Active Fire Protection v. BWK Constr., (2005) 200 O.A.C. 275 (CA)

• Judge: Doherty, MacPherson and Cronk, JJ.A.
• Court: Court of Appeal (Ontario)
• Case Date: July 05, 2005
• Jurisdiction: Ontario
• Citations: (2005), 200 O.A.C. 275 (CA)

Active Fire Protection v. BWK Constr. (2005), 200 O.A.C. 275 (CA)

MLB headnote and full text

Temp. Cite: [2005] O.A.C. TBEd. JL.033

Active Fire Protection 2000 Ltd. (plaintiff/defendant by counterclaim/respondent) v. B.W.K. Construction Company Limited (defendant/plaintiff by counterclaim/appellant)

(C42865)

Indexed As: Active Fire Protection 2000 Ltd. v. B.W.K. Construction Co.

Ontario Court of Appeal

Doherty, MacPherson and Cronk, JJ.A.

July 11, 2005.

Summary:

A construction contract required the general contractor to obtain a policy of all risks property insurance in the joint names of the general contractor, the owner and the consultant to the project. The obligation was incorporated by reference into a subcontract for the provision of a fire protection system. The subcontract also required the general contractor to maintain fire insurance. The subcontract provided that the subcontractor would be liable for any damage arising from its performance of the subcontract and would indemnify the general contractor for any resulting loss. The subcontractor was required to obtain sufficient insurance to indemnify the owner and general contractor from any claims. The general contractor did not obtain insurance. The subcontractor's negligence resulted in flood damage. The general contractor paid the owner for the damage and sought reimbursement from the subcontractor. The general contractor withheld further payments under the subcontract. The subcontractor sued the general contractor for payment. The general contractor counterclaimed for indemnification. The parties agreed to the subcontractor's liability for flood damages being determined on summary judgment.

The Ontario Superior Court, in a decision reported at [2004] O.T.C. 1101, held that the subcontractor was not liable for the damage. The general contractor appealed.

The Ontario Court of Appeal dismissed the appeal.

Building Contracts - Topic 987

The contract - Insurance - Agreement between owner and contractor - A construction contract's requirement that the general contractor obtain all risks property insurance was incorporated by reference into a subcontract for the provision of a fire protection system - The subcontract also required the general contractor to maintain fire insurance - Article 12 of the subcontract provided that the subcontractor would be liable for any damage arising from its performance of the subcontract and would indemnify the general contractor for any resulting loss - Article 12 also required the subcontractor to obtain sufficient insurance coverage to indemnify the general contractor from any claims - The general contractor did not obtain insurance - The subcontractor's negligence resulted in flood damage - The general contractor paid for the damage and sought indemnification from the subcontractor - The Ontario Court of Appeal held that the subcontractor was not liable for the damage - The general contractor's contractual commitments to obtain insurance operated as a voluntary assumption of risk - The subcontractor's assumption of liability under article 12 was done with the expectation that the general contractor would meet its insurance obligations - The insurance required by article 12 was intended to respond to third party claims against the general contractor that were in excess of the limits provided for under the policies required to be obtained by the general contractor.

Building Contracts - Topic 988

The contract - Insurance - Agreement between contractor and subcontractor - [See Building Contracts - Topic 987 ].

Building Contracts - Topic 7106

Subcontractors - Liability to general contractor - Extent of liability for negligence -[See Building Contracts - Topic 987 ].

Cases Noticed:

Madison Developments Ltd. et al. v. Plan Electric Co. et al. (1997), 104 O.A.C. 194; 152 D.L.R.(4th) 653 (C.A.), leave to appeal refused (1998), 228 N.R. 97; 111 O.A.C. 199 (S.C.C.), appld. [para. 18].

Counsel:

Ronald B. Moldaver, Q.C., for the appellant;

Chris Reain, for the respondent.

This appeal was heard on July 5, 2005, by Doherty, MacPherson and Cronk, JJ.A., of the Ontario Court of Appeal. Cronk, J.A., released the following judgment for the court on July 11, 2005.