



COURT OF APPEAL
    FOR ONTARIO

CITATION: Crosstown Transit Constructors v. METROLINX, 2019
    ONCA 240

DATE: 20190327

DOCKET: C65832

Feldman, Simmons and Nordheimer JJ.A.

BETWEEN

Crosstown Transit
    Constructors

Plaintiff (Appellant)

and

Metrolinx

Defendant (Respondent)

Duncan Glaholt and Michael Valo, for the appellant

Peter Wardle and Evan Rankin, for the respondents

Heard:  March 22, 2019

On appeal from the order of Justice Herman Wilton-Siegel of
    the Superior Court of Justice, dated July 31, 2018 with reasons reported at 2018
    ONSC 4650

REASONS FOR DECISION

[1]

The applicant appeals from the order of the application judge that
    dismissed its application for judgment against the respondent in the amount of
    $7,451,662.65 pursuant to the terms of a settlement agreement
.

[2]

The parties entered into a contract for the construction of the western
    portion of the Eglinton Crosstown Tunnel (the Project).

[3]

Pursuant to the contract, the respondent was required to obtain certain
    insurance including third party liability insurance for the benefit of both
    parties and other subcontractors on the Project, which it did. The respondent
    is the first named insured and the appellant is an additional insured in the insurance
    policies.

[4]

An additional term of the contract between the parties was that the
    appellant was responsible for paying 100% of the deductibles for each third
    party claim against the appellant  made under the insurance policies, save for
    certain specific exceptions, none of which are of relevance here.

[5]

The appellant completed all of its work on the Project and a certificate
    of substantial performance of the contract was issued on November 29, 2016. 
    There were some disputes outstanding but, after negotiations, the parties
    entered into a final settlement of the outstanding contract related issues
    between them.

[6]

As part of that settlement, the parties agreed to provide mutual
    releases.  One term of those releases was as follows:

THE PARTIES acknowledge that this Release is not intended to,
    and does not, affect the Parties' rights and obligations with regard to the
    insurance policies METROLINX was required to procure and maintain under the
    Contract ("OCIP Policies"). The Parties further acknowledge and agree
    that they will take all such action as reasonably necessary to allow each Party
    to secure any benefits which are or may be due under the OCIP Policies.

[7]

When it came time for the respondent to pay the final amount due to the
    appellant under the settlement, the respondent advised the appellant that it
    was going to withhold, from that payment, the amount potentially due for
    deductibles relating to outstanding claims by third parties that would be covered
    by the insurance policies.  The amount potentially due, at the time, was $6.4
    million.

[8]

The appellant took the position that no amount was owing to the
    respondent in respect of the deductibles as the settlement had resolved all
    outstanding issues under the contract, including any liability it had for the deductibles. 
    The appellant brought an application for the interpretation of the settlement
    agreement and for judgment for the amount that the respondent had withheld from
    the settlement payment on account of the deductibles.

[9]

The motion judge found that the above term in the release was ambiguous.
    However, he concluded, after considering the intentions of the parties and the
    surrounding factual matrix, that the proper interpretation of the release, read
    as a whole, was that it did not release the appellant from its obligation to
    pay the applicable deductibles.

[10]

We
    agree with the conclusion reached by the motion judge but for different
    reasons. We do not view the term of the release as being ambiguous. There is no
    dispute that the parties intention was to protect their rights under the insurance
    policies. The term in the release is not restricted just to the rights and
    obligations as stipulated in those insurance policies. Rather, the term
    expressly states that it is not intended to, and does not, affect the parties'
    rights and obligations
with regard to
the
    insurance policies. In our view, that language clearly applies to all of the
    rights and obligations of the parties relating to the insurance policies, including
    the rights and obligations that they agreed upon
in the
    contract
with respect to the payment of the applicable deductibles.

[11]

However,
    even if the language of this term of the release is ambiguous, we do not find
    any error in the analysis and conclusion reached by the motion judge in terms
    of the interpretation he gave to it, which leads to the same result. The motion
    judges interpretation is entitled to deference from this court unless a
    palpable and overriding error can be shown, of which there is none here:
Sattva
    Capital Corp. v. Creston Moly Corp.,
2014 SCC 53, [2014] 2 S.C.R. 633. 
    Nor is there any extricable question of law involved that would invoke a
    correctness standard of review.

[12]

We
    would add that we are unable to see anything in the events that led up to the
    settlement that would demonstrate that it was the intention of the parties to
    release the appellant from its contractual obligation to pay the deductibles.
    The appellant points to an email it sent to the respondent that proposed that
    mutual releases be exchanged and that the insurance exemption clause be
    inserted. There is nothing in that email that refers to the deductibles or
    suggests that the purpose of the proposed changes was to release the appellant
    from its obligation to pay them. Further, as the application judge noted, there
    is nothing in the record to suggest there was any reason for the respondent to have
    agreed to give up its entitlement to have the appellant pay the deductibles.
    That is, there is nothing in the evidence that demonstrates that the respondent
    gained anything in exchange for relinquishing its entitlement to be paid those
    amounts.

Conclusion

[13]

The
    appeal is dismissed with costs to the respondent fixed in the agreed amount of
    $30,000 inclusive of disbursements and HST.

K.
    Feldman J.A.
Janet Simmons J.A.
I.V.B. Nordheimer J.A.


