



COURT OF APPEAL FOR ONTARIO

CITATION: Neely v. MacDonald, 2014 ONCA 874

DATE: 20141208

DOCKET: C58903

Blair, Pepall and Lauwers JJ.A.

BETWEEN

Sandi Neely

Plaintiff

and

Kelly MacDonald,
Bond Head
    Golf Resort Inc
.
, and
ClubLink Corporation
    ULC

Defendants

(Respondents)

and

Canadian Litigation
    Counsel
and Paul McCague

Third Party

(Appellant)

Christopher R. Dunn, for the appellant

Mark Elkin, for the respondents

Heard: November 24, 2014

On appeal from the order of Justice F.L. Myers of the Superior
    Court of Justice, dated May 12, 2014 with reasons reported at 2014 ONSC 2866.

By The Court:

[1]

In 2010, the appellant, Canadian Litigation Counsel (CLC), hosted a
    golf tournament at Bond Head Golf Resort. CLC signed a Special Function
    Contract with ClubLink Corporation ULC, which owned the golf course. CLC paid approximately
    $28,000 for 180 guests for breakfast, dinner, and golf.

[2]

Sandi Neely attended the tournament. She was the passenger in a golf
    cart driven by the defendant Kelly MacDonald, another guest. Ms. MacDonald lost
    control of the golf cart while driving down a steep hill, injuring Ms. Neely. Ms. Neely
    sued Ms. MacDonald for negligence in the operation of the cart.

[3]

Ms. Neely also sued Bond Head and ClubLink. There had been past complaints
    about carts going too fast down the hill where the accident occurred, but ClubLink
    only remodeled the course to reduce the hills grade after Ms. Neelys injury.
    She alleged that ClubLink was negligent in failing to remedy the hills grade
    earlier.

[4]

The respondents, Bond Head and ClubLink, brought a third party action
    against CLC for indemnity under the Special Function Contract. The motion judge
    granted summary judgment to the respondents against CLC, obliging it to
    indemnify ClubLink for all of the plaintiffs personal injury claims. CLC
    appeals from that judgment.

[5]

For the reasons set out below, we allow CLCs appeal.

Analysis

[6]

There is a significant distinction between the negligence of a guest in
    the operation of a golf cart, and the negligence of ClubLink relating to the
    design and operation of the golf course.

[7]

For ClubLink to shift the risk of its own negligence to CLC successfully,
    the contract must say so in the clearest terms.
Fenn v. Peterborough (City)

(1979)
,
    25 O.R. (2d) 399 (C.A.), affd [1981] 2 S.C.R. 613, was a decision of a
    five-judge panel of this court which was affirmed by the Supreme Court. This courts
    statement at paras. 35 and 36 was adopted by the Supreme Court:

As we have agreed with the trial Judge in his finding that
    Consumers owed a duty of care, not only to the plaintiffs but also to the
    Commission,
we know of no authority which allows a party
    to be indemnified for its own negligence in the absence of a contractual right
    thereto and we were referred to none
.



If one is to be protected against and
    indemnified for one's own negligence there would have to be an indemnity clause
    spelling out this obligation on the other party in the clearest terms
. [Emphasis
    added]

[8]

The basis for ClubLinks indemnification claim against CLC is the
    following provision in the Special Function Contract:

CUSTOMER IS LIABLE FOR ALL DAMAGE CAUSED BY CUSTOMER AND/OR
    THEIR GUEST(S)

The Customer and/or their guest(s) agree to hold ClubLink
    Corporation and its officers and employees free and harmless from any damage or
    claims of any nature whatsoever that may arise from or through the use of a
    golf cart.

It is the Customers and/or their guest(s) responsibility to
    fully understand the safe operating instructions of the golf cart and to return
    it immediately following the completion of the round of golf in as good
    condition as it was received.

[9]

The motion judge drew a distinction between what he called the title
    of the provision and what he called the provisions wording:

[10]

While
    the title of the clause could be seen to suggest a limitation of liability to
    damage caused by guests, the wording actually used carries with it claims made
    against Clublink in tort in connection with the use of a golf cart. (Para. 16.)
    The motion judge distinguished
Fenn
, at para. 10, on the basis that
    in that case, there was no indemnity agreement at all between the parties. His
    point of distinction is not persuasive. In our view, in
Fenn
this
    court expressed a general principle of law that remains valid and applicable.

[11]

The
    clause heading that reads CUSTOMER IS LIABLE FOR ALL DAMAGE CAUSED BY CUSTOMER
    AND/OR THEIR GUEST(S) is at once a title and a provision, and has been
    emphasized within the contract. The headings contained in a contract are part
    of the language chosen by the parties and can properly be considered in
    interpreting the provisions that follow, provided the wording of the contract is
    not inconsistent with such an interpretation:
Cathcart Inspection Services
    Ltd. v. Purolator Courier Ltd
.
(1981), 34 O.R. (2d) 187 (S.C.), at
    para. 29, affd 39 O.R. (2d) 656 (C.A.);
Toronto (City) v. Toronto Railway
,
    [1907] A.C. 315 (P.C.). Failure to read an agreement in accordance with its
    headings may lead a court to misconstrue the contractual provisions (
Solway
    v. Lloyds Underwriters
(2006), 80 O.R. (3d) 401 (C.A.), at para. 44).

[12]

Based
    on the indemnity provision as well as its accompanying heading, we agree with
    the motion judge that the wording "claims of any nature that may arise
    from or through the use of a golf cart" is broad enough to oblige CLC to
    indemnify ClubLink for damages arising from the operation of a cart by a guest,
    including personal injury. However, we do not agree that this provision clearly
    extends to ClubLinks own negligence.

[13]

In
    our view, the motion judge did not give due effect to the principle in
Fenn
.
A similar principle is also reflected in
Potvin v. Canadian Museum of Nature
,
    [2003] O.T.C. 449 (S.C.), at paras. 4-6.


[14]

He
    also did not properly consider the provision in its entirety. Read as a whole,
    the provision is ambiguous and must be construed against the drafter, ClubLink.

[15]

In
    short, we are unable to find that the contract clearly shifted to CLC the risk
    of ClubLinks own negligence.

[16]

The
    heading of the indemnity provision makes it clear that it is only damage
caused by
the customer and/or their guest (emphasis
    added) that is the subject of any indemnity by CLC. It is arguable that the hill
    was negligently designed and maintained by ClubLink, and that this caused or
    contributed to the accident. If so, this would lead naturally to an
    apportionment of liability by the jury between ClubLink and CLC. Perhaps the
    jury will find, as the motion judge stated, that the liability claimed in this
    case arises out of the normal use of a golf cart as driven every day by
    thousands of golfers at golf courses. Perhaps it will find that the design of
    the hill was negligent, which contributed to the accident. Those issues are
    matters for the jury and cannot be decided on a motion

[17]

We
    invited counsel to make submissions on the application of
Sattva Capital Corp.
    v. Creston Moly Corp
.
, 2014 SCC 53, 373 D.L.R. (4th) 393, to the
    standard of appellate review. Counsel for the appellant submitted that the
    motion judges approach reflected a palpable and overriding error. The respondents
    counsel made no submissions.

[18]

Although
    the Supreme Court, at para. 52 of
Sattva
, stated that appellate
    deference to first instance deciders on points of contractual interpretation is
    desirable, the court also noted, at para. 53, that legal errors made in the
    course of contractual interpretation continue to be properly subject to
    appellate review. The court listed some examples of legal errors, such as
    "the application of an incorrect principle, the failure to consider a
    required element of a legal test, or the failure to consider a relevant
    factor". In our view, the motion judges interpretation of the indemnity
    provision, and particularly the failure to apply the principle in
Fenn
,
    are errors that meet the standard in
Sattva

and justify
    appellate intervention.

Disposition

[19]

The
    appeal is allowed with costs to the appellant fixed, as agreed, at $10,000
    all-inclusive. As also agreed, the appellant is entitled to costs in the same
    amount for the motion below.

Released: December 8, 2014 RAB

R.A.
    Blair J.A.

S.E.
    Pepall J.A.

P.
    Lauwers J.A.


