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ARTICLE · 13 JUNE 2014

Limiting Your Indemnity – When The Words Are Important

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Tsain-Ko Village Shopping Centre Limited Partnership v Watts ("Tsain-Ko")1 is the story of how the best laid plans of a father trying to help his son get started down his chosen career path can go awry.

CanadaReal Estate and Construction
David N. Ross
David N. Ross
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Tsain-Ko Village Shopping Centre Limited Partnership v Watts ("Tsain-Ko")1 is the story of how the best laid plans of a father trying to help his son get started down his chosen career path can go awry.

In the case the father, Ronald Watts ("Watts"), agreed to provide to a landlord a limited indemnity of the lease obligations of a shell company being used by Spencer Watts, his son, to lease premises for his fledging restaurant business. The indemnity agreement contained typical provisions, essentially putting the father, as indemnifier, into the shoes of the tenant under the lease. However, it also contained the following limitation in section 8:

"8. Limitation. Notwithstanding anything to the contrary contained herein, the liability of the Indemnitor under this Indemnity Agreement shall be limited so long as the Indemnitor is not in default hereunder, to:

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