Canadian Premier Holdings Ltd. et al. v. Winterthur Canada Financial Corp. et al., (2000) 132 O.A.C. 172 (CA)

• Judge: Carthy, Laskin and Rosenberg, JJ.A.
• Court: Court of Appeal (Ontario)
• Case Date: April 17, 2000
• Jurisdiction: Ontario
• Citations: (2000), 132 O.A.C. 172 (CA)

Cdn. Premier Holdings v. Winterthur (2000), 132 O.A.C. 172 (CA)

MLB headnote and full text

Temp. Cite: [2000] O.A.C. TBEd. MY.036

Canadian Premier Holdings Ltd. and Canadian Premier Life Insurance Company (respondents) v. Winterthur Canada Financial Corporation and The Citadel General Assurance Company (appellants)

(C29504)

Indexed As: Canadian Premier Holdings Ltd. et al. v. Winterthur Canada Financial Corp. et al.

Ontario Court of Appeal

Carthy, Laskin and Rosenberg, JJ.A.

May 11, 2000.

Summary:

Through Canadian Premier Holdings, J.C. Penney Life Insurance Co. purchased two shell insurance companies, i.e., the com­panies held federal and provincial licences but were without existing business. The purchase agreement provided that the ven­dors would indemnify the purchasers for losses. According to Article 4.2. of the agreement, the vendors agreed to pay any 1993 or prior years' assessment by Comp­Corp (Canadian Life and Health Insurance Compensation Corporation). CompCorp levied special assessments in 1994, 1995 and 1996 based on income from 1989 to 1993. The purchasers claimed that the vendors were liable for the assessments.

The Ontario Court (General Division), in a decision reported at 59 O.T.C. 304, held that the vendors were liable for the assessments. The vendors appealed.

The Ontario Court of Appeal allowed the appeal, holding that the purchasers were liable for the assessments.

Contracts - Topic 7401

Interpretation - General principles - Inten­tion of parties (incl. reasonable expec­tations) - Canadian Premier purchased two shell insurance companies, i.e., the com­panies held federal and provincial licences but were without existing business - The purchase agreement provided that the vendors would indemnify the purchaser for losses arising from the insurer's book of business before closing - According to Article 4.2. of the agreement, the vendors agreed to pay any 1993 or prior years' assessment by CompCorp (Canadian Life and Health Insurance Compensation Cor­poration) - Because of the insolvencies of two insurers, CompCorp levied special assessments in 1994, 1995 and 1996 based on income from 1989 to 1993 - The On­tario Court of Appeal held that the negotia­tions that led to the purchase agreement revealed that the vendor was concerned with not being liable for assessments after closing and the purchaser did not want to be liable for retroactive assessments - Accordingly, the purchaser was liable to pay the assessments relating to insolvencies that occurred after the closing - See para­graphs 15 to 19.

Contracts - Topic 7412

Interpretation - General principles - Incon­sistent clauses - Specific v. general - Cana­dian Premier purchased two shell insurance companies, i.e., the companies held federal and provincial licences but were without existing business - The purchase agree­ment, s. 5.2(f), provided that the vendors would indemnify the purchaser for losses arising from the insurer's book of business before closing - According to Article 4.2. of the agreement, the vendors agreed to pay any 1993 or prior years' assessment by CompCorp (Canadian Life and Health Insurance Compensation Corporation) - Because of the insolvencies of two in­surers, CompCorp levied special as­sessments in 1994, 1995 and 1996 based on income from 1989 to 1993 - The On­tario Court of Appeal held that the general indemnity clause did not apply to the assessments, where s. 4.2 specifically addressed liability for CompCorp as­sessments - Moreover, even if s. 5.2(f) applied, it only called for indemnification of liability arising before closing and the vendor was not liable for any assessments before closing - See paragraphs 20 to 22.

Contracts - Topic 7416

Interpretation - General principles - Most commercially reasonable interpretation - Canadian Premier purchased two shell insurance companies, i.e., the companies held federal and provincial licences but were without existing business - The pur­chase agreement provided that the vendors would indemnify the purchaser for losses arising from the insurer's book of business before closing - According to Article 4.2. of the agreement, the vendors agreed to pay any 1993 or prior years' assessment by CompCorp (Canadian Life and Health Insurance Compensation Corporation) - Because of the insolvencies of two in­surers, CompCorp levied special as­sessments in 1994, 1995 and 1996 based on income from 1989 to 1993 - The On­tario Court of Appeal held that the pur­chaser was liable - A commercially reason­able interpretation of the agreement pro­vided that the purchaser, now in the busi­ness of insurance, would pay assessments that arose because of insolvencies that took place after the closing date, regardless of what period of time was used for the cal­culation of the assessments - See para­graphs 10 to 14.

Cases Noticed:

Eli Lilly & Co. et al. v. Novopharm et al., [1998] 2 S.C.R. 129; 227 N.R. 210, refd to. [para. 12].

Novopharm v. Apotex Inc. (1995), 60 C.P.R.(3d) 345 (Ont. Gen. Div.), affd. (1996), 68 C.P.R.(3d) 238 (Ont. C.A.), refd to. [para. 21].

Counsel:

A. Pettingill, for the appellants;

A. D'Silva, for the respondents.

This appeal was heard on April 17, 2000, before Carthy, Laskin and Rosenberg, JJ.A., of the Ontario Court of Appeal. On May 11, 2000, Laskin, J.A., delivered the following judgment for the court.