Portage LaPrairie Mutual Insurance Company v. MacLean, 2012 NSSC 341

SUPREME COURT OF NOVA SCOTIA Citation: Portage LaPrairie Mutual Insurance Company v. MacLean, 2012 NSSC 341 Date: 20121001 Docket: Hfx 257302 Registry: Halifax Between: The Portage La Prairie Mutual Insurance Company, a body corporate, Green Thumb Farmers Market Incorporated, a body corporate, and James Hermanson and Jeanette Hermanson, Plaintiffs/Defendants by Counterclaim - and - Emily Anne MacLean Defendant/Plaintiff by Counterclaim - and - Green Thumb Farmers Market Incorporated Third Party Judge: The Honourable Justice Patrick J. Duncan Heard: April 3, 2012, in Pictou, Nova Scotia Counsel: John T.

Shanks and James L. Chipman,Q.C. for the Plaintiffs and for the Third Party Donn Fraser, for the Defendant

By the Court: Introduction [1] The defendant, Emily MacLean, worked for the plaintiff Green Thumb Farmers Market (Green Thumb). A fire causedsubstantial property damage to that business. Green Thumb made a claim of loss to its insurer, the plaintiff Portage La Prairie MutualInsurance Company (Portage La Prairie). Portage La Prairie filed this action against Emily MacLean, alleging that the loss was causedby her negligence and seeking to be reimbursed for the loss. [2] This motion for

summary judgment on evidence is brought by Emily MacLean and seeks dismissal of the claims against her.

Summary Judgment on Evidence: test [3] The defendant seeks

summary judgment on evidence pursuant to Nova Scotia Civil Procedure Rule 13, which states: 13.04

(1) A judge who is satisfied that evidence, or the lack of evidence, shows that a statement of claim or defence fails to raise agenuine issue for trial must grant

summary judgment.

(2) The judge may grant judgment for the plaintiff, dismiss the proceeding, allow a claim, dismiss a claim, or dismiss a defence.

(3) On a motion for

summary judgment on evidence, the pleadings serve only to indicate the laws and facts in issue, and thequestion of a genuine issue for trial depends on the evidence presented.

(4) A party who wishes to contest the motion must provide evidence in favour of the party's claim or defence by affidavit filed bythe contesting party, affidavit filed by another party, cross-examination, or other means permitted by a judge.

(5) A judge hearing a motion for

summary judgment on evidence may determine a question of law, if the only genuine issue fortrial is a question of law. [4] The role of the motions judge in applying this rule has been the subject of appellate comment on various occasions since therule was enacted. I take the current state of the law to be that enunciated in Globex Foreign Exchange Corp. v. Launt 2011 NSCA 67, byFarrar J.A. for the majority: 13 The prerequisites for

summary judgment to dismiss an action are -- first, that the applying defendant shows that there is no genuineissue of material fact requiring trial; and second, that the responding plaintiff fails to show that his claim has a real chance of success(Guarantee Co. of North America v. Gordon Capital Corp., (SCC), [1999] 3 S.C.R. 423 at para. 27). 14 Accordingly, the first question the Chambers judge had to ask herself was whether she was satisfied that there were no matters offact or of mixed law and fact requiring trial.

Only if she were persuaded that this initial threshold had been met, would she then go on toask the second question, that is, whether Globex demonstrated that it had a real chance of success in advancing its argument that anagency relationship existed between Launt and Numberco (Frothingham v. Perez, 2011 NSCA 59, para. 38-40).

15 In conducting the requisite analysis the clear directions of this Court on a number of occasions bear repeating. It is not the functionof the Chambers judge on a motion for

summary judgment to determine matters of fact or mixed law and fact which are in dispute(Oceanus Marine Inc. v. Saunders, 1996 NSCA 139 , [1996] N.S.J. No. 301 (Lexis) (C.A.), para. 20, The Bank of Nova Scotiav. A. MacKenzie's Auto Mart Inc., 2010 NSCA 81 at para. 21, Young v. Meery, 2009 NSCA 47). 16 The Court's role is limited to assessing the threshold of whether a genuine issue exists for trial.

The evaluation of credibility, theweighing of evidence and the drawing of factual inferences (except in limited circumstances) are functions reserved for the trial judge. 17 With respect, the Chambers judge erred in approaching her task as if she were to determine on the evidence before her whether anagency relationship existed between Launt and Numberco, rather than determining whether there was a material fact in issue requiring atrial. I will come back to the Chambers judge's error after discussing the law of agency. [5] To the same effect the court stated in Gilbert v.

Giffin 2010 NSCA 95: 14 The prerequisites for

summary judgment to dismiss an action are -- first that the applying defendant shows that there is no genuineissue of material fact requiring trial; and second, that the responding plaintiff fails to show that his claim has a real chance of success(Guarantee Co. of North America v. Gordon Capital Corp., (SCC), [1999] 3 S.C.R. 423 at para. 27). [6] And in Bank of Nova Scotia v. A. MacKenzie's Auto Mart Inc. 2010 NSCA 81 Farrar J.A. says: 21 AMCI Export Corp., supra, makes clear that which is well-known; it is not the function of the Chambers judge on an applicationfor

summary judgment to determine matters of fact or mixed law and fact which are in dispute. Matters of controversy are to be left forresolution at trial (para. 16 and para. 17). Issue 1: Are there matters of fact or of mixed law and fact requiring trial? [7] Evidence in the hearing came in the form of affidavits from Emily MacLean, Jeanette Hermanson and Donn Fraser. There isalso an expert's report from Mark Wentzell.

The following are the undisputed facts arising from the evidence in the hearing. [8] On August 1, 2003 a fire destroyed the premises and business known as the Green Thumb Farmers Market Incorporated inAlma, Pictou County, Nova Scotia. Green Thumb was wholly owned and operated by James Hermanson and Jeanette Hermanson. ThePortage La Prairie Mutual Insurance Company was the insurer for the fire loss. Emily Anne MacLean was a twenty year old summerstudent employee of Green Thumb earning $6.50 per hour. [9] Around 6:20 p.m., near closing time, on the evening of August 1, 2003 Ms.

MacLean was working at Green Thumb togetherwith James Hermanson. No other staff was present. On that evening the business was short staffed. [10] Ms. MacLean placed eggs in a pot on a hot plate to boil. This was in the bakery

section of the store. The eggs were to be usedfor the next day's sandwiches. She then attended to other tasks in the front

section of the store. Shortly thereafter Ms. MacLean smelledsmoke, opened the door to the bakery and discovered full blown flames. She yelled to James Hermanson and called 911. [11] An expert's report concerning the source of the fire was prepared, at the direction of the plaintiffs, by Mark Wentzell, P. Eng. While he found substandard electrical installation connected to the receptacle into which the hot plate was plugged, he opined the faultywiring was not the cause of the fire. His conclusion, following investigation, was that the cause of the fire was probably the heat fromthe hot plate igniting the wooden frame of the cupboard above.

[12] There was some dispute between the parties as to whether Ms. MacLean, as primarily a "front section" worker had a primaryresponsibility of boiling eggs. There is no dispute, however, that she was permitted to do so in the bakery. [13] Unfortunately, sometime after 2003 and before this application James Hermanson died. No sworn statement concerning theevents surrounding the night of the fire appears to have been taken from Mr. Hermanson before his death.

Instead, hearsay evidencefrom Jeanette Hermanson details what he told her. [14] A solicitor's affidavit of Donn Fraser was also filed, with consent of plaintiffs. The latter affidavit was filed for the purpose ofattaching the insurance policy relevant to this proceeding and to set out the agreement that the claims of all named plaintiffs are strictlysubrogated claims advanced by The Portage La Prairie Mutual Insurance Company against Ms. MacLean. [15] There is contradictory evidence before the court as well.

However for reasons that will become evident I conclude that thecontroversial evidence does not raise genuine issues requiring a trial. [16] In reaching my conclusions I rely solely on the undisputed facts. Issue 2: Does the plaintiffs' claim have a real chance of success? [17] The Plaintiffs have brought this action in tort claiming negligence and consequential loss against Ms. MacLean. Thedetermination of the plaintiffs' right to advance this claim presents a question of law, that is, the nature of a subrogated claim.

The Subrogated Claim [18] An insurer's right to bring a subrogated action is dependent on the existence of a cause of action by the insured. This is so bothunder the common law and under statute. Justice Sharpe explained the common law principle in McCourt Cartage Ltd. v. FlemingEstate (1997), (ON SC), 35 O.R. (3d) 795, at 799 (Gen. Div.): If the insured has no right of action, then the foundation of the insurer's right to bring a subrogated action is removed.

It is clear that atcommon law, an insurer's right to bring a subrogated action is derivative of and dependent upon the existence of a cause of action by theinsured. In the context of this case Portage La Prairie's claim, as a subrogated claim, is a derivative claim. The plaintiff insurer has no greaterrights and privileges than are possessed by the remaining named plaintiffs against Ms. MacLean. If Green Thumb, in its capacity asemployer, or the individual plaintiffs in their respective personal capacities can properly seek recovery in a claim of negligence againstMs.

MacLean then this motion must fail and a trial must ensue for a factual determination of whether negligence and causation can beestablished. [19] The overarching question then is whether the law would permit the employer, Green Thumb, to hold their employee, EmilyMacLean, liable in tort for the loss arising from the property damage? First Principles - The Law of Tort - Proximity and Policy Considerations [20] As observed by Lang, J.A. on behalf of the Court of Appeal in Douglas v. Kinger, 2008 ONCA 452 (leave to appeal to

Supreme Court of Canada refused [2008] S.C.C.A. No. 363) beginning at paragraph 9: 9 The foundational authority for the law governing tort liability is Donoghue v. Stevenson, (FOREP), [1932] A.C.562 (H.L.). Its "neighbour" concept, that one owes a duty of care to those whom one may foreseeably injure, was considered in Anns v.Merton London Borough Council, [1978] A.C. 728 (H.L.). In that case, the House of Lords provided an analytical framework forestablishing a duty of care. This framework involves a two-stage analysis involving proximity and policy considerations.

The SupremeCourt of Canada adopted a nuanced Anns test in Kamloops (City of) v. Nielsen, (SCC), [1984] 2 S.C.R. 2, at pp. 10-11,which posed two questions: (1) is there a sufficiently close relationship between the parties to justify the imposition of a duty (proximity) and, if so, (2) are there any residual policy considerations which ought to negative or limit the scope of the duty, the class of persons towhom it is owed or the damages to which breach may give rise?

The plaintiff bears the burden of establishing a prima facie duty of care; however, if the plaintiff does so, the defendant has theevidentiary burden to show countervailing policy considerations: see Childs v. Desormeaux, 2006 SCC 18 , [2006] 1 S.C.R. 643at para. 13. 10 While the later case of Odhavji Estate v. Woodhouse, 2003 SCC 69 , [2003] 3 S.C.R. 263, was initially seen to adjust thetwo-stage test, the Supreme Court observed at para. 12 of Childs that Odhavji simply clarified that "proximity will not always besatisfied by reasonable foreseeability".

The court explained at para. 12 of Childs that "at stage one, foreseeability and factors going to therelationship between the parties must be considered with a view to determining whether a prima facie duty of care arises." Stage two ofthe test inquires whether any duty is negated by broader policy considerations beyond the relationship between the parties. 11 The two components of the stage one test were discussed in Syl Apps Secure Treatment Centre v. B.D., 2007 SCC 38 ,[2007] 3 S.C.R. 83.

In explaining the purpose for the requirement of sufficient proximity at para. 26, Abella J. referred to Allen M.Linden and Bruce Feldthusen's text, Canadian Tort Law, 8th ed. (Markham: Butterworths, 2006).

At p. 304 of that text, the authorsexplain that a court must inquire "whether, despite the reasonable foresight of harm, it is unjust or unfair to hold the defendant subject toa duty because of the absence of any relationship of proximity between the plaintiff and the defendant." Abella J. concluded at para. 30that "[d]epending on the circumstances of the case, the factors to be considered in the proximity analysis include the parties'expectations, representations and reliance." 12 Referring to Cooper v.

Hobart, 2001 SCC 79 , [2001] 3 S.C.R. 537, Abella J. explained at para. 32 what policyconsiderations are relevant at the first and at the second stage of the Anns analysis: [P]olicy is relevant at both the "proximity" stage and the "residual policy concerns" stage of the Anns test. The difference is thatunder proximity, the relevant questions of policy relate to factors arising from the particular relationship between the plaintiff and thedefendant.

In contrast, residual policy considerations are concerned not so much with "the relationship between the parties, but with theeffect of recognizing a duty of care on other legal obligations, the legal system and society more generally" (Cooper, at para. 37). 13 To summarize, the first stage of the analysis asks whether a duty of care has been established by considering both the foreseeabilityof the harm and the relationship between the parties that would make the imposition of a duty unjust or unfair, including any factorsarising from the relationship such as the parties' expectations, representations and reliance.

Where foreseeability and sufficient proximityare established in the first stage of the test, the second stage requires a consideration of residual policy factors, including the impact ofthe proposed duty of care on other legal obligations, the legal system, and on society generally. 14 Before embarking on the two-stage analysis, the Supreme Court instructed in Cooper that a court must first determine whether theparties' relationship falls into a category already recognized as giving rise to a duty of care.

If it does, a prima facie duty of care isestablished and it becomes unnecessary to undertake the Anns analysis. If the case falls outside an established category, Anns must beapplied.

[21] Did Ms. MacLean owe a duty of care to her employer? As Cooper instructs, I must first resolve the preliminary question in atort claim such as this - whether the relationship between the employer and Ms. MacLean falls into a category already recognized asgiving rise to a duty of care? [22] Ms. MacLean was an entry level employee, earning at or near minimum wage, performing unskilled labour with no managerialduties. [23] In Lister v. Romford Ice and Cold Storage Co. Ltd., [1957] A.C. 555 the House of Lords suggested such an employee could besued.

In holding the employee liable to indemnify the employer, Viscount Simonds observed at p. 573 that he saw no "valid reason forsaying that a distinction is to be made between possessing skill and exercising it." The word "skill", Viscount Simonds observed,"embraces care" and "even in so-called unskilled operations an exercise of care is necessary to the proper performance of duty." [24] The authors of Employment Law in Canada, 4th ed., Vol. 2 (Barnacle, Woods) (Markham: Lexis Nexis, current to August2012), suggest in ss 11.113 to 11.118, that following the decision, an apparent "gentlemen's agreement" developed among insurancecompanies in Britain not to enforce the right of subrogation against employees except in cases of collusion or willful misconduct.

Neither of these exceptions would apply in this case. (Of course, a gentleman's agreement can not remove the right of a party to pursuethe rights permitted to them by law.) [25] The Lister decision has been the subject of much criticism in this country. A review of Canadian jurisprudence reveals thatsuch unskilled labourers have generally not been sued by or found liable to an employer in this country for ordinary negligence orcarelessness as has been claimed here. e.g., Cole v. Lockhart, (1998) (NB KB), 205 N.B.R. (2d) 48. [26] In Douglas v.

Kinger, supra, Lang J.A., following a review of reported cases, suggests liability appears to depend on the degreeof the employee's negligence in the context of the employment relationship. She suggests something more than ordinary negligence mustbe present. see, para. 27 to 35). I agree. [27] In keeping with the determination in Douglas v. Kinger, I find employee liability to an employer for ordinary negligence doesnot fit into and is not analogous to any of the existing categories giving rise to a prima facie duty of care.

Therefore, in my view Ms.MacLean's relationship with Green Thumb does not fall into an already recognized category giving rise to a prima facie duty of care. [28] In the result, I now turn to an analysis of the Anns test.

(1) Is there a sufficiently close relationship between the parties to justify the imposition of a duty (proximity)? [29] Accepting, for the purposes of this motion only, the plaintiffs' position that Ms. MacLean left the hot plate unattended, which inturn caused the fire, it is clear foreseeability can be established. However, contrary to the representations of the plaintiffs, this does notresolve the proximity issue. That requires consideration of policy issues. In my view, imposition of a duty of care on Ms.

MacLeanwould be unjust and/or unfair in the circumstances. [30] In making this determination I am again persuaded by the reasoning of Lang, J.A. where, after citing a number of scholarlytreatises in support she writes, beginning at paragraph 52: 52 An examination of the employment relationship demonstrates that employee negligence was foreseeable and that the employee'sliability for ordinary negligence was not. This is apparent from the expectations that can be readily inferred from any common senseconsideration of the employment relationship.

Both an employer and an employee would normally expect the other to exercisereasonable care: the employer would expect the employee to perform his tasks with reasonable care, and the employee would expect theemployer to take reasonable care for his or her safety. In addition, both would know that accidents happen, whether as a result ofdefective equipment provided by the employer, as a result of the employee's carelessness in the use of that equipment, or for some otherreason.

53 The fact that employee negligence was contemplated in this case is supported by the terms the appellant specified in the respondent's employment. When the appellant hired the respondent as a "boat boy", he knew that the respondent's negligence could cause harm and, accordingly, imposed rules to protect his safety. As in most other employment relationships, the appellant was also aware that it was unlikely the respondent would have the financial resources to compensate for any loss, such as the $285,000 loss that actually occurred.

An expectation that the respondent would be able to compensate for loss, through insurance or otherwise, was not articulated at the time of his employment and, in any event, would be unreasonable given the respondent's young age and his wage of $8.00 an hour. The appellant also knew that he had insurance to guard against many losses. 54 On this view of the parties' expectations, representations and reliance, it would be neither just nor fair to impose the loss on the respondent.

While this is enough to conclude that the appellant has failed to establish a duty of care, in my view, the policy considerations discussed above pertaining to employment relationships as well as to other societal issues also negate liability, as I will discuss further under the second stage of the Anns analysis. 55 To summarize, in the circumstances of this case, the component of reasonable foreseeability under the first stage of the Anns test is satisfied. However, having regard to the nature of the parties' relationship, the component of sufficient proximity is not.

Accordingly, I conclude that a duty of care should not be imposed for the respondent's ordinary negligence. [ 31 ] In my view, her analysis is applicable and appropriate to the facts in the instant case. As no duty of care arises a claim for negligence cannot succeed. However, if I am wrong and it can be said sufficient foreseeability and proximity have been established, I will proceed to consider the second stage of the nuanced Anns test set out in Kamloops , supra.

(2) Are there any residual policy considerations which ought to negative or limit the scope of the duty, the class of persons to whom it is owed or the damages to which breach may give rise? [ 32 ] At the second stage of the analysis I must consider residual policy factors, including the effect of recognizing a duty of care on other legal obligations, the legal system and society more generally. [ 33 ] I adopt the reasoning found at paragraphs 58 to 65 of Douglas v. Kinger , supra .

I do not think I can state it better: 58 A return to the Lister principle of employee liability without regard to the individual circumstances of each case would create the potential for significant disruption to employer/employee relations. Obviously, certain types of employment are disproportionately fraught with risk. For example, in these days of increasingly complex technology, employees are required to handle ever more sophisticated machinery. Minor employee error can result in major equipment breakdown and, consequently significant damages.

In those circumstances, employment relations would be greatly challenged if an employee was to be held financially liable to the employer for the financial consequences of a momentary lapse of attention. As LaForest J. observed at p. 340 of London Drugs , "an employee's capacity to cause loss does not bear any relation to his salary." 59 Moreover, there is a power imbalance inherent in most employment relationships. An employee is usually not in a position to bargain at the outset of the employment relationship regarding the terms of his or her potential liability for

an act of negligence. In contrast, an employer concerned about employee negligence is in a position to dictate terms of employment and can contract for the employee's liability.

As LaForest J. points out at p. 34 of London Drugs, employers are at liberty to establish "contractual schemes of contribution from negligent employees" and such contractual terms would be relevant to a tort claim. 60 In addition, while employees are implicitly, if not explicitly, expected to exercise reasonable care in their employment, there are other means to encourage that care without burdening the employee with an impossible financial judgment. While the appellant argued that a finding of liability against the respondent will promote responsibility in all workers, I am not persuaded that is so.

Discipline and dismissal are often cited as more useful tools to promote deterrence without the need to impose financial responsibility. Thus, a policy that supports good industrial relations weighs against the imposition of a duty of care. 61 Second, risk and resource allocation are important policy considerations. These considerations, which are particularly relevant to

61 Second, risk and resource allocation are important policy considerations. These considerations, which are particularly relevant toemployment situations, support the conclusion that the employer should be the party charged with protecting his or her own interests.This is because the employer is generally in a better position than the employee to internalize the cost of ordinary employee negligence,whether as a cost of doing business or by acquiring appropriate insurance. Generally speaking, employers do so. This was the view takenin Morris v. Ford Motor Co.

Ltd., [1973] 1 Q.B. 792 (C.A.), where Lord Denning emphasized that the employer should bear the liabilityfor employee negligence because the employer enjoys the benefit of the work and should, in turn, bear the burden. He supports this viewby pointing to the fact that the employee's wages are fixed on the basis that the employer will bear the expense of employee negligence,usually through insurance. If the employer chooses not to obtain insurance, he or she should still absorb the cost of avoiding harm as amatter of sound resource allocation.

If it was otherwise, and the employee is expected to bear the risk, his or her wages should beincreased to cover that risk. 62 In concluding that liability must depend on the individual contractual circumstances of the employment, Seaton J.A. in Overmyerobserved at pp. 723-24 that an employer accepts the risk of employee fallibility and takes that fallibility into account in the costs of doingbusiness, supervising the employee, and insuring the enterprise.

Regarding any presumption of employee liability, he stated at pp.724-25: If an employee, by lack of care, causes loss to his employer, I do not think that it should be presumed that the employee will beliable, and I do not think that we should look at decisions on other employment contracts for the answer. We should look at the hiring tosee what was said and at the circumstances to see what might properly be implied.

It follows that this employment and this error must belooked at to see what terms were in the contract and whether they were breached. [Emphasis added.] 63 In addition, it would make no economic sense to require both the employer and the employee to obtain and maintain insurancecoverage.

An approach that promotes double insurance - even assuming such insurance would be available to every employee - has nosocial utility: see London Drugs at p. 387. 64 Finally, as I have already noted, a determination that, in the ordinary course, employees are not liable to indemnify employers forordinary negligence, accords with practice or legislation in many other jurisdictions that have already abolished the right of insurers tosubrogate against employees under general liability policies. 65 Accordingly, in addition to my conclusion at the first stage of the Anns test that the parties' relationship lacks the necessaryproximity, I would also conclude that the residual policy considerations at the second stage of the Anns analysis weigh against theimposition of a duty of care.

In coming to this conclusion, I observe that the result could be different if the loss is occasioned bynegligence outside the parties' reasonable expectations, such as one caused by an intentional tort or wilful misconduct on the respondent'spart. London Drugs also references "gross negligence", a concept I would leave for discussion in another case where it is raised by theparticular facts.

Finally, the result may be different in other situations, such as if the negligence involved a vehicular accident, wheredifferent considerations may apply between insurers and, as well, if the defendant had been from a profession where, as the ListerCommittee said, "it is accepted prudence" to purchase insurance (Gardiner at 655) [34] In sum, there are significant serious policy reasons that dictate against finding of a duty of care in this matter. These policyreasons have been well explained by Lang, J.A. in the foregoing passage from Douglas v.

Kinger, supra. [35] I am bolstered in my views by the policy reasons cited by Iacobucci J. on behalf of the majority of the Supreme Court ofCanada in the landmark decision in London Drugs v. Kuehne and Nagel International Ltd. (SCC), [1992] S.C.J. No. 84. [36] That case allowed employees to obtain the protection of an exclusion clause in a contract between a third party and theemployer for loss or damage by employees for negligent actions in the course of their employment.

While not directly on point, thatdecision recognizes the identity of interest between employer and employee in the performance of business activities; recognizes that anemployer has the power to insure against such risks; and recognizes that employees are the least financially able to assume financialresponsibility for such acts or for purchasing insurance. Those factors are all relevant to this determination. [37] In my view, no action for negligence can be properly brought by the employers against Ms. MacLean in these circumstances. Portage La Prairie is in no better position than their insured.

[ 38 ] I conclude the plaintiffs do not have a real chance of success. Issues relating to

interpretation of contract [ 39 ] A substantial part of this motion dealt with whether, in the insurance policy in question in this matter, the insurer specifically contracted out of the right to sue an employee. In my view, it is not necessary to determine this for disposition of this motion as I find no right of the employer/owner to sue an employee and therefore no subrogated right of the insurer to bring this claim.

Nevertheless, I will consider the insurance contract. [ 40 ] The defendant/applicant has relied upon a provision of the commercial general liability portion of the contract in which the insurer names employees as insured for negligent acts in the course of employment causing bodily injury and property damage to third parties.

The defendant reasons that because the employees are "insured" for the purpose of the commercial general liability insurance portion of the policy, the insurer specifically agreed not to bring a subrogated claim against the employees under the property, business interruption and extra expense portion ("property portion") of the policy (under which payment was made for the fire loss.) [ 41 ] The property portion of the policy contains the following provision: 11.

The Insurer, upon making any payment or assuming liability therefor under this Form, shall be subrogated to all rights of recovery of the Insured against others and may bring action to enforce such rights. Notwithstanding the foregoing, all rights of subrogation are hereby waived against any corporation, firm, individual or other interest with respect to which insurance is provided by this Policy. The declarations portion of the policy makes it clear that the term "policy" encompasses both the property portion and the commercial general liability portion of the policy.

Therefore, on plain reading of the policy, I agree with the applicant that the rights of subrogation against the employees have been specifically waived by the insurer. [ 42 ] Further, I am of the view that the reasoning in London Drugs supra , has application. There can be little doubt in this case as between the insurer and named insured that the business of the insured would largely be conducted by employees.

There is such similarity of interest between employer and employee that a clause waiving subrogation rights against the employer for loss arising from what will normally be conduct contemplated by the contracting parties to be performed by the employer's employees, surely should also apply for the benefit of the employees.

To borrow the words of Iaccobucci, J. in London Drugs : "there is simply no valid reason for denying the benefit of the clause to employees". [ 43 ] It makes no rational sense that an employee can be sued for ordinary negligence in the workplace through a subrogated claim by the insurer in these circumstances. Holding the employees liable in these circumstances would lead to serious injustice especially when one considers the financial position of the employees. Volenti non Fit Injuria [ 44 ] I decline to rule whether the defence of "volenti" is available in this matter as it has no impact on my determination.

In any event that finding would not be appropriate for a

summary judgment application in light of disputed facts that I have concluded are not material to the determination of the motion. Disposition

[ 45 ] I grant the motion for

summary judgment by the Defendant/Applicant and dismiss the claims of the plaintiffs. I will hear the parties on the issue of costs if they cannot reach agreement. J.