Insurance (LTB)

Caselaw.Ninja, Riverview Group Publishing 2021 ©
Date Retrieved:	2024-11-22
CLNP Page ID:	1918
Page Categories:	Landlord & Tenant (Residential)
Citation:	Insurance (LTB), CLNP 1918, <7A>, retrieved on 2024-11-22
Editor:	MKent
Last Updated:	2022/05/14

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Madison Developments Ltd. v. Plan electric Co., 1997 CanLII 1277 (ON CA)

Let me begin with an analogous circumstance. The law is now clear that in a landlord-tenant relationship, where the landlord covenants to obtain insurance against the damage to the premises by fire, the landlord cannot sue the tenant for a loss by fire caused by the tenant's negligence. A contractual undertaking by the one party to secure property insurance operates in effect as an assumption by that party of the risk of loss or damage caused by the peril to be insured against. This is so notwithstanding a covenant by the tenant to repair which, without the landlord's covenant to insure, would obligate the tenant to indemnify for such a loss. This is a matter of contractual law, not insurance law, but, of course, the insurer can be in no better position than the landlord on a subrogated claim. The rationale for this conclusion is that the covenant to insure is a contractual benefit accorded to the tenant, which, on its face, covers fires with or without negligence by any person. There would be no benefit to the tenant from the covenant if it did not apply to a fire caused by the tenant's negligence: see Agnew Surpass Shoe Stores Ltd. v. Cummer-Yonge Investments Ltd., 1975 CanLII 26 (SCC), [1976] 2 S.C.R. 221 at pp. 230 and 248-49, 55 D.L.R. (3d) 676 at pp. 683 and 689-90; Ross Southward Tire Ltd. v. Pyrotech Products Ltd., 1975 CanLII 25 (SCC), [1976] 2 S.C.R. 35 at p. 39, 57 D.L.R. (3d) 248 at p. 251; T. Eaton Co. v. Smith, 1977 CanLII 39 (SCC), [1978] 2 S.C.R. 749 at p. 755, 92 D.L.R. (3d) 425 at p. 429

D.L.G. & Associates Ltd. v. Minto Properties Inc., 2014 ONSC 7287 (CanLII)

[52] In Cummer-Yonge Investments, supra, the landlord was contractually required to insure the property against fire damage. The landlord’s insurer sought to recover the amount it paid to the landlord under the landlord’s insurance policy after a fire caused by the tenant’s negligence. Even though the damage was attributable to the tenant’s negligence, the Supreme Court held that the contractual language negotiated by the landlord and tenant was sufficient to protect the tenant from liability for the property damage. Further, the Court noted that in the circumstances of a covenant to insure, explicit reference to the negligence of the party is not required to absolve the negligent party of liability, and even a covenant to insure in general terms will cover negligence.

[53] In Pyrotech Products, supra, the Supreme Court noted that the covenant to insure modified the relationship between the landlord and tenant. In that case, the tenant was held not liable despite negligently causing a fire. The Court held that in the context of a lease, the liability for a fire caused by negligence must be determined on the basis of the lease, not by reference to insurance policy considerations.

[54] In Smith v. T. Eaton Co., supra, the Supreme Court held that despite the fact that the fire was caused by the tenant’s negligent actions, as the landlord had covenanted to insure against fire damage, therefore, the landlord could not recover against the tenant, nor could the landlord’s insurer advance a subrogated claim against the tenant. The landlord's covenant to insure benefitted the tenant by lifting from it the risk of liability for fire arising from its negligence and bringing that risk under insurance coverage: Smith v. T. Eaton Co. at p. 754.