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ARTICLE · 20 JUNE 2016

Premises Damaged By Fire? Don't Be Left Holding The Bag

WeirFoulds LLP
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In an article from January 2015, we cautioned landlords and tenants to pay particular attention to the interplay of insurance and indemnity clauses in a commercial lease...

CanadaReal Estate and Construction
Macdonald Allen
Macdonald Allen
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An Appellate Review of Insurance and Indemnity Clauses in a Commercial Lease

In an article from January 2015, we cautioned landlords and tenants to pay particular attention to the interplay of insurance and indemnity clauses in a commercial lease as a result of the Superior Court of Justice's surprising decision in Deslaurier Custom Cabinets Inc. v. 1728106 Ontario Inc. This decision held the landlord responsible for damage to the tenant's property caused by fire, a peril against which the tenant specifically contracted to insure.

On April 4, 2016 the case was overturned on appeal. Justice Cronk, writing for the Court of Appeal, held that the motions judge's failure to apply applicable jurisprudence constituted an error of law, and the effect of the tenant's covenant to insure was to presumptively fix the tenant, rather than the landlord, with responsibility for the tenant's losses.

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