In a ruling applauded by business and insurance companies
but lamented by municipalities,
the Quebec Court of Appeal
recently limited the application
of a broad indemnity clause that
sought to transfer all the risks
related to contract performance
to a contractor.
The appeal court held that
the City of Montreal could not
receive compensation for damages stemming from a snow
removal accident because the
city itself was at fault.
“The judgment sends the
message that the courts will
narrowly construe the scope of
contracts even though the
wording of the contract may be
very broad,” remarked Jean-François Michaud, an insurance law expert with Norton
Rose OR LLP.
The case dates back seven
years, when an employee of a
snow removal contractor acci-
dently struck a snow-covered
fire hydrant, which in turn dam-
aged two buildings. The court of
first instance held that the city’s
snow removal system was not
safe and “even a trap” for snow
removal contractors because in
spite of repeated requests, the
city refused to plant stakes by
fire hydrants after snowstorms,
citing budgetary constraints.
Reasons: Ville de Montréal c. C.M.S.
Entrepreneurs Généraux, [2011] J.Q. no
1965.
Quotes cited in the ruling were translated
by the author, as were those by Antoine
St-Germain.
“The Montreal lawyer
believes the ruling
will apply not only to
municipalities across
the province, but to
all parties who enter
into a contract.
VINCENT GIORDANO / DREAMSTIME
Each family member could be separately insured
Malach + Fidler LLP
Innocent
Continued From Page 9
the loss. And how, realistically,
are parents to control the angst-
ridden teen?
The vengeful spouse or
troubled teen who damages
family property is not motivated
by personal financial gain. If the
spouse or teen is not deterred by
the threat of a criminal charge or
even a tort lawsuit, why would
there be any deterrent in the
threat of loss of insurance coverage? In cases of domestic violence, not indemnifying the
innocent co-insured can
actually be an incentive for a
guilty party to bring about the
loss because that party may
know the innocent spouse will
never be able to receive insurance indemnification.
Insurers could instead
explicitly make coverage sever-
able within the standard home-
owners’ policy by drafting a
specific clause to protect each
insured’s interests separately, as is
done in policies which protect a
financial lender’s investment, like
a mortgage. Alternatively, statu-
tory reforms could make insur-
ance coverage severable, particu-
larly in instances where the loss
was brought about by domestic
discord (as some American states
have done). B.C. and Alberta have
tabled such legislation, which
presently languishes in limbo.
Mediation & Arbitration Services
A Fair Settlement
Is No Accident
Jon Fidler, C.Med.
John Soule
Stephen Malach, Q.C.
Ivan Luxenberg
Erik Knutsen is an associate
professor at the Faculty of Law,
Queen’s University. He teaches
insurance, torts and civil procedure.
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