] Breaking Ground was hired by Hanslip Demolition to drill and blast rock on a construction site (“the Project”) located in a quarry owned by Niiwin Wendaanimok Construction (“NWC”). Once the rock was broken up into pieces by the drilling and blasting, it would be crushed for use in laying foundations for highway construction. However, citing issues with the completed work, Hanslip Demolition did not pay the invoices submitted by Breaking Ground.

[4] Breaking Ground is suing Hanslip Demolition for payment of its invoices totalling $377,293.85. Hanslip Demolition claims that the work Breaking Ground did was deficient, and in its efforts to clean up and perform the work which Breaking Ground agreed to do, Hanslip Demolition incurred $6 million in costs, which it is seeking from Breaking Ground.

[5] Hanslip Demolition also issued a Third Party Claim against Lloyd’s of London Limited (“Lloyds”) and Intact Insurance Company (“Intact”), claiming indemnification as an additional insured under the policies secured by Breaking Ground relating to the Project.

[6] The parties acknowledge that the insurance policy from Intact does not provide coverage which could be triggered by the issues in this litigation. As such, the Third Party Claim has been dismissed against Intact.

[7] This motion is brought by Lloyds. It seeks an order striking the Third Party Claim against Lloyds without leave to amend on the basis it discloses no reasonable cause of action. Since this motion only involves Lloyds and Hanslip Demolition, neither the plaintiff nor its counsel appeared at the hearing.

[8] I released an endorsement on October 28, 2024, which set out my decision to dismiss the Third Party Claim of Hanslip Demolition against Lloyds with costs. These are the reasons in support of my decision.

Background

[9] The MTO Clearwater Bay Quarry Project is owned by His Majesty the King (“HMK”). HMK hired NWC to do work on the Project, which included crushing rock from the quarry.

[10] In January 2022, NWC retained Hanslip Demolition as a subcontractor to crush rock at the Project. Before the rock could be crushed, drilling and blasting was necessary. As such, Hanslip Demolition entered into a contract with Breaking Ground to drill and blast rock at the quarry site.

[11] A quote was provided by Breaking Ground to Hanslip Demolition for drilling and blasting services. The quote was accepted, and Breaking Ground commenced work in March 2022. Invoices were provided to Hanslip Demolition for the work undertaken by Breaking Ground, one dated March 18, 2022, in the amount of $304,715.67, and a second dated June 6, 2022, in the amount of $72,578.18.

[12] Breaking Ground’s invoices were not paid by Hanslip Demolition. According to Hanslip Demolition, the rocks that resulted from the drilling and blasting were too large to be crushed. The services provided by Breaking Ground, according to Hanslip Demolition, were performed in a non-workmanlike manner, and additional blasting was required in order to rectify the commercially unreasonable size of the blasted rock product.

[13] Breaking Ground issued a Statement of Claim on September 20, 2022, against Hanslip Demolition and Hanslip – in addition to HMQ Ontario and NWC – seeking damages in the amount of $377,293.85. The basis of Breaking Ground’s claim is breach of contract and it seeks the following damages:

a) damages of $377,293.85 for breach of contract and/or unjust enrichment; b) special damages; c) a declaration of a valid construction lien claim; d) pre- and post-judgment interest; and e) costs and HST.

[14] In a section entitled “DAMAGES” in the Statement of Claim, Breaking Ground claims (a) that the defendants are in a breach of contract by refusing to pay the outstanding balance due and owing to Breaking Ground, and (b) that the defendants have been unjustly enriched by the work completed by Breaking Ground.

[15] In response to Breaking Ground’s Statement of Claim, Hanslip Demolition delivered a Statement of Defence and Counterclaim, which in addition to disputing the claim of Breaking Ground, seeks $6 million for its efforts to address the alleged deficiencies in Breaking Ground’s work.

[16] In its Statement of Defence and Counterclaim, Hanslip Demolition alleges the following against Breaking Ground in support of its $6 million counterclaim:

1. After being advised of deficiencies, Breaking Ground refused to rectify the project and left without completing the work contemplated by the Contract;
2. Breaking Ground held itself out to be an experienced and reliable contractor, employing specialized staff with expertise in completing the work under the Contract, and Hanslip Demolition relied upon those representations and warranties;
3. Breaking Ground breached its contractual obligations and its duty to perform the work to the requisite standard of care such that the work was defective, causing delays, resulting in damages to Hanslip Demolition estimated to be $6 million;
4. The breaches of contract and/or negligence of Breaking Ground include the following: a. Not providing or using an adequate amount of explosive energy for the size and type of blast it was hired to perform; b. Failing to use the proper explosive materials; c. Failing to plan, create, design, and follow an appropriate and adequate Blast Design; d. Failing to ensure the firing sequencing of the boreholes was satisfactory to ensure a commercially reasonable amount of rock displacement; e. Failing to check each borehole before the blast and failing to top each borehole with explosives prior to the blast; f. Failing to ensure the proper and appropriate borehole collar size was present in each borehole prior to the blast; g. Improperly leaving the loaded and primed explosives in the boreholes unattended for approximately a three (3) week period; h. Failing to ensure the loaded emulsion in the boreholes was not unnecessarily exposed to water, moisture, and other environmental factors that could negatively impact the blast; and i. Performing a blast which caused the production of a commercially unreasonable volume of oversize rock.

[17] Finally, Hanslip Demolition alleges that it repeatedly informed Breaking Ground of the deficiencies and demanded that Breaking Ground re-attend to correct its errors and complete its contractual obligations, but Breaking Ground refused to undertake the necessary remedial work or even communicate with Hanslip Demolition or any of its representatives.

[18] In addition to delivering a Statement of Defence and Counterclaim, Hanslip Demolition commenced a Third Party Claim against Intact and Lloyds. As already noted, the claim against Intact has been dismissed, but Hanslip Demolition maintains its claim against Lloyds.

[19] The Third Party Claim is based upon a Certificate of Insurance which names Hanslip Demolition as an additional insured under the Lloyds insurance policy secured by Breaking Ground.

[20] Breaking Ground secured an insurance policy from Lloyds covering the period of January 16, 2022, to January 16, 2023, in order to support the work Hanslip Demolition contracted with Breaking Ground to perform.

[21] As part of the agreement between Breaking Ground and Hanslip Demolition, Lloyds also issued a Certificate of Insurance which listed Hanslip Demolition as an additional insured. The Certificate of Insurance, dated January 18, 2022, and issued by BrokerLink Inc., clearly states that the Insured’s name on the Lloyds policy is “Breaking Ground Drilling & Blasting Inc.”, with the Additional Insured box stating the following:

A.D. Hanslip [sic] Excavating & Demolition Ltd is added as an additional insured but only with respect to liability arising from the operations of our named insured.

[22] It is this Certificate of Insurance which Hanslip Demolition relies upon to advances its Third Party Claim against Lloyds seeking the following relief:

a) a declaration that the Policy is binding and enforceable against Lloyd’s, and that by virtue of the Policy, Hanslip is entitled to be fully indemnified by Lloyd’s from and against the losses set out in subparagraphs (d) to (j); b) a declaration that Lloyd’s is required to pay Hanslip the amounts set out in subparagraphs (d) to (j); c) specific performance of the Policy; d) $6 million for losses sustained by Hanslip, and insured under the Policy on account of Breaking Ground’s negligence and breach of contract in carrying out a failed blast on March 18, 2022 at the quarry; e) $1 million for losses sustained by Hanslip and insured under the Policy on account of damages as a result of the wrongful lien claim made by Breaking Ground in respect of the non-performance of Breaking Ground’s obligations under its blasting contract with Hanslip; f) full contribution and indemnity equal to any amounts Hanslip may be liable to pay Breaking Ground; g) special damages incurred and to be incurred; h) prejudgment interest; i) post-judgment interest; and j) costs.

[23] In summary, Breaking Ground is suing Hanslip Demolition for monies which Breaking Ground alleges are owing pursuant to its contract for services with Hanslip Demolition.

[24] Hanslip Demolition has defended Breaking Ground’s claim on the grounds that Breaking Ground did not perform the contract according to its terms. Hanslip Demolition is also seeking damages from Breaking Ground representing the costs incurred by Hanslip Demolition to perform the work which it states Breaking Ground was supposed to undertake.

[25] Hanslip Demolition is further claiming indemnification for its losses and a defence from Lloyds pursuant to the Certificate of Insurance in which Hanslip Demolition is listed as an additional insured.

[26] Hanslip Demolition is only an additional insured with respect to liability arising from Breaking Ground’s operations. If, for example, the blasting activities of Breaking Ground injured or caused damage to a third party’s person or property, and if a claim was advanced against Hanslip Demolition for those damages, that claim would likely be covered.

Lloyds Insurance Policy

[27] The policy which Lloyds issued to Breaking Ground was a commercial general liability policy, number 10029136, for the period January 16, 2022, to January 16, 2023 (“the Policy”).

[28] The Comprehensive General Liability policy provides in paragraph 1 the following:

1. INSURING AGREEMENT

To pay on behalf of the Insured all sums which the Insured shall become legally obligated to pay as compensatory damages, including damages for care and loss of services, because of

a) Bodily Injury b) Personal Injury c) Property Damage d) Advertising Liability

caused by an Occurrence during the period of insurance.

[29] The Policy defines Bodily Injury, Personal Injury, and Advertising Injury as:

Bodily Injury [means] actual or physical injury, mental anguish, mental injury, shock, sickness, disease or disability, including death at any time resulting therefrom, sustained by any person.

Personal Injury [means]:

(i) False arrest, detention or imprisonment, malicious prosecution; (ii) Libel, slander, defamation of character; (iii) Invasion of privacy, wrongful eviction or wrongful entry; (iv) Discrimination, unless insurance thereof is prohibited by law; (v) Humiliation; (vi) Harassment;

sustained by any person or organisation.

Advertising Liability [means]

(i) Libel, slander or defamation; (ii) Any infringement of copyright or of title or of slogan; (iii) Piracy or unfair competition or idea misappropriation under an implied contract; (iv) Any invasion of right of privacy;

committed, or alleged to have been committed during the period of insurance in any advertisement, article, broadcast, or telecast, and arising out of the Named Insured’s activities.

[30] The Policy defines Property Damage as:

(i) Injury to or destruction of tangible property, including loss of use thereof at any time resulting therefrom, or (ii) Loss of use of tangible property which has not been injured or destroyed.

Decision

[31] In its Third Party Claim, Hanslip Demolition is seeking coverage under the Policy.

[32] Hanslip Demolition asserts a claim against Lloyds for its costs of defending Breaking Ground’s action, and indemnity for the monies which Breaking Ground alleges are owed by Hanslip Demolition.

[33] In addition, Hanslip Demolition is seeking indemnity for the losses it incurred in addressing the allegedly deficient work of Breaking Ground, which are advanced in its counterclaim.

Rule 21

[34] Both claims asserted by Hanslip Demolition against Lloyds are grounded in the pleadings. It is on this basis that Lloyds brings this Rule 21 motion.

[35] Rule 21.01 of the Rules of Civil Procedure, R.R.O. 1990, Reg. 194 as amended, provides that a party may move to strike a pleading in certain circumstances:

21.01 (1) A party may move before a judge,

(b) to strike out a pleading on the ground that it discloses no reasonable cause of action or defence,

and the judge may make an order or grant judgment accordingly.

[36] When considering the application of Rule 21.01(1)(b), the allegations of fact in the pleadings are assumed to be capable of being proven, unless they are patently ridiculous or incapable of proof: see Hunt v. Carey Canada Inc., [1990] 2 S.C.R. 959, at p. 989; Paton Estate v. Ontario Lottery and Gaming Corporation, 2016 ONCA 458, 131 O.R. (3d) 273, at para. 12.

[37] Assuming the claims can be proven, in assessing whether a claim discloses a reasonable cause of action the court must consider a “plain and obvious” test. In other words, is it plain and obvious that the impugned claim discloses no reasonable cause of action: see Hunt, at p. 960; Tran v. University of Western Ontario, 2015 ONCA 295, at para. 16.

[38] The application of the plain and obvious test has been considered by the Supreme Court of Canada in R. v. Imperial Tobacco Canada Ltd., 2011 SCC 42, 3 S.C.R. 45, at para. 22:

A motion to strike for failure to disclose a reasonable cause of action proceeds on the basis that the facts pleaded are true, unless they are manifestly incapable of being proven. No evidence is admissible on such a motion. It is incumbent on the claimant to clearly plead the facts upon which it relies in making its claim. A claimant is not entitled to rely on the possibility that new facts may turn up as the case progresses. The claimant may not be in a position to prove the facts pleaded at the time of the motion. It may only hope to be able to prove them. But plead them it must. The facts pleaded are the firm basis upon which the possibility of success of the claim must be evaluated. If they are not pleaded, the exercise cannot be properly conducted. [Citations omitted].

[39] At the pleadings stage, it is the obligation of the courts to prevent claims which have no hope of proceeding. The focus of such an inquiry are the pleadings, which is why r. 21.01(2)(b) precludes the introduction of evidence other than the relevant pleadings. If a pleading fails to disclose a reasonable cause of action, the appropriate remedy is to strike the claim.

[40] In this motion, Hanslip Demolition included the affidavit of Allan Hanslip, sworn October 22, 2024, with attached exhibits A to Q in its Responding Motion Record. While this motion was argued on the basis of r. 21.01(1)(b), I note that evidence is permissible on a motion brought pursuant to r. 21.01(1)(a) with leave of the court or on consent of the parties. In this case, irrespective of this motion arising from r. 21.01(b), Lloyds did not consent to any evidence being filed by Hanslip Demolition, and Hanslip Demolition did not request leave. Accordingly, following the decision in Web Offset Publications v. Vickery (1990), 43 O.R. (3d) 802 (C.A.), except where documents were specifically referenced in the pleadings, I did not rely upon the evidence contained in the Responding Motion Record for my decision.

[41] Therefore, based upon the pleadings, the question is whether Lloyds has a duty to defend the claims against Hanslip Demolition, and whether there are claims which, if successful, Lloyds could be called upon to indemnify?

Duties to Indemnify and Defend

[42] As the duty to defend is based on the allegations made against the insured, Lloyds has a duty to defend Hanslip Demolition if the allegations made against it in the Statement of Claim commenced by Breaking Ground fall within coverage.

[43] Determining whether an insurer has a duty to defend involves interpreting the insurance policy. The court must consider whether the pleadings in the action allege facts that, if true, would be covered by the policy: see Tedford v. TD Insurance Meloche Monnex, 2012 ONCA 429, 112 O.R. (3d) 144, at para. 14.

[44] In Non-Marine Underwriters, Lloyd’s of London v. Scalera, 2000 SCC 24, 1 S.C.R. 551, at paras. 50–52, the Supreme Court set out a three-step process to be used in determining whether a given claim could trigger an insurer’s duty to defend:

[50] First, a court should determine which of the plaintiff’s legal allegations are properly pleaded. In doing so, courts are not bound by the legal labels chosen by the plaintiff. A plaintiff cannot change an intentional tort into a negligent one simply by choice of words, or vice versa. Therefore, when ascertaining the scope of the duty to defend, a court must look beyond the choice of labels, and examine the substance of the allegations contained in the pleadings. This does not involve deciding whether the claims have any merit; all a court must do is decide, based on the pleadings, the true nature of the claims.

[51] At the second stage, having determined what claims are properly pleaded, the court should determine if any claims are entirely derivative in nature. The duty to defend will not be triggered simply because a claim can be cast in terms of both negligence and intentional tort. If the alleged negligence is based on the same harm as the intentional tort, it will not allow the insured to avoid the exclusion clause for intentionally caused injuries.

[52] Finally, at the third stage, the court must decide whether any of the properly pleaded, non-derivative claims could potentially trigger the insurer’s duty to defend.

[45] The Court of Appeal for Ontario expanded on the Scalera test in TD Insurance Meloche Monnex, at para.14, and provided seven principles flowing from the framework:

(1) The insurer has a duty to defend if the pleadings filed against the insured allege facts which, if true, would require the insurer to indemnify the insured. (2) If there is any possibility that the claim falls within the liability coverage, the insurer must defend. (3) The court must look beyond the labels used by the plaintiff to ascertain the “substance” and “true nature” of the claims. It must determine whether the factual allegations, if true, could possibly support the plaintiff’s legal claims. (4) The court should determine if any claims plead are entirely “derivative” in nature…. A derivative claim will not trigger a duty to defend. (5) If the pleadings are not sufficiently precise to determine whether the claims would be covered by the policy, “the insurer’s obligation to defend will be triggered where, on a reasonable reading of the pleadings, a claim within coverage can be inferred”. (6) In determining whether the policy would cover the claim, the usual principles governing the construction of insurance contracts apply, namely: the contra proferentem rule and the principle that coverage clauses should be construed broadly and exclusion clauses narrowly…. As well, the desirability, where the policy is ambiguous, of giving effect to the reasonable expectations of the parties. (7) Extrinsic evidence that has been explicitly referred to in the pleadings may be considered to determine the substance and true nature of the allegations. [Citations omitted].

[46] The substance and true nature of Breaking Ground’s claim against Hanslip Demolition is the non-payment of debt owed for construction services performed on the Project. The Statement of Claim is not based in tort, nor in negligence. It simply alleges that Hanslip Demolition owes Breaking Ground for the value of the work which Breaking Ground undertook, as was agreed upon by the parties.

[47] Here, the only existing claim is the one where Hanslip Demolition did not pay the invoices of Breaking Ground. At most, this arises out of Hanslip Demolition’s operations, not Breaking Ground’s operations. Hanslip Demolition simply did not pay the invoices which were sent by Breaking Ground, and the non-payment arises from the fact that the rock crushed by Breaking Ground was not small enough. This is a breach of contract claim, not a claim grounded in negligence or tort.

[48] The claim of Breaking Ground is not derivative in nature.

[49] So, the question to be determined is whether the breach of contract claim amounting to a failure to pay for services rendered by Breaking Ground is covered under the Policy.

[50] The answer to that question is a clear and unequivocal “no”.

[51] The comprehensive general liability section of the Policy states that Lloyds will pay on behalf of an Insured all sums which the Insured shall become legally obligated to pay as compensatory damages, including damages for care and loss of services, because of bodily injury, personal injury, property damage or advertising liability caused by an occurrence during the period of insurance.

[52] In the Statement of Claim, the monies sought by Breaking Ground against Hanslip Demolition are not “compensatory damages”. No loss or damages are being claimed arising from bodily injury, personal injury, property damage or advertising liability.

[53] Breaking Ground’s claim against Hanslip Demolition does not trigger the Policy. As such, to the extent that the Third Party Claim is seeking a defence or indemnity under the Policy arising from the claim issued by Breaking Ground, there is no claim under the Policy which could be inferred.

Property Damage Claim

[54] The factum filed by Hanslip Demolition in support of its position in this motion included references to property damage and coverage which could arise on the basis of property damage.

[55] This is akin to a first party claim under the Policy in which Hanslip Demolition is claiming its property was damaged, which potentially triggers the Policy.

[56] First, there is no property of Hanslip Demolition which has been damaged. The quarry site location of the Project was not owned by Hanslip Demolition nor Breaking Ground. Hanslip Demolition cannot trigger the Policy on the basis of a property damage claim which is not rooted in “property”.

[57] The Policy does have a property section which covers property of Breaking Ground. However, the property covered is specifically laid out in the equipment schedule of the Policy, and includes two Furakawa Drills, a Comachhio Drill, an Altas Compressor Drill, and a John Deere Drill, all owned by Breaking Ground.

[58] There is no wording in the Policy which references any property of Hanslip Demolition.

[59] There is therefore no coverage in the Policy which could be extended to property damage incurred by Hanslip Demolition. The only coverage available is third party liability coverage for acts of Breaking Ground, which is clearly referenced in the Certificate of Insurance.

Allegations of Negligence in the Counterclaim

[60] Hanslip Demolition has advanced claims in negligence against Breaking Ground within its counterclaim. Arguably, these claims may trigger coverage under the Policy such that Lloyds owes a defence and indemnity to Breaking Ground. It does appear, however, that the claims of Hanslip Demolition are still rooted in contract, and the allegations that Breaking Ground did not perform its obligations under the contract between Breaking Ground and Hanslip Demolition are better characterized as a breach of contract instead of negligence. But I need not determine that issue since Breaking Ground – who is subject to those allegations stemming from the counterclaim – is not here seeking coverage under the Policy.

[61] Hanslip Demolition is seeking coverage which can only arise from the allegations advanced by Breaking Ground against the defendants in the Statement of Claim. In the absence of allegations triggering coverage in the Policy, the Third Party Claim seeking coverage has no reasonable prospect of success.

[62] Having said that, seeking a defence and indemnity under the Policy for claims against an insured is not the only way in which to access proceeds from an insurance policy. The Insurance Act can be used by a plaintiff to force an insurer to satisfy a successful claim which has not already been defended by an insurance company.

Application of the Insurance Act

[63] Without any coverage being triggered by the pleadings, the only way in which Hanslip Demolition can advance a valid claim against the Policy is through s. 132 of the Insurance Act, R.S.O. 1990, c. I.8, as amended.

[64] What Hanslip Demolition may be attempting to do with its counterclaim against Breaking Ground, for which it is claiming through the Third Party Claim, is maintain that the negligence of Breaking Ground caused Hanslip Demolition to incur compensatory damages. If Hanslip Demolition’s claim is truly based in negligence, and not a simple breach of contract claim, then arguably Breaking Ground may have a means to trigger the Policy, pursuant to the coverage available to Breaking Ground.

[65] There are many legal proceedings in which the alleged tortfeasor seeks coverage under an insurance policy without its insurer responding to the claim. There are various reasons why an insurer may not respond to a claim, many of which stem from insurance policy wordings which exclude varieties of coverages. When an insurer does not respond to a claim on behalf of its insured, there are avenues for the insured to “force” an insurance company to respond.

[66] In fact, this is what Hanslip Demolition was attempting to do in its Third Party Claim. As an additional insured, it is seeking coverage under the Policy. For reasons already provided, that attempt to trigger coverage is not going to succeed.

[67] In those situations where an insured does not take legal steps in order to engage an insurer, or where those steps do not result an insurance company acknowledging its obligations, there is a way in which a plaintiff suffering compensatory damages can take steps to legally bring that insurance company to the table.

[68] That way is through s. 132 of the Insurance Act. If Hanslip Demolition can satisfy the requirements of s. 132, then it can proceed with a claim against Lloyds.

[69] Unfortunately for Hanslip Demolition, s. 132 has not been satisfied.

[70] Section 132 of the Insurance Act reads as follows:

132 (1) Where a person incurs a liability for injury or damage to the person or property of another, and is insured against such liability, and fails to satisfy a judgment awarding damages against the person in respect of the person’s liability, and an execution against the person in respect thereof is returned unsatisfied, the person entitled to the damages may recover by action against the insurer the amount of the judgment up to the face value of the policy, but subject to the same equities as the insurer would have if the judgment had been satisfied.

[71] A review of s. 132 indicates that there are four prerequisites for it to be triggered.

[72] First, there must be liability for damage to a person or the property of another.

[73] Second, a judgment is required in favour of a plaintiff against a defendant.

[74] Third, the judgment obtained must be enforced, and in that effort, an execution is unsuccessful in satisfying the judgment.

[75] And fourth, the other person must be insured against the liability.

[76] As noted earlier, Lloyds may owe a defence and indemnity to Breaking Ground for the allegations advanced by Hanslip Demolition in its counterclaim. However, that claim belongs to Breaking Ground, and is not one which Hanslip Demolition can advance.

[77] If Hanslip Demolition does continue with its counterclaim against Breaking Ground and succeeds in its claim for the costs of doing the work which Breaking Ground was supposed to undertake, then it can advance a claim under s. 132(1) if Lloyds has not already acknowledged any available coverage to Breaking Ground.

[78] Before doing so, however, liability for Hanslip Demolition’s damages must be established through a judgment against Breaking Ground. In addition, Hanslip Demolition must be unsuccessful in attempting to realize upon its judgment. And finally, Hanslip Demolition must establish coverage under the Policy which extends to Breaking Ground for the losses claimed by Hanslip Demolition.

[79] Since the first step of this four-step process has not yet been completed, s. 132(1) is currently unavailable to Hanslip Demolition, and, as such, its Third Party Claim has no reasonable prospect of succeeding.

[80] Accordingly, it is my decision that the Third Party Claim of Hanslip Demolition against Lloyds shall be dismissed with costs.

Costs of the Motion

[81] As per my endorsement of October 28, 2024, Lloyds was the successful party in this matter and is entitled to its costs.

[82] No offers to settle were provided to me. As such, costs shall be awarded on a partial indemnity basis.

[83] Both Lloyds and Hanslip Demolition provided me with their positions on costs at the end of the motion hearing.

[84] In reviewing the Bill of Costs of Lloyds, I note that partial indemnity costs of $15,007.67 in fees is calculated on the basis of 65% of the actual costs of Lloyds. Generally, partial indemnity costs work out to roughly 60% of a party’s actual costs. In addition, I note that 4.0 hours were anticipated for arguing the motion, which ended up taking only 2.5 hours. Making these adjustments, the claim for partial indemnity costs works out to $13,039.54 in fees plus $362.11 in disbursements.

[85] In reviewing the Bill of Costs of Hanslip Demolition, partial indemnity costs of participating in the motion brought by Lloyds is suggested to be $13,575.40 which includes fees, HST and $219.73 in disbursements.

[86] In exercising my discretion under s. 131 of the Courts of Justice Act, and in considering the factors set out within r. 57.01(1), the costs claimed by both parties – of practically the same amounts – speak to r. 57.01(1)(0.b).

[87] In considering the principles of indemnity, the complexity of the issues raised by the parties, and the importance of these issues to both Lloyds and Hanslip Demolition, as well as the costs typically awarded in the Northwest Region for similar motions, a reasonable and fair amount of costs is assessed at $10,000, inclusive of fees, disbursements, and HST, which shall be payable by Hanslip Demolition to Lloyds.

“Original signed by” ___ The Hon. Justice S.J. Wojciechowski

Released: December 6, 2024