Court of Queen ’ s Bench of Alberta Citation: Sun Life Assurance Company of Canada v. 671095 Alberta Ltd., 2010 ABQB 814 Date: 20101217 Docket: 0803 04842 Registry: Edmonton Between: Sun Life Assurance Company of Canada Plaintiff - and - 671095 Alberta Ltd. carrying on business as “ Charger Installations ” , Howalta Electrical Services Inc., Action Electrical Ltd., V & S Roofing Inc, Robert Graves, CDI Career Development Institutes Ltd., Shauna Godin, and Lisa McCaskill Defendants _______________________________________________________ Reasons for Decision of the Associate Chief Justice J.D. Rooke _______________________________________________________ I. Introduction and Executive

Summary

[ 1 ] The Applicant, CDI Career Development Institutes Ltd. (CDI), leased a portion of the Plaintiff’s premises that were destroyed by fire; the other Applicant, Shauna Godin, was an employee of CDI . The Plaintiff sued a number of defendants and then discontinued its action against CDI and Godin, based on the Plaintiff’s

interpretation of the legal effect of certain provisions in the lease requiring CDI to contribute to the cost of the Plaintiff’s fire insurance. [ 2 ] CDI and Godin (collectively CDI for convenience) now seek to strike or dismiss certain Claims against Co-Defendant filed by some of the remaining Defendants under what was Rule 77 and is now Rule 3.43. [ 3 ] CDI argues they are not tort-feasors who would, if sued, be liable to the Plaintiff under s. 3.1 of the Tort-feasors Act , R.S.A. 2000, c. T - 5 (the “ Act ”). [ 4 ] My view, in

summary, is that the fact that the tenant’s property damage from fire is covered by insurance placed by the landlord (and contributed to by the tenant in accordance with the lease) does not absolve the tenant from liability for negligence to third parties. This may differ from liability to the landlord or those claiming through the landlord. [ 5 ] For the reasons that follow, this application is dismissed, with costs in any event of the cause, payable at the end of the cause. II. Pertinent Facts and Positions [ 6 ] The facts (at least for the purposes of this application) are not in dispute.

Howalta Electrical Services Inc. (Howalta) agrees with the facts set out by the Plaintiff as summarized below. [ 7 ] CDI leased a portion of the Plaintiff’s premises located at 8651 – 51 Avenue, Edmonton, Alberta.

The lease required CDI to pay a proportionate share of the costs of the Plaintiff’s fire insurance on the premises, and it did. [ 8 ] On March 28, 2007, the premises were destroyed by fire. [ 9 ] The Plaintiff sued the Applicants and six others, but discontinued the action against CDI when it considered the effect of CDI having contributed to the cost of the Plaintiff’s fire insurance. [ 10 ] Before the discontinuance was filed, each of the other Defendants: 671095 Alberta Ltd., carrying on business as “Charger Installations”, Howalta Electrical Services Inc., V & S Roofing Inc. and Robert Graves (collectively “Other Defendants”), filed and served CDI with Claims against Co-Defendants. [ 11 ] CDI claims that the Other Defendants have wrongfully refused to discontinue or withdraw their Claims.

However, one of the Other Defendants, Howalta, takes the position that, under a proper reading of the Act , and the authorities, CDI is a party “who would, if sued, be liable to the plaintiff”, and accordingly argue that its Claim against Co-Defendant should stand. [1] III. The Issue [ 12 ] Counsel for CDI states, and Counsel for Howalta agrees, that the issue, modified to take into account the new Rules, is: Are CDI and Godin entitled to have the Claims against Co-Defendants filed against them struck or dismissed on the basis that they are not tort-feasors who would, if sued, be liable to the Plaintiff?

[ 13 ] CDI asserts that if a tenant is not liable to the landlord, there can be no claim for contribution for any liability of other third party tort-feasors under the Act .

CDI further argues that the trilogy of Supreme Court of Canada cases [2] has held that where the risk is allocated between the landlord and tenant, any potential liability is “automatically” ( my word) excluded under the Act . [ 14 ] Howalta, however, asserts that, for the tenant to escape a claim for contribution to any third party tort-feasor’s liability, it is not enough that the landlord (Plaintiff) and tenant (CDI) have allocated the risk to the landlord in the context of their individual claims for loss in property through insurance, but that the tenant must have been (by the lease, contract, or statute) specifically exonerated from any tortious liability.

Howalta further argues that the trilogy merely allocates the risk between the landlord and tenant, and does not exonerate the tenant from potential liability to contribute to any third party joint tort-feasors. IV. The Legislation [ 15 ] The relevant provisions of the Act provide as follows: 3(1) When damage is suffered by any person as a result of a tort ..., …

c) any tort-feasor liable in respect of that damage may recover contribution from any other tort-feasor who is, or would, if sued, have been liable in respect of the same damage, whether as a joint tort-feasor or otherwise, but no person is entitled to recover contribution under this

section from any person entitled to be indemnified by the person first mentioned in respect to the liability regarding which the contribution is sought. [Emphasis added.] [ 16 ] Applying those words to the parties here, I believe it would read, in effect (allowing for the fact that liability is not yet proven): When the Plaintiff suffers tort damage, the Other Defendants, who are potentially liable for that damage, may recover contribution from CDI, another potentially liable tort-feasor, who, if sued, might be liable in respect of the same damage.

However, the Other Defendants are not entitled to recover contribution from CDI, if CDI is indemnified by the Plaintiff for the damage. V. Analysis A. CDI [ 17 ] Under the lease, CDI is entitled to have its property losses suffered in the fire paid for by the insurance which the Plaintiff undertook to secure, and for which CDI contributed to the premiums. That is a stand alone matter, and should be the end of confusing reference to the presence of insurance: Petro-Canada Inc. v.

Singer Valve (1991), 1993 CanLII 7166 (AB KB) , 146 A.R. 97 (Q.B. - Sulatycky J.), at para. 33; appeal dismissed without reasons: (1992), 1992 ABCA 286 (CanLII) , 131 A.R. 398 (C.A.). [ 18 ] It is also clear that a potential joint tort-feasor (such as CDI) is exempted from liability under the Act , if liability is extinguished by some other factor. [ 19 ] An example of extinguishment would be an applicable limitation date : County of Parkland No. 31 v. Stetar et al. , 1974 CanLII 198 (SCC) , [1975] 2 S.C.R. 884, at para. 29 , relying on Lord Denning in Hart v.

Hall & Pickles Ltd. , [1969] 1 Q.B. 405, [1968] 3 All E.R. 291 , who said at p. 293:

If he has been held not liable on the merits of the case, clearly he cannot be sued for contribution. If he has been saved from liability by reason of the Statute of Limitations, again he cannot be sued for contribution. See also : J. R. Paine & Associates Ltd. v . Strong, Lamb & Nelson Ltd. (1979), 1979 ABCA 212 (CanLII) , 103 D.L.R. (3d) 579, [1979] 6 W.W.R. 353 (Alta. C.A.); and Canada Deposit Insurance Corp. v . Prisco (1996), 1996 CanLII 17968 (AB CA) , 181 A.R. 161, 38 Alta. L.R. (3d) 97 (Alta. C.A.).

There is no limitation period issue here. [ 20 ] Another case of extinguishment would be an express contractual exculpation between a plaintiff and a defendant: Dominion Chain Co. v. Eastern Construction Co. 1978 CanLII 39 (SCC) , [1978] 2 S.C.R. 1346.

Again that is not the case here. [ 21 ] I agree with Howalta’s argument that a full consideration of the cases in some depth does not support the proposition that a landlord’s purchase of fire insurance for the tenant’s benefit is sufficient to place the tenant beyond the reach of other potential tort- feasors seeking contribution. [ 22 ] I further agree with Counsel for Howalta that CDI cannot succeed on the basis of the Supreme Court’s trilogy cases, because they also contemplate an extension of insurance coverage to the tenant’s benefit, not the tenant’s exculpation from tortious liability.

These are conceptually and significantly distinct principles. [ 23 ] To illustrate this, in Cummer-Yonge , notwithstanding “damage from a fire originating in the tenant's premises and caused by its negligence”, the Court held that the payment of insurance premiums by the tenant entitled the tenant to the benefit of the landlord’s insurance coverage (at para. 11). The Court indicated that the issue was not one dealing with the

interpretation of the insurance policy, but, rather, the terms of the lease.

The Court did not find that the extension of the insurance policy to the tenant’s benefit was an exculpation of the tenant’s tort liability, expressly distinguishing this mutual contractual obligation to pay premiums and receive the benefit of insurance from any potential exculpatory language which might have reduced or eliminated such tort liability (at para. 13): But be that as it may, we are not faced in this case with an exculpatory clause which is predicated upon the existence of some liability which that clause would reduce or eliminate.

In other words, as I interpret it, the Court found that while a specific clause might potentially extinguish tortuous liability, such a clause was not present and a lease provision that merely provided for coverage for the tenant’s loss did not do that. [ 24 ] A similar distinction was further clarified in Pyrotech , which provided that, aside from coverage for its property damage, the tenant “may well be liable to answer for negligence in other respects...” (at para 9). [ 25 ] See also Smith , at para. 10, where the Court found that, while the landlord provided insurance for the tenant’s loss from fire, it was not a case where there was “some provision exonerating one contracting party from liability to the other for the former’s negligence”. [ 26 ] While I do not need to determine the reason that the Plaintiff terminated its action against CDI and Godin, Counsel for Howalta provides an explanation that flows from the trilogy cases: A corollary of that covenant [to provide insurance] is that the insurer, when subrogating, cannot subrogate against its own insured.

To the extent the applicant [CDI and Godin] enjoys immunity from the plaintiff, and the plaintiff has discontinued its proceedings, it is a result of the principles of insurance law, and not as a result of its liability being extinguished. In other words, the position of the landlord’s insurer could be not better than the landlord’s claim as against the tenant, and as between

In other words, the position of the landlord’s insurer could be not better than the landlord’s claim as against the tenant, and as between the landlord and the tenant , the risk of loss passed to the landlord. That does not mean that the tenant is not liable as a co-defendant for tort liability here, where the claim is not brought by way of subrogation through the landlord. This would tend to be supported by the cases that CDI relied upon, which might contractually terminate the liability of CDI to the Plaintiff , but not Other Defendants: Seig Estate v . Plante Estate (1990), 1990 ABCA 28 (CanLII) , 71 Alta.

L.R. (2d) 394, [1990] 3 W.W.R. 191(Alta. C.A.); Northwestern Metal & Salvage Ltd. v . Alltar Roofing Ltd. (1994), 1994 ABCA 204 (CanLII) , 19 Alta. L.R. (3d) 439, 25 C.C.L.I. (2d) 116 (Alta. C.A.); Alberta Importers and Distributers

(1993) Inc. v . Phoenix Marble Ltd. , 2008 ABCA 177 , 88 Alta. L.R. (4th) 225 (Alta. C.A.); and 1044589 Ontario Inc., carrying on business as Nantucket Business Centre v . AB Autorama, 2009 ONCA 654 , 98 O.R. (3d) 263 (Ont. C.A). [ 27 ] However, based on the principle in Petro -Canada , issues of insurance should be disregarded in the context of the issues here. [ 28 ] In the result, I find that the application of CDI must fail. B. GODIN [ 29 ] Howalta did not join issue on this argument. [ 30 ] Counsel for the applicants argued that, in effect, Godin should have the same rights that CDI does.

He relied upon: London Drugs Ltd. v. Kuehne & Nagel International Ltd. , 1992 CanLII 41 (SCC) , [1992] 3 S.C.R. 299, 97 D.L.R. (4th) 261 (S.C.C.), at paras. 95 and 101 ; and Tony & Jim’s Holdings Ltd. v. Silvia (1999), 1999 CanLII 969 (ON CA) , 43 O.R. (3d) 633, 170 D.L.R. (4 th ) 193 (Ont. C.A.). [ 31 ] If CDI had been successful, this might have meant the same result for Godin, but CDI was not successful. Therefore, absent other issues of vicarious liability, the same result would apply to CDI’s employee, Godin, as a matter of contribution among tort-feasors. VI.

Conclusion [ 32 ] The application before the Court in this matter is dismissed, with costs in any event of the cause, payable at the end of the cause. Heard on the 3 rd day of November 2010. Dated at the City of Edmonton, Alberta this 17 th day of December 2010. J.D. Rooke A.C.J.C.Q.B.A. Appearances:

K.F. Bailey, Q.C. Parlee McLaws for the Plaintiff Louis M.H. Belzil Rackel Belzil for the Defendant Howalta Electrical Services Inc. Havelock B. Madill Brownlee LLP for the Defendant CDI Career Development Institutes Ltd. Jonathan W. McCully Sharek Logan & Van Leenan for the Defendant V & S Roofing Inc. John R. Carlson Dean Duckett Carlson for the Defendant 671095 Alberta Ltd. carrying on business as Charger Installations Sharon R.

Stefanyk Field LLP for the Defendant Action Electrical Ltd. [1] Presumably the same result would be attained by the remainder of the Other Defendants. [2] Cummer-Yonge Investments Ltd. v. Agnew Surpass Shoe Stores Ltd. , 1975 CanLII 26 (SCC) , [1976] 2 S.C.R. 221 , 55 D.L.R. (3d) 676 ; Pyrotech Products Ltd. v. Ross Southward Tire Ltd. , 1975 CanLII 25 (SCC) , [1976] 2 S.C.R. 35 , 57 D.L.R. (3d) 248 ; and Smith v . T. Eaton Co. , 1977 CanLII 39 (SCC) , [1978] 2 S.C.R. 749 , 92 D.L.R. (3d) 425 .