



COURT OF APPEAL FOR ONTARIO

CITATION: Scaffidi-Argentina v. Tega Homes Developments, 2021 ONCA
    738

DATE: 20211022

DOCKET: C68870

Hourigan, Huscroft and Coroza JJ.A.

BETWEEN

Carmen
    Scaffidi-Argentina, Michaelangelo Scaffidi-Argentina,

Sheila Scaffidi-Argentina
    and Marissa Scaffidi-Argentina

Plaintiffs

and

Tega
    Homes Developments Inc.
,
Goodeve
    Manhire Inc.
,
Goodeve Manhire
    Partners Inc.
, Paterson Group Inc. and the City of Ottawa

Defendants
    (
Appellant
/
Respondents
)

Robert Emblem and William Plante-Bischoff, for the
    appellant

Elizabeth K. Ackman and Sean D. McGarry, for the
    respondents

Heard: October 8, 2021 by video conference

On appeal from the order of Justice Charles T. Hackland
    of the Superior Court of Justice, dated October 30, 2020, with reasons reported
    at 2020 ONSC 6656, 8 C.C.L.I. (6th) 223.

REASONS FOR DECISION

[1]

The respondents served as an engineering consultant and subcontractor on
    a construction project in the City of Ottawa. The appellant was the owner and
    developer of the project and was insured under a wrap-up liability policy which
    contained a waiver of subrogation clause. Adjacent property owners (the plaintiffs)
    sued the parties arising from damages caused by excavation work on the project.
    The plaintiffs filed a statement of claim and their own property insurer, State
    Farm Fire and Casualty Company (State Farm), indemnified part of the damages
    sought in the claim. State Farm thus became subrogated to part of the plaintiffs
    claim against the parties. The plaintiffs later recovered an amount from the
    appellants insurer.

[2]

In response to the claim, the appellant filed a statement of defence and
    crossclaim. The crossclaim against the respondents sought contribution and
    indemnity in respect of any amounts it might be found liable to pay to the plaintiffs.
    The respondents then brought a summary judgment motion requesting that the
    crossclaim be dismissed on the basis that they were insured under the
    appellants policy and the crossclaim was prohibited by the waiver of
    subrogation clause in the policy.

[3]

The motion judge granted the motion and dismissed the appellants
    crossclaim. He concluded that the respondents were additional insured under
    the policy and were entitled to the waiver of subrogation provided for in the
    policy.

[4]

In this appeal, the appellant repeats the same argument made before the
    motion judge  that the policy does not bar it from asserting a subrogated
    claim for indemnity against the respondents because they are not covered under
    the policy for the professional services claims brought by the property owners.
    According to the appellant, the respondents have coverage for professional
    services claims from their own insurer, yet, the motion judges decision
    requires it to nevertheless cover the loss because of the waiver of subrogation
    clause. The appellant submits that such a decision results in a windfall for
    the respondents, is commercially unreasonable, and ignores the relevant
    surrounding circumstances.

[5]

We reject the appellants argument.

[6]

The policy was a standard form contract. The surrounding circumstances
    generally play less of a role in the interpretation of these types of contracts
    of adhesion because the parties do not negotiate the terms, and the contract is
    put to the receiving party as a take it or leave it proposition:
Ledcor
    Construction Ltd. v. Northbridge Indemnity Insurance Co.
, 2016 SCC
    37, [2016] 2 S.C.R. 23, at paras. 25, 32.

[7]

It was agreed that the respondents were an engineering consultant and
    subcontractor. As such, the respondents were within the definition of additional
    insureds under the policy and although the policy specifically excluded
    coverage for professional liability, the appellant contracted out of any right
    of subrogation against all insureds (including additional insureds) under the
    policy. The motion judge observed that it would have been open to the appellant
    to have changed the wording of the policy, perhaps by altering the scope of the
    subrogation waiver or the definition of additional insured, to reflect the
    professional services coverage exclusion. We agree with the motion judges
    conclusion that it was not his function to restructure the commercial
    contractual arrangement agreed upon by these sophisticated parties to achieve what
    might be considered a fairer result. The motion judge noted that since there
    were no project agreements between the parties pertaining to insurance coverage,
    the policy must speak for itself.

[8]

The motion judge interpreted the policy in accordance with the guidance
    set out by the Supreme Court of Canada in its decision in
Progressive Homes
    Ltd.  v.  Lombard General Insurance Co. of Canada
, 2010 SCC 33,
    [2010] 2 S.C.R. 245, at paras. 22-24. Reading the contract as a whole, the
    language of the policy is unambiguous and the motion judge was required to give
    effect to the clear language set out in the policy. We are in substantial
    agreement with his reasons.

[9]

The appellant also argues that the motion judge erred in assuming that
    the crossclaim was a subrogated claim. To support this point, the appellant advanced
    two main submissions in oral argument.

[10]

First,
    the appellant contends that the crossclaim was filed before its insurer made
    any payment to the plaintiffs, and the payment that was subsequently made was not
    to settle the appellants liability since no trial determining liability has taken
    place yet. The appellant thus argues that the crossclaim never became a
    subrogated claim because its insurer made no payments pursuant to a policy
    obligation. We disagree. The appellants insurer made payment to the plaintiffs
    after damages were assessed at the damages trial and in exchange for a full and
    final release. The release explicitly refers to the damage amount being consideration
    for the settlement of the issue of liability advanced by the plaintiffs. In
    settling with the plaintiffs, the appellants insurer was dealing with a
    liability issue, notwithstanding the fact that the crossclaim remained to be
    determined.

[11]

At
    its core, the dispute between the parties on the crossclaim was whether the appellant
    could recover the payment of money from the respondents. It is self-evident
    that any recovery on the crossclaim would have been paid to the appellants
    insurer to cover the settlement amount. The act of seeking indemnity from a
    third party such as the respondents for payments is, by definition,
    subrogation.

[12]

Second,
    the appellant submits that the crossclaim was not a subrogated claim because
    the appellant has made no payment to State Farm for its subrogated portion of
    the plaintiffs claim. We do not accept this submission. The appellant is the
    only defendant remaining in the action. Thus, the only party State Farm can
    obtain judgment against is the appellant. Indeed, in oral argument it was acknowledged
    that State Farm has obtained a judgment against the appellant for this payment:
Scaffidi-Argentina v. Tega Homes Developments Inc. et al.
, 2021 ONSC
    3223, appeal as of right filed, C69482. The appellants submission is an
    argument with respect to timing. A payment to State Farm may not have been made
    yet, but that does not change the nature of the claim being made by the
    appellant against the respondents. Again, the only way it can seek recovery is
    by subrogation.

[13]

The
    motion judge was correct to consider the appellants crossclaim a subrogated
    claim. He did not err in dismissing the crossclaim in its entirety.

[14]

The
    appeal is dismissed. Costs for the appeal are awarded to the respondents in the
    agreed upon amount of $25,000 all-inclusive.

C. W. Hourigan J.A.

Grant Huscroft J.A.

S. Coroza J.A.


