Court File and Parties

COURT FILE NO.: CV-17-571175-0000 DATE: 20240501 SUPERIOR COURT OF JUSTICE - ONTARIO

RE: ZAREEN HUSSAIN, Plaintiff AND: WAL-MART CANADA CORPORATION AND MARKHAM STEELES CROSSING AND M&R HOLDINGS, MARKHAM STEELES REALTY INC. AND UNITED SERVICES GROUP AND JOHN DOE MAINTENANCE COMPANY CSVN CLEANING SERVICES AND GUS TSIPAS, Defendants

BEFORE: Merritt J.

COUNSEL: Jennifer Singh, Counsel for the Defendant Wal-Mart Canada Corporation Arthur Rozumek, Counsel for the Defendant United Services Group

HEARD: March 14, 2024

Endorsement

Overview

[1] The defendant Wal-Mart Canada Corporation (“Wal-Mart”) moves for summary judgment with respect to its crossclaim against the defendant United Services Group (“United”). In the action, the plaintiff alleges she slipped and fell as she was exiting a Wal-Mart store (the “Premises”) and was injured.

[2] Wal-Mart and United entered into a Facilities Maintenance Services Agreement (the “Agreement”) whereby United was responsible for maintenance of the parking lot, sidewalks, curb areas and driveways.

[3] United was responsible for having a comprehensive general liability insurance policy (the “Policy”) with coverage for personal injury liability and bodily injury arising from the business operations conducted by United on the Premises. United was to have Wal-Mart named as an additional insured. United did not list Wal-Mart as an insured on the Policy.

[4] Wal-Mart crossclaims against United for damages for breach of contract including the cost of defending the action as well as any amounts it may be found liable to pay to the plaintiff. At the hearing of the motion, counsel for Wal-Mart advised that Wal-Mart is not pursing any future costs incurred in defending the action because it has tentatively settled the action with the plaintiff.

Decision

[5] There is no issue requiring a trial with respect to United’s breach of the Agreement. United breached the Agreement when it failed to name Wal-Mart under the Policy. Had it done so, United’s insurer would have been obligated to defend Wal-Mart. It is premature to determine whether United or its insurer have an obligation to indemnify Wal-Mart under the Agreement and a trial is required on this issue. Walmart is entitled to damages for breach of the duty to defend in the amount of the legal fees it spent defending the action, but I am unable to quantify those damages without a trial of that issue. The trial of that issue may be determined on affidavit evidence.

Positions of the Parties

[6] Wal-Mart’s position is that if United had named Wal-Mart as a named insured under the Policy, United’s insurer would be obligated to defend and indemnify Wal-Mart with respect to the plaintiff’s claims that she suffered injuries as a result of a failure to inspect and maintain the Premises.

[7] United’s position is that Wal-Mart is not entitled to reimbursement of its costs to date and there is insufficient evidence to determine whether United must indemnify Wal-Mart. The Agreement did not require United to obtain insurance coverage for or to indemnify Wal-Mart generally; rather, it required a policy and indemnification only for claims that arise out of the performance of services under the Agreement. The services to be performed required United to pick up garbage, litter, and debris on specific days and to maintain a clean and tidy appearance. It did not require United to inspect for or warn customers about unsafe conditions or safety hazards, or to implement a system to address all of the store’s maintenance needs or to prevent injuries to customers.

Issues

[8] The question is whether any of the following issues require a trial:

1. Did United breach the Agreement?
2. Would the plaintiff’s allegations have triggered the duty to defend?
3. Is United required to indemnify Wal-Mart?
4. What are Wal-Mart’s damages?

Analysis

[9] Rule 20.04(2)(a) of the Rules of Civil Procedure, R.R.O. 1990, Reg. 194 (the “Rules”), provides: “The court shall grant summary judgment if the court is satisfied that there is no genuine issue requiring a trial with respect to a claim or defence”.

[10] Rule 20.04(2.1) sets out the court's powers on a motion for summary judgment:

In determining under clause (2)(a) whether there is a genuine issue requiring a trial, the court shall consider the evidence submitted by the parties and, if the determination is being made by a judge, the judge may exercise any of the following powers for the purpose, unless it is in the interest of justice for such powers to be exercised only at a trial:

1. Weighing the evidence.
2. Evaluating the credibility of a deponent.
3. Drawing any reasonable inference from the evidence.

[11] In Hryniak v. Mauldin, 2014 SCC 7, [2014] 1 S.C.R. 87, at para. 66, the Supreme Court of Canada established a road map outlining how a motions judge should approach a motion for summary judgment:

[T]he judge should first determine if there is a genuine issue requiring trial based only on the evidence before her, without using the new fact-finding powers. There will be no genuine issue requiring a trial if the summary judgment process provides her with the evidence required to fairly and justly adjudicate the dispute and is a timely, affordable, and proportionate procedure, under Rule 20.04(2)(a). If there appears to be a genuine issue requiring a trial, she should then determine if the need for a trial can be avoided by using the new powers under Rules 20.04(2.1) and (2.2). She may, at her discretion, use those powers, provided that their use is not against the interest of justice. Their use will not be against the interest of justice if they will lead to a fair and just result and will serve the goals of timeliness, affordability, and proportionality in light of the litigation as a whole. [Emphasis in original.]

[12] There is no genuine issue requiring a trial when the court is able to reach a fair and just determination on the merits of the motion. This will be the case where the process (1) allows the court to make necessary findings of fact, (2) allows the court to apply the law to the facts, and (3) is a proportionate, more expeditious, and less expensive means to achieve a just result: Hryniak, at para. 49; Moffitt v. TD Canada Trust, 2023 ONCA 349, 483 D.L.R. (4th) 432, at paras. 39-40.

[13] The court should use its enhanced powers and decide a motion for summary judgment only where it leads to "a fair process and just adjudication": Ang v. Lin, 2023 ONSC 4446, at para. 15, citing Mason v. Perras Mongenais, 2018 ONCA 978, at para. 44; Eastwood Square Kitchener Inc. v. Value Village Stores, Inc., 2017 ONSC 832, at paras. 3-6 (and cases cited therein).

[14] In Joshi v. Chada, 2022 ONSC 4910, Glustein J. set out the relevant legal principles applicable to summary judgment as follows:

(i) The purpose of r. 20 of the Rules is to (a) eliminate claims that have no chance of success at trial, and (b) provide judges with fact-finding powers to be used on a summary judgment motion: Hryniak, at paras. 44-45, 66; (ii) The evidence on a summary judgment motion must enable the motion judge to be confident that they can fairly resolve the dispute: Hryniak, at para. 57; (iii) The motion judge’s enhanced powers allow the court to weigh evidence, evaluate credibility, and draw reasonable inferences from the evidence: Mega International Commercial Bank (Canada) v. Yung, 2018 ONCA 429, 141 O.R. (3d) 81, at para. 83; (iv) The focus of a summary judgment motion is not on what kind of evidence could be adduced at trial, but rather on whether a trial is required: Hryniak, at para. 56; (v) The court is entitled to assume that it has all the evidence that would be available at trial related to the matters at issue: Portuguese Canadian Credit Union v. Pires, 2011 ONSC 7448, at para. 11, aff’d 2012 ONCA 335; (vi) The moving party has the onus of proving that there is no genuine issue requiring a trial. Then, the onus shifts to the responding party to provide evidence of specific facts showing that there is a genuine issue requiring a trial: Sweda Farms Ltd. et al. v. L.H. Gray & Son Limited et al., 2013 ONSC 4195, at paras. 26-27, leave to appeal refused, 2014 ONSC 3016; (vii) Summary judgment is not appropriate if the credibility of the parties is squarely in issue and requires a trial: Demetriou v. AIG Insurance Company of Canada, 2019 ONCA 855, 97 C.C.L.I. (5th) 204, at para. 9; (viii) The more important credibility disputes are to determining key issues, the harder it will be to fairly adjudicate those issues solely on a paper record. “It is not always a simple task to assess credibility on a written record. If it cannot be done, that should be a sign that oral evidence or a trial is required”: Cook v. Joyce, 2017 ONCA 49, at para. 92, citing Trotter Estate, 2014 ONCA 841, 122 O.R. (3d) 625, at para. 55; and (ix) The court must take “great care” in assessing credibility and reliability on affidavit evidence, since “[e]vidence by affidavit, prepared by a party’s legal counsel, which may include voluminous exhibits, can obscure the affiant’s authentic voice”. Consequently, the motion court must “ensure that decontextualized affidavit and transcript evidence does not become the means by which substantive unfairness enters, in a way that would not likely occur in a full trial where the trial judge sees and hears it all”: Baywood Homes Partnership v. Haditaghi, 2014 ONCA 450, 120 O.R. (3d) 438 (C.A.), at para. 44.

[15] Partial summary judgment should only be granted in the clearest of cases where there are issues that can be readily bifurcated, and which do not give rise to risks of delay, expense, inefficiency and inconsistent findings. It must be appropriate in the context of the litigation as a whole: Truscott v. Co-Operators General Insurance Company, 2023 ONCA 267, 482 D.L.R. (4th) 113, at para. 54.

[16] In considering whether to grant partial summary judgment I must consider whether (i) there is a risk of duplicative or inconsistent findings at trial; and (ii) whether granting partial summary judgment is advisable in the context of the litigation as a whole: Butera v. Chown Cairns LLP, 2017 ONCA 783, 137 O.R. (3d) 561, at paras. 27-28.

Issue 1. Did United breach the Agreement?

[17] United breached the Agreement which required it to take out a commercial general liability policy with Wal-Mart named as an additional insured.

[18] Section 7.1 of the Agreement provides:

The Service Provider shall, at its sole cost and expense, take out and keep in full force and effect at all times during the Term, with an insurer which is acceptable to Wal-Mart, a comprehensive commercial general liability insurance policy for bodily injury and property damage with limits in an amount of not less than Two Million ($2,000,000.00) Dollars per occurrence (the "Policy").… The Service Provider shall cause the Policy to name Wal-Mart as an additional insured to the extent of the obligations of the Service Provider under this Agreement and shall contain a waiver of subrogation provision in favour of Wal-Mart.

[19] After being served with the claim, Wal-Mart requested a defence and indemnity from United’s insurer and a copy of the certificate of insurance. On May 29, 2020, United advised Wal-Mart that it was not named as an additional insured on the Policy.

Issue 2. Would the plaintiff’s allegations have triggered the duty to defend?

[20] In determining whether there is a duty to defend, only the pleadings and documents referred to in the pleadings are relevant: Bentley v. Hastings (County), 2017 ONSC 2980, 68 C.C.L.I. (5th) 334, at para. 20.

[21] If the pleadings allege facts which, if true, would require the insurer to indemnify the insured for the claim, the insurer is obligated to defend the claim: Monenco Ltd. v. Commonwealth Insurance Co., 2001 SCC 49, [2001] 2 S.C.R. 699, at para. 28. The duty to defend is triggered where, on a reasonable reading of the pleadings, a claim within the coverage can be inferred: Monenco Ltd., at para. 31.

[22] The test is whether there is a possibility that the claim falls within the insurance coverage: Progressive Homes Ltd. v. Lombard General Insurance Co. of Canada, 2010 SCC 33, at para. 19.

[23] United relies on Non-Marine Underwriters, Lloyd's of London v. Scalera, 2000 SCC 24, [2000] 1 S.C.R. 551, for the proposition that the court must determine the true nature of the claim. Scalera is distinguishable. In Scalera, the plaintiff was trying to dress up an assault claim as a negligence claim to attract coverage. That is not the case here. The plaintiff is claiming the defendants’ negligence caused her injuries.

[24] The plaintiff claims that on March 12, 2015, she slipped and fell at the Premises and that the incident was caused by the negligence of Wal-Mart, United and the other defendants.

[25] The allegations of the defendants’ negligence in the Amended Statement of Claim include:

• They failed to properly inspect the premises for unsafe conditions;
• They failed to hire an adequate number of agents or employees to implement a system of property maintenance;
• They hired incompetent servants, agents, or employees;
• They failed to properly train their agents or employees in their duties of property maintenance; and
• They permitted an unsafe condition to exist on the premises thereby setting a trap for a person such as the Plaintiff; and
• They failed to take reasonable steps to ensure that customers of the premises, including the Plaintiff, were not exposed to a risk of injury.

[26] Following a demand for particulars, the plaintiff responded with a letter dated June 22, 2017, where she advised that the fall occurred outside at approximately 4:00 p.m. as the plaintiff was exiting the Premises in front of the automatic doors, and that she felt a metal piece or stone under her foot which caused her to roll her foot and fall to the ground (the “Response Letter”). On July 31, 2017, Wal-Mart wrote confirming that the Response Letter would constitute formal particulars. The plaintiff did not respond.

[27] United submits that I should not consider the Response Letter in determining coverage because I should only rely on the allegations in the pleadings and the particulars were not provided by way of direct evidence from the plaintiff taken under oath.

[28] I accept that the Response Letter constitutes a response to a demand for particulars in the circumstances of this case. The Rules do not require that particulars be provided by way of an affidavit. The plaintiff’s lawyer did not respond or object after Wal-Mart advised it would treat the response letter as formal particulars.

[29] The function of particulars is to limit the generality of pleadings and define the issues to be tried: Sleep Clinic London Inc. v Merchea, 2012 ONSC 3004, 110 O.R. (3d) 657, at para. 32, citing the Court of Appeal in Int. Nickle Co. v. Travelers Indemnity Co., [1962] O.W.N. 109.

[30] It is appropriate to consider the Response Letter in determining whether the claims advanced by the plaintiff trigger the duty to defend: Sinclair v. Town of Markham, 2014 ONSC 1550, 27 M.P.L.R. (5th) 32 at para. 13-14.

[31] The court in Monenco Ltd. did not establish a general rule that no extrinsic evidence can ever be considered to determine the substance and true nature of the allegations in order to define the nature and scope of the duty to defend. The court specifically did not decide the extent to which extrinsic evidence could be considered: Monenco Ltd., at para. 36.

[32] The reason the court cautioned against considering extrinsic evidence is that in doing so a court might consider “premature evidence” that would require findings to be made that would affect the underlying litigation. A response to a demand for particulars is akin to a pleading and is not extrinsic evidence that offends the “trial within a trial” concern that the Supreme Court warned against in Monenco Ltd.

[33] I turn then to the coverage that United was required to obtain for Wal-Mart.

[34] Section 7.1 of the Agreement requires United to name Wal-Mart as an additional insured “to the extent of the obligations of the Service Provider under this Agreement”. Wal-Mart submits that this wording is akin to “arising out of the operations”. I agree.

[35] In the context of insurance coverage, “arising from” means an unbroken chain of causation that is more than merely incidental or fortuitous. “Operations” means “the creation of a situation, or circumstance, that is connected in some way to the alleged liability”: Sky Clean Energy Ltd. (Sky Solar (Canada) Ltd.) v. Economical Mutual Insurance Company, 2020 ONCA 558, 152 O.R. (3d) 159, at para. 101.

[36] The plaintiff’s allegations against Wal-Mart include a failure to inspect and maintain the Premises and a failure to hire proper agents to do so.

[37] Schedule A of the Agreement provides:

A.02 The SERVICE PROVIDER shall supply all necessary equipment, labor, materials, supplies and transportation required to ensure a clean & tidy appearance of all exterior areas of the property at all times during the calendar year. All Services are to be provided on each Monday, Thursday, Saturday and Sunday of every week.

A.03 The SERVICE PROVIDER will collect all garbage, litter, debris, etc. from within the boundaries of the Walmart property including but not limited to;

• parking lots;
• sidewalks;
• curb areas;
• driveways;
• buggy corral areas;
• grass areas, plant and shrub beds or other cultivated areas; and
• receiving and loading dock areas including a cleaning of the inside of the trench drains at the beginning of Spring and end of Autumn

A.04 The SERVICE PROVIDER will spot sweep all non-landscaped areas within the boundaries of the Walmart property including but not limited to;

• parking lots;
• sidewalks;
• curb areas;
• paving stones;
• driveways; and
• buggy corral areas

A.05 The SERVICE PROVIDER will complete the cleaning & sweeping of the Walmart property at least one (1) hour prior to opening of business.

A.06 The SERVICE PROVIDER will be responsible for the offsite disposal of all collected garbage, litter and debris in accordance with all applicable municipal, provincial and federal laws and regulations.

[Emphasis in original.]

[38] There is a possibility that the plaintiff’s allegations in her claim fall within the extent of the obligations of United under the Agreement and would have triggered a duty to defend had Wal-Mart been a named insured. If the debris upon which the plaintiff fell, as she alleges, was left there after United performed its services under the Agreement, there would be an unbroken chain of causation that is more than merely incidental or fortuitous and United would have created a situation or circumstance that is connected in some way to the alleged liability.

[39] Even if I am wrong about finding that I can consider the Response Letter, I find that there is a possibility that the plaintiff’s allegations would have come within the covered claims and triggered a duty to defend. The plaintiff alleges she fell due to Wal-Mart’s negligence and that negligence included failing to hire competent, or enough, agents or employees, permitting an unsafe condition, and failing to take reasonable steps to ensure that customers were not exposed to a risk of injury.

Issue 3: Is United required to indemnify Wal-Mart?

[40] Section 8.1 of the Agreement provides:

The Service Provider shall indemnify and save Wal-Mart, its directors, officers, employees and agents, harmless from and against any and all claims, damages, losses, liabilities, demands, judgments, causes of action, legal proceedings, economic loss (including lost profits), penalties or other sanctions and any and all costs and expenses arising in connection therewith (including legal fees and disbursements on a substantial indemnity basis) which may, directly or indirectly, result from, arise out of or be in relation to (i) the performance by the Service Provider or any of its employees, subcontractors or other persons for whom it is responsible of the Services; (ii) any breach, violation or non-performance by the Service Provider or any of its employees, subcontractors or other persons for whom it is responsible of any term, condition, representation, warranty or covenant contained in this Agreement; (iii) any failure or delay by the Service Provider to make or maintain any registration, coverage or payments or file any return or information required by any law; and/or (iv) any negligent or wilful act or omission of the Service Provider or any of its employees, subcontractors or other persons for whom it is responsible at law or in equity.

[41] The Agreement requires United to indemnify Walmart and hold it harmless with respect to services it provides under the Agreement, and not generally for all claims regarding litter, garbage, or debris.

[42] United does not have a general duty under the Agreement to inspect and maintain the Premises and keep them safe. Under the Agreement United was obligated to clean on specified days. United was not required to perform services during the store’s open hours. The Agreement specifically provides that the cleaning and sweeping is to be done at least one hour prior to the opening of the business. The plaintiff fell leaving the store at 4:00 p.m.

[43] Wal-Mart tentatively settled the plaintiff’s action prior to discoveries. The plaintiff’s description of falling on a piece of metal or stone was provided in the response to the demand for particulars in a letter from her lawyer. The defendants had no ability to test the plaintiff’s evidence or compare it to the evidence of the defendants.

[44] Wal-Mart has produced no surveillance footage to show that United left litter or debris after performing its cleaning services under the Agreement.

[45] There is no statement or evidence from the Assistant Manager (who was the first to attend the scene where the plaintiff fell) as to what he saw.

[46] At this point, it is premature to determine whether the plaintiff’s claim against Wal-Mart directly or indirectly results from, arises out of or is in relation to United’s performance or any breach, violation, or non-performance by United of any term, condition, representation, warranty or covenant contained in the Agreement. As set out above, if the debris was left by United it may well be obligated to indemnify Wal-Mart. However, if the debris was left there after United cleaned the premises it may not be obligated to indemnify Wal-Mart.

[47] I cannot find that the plaintiff tripped on debris, let alone infer it was left there by United after its cleaning before the store opened.

[48] The issue of whether United is obligated to indemnify Wal-Mart is a genuine issue requiring a trial.

[49] This is a clear case where the issues of the duty to defend and the duty to indemnify can be readily bifurcated and do not give rise to inconsistent findings. Partial summary judgment is appropriate.

Issue 4: What are Wal-Mart’s damages?

[50] Wal-Mart is entitled to damages for breach of the Agreement. The damages that flow from a breach of an agreement to provide insurance are equal to the insurance that would have been available if insurance were in place: Papapetrou v. 1054422 Ontario Ltd., 2012 ONCA 506, 111 O.R. (3d) 532, at paras. 34, 54; Ashcroft Homes Inc. v. Aviva Insurance Company of Canada et al., 2019 ONSC 4634, 3 C.L.R. (5th) 69, at para. 21.

[51] In this case, some of the plaintiff’s allegations, such as failing to warn her of or post signs regarding unsafe conditions, do not fall within the extent of United’s obligations under the Agreement.

[52] Where there is a mix of covered and uncovered claims advanced in a pleading, and the language of the policy requires the insurer to pay all costs of defending covered claims, the insurer must pay for the defence of the covered claims even if in doing so it advances the defence of the uncovered claims. The insurer is not responsible if there are severable expenses associated only with defending the uncovered claims: Papapetrou, at paras. 32, 51; Carneiro v. Durham (Regional Municipality), 2015 ONCA 909, 55 C.C.L.I. (5th) 1, at paras. 13, 19-22; and Hanis v. University of Western Ontario, 2008 ONCA 678, 92 O.R. (3d) 594, at paras. 2, 23.

[53] There is no evidence that the uncovered claims required extricable defence efforts or that United’s commercial general liability Policy provides for an allocation of defence costs. This case was tentatively settled at a very early stage. Most of the costs incurred would have been for investigating the circumstances giving rise to the fall and the plaintiff’s injuries. These costs would have been incurred whether Wal-Mart was defending the plaintiff’s covered or uncovered claims.

[54] United submits that it may have a claim for contribution under Wal-Mart’s insurance policy because if there is overlapping coverage for concurrent costs they may be apportioned. United is required to put its best foot forward on a motion for summary judgment and I have no evidence of overlapping coverage.

[55] Had United not breached the Agreement, the insurer would have been obligated to pay Wal-Mart’s defence costs.

[56] United is liable for Wal-Mart’s reasonable defence costs: Hanis, at para. 23.

[57] Wal-Mart claims that it has incurred costs of $39,333.91 in defending the action. United submits that the costs are unusually high for the defence of a straightforward personal injury claim and Wal-Mart has not produced dockets. Wal-Mart submits that its costs also include the time spent on the crossclaim addressing the coverage issues but not the costs associated with this motion for summary judgment. I find that Wal-Mart’s damages for United’s breach of contract should include both Wal-Mart’s legal costs of defending the plaintiff’s claim and the costs associated with addressing the crossclaim.

[58] I encourage counsel to agree on the quantum of damages given my findings. If counsel cannot agree on damages, then I order a trial on the issue of quantum of damages pursuant to r. 20.05(1) and that evidence of damages be given by affidavit pursuant to r. 20.05(2)(j).

Costs

[59] If the parties cannot agree on the issue of costs, I will consider brief written submissions. These costs memoranda shall not exceed three pages in length (not including any bills of costs or offers to settle). Wal-Mart shall file their costs submissions within 15 days of the date of this endorsement. United shall file their costs submissions within 15 days of the receipt of Wal-Mart’s materials. Wal-Mart may file a brief reply within five days thereafter. If submissions are not received by May 31 2024, the file will be closed, and the issue of costs considered settled.

Merritt. J. Date: May 1, 2024.