



COURT OF APPEAL FOR ONTARIO

CITATION: Seidel v. Markham (Town), 2016 ONCA 306

DATE: 20160426

DOCKET: C60817

Sharpe, LaForme and van Rensburg JJ.A.

BETWEEN

Henry Seidel

Plaintiff

and

Town of Markham

Defendant/Appellant

and

V.T.A.
    Construction Ltd. and
Intact Insurance (formerly ING
    Insurance

Company
    of Canada
)

Third Parties/
Respondent

David G. Boghosian and Shaneka M. Taylor, for the
    appellant

Sean R. Chambers, for the respondent

Heard and released orally: April 22, 2016

On appeal from the judgment of Justice Bruce A. Glass of
    the Superior Court of Justice, dated July 3, 2015.

ENDORSEMENT

[1]

This appeal arises out of a dispute between the appellant Town of
    Markham (Markham) and the respondent Intact Insurance Company of Canada
    (Intact), with respect to the interpretation of what both parties referred to
    as an agreement.

[2]

The plaintiff sued for damages after an alleged slip and fall on
    Markhams property. He sued Markham, the appellant in this appeal, initially
    pleading that the accident occurred March 6, 2011. Markham had a winter
    maintenance contract with V.T.A. Construction Ltd (V.T.A.). As required by
    the contract, V.T.A. had Markham added as an additional insured to its policy with
    Intact but only with respect to the legal liability arising out of the
    operations of [V.T.A.]. Markham retained counsel, Mr. Persaud, and in January
    2012, served a statement of defence and issued a third party claim against
    V.T.A. and Intact. The third party claim claimed contribution and indemnity from
    V.T.A. and a declaration that Intact owed a duty to defend and indemnify
    Markham in respect of the plaintiffs claims.

[3]

In May 2012, the plaintiff added V.T.A. as a defendant to the action and
    amended the statement of claim to plead that the accident occurred on March 5,
    2011.

[4]

In the fall of 2012 and early 2013, there were a series of
    communications between Mr. Persaud, Intact and Mr. Lipetz at Benson Percival
    Brown LLP (BPB), the law firm appointed to defend V.T.A. in the action, about
    the defence of the action and the third party claim. Mr. Persaud prepared an Assumption
    of Defence Agreement that specifically provided for Intact to assume Markhams
    defence and to indemnify Markham in respect of any damages in the action.
    Mr. Lipetz advised that Intact would not be executing the agreement but
    that his office would serve a Notice of Change of Lawyers. Mr. Persaud
    replied that he did not have to sign the agreement so long as it was understood
    that Markham would be covered for any amounts arising from a finding of
    liability against it. The next day, Mr. Lipetz delivered the Notice of Change
    of Lawyers, with the effect that BPB represented both V.T.A. and Markham in the
    defence of the action. In fact, the retainer continued for the following 16.5
    months, during which time BPB was the only firm representing Markham in the
    proceedings, which included attendance at examinations for discovery.

[5]

In December 2013, BPB notified Mr. Persaud that it was bringing a motion
    to remove itself from the record. This occurred six months later. New counsel
    was appointed for V.T.A. but not Markham. Markham brought a motion under Rule
    49 to enforce the settlement agreement.

[6]

The motion judge dismissed Markhams motion that sought to enforce
    Intacts obligation to both defend and indemnify Markham in the action. He
    concluded that there had not been a meeting of the minds between the parties
    on the question of indemnification and that the agreement was not in clear
    enough terms to require Intact to indemnify Markham for any loss suffered as a
    result of V.T.A.s negligence.

[7]

The appellant raises a number of arguments on appeal, having to do with
    the motion judges approach to the issue and his consideration of the evidence.
    The respondent asserts that the motion judges interpretation of what occurred
    is based on his findings of fact and entitled to deference. Further, the
    communications between counsel were not sufficient to conclude an agreement to
    indemnify in the clearest of terms.

[8]

This appeal is allowed for the following reasons.

[9]

First, the motion judge erred in concluding that there was no agreement.
    The parties both agreed that they entered into an agreement resulting in the
    appointment of the same counsel to represent both V.T.A. and Markham in the
    defence of the action. The issue was not whether there was an agreement, but
    its interpretation.

[10]

Second,
    the motion judge erred in concluding that Intact could not have agreed to
    indemnify Markham for liability in the action, except as resulted from V.T.A.s
    negligence. While that may well have been what was provided for in the
    maintenance contract, and the coverage provided by V.T.A.s insurance policy
    with Intact, the issue was the interpretation of the parties agreement that
    was entered into in the context of both the action and the third party claim.

[11]

In
    its third party claim, Markham claimed both a defence and indemnification from
    Intact. Intact had three choices. It could have denied both obligations, in
    which case Markham would have been on its own in the action. It could have resisted
    the claim for indemnification but accepted the obligation to defend, assuming
    the cost of Markhams defence by different counsel. Or it could have accepted
    the obligation to defend and indemnify. The first two options would recognize
    that Markham and V.T.A. continued to be adverse in interest in the main and
    third party action. The third would mean that their interests were aligned or
    the same.

[12]

Intacts
    appointment of a single firm to represent both Markham and V.T.A. could not
    have occurred if V.T.A. and Markham continued to be adverse in interest. The
    motion judge erred in failing to consider this important and determinative
    fact. The fact that BPB was appointed to represent both defendants and in fact
    did represent them in litigation until discoveries had been completed was only
    consistent with one meaning, namely, that Intact had agreed to both defend and
    indemnify Markham, including in respect of its own negligence unrelated to
    V.T.A.s acts or omissions. This, in our view, is an agreement to indemnify in
    sufficiently clear terms. Without an agreement to indemnify Markham, counsel
    appointed by Intact to act for both V.T.A. and Markham would have been in an
    obvious and untenable conflict of interest.

[13]

It
    may be that Intact and its counsel failed to appreciate the significance of the
    change in the plaintiffs pleading of the accident date until quite late in the
    day. However, this did not permit Intact to resile from the agreement the
    parties had reached, after discoveries had been conducted and after BPB had
    acted as Markhams counsel for more than 16 months.

[14]

The
    appeal is therefore allowed. The order in the court below is set aside. Intact
    shall appoint counsel to defend Markham at its sole expense and Intact shall
    indemnify Markham for any damages and costs awarded against Markham in the main
    action.

[15]

Costs
    are payable to the appellant and fixed in the sum of $25,000, inclusive of the
    costs below, the appeal and applicable taxes and disbursements.

R.J. Sharpe J.A.

H.S.
    LaForme J.A.

K. van Rensburg J.A.


