ALLOCATION OF RISK UPDATE: Interplay of Insurance,
Indemnity, & Release Clauses
Any analysis with respect to the allocation of risk in a
commercial lease will inevitably draw upon the principles set out
by the Supreme Court of Canada in the “Trilogy”: (1)
Pyrotech Products Ltd. v. Ross Southward Tire Ltd., (1975)
[1976] 2 S.C.R. 35; (2) Cummer-Yonge Investments Ltd. v.
Agnew-Surpass Shoe Stores Ltd., (1975) [1976] 2 S.C.R. 221;
and (3) Smith v. T. Eaton Co., (1977) [1978] 2 S.C.R. 749.
Each of these Trilogy cases involved attempts by a landlord (or its
insurer by way of subrogation) to recover damages from a tenant as
a result of fire damage caused by each tenant’s
negligence. In all three cases, the Supreme Court found in favour
of the tenant and dismissed each landlord’s action on the
basis of the principle of immunity. The Supreme Court established
the principles specifying that in a landlord-tenant relationship
where there is an express obligation by one party to
