Insurance (LTB)

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