Global Transportation and Insurance Updates

A.         SOLAS UPDATE

The IMO (International Maritime Organization) has amended the SOLAS (Safety of Life at Sea) Convention to require a packed container’s gross weight to be verified before the container can be loaded on board a vessel. This new rule will come into effect on July 1^st, 2016. A container without a verified gross mass (VGM) cannot be loaded on a vessel. Shippers have to submit the VGM to the shipping line who must transmit the information to the terminal operator. The IMO places responsibility on all parties involved for compliance. The IMO Guidelines provide:

13.1 Notwithstanding that the shipper is responsible for obtaining and documenting the verified gross mass of a packed container, situations may occur where a packed container is delivered to a port terminal facility without the shipper having provided the required verified gross mass of the container. Such a container should not be loaded onto the ship until its verified gross mass has been obtained. In order to allow the continued efficient onward movement of such containers, the master or his representative and the terminal representative may obtain the verified gross mass of the packed container on behalf of the shipper. This may be done by weighing the packed container in the terminal or elsewhere. The verified gross mass so obtained should be used in the preparation of the ship loading plan. Whether and how to do this should be agreed between the commercial parties, including the apportionment of the costs involved.

The SOLAS amendment will apply globally. Like other SOLAS provisions, the enforcement of the SOLAS requirements regarding the verified gross mass of packed containers falls within the competence and is the responsibility of the SOLAS Contracting Governments. Contracting Governments acting as port States are to verify compliance with these SOLAS requirements. Any incidence of non-compliance with the SOLAS requirements is enforceable according to national legislation.

B.         UK Supreme Court – “Global Santosh” Decision Handed Down

The Supreme Court handed down its decision on May 11^th, 2016 in NYK Bulkship (Atlantic) NV (Respondent) v Cargill International SA (Appellant) [2016] UKSC 20. By a time charter dated 11 September 2008, on an amended NYPE form, the owners NYK Bulkship (“NYK”) chartered the vessel Global Santosh to charterers Cargill International (“Cargill”) for one time charter trip (“the charter”). Cargill sub-chartered the vessel to Sigma Shipping. The vessel carried a cargo of cement from Slite, Sweden to Port Harcourt, Nigeria, pursuant to a contract of sale between Transclear SA (as sellers) and IBG Investments Ltd, which had the ultimate obligation to discharge the cargo. Transclear had probably sub-chartered the vessel, but whether this was from Sigma or by a more indirect link was not clear. Under that sale contract, IBG was to pay demurrage to Transclear in the event of delay in discharge beyond the agreed laytime in the contract. If that demurrage was unpaid, Transclear was purportedly granted a lien over the cargo.

The vessel arrived at Port Harcourt on 15 October 2008 and tendered notice of readiness. She was instructed to remain at anchorage because of port congestion (caused, at least in part, by the breakdown of IBG’s off-loader). She proceeded to berth on 18 December 2008, but was ordered back to anchorage and arrested on the basis of a Nigerian court order arising from a claim by Transclear to secure a demurrage claim against IBG. This was an obvious mistake, because the order should have directed the arrest of the cargo, not the vessel. Following an agreement between Transclear and IBG, the vessel finally began discharging on 15 January 2009 and completed discharge on 26 January 2009.

Cargill withheld hire for the period of the arrest. It relied on an off-hire clause in the charter, clause 49, which stated that the vessel should be off-hire during any period of detention or arrest by any authority or legal process during the charter, with the proviso “unless such capture or seizure or detention is occasioned by any personal act or omission or default of the Charterers or their agents”. Cargill commenced London arbitration claiming hire, but the arbitrators determined that the proviso in clause 49 did not apply during the period of the arrest. On an appeal, the Commercial Court allowed the appeal, holding that IBG’s failure to discharge within the laydays under its contract of sale with Transclear and to pay demurrage were omissions in the course of discharging, and remitted the question of causation back to the arbitrators. The Court of Appeal dismissed the appeal, on the basis that the delay to the vessel fell within the charterer’ “sphere of responsibility”. Cargill appealed to the Supreme Court.

The Supreme Court allowed Cargill’s appeal by a majority of four to one, holding that the vessel was off hire throughout the period of arrest and that the proviso in clause 49 was not engaged. Lord Sumption gives the lead judgment, with which Lord Neuberger, Lord Mance and Lord Toulson agree. Lord Clarke writes a dissenting judgment, and would have dismissed the appeal and held that the vessel was on hire.

C.         UK Supreme Court – “Res Cogitans” Decision Handed Down

The Supreme Court handed down its decision on May 11^th, 2016 in PST Energy 7 Shipping LLC and another v O W Bunker Malta Limited and another [2016] UKSC 23. In October 2014, PST Energy 7 Shipping LLC and Product Shipping and Trading S.A., the owners and managers of the vessel Res Cogitans, (collectively, the “Owners”) ordered a quantity of marine fuel, (the “bunkers”) from OW Bunker Malta Ltd (“OWB”). The contract between OWB and the Owners provided for payment 60 days after delivery and included a clause under which property was not to pass to the Owners until payment for the bunkers had been made. It also entitled the Owners to use the bunkers for the propulsion of Res Cogitans from the moment of delivery.

OWB obtained the bunkers from its parent company, OW Bunker & Trading A/S (“OWBAS”). OWBAS obtained the bunkers from Rosneft Marines (UK) Ltd (“RMUK”), which obtained them from RN-Bunker Ltd (“RNB”). In November 2014 OWBAS announced that it was applying to the Danish courts for restructuring and subsequently became insolvent. ING Bank NV (“ING”) became the assignee of OWB’s rights against the Owners.

The Owners consumed all of the bunkers in the vessel’s propulsion, without making payment to OWB, which did not make payment to OWBAS, which in turn did not make payment to RMUK. RMUK paid RNB and demanded payment from the Owners, asserting that it remained the owner of the bunkers. The Owners commenced arbitration against OWB and ING, seeking a declaration that they were not bound to pay for the bunkers, or damages for breach of contract, on the grounds that OWB had been unable to pass title to them, owing to the application of s. 2(1) and s.49 of the Sale of Goods Act 1979 (“SoGA”). The arbitrators determined that OWB did not undertake to transfer property in the bunkers to the Owners under the Contract and that the Owners therefore remained liable to pay OWB/ING. Males J agreed and the Court of Appeal dismissed a further appeal by the Owners.

The Supreme Court unanimously dismissed the appeal by the Owners, PST Energy. Lord Mance gave the only judgment, with which the other Justices agreed.

D.        Tokyo District Court Approves Rehabilitation Plan for DCKK

The Tokyo District Court has approved the rehabilitation plan for Japanese bulk-shipper Daiichi Chuo Kisen Kaisha (DCKK). The rehabilitation plan of Star Bulk Carriers, Daiichi Chuo’s wholly owned subsidiary, has also been approved and confirmed by the court. Under the rehabilitation plan, Daiichi Chuo would buy all of the company’s existing shares without consideration. Following the confirmation of the plan, the company would acquire and cancel the shares and issue new shares through which fourteen maritime cluster members would become Daiichi Chuo’s new shareholders.

E.         Greece - Piraeus Court of Appeal - Manager of Vessel Not Liable for Insurance Premium

The management company of a number of vessels arranged insurance cover for them. Premium being due, the insurers sued the managers claiming the premium. The managers contended they were not party to the insurance contract; they were acting on behalf of their principals, who were the shipowners; they alleged this was also clear to the underwriters, who were issuing the payment receipts in the name of the manager, "on behalf of" the owner. Based on this evidence, the court rejected the claim against the manager, considering it was the owners

who were party to the insurance contract and it was them who had to pay the insurance company. Piraeus One Membered Court of Appeal Judgment no 110/2014, Judge: I. Apostolopoulos, Attorneys at law: X. Adamandidis, Al. Konnidas, Maritime Law Review vol. 42, p. 360. NOTE: The manager can assume technical management (maintenance equipment, crewing of vessel) or commercial and technical management (also including chartering, expenses settlement, and any other job related to the vessel). The manager acting within these duties, binds the owner. For the manager to become liable, it should either not declare it acts for the principal – and under circumstances that cannot be inferred – or it should act beyond the scope of its powers.

[This legal column was written by Manolis Eglezos, Attorney at law, Manolis Eglezos & Associates Law Firm Attorneys at Law and Consultants, www.eglezoslaw.gr]

Declaration of Value on Bills of Lading: Clarification by Ontario Court of Appeal

The Ontario Court of Appeal released its decision in National Refrigerator & Air Conditioning Canada Corp. v. Celadon Group Inc., 2016 ONCA 339 and clarified how a shipper must declare the value of cargo in order to receive the full value of the cargo if the cargo is lost or damaged.

The trial had been heard before Justice Chapnick. The following evidence was established. National Refrigeration & Air Conditioning Canada Corp. was a manufacturer of commercial refrigeration products. In October and November 2011, National hired Celadon Group Inc., Celadon Canada Inc., and Celadon Trucking Services Inc. (collectively “Celadon”) to transport two shipments of copper tubing from Mexico to Ontario. Both shipments were hijacked in Mexico and never recovered. National submitted a claim for loss and damage for US$122,228.46 and US$98,700.52 respectively. Celadon denied both claims relying on exclusion of liability clauses contained in Celadon’s Rules and Regulations and posted on Celadon’s website. National commenced an action to recover damages.

 After a three-day trial, the trial judge found that Celadon could not rely on the exclusionary terms, not having notified National of those terms, and, that in any event, the exclusionary terms were unconscionable.  She also found that the value of the goods had been declared on the commercial invoice contained in the shipping documents and that those documents formed part of the contract of carriage. Consequently, Celadon could not rely on the statutory limitation of liability to $4.41 per kilogram pursuant to Carriage of Goods, O. Reg. 643/05 under the Highway Traffic Act, R.S.O. 1990, c. H.8.

The trial judge also found that independent of the carriage agreement, Celadon was liable in negligence. This was because Celadon had specific knowledge about the enhanced risk of hijacking in Mexico that gave rise to a duty to warn National of the increased danger and it failed to do so.

At trial, the trial judge found that Celadon could not rely on the exclusionary terms, not having notified National of those terms. This despite the fact that the parties had prior dealings with each other where Celadon had specifically brought those terms to National’s attention. The terms were also on Celadon’s website. The logistics manager for National testified that there was no discussion, either in writing or orally, about limiting liability when transporting goods from Mexico [other than references to the tariffs and website in an email]. The Court of Appeal refused to overturn Justice Chapnick’s ruling that the terms and conditions applied. The trial judge had specifically held that:

[T]he clauses in question were not brought to [National’s] attention at the time that the agreement for shipment was reached with respect to the October or November shipments. [National] cannot be said to have assented to the inclusion of the exclusion of liability clause in the parties’ contract.

The Court of Appeal held that that finding was not tainted by legal error and was clearly supported by the record. They saw no basis for appellate intervention. Surprisingly, this is in contrast to other court decisions that reference to terms and conditions in a website are sufficient for incorporation by reference into a contact. Warning to carriers: terms and conditions on a website and reference to a web site are not sufficient to incorporate those terms into a contract of carriage. To be safe carriers should send a copy of the tariff to the customer and have them sign off on the terms.

With regards to the statutory limitation of liability, Celadon submitted on Appeal that, even if the exclusion of liability clause did not apply, liability was limited by s. 9 of Schedule 1 of Ontario Regulation 643/05 because the contract was governed by Ontario law. Section 9 provides that carrier liability is limited to $4.41 per kilogram unless s. 10 is satisfied. Section 10 provides the following:

If the consignor has declared a value of the goods on the face of the contract of carriage, the amount of any loss or damage for which the carrier is liable shall not exceed the declared value.

There was no declared value on the bill of lading. The trial judge found that as a copy of the commercial invoice issued by the Mexican consignor to was provided to the carrier, s. 10 was satisfied.

The Court of Appeal found that the trial judge erred in law in so finding stating:

[20] The terms of s. 10 are clear. The consignee must declare the value of the goods on the face of the contract of carriage. Section 4(1) of the regulation specifies what a contract of carriage must contain and that specification includes “(i) a space to show the declared valuation of the shipment, if any”.

[21] The bill of lading used for these shipments met the specifications of s. 4 and included a space to show the declared value of the shipment. That space was not completed for these shipments. The invoice issued to National by the consignor had nothing to do with the contract of carriage and providing a copy of the invoice to the carrier was not declaring the value of the goods on the face of the contract of carriage within the meaning of the regulation.

The Appeal Court concluded that the trial judge erred by failing to limit National’s claim to the value permitted by the regulation, namely, $110,830 (Canadian).

With respect to the trial judge’s finding that the exclusion term in the tariff was unconscionable, the Court of Appeal in obiter in essence implied that the trial judge was wrong, stating “As we have concluded that the trial judge did not err in holding that the exclusion of liability clause did not apply, it is not necessary for us to deal with her finding of unconscionability. Our silence, however, should not be taken as agreeing with that finding.”

Lastly, the Court of Appeal had to deal with the trial judge’s finding that Celadon was independently negligent (and could not limit liability) for its failure to adequately warn National about the enhanced risk of hijacking in Mexico. The Court found that the trial judge erred on this issue as well. The Court agreed with Celadon that the trial judge erred in law by holding that could be liable in tort in the circumstances of this case. Any failure or neglect on the part of Celadon with regard to the shipments arose directly out of the duties associated with performance of the contract of carriage and as such did not give rise to an independent duty in tort.

Accordingly, Celadon was entitled to limit its liability to the $4.41 per kilogram ($2 per pound) Ontario statutory limitation of liability.

[Rui M. Fernandes and David Huard of Fernandes Hearn LLP were counsel for Celadon in this matter]

Effect of “Mary Carter Agreement” on Joint Liability

In Cormack v. Chalmers, 2015 ONSC 5564, the court held that a “Mary Carter”(*1) type settlement agreement with one defendant, who was entitled to limit his liability, did not change the liability of the other defendant from joint liability to several liability.

The following is a reproduction of the court’s endorsement:

This motion is brought by the defendants Pitt and Rubadeau (“Pitt”) seeking summary judgement against the plaintiff, Cormack dismissing paragraph 14(b) of her Statement of Claim (which pleads the Negligence Act); and for an order that the plaintiff’s claims against Pitt are subject only to several, and not joint liability because of a partial settlement agreement entered into between the plaintiff and the defendant Chalmers. This partial settlement agreement (or Mary Carter agreement) between the plaintiff and the defendant Chalmers limited the liability of Chalmers in exchange for payment by Chalmers of a fixed sum to the plaintiff, and an agreement by the plaintiff to save Chalmers harmless from any liability above the fixed amount.

This motion was argued following a trial management conference held on the eve of a civil jury trial to commence at Picton.  

Pitt’s position is that the partial settlement agreement has changed the legal relationships between the parties such that Pitt is no longer potentially jointly liable with Chalmers to the plaintiff, but is now only potentially severally liable to the plaintiff.

The plaintiff’s position is that the joint liability of Pitt to the plaintiff is unchanged, and Pitt’s motion should fail.

The plaintiff was badly injured while she was swimming in proximity to a harbour entrance. She was struck by Chalmers motor boat and was badly injured by its propeller. At the time the plaintiff went swimming, she was a guest of Pitt at their residence close to the harbour, had allegedly not been there previously, and allegedly had not been warned about possible hazards of swimming off their dock. The action was framed in negligence against all defendants, the Negligence Act was pleaded; and joint and several liability was claimed against the defendants Chalmers and Pitt.

Following completion of the pleadings and discoveries, Chalmers initiated proceedings in the Federal Court for a declaratory judgement that his liability was limited under the Marine Liability Act to a maximum amount. In their Statement of Defence in the Federal Court Pitt admitted the allegations in Chalmers Statement of Claim, admitted that Chalmer’s liability was capped at the fixed amount, and except for costs, admitted that Chalmers was entitled to the relief he was seeking. A consent judgement was then obtained in the Federal Court, to which Pitt also consented. Before the consent order was obtained, the plaintiff and Chalmers entered into a settlement agreement which provided that Chalmers liability was capped in all respects, that Chalmers was to pay the fixed amount to the plaintiff, and the plaintiff would save Chalmers harmless in the event he was called upon to pay more than the capped amount. The agreement contained a number of other provisions which included the obligation on Chalmers to cooperate with the plaintiff in prosecuting the action, and not to contest the plaintiff’s damages.  Pitt was not a party to the agreement and learned of it afterwards. It seems beyond question that Chalmers liability was correctly capped at $1,000,000.

The knub of Pitt’s argument is that the save harmless provision favouring Chalmers has so changed the relationship between the parties that it nullifies the joint liability provisions flowing from the Negligence Act, and has the legal effect of limiting Pitt’s liability to one of several liability.

Specifically the relevant provision of the partial settlement agreement relied upon is as follows:

12. Cormack agrees to indemnify Chalmers and to hold Chalmers harmless in respect of any crossclaim or any other proceeding or any other claim whatsoever arising from issues and allegations in Ontario Superior Court Action 11-0574 and in Federal Court Action T-812-13.

I don’t accept that the partial settlement agreement, or Mary Carter agreement, in this case has the effect of limiting Pitt’s liability to one of several liability to the plaintiff.

Essentially Pitt’s position remains unchanged following the agreement. Chalmer’s exposure was capped at the fixed amount with or without the agreement so that if a judgement against all of the defendants were to exceed Chalmers cap, Pitt would liable for the balance. The fact that the agreement provides for a refund to Chalmers up to a capped amount does not alter the rights or liability of Pitt.

If the judgement were to be less than the cap, then subject to the further submissions of counsel, there would be no enforceable judgement against Pitt because the plaintiff has already been paid.  The question of costs is still a live issue for Pitt; and their rights are unaffected by the agreement.

In Moore v Bertuzzi,(*2) Perell, J, dismissed an appeal from the Master who had ordered disclosure of a proportionate share settlement agreement, on the ground that settlement agreements of the type in question change the adversarial process and the court must therefore understand what and why the change is present. His reasons do not support the argument that paragraph 12 of the partial settlement agreement (and paras 14 and 15) alter Pitts liability to one of several liability. His comments at paragraph 67 of his decision are not statements of law but statements of fact concerning the usual terms of Mary Carter agreements. At paragraph 85, Perrell, J discusses the typical terms of a Pierringer agreement and the reasons therefore. I take neither of these references to be statements of law that are of assistance on this motion.

The reference to the excellent article by Stephen Moore entitled “Limitations and Joint and Several Liability” (*3) is similarly of limited assistance in dealing with the legal effect of the above noted provision in the partial settlement agreement. Again it is a practical guide and explanation of the use of proportionate or partial settlement agreements and is not authority for the proposition that Mary Carter agreements as a matter of law result in several liability only as against the non-settling defendant. It depends solely on the language of the agreement in question.

This in fact may be analogous to a situation whereby one defendant enjoys immunity at law or limited liability at statute, or perhaps even no assets to pay their proportionate share. It has been held that any of those circumstances do not protect the remaining defendant or defendants from joint liability. (*4)

The authorities relied upon by Pitt for the most part dealt with the issue of privilege and disclosure of partial settlement agreements, and not the legal effect on the substantive rights of the parties. They also appeared to involve agreements that were similar to a ‘Pierringer’ agreement where the settling defendant was to be let out of the action, and required as a term for its own protection, that the plaintiff would limit its claim against the non-settling defendant to several liability in order to prevent any claims for indemnity by the non-settling defendant.    Where the settling party remains as a defendant as in a ‘Mary Carter’ agreement, there is no authority that I am aware of that supports the proposition that the relationships between the parties has been altered as a matter of law to such an extent as to protect the non-settling defendant from joint liability. (*5) In this case, I am satisfied that the paragraph noted above does not have the effect of restricting the liability of Pitt to one of several liability.

   The motion on behalf of Pitt and Rubadeau is dismissed. I will hear submissions on costs at the conclusion of the trial unless the parties have in the meantime reached an agreement.

Endnotes

(*1) A Mary Carter Agreement is a settlement between the plaintiff and one or more defendants wherein the settling defendant guarantees to the plaintiff a minimal financial recovery. In return, the plaintiff agrees to limit the exposure to the settling defendant including to indemnify for any cross claims. A significant term of a Mary Carter agreement is that the settling defendant remains in the lawsuit. Traditionally, in a Mary Carter agreement the settling defendant’s payment to the plaintiff is tied to a determination of liability. The more the liability found against the non-settling defendant the less the settling defendant has to pay. While the settling defendant has agreed to pay to the claimant a value to the claim, that value has the potential to decrease, depending on the net result at trial. As such, the settling defendant has a stake in the outcome of the trial.

(*2) 2015 ONSC 3248, 110 O.R. (3d) 611

(*3) CLE program, Ontario, June 23, 2006

(*4) Ryan Estate v. Canada.(Attorney-General), 2015 NLTD(G) 90, 2015 CarswellNfld 221, 2015 NLTD(G) 90 paragraphs 59- 62

(*5) Noonan v. Alpha-Vico, 2010 ONSC 2720 (CanLII). although the case deals primarily with disclosure, privilege, and discovery issues where there are partial settlement agreements,  an excellent summary by Master McLeod appears at paragraphs 28 and 29.

One Year Contractual Limitation Period Overrides Statutory Period

In Ontario under the Limitations Act, 2002, the general limitation period for contracts is two years. The limitation period under the Act in respect of business agreements may be varied or excluded by agreement. A “business agreement” is defined as an agreement made by parties none of whom is a consumer as defined in the Consumer Protection Act, 2002. A recent decision of the Ontario Court of Appeal considered whether a one year limitation period in an insurance policy was a “business agreement” and would be enforced.

In Daverne v. John Switzer Fuels Ltd. 2015 ONCA 919 a fuel oil tank leak caused damages to property owned by Gerald Daverne and Jutta Daverne. McKeown & Wood Limited (“MW”) had sold the tank to the Davernes. MW was insured by Federated Insurance Company of Canada (“Federated”). At issue in the litigation considered by the Court of Appeal was whether the one year limitation period set out in Federated’s insurance policy was enforceable against MW. The judge hearing the original application had found that the clause was not enforceable. The Court of Appeal disagreed.

Firstly, the Court of Appeal found that the standard of review (of the judge’s decision) was correctness. The Court of Appeal reiterated that the correctness standard of review applies on standard form insurance contracts. (*1) The Court of Appeal held that, in the case of insurance policies, which involve the interpretation of similar if not common language and the application of general principles of insurance law, the high degree of generality and precedential value justifies a departure from the reasonableness standard of appellate review set out by the Supreme Court of Canada.

The Court of Appeal had to consider if in fact there was a one year limitation period in the policy, given that the period was set out in a statutory condition.

Section 148 of the Insurance Act, R.S.O. 1990, c. I.8, makes certain statutory conditions part of every fire insurance contract in Ontario. Statutory condition 14 was included in Federated’s policy as clause 14 of the “Basic Policy Statutory Conditions” form that is included in the Basic Policy. It provided:

14. Action: Every action or proceeding against the insurer for the recovery of any claim under or by virtue of this contract is absolutely barred unless commenced within one year next after the loss or damage occurs. [Emphasis added.]

Clause 8 of the “Additional Conditions” of the Basic Policy form also applies:

8. Applicability of Statutory Conditions and Additional Conditions: The Statutory Conditions and Additional conditions apply with respect to all the perils insured by this policy and to the liability coverage, where provided, except where these conditions may be modified or supplemented by riders or endorsements attached. [Emphasis added.]

The Court of Appeal held that Clause 8 applied the contractual limitations period in clause 14 to the other perils insured against in Federated’s policy and to the liability coverage provided by it.

The Court of Appeal then had to deal with the issue as to whether the policy was a business agreement. The Court of Appeal concluded that “It is plain that none of the parties to Federated’s insurance policy is a “consumer”, which is defined in the Consumer Protection Act, 2002 to mean “an individual acting for personal, family or household purposes and does not include a person who is acting for business purposes.” The parties are business entities.” The parties referred to, of course, were Federated and MW. The Court held that clause 14 of the Basic Policy Statutory Conditions, combined with clause 8 of the Additional Conditions, clearly varied the two-year limitation period provided for in the Limitations Act, 2002.

The Appeal Court noted that the judge hearing the original application held that the phrase “loss or damage”, as used in clause 14 and other places in the statutory conditions, is “not readily adaptable to liability insurance coverage where the loss or damage which is the subject of a claim has been suffered by a third party who then seeks compensation from the insured.” The Appeal Court found that the judge erred in rejecting Federated’s argument that its denial of defence coverage to MW could constitute “loss or damage” for the purpose of the limitation period in clause 14 stating:

There is no reason not to apply the basic principle that the insured “suffers a loss from the moment [the insurer] can be said to have failed to satisfy its legal obligation [under the policy of insurance].” Where the benefit of a duty to defend is denied, the insured “suffers a loss ‘caused by’” the insurer’s denial of a defence “the day after the demand … is made” (*2)

The Appeal Court concluded that Clause 8 is clear and unambiguous. It explicitly states that the statutory conditions apply to the liability coverage under the policy. The insurance policy at issue in this case was a business agreement for the purposes of s. 22 of the Limitations Act, 2002, and the one-year contractual limitation period was enforceable by Federated against MW.

Endnotes

(*1) The Court of Appeal in MacDonald v. Chicago Title Insurance Company of Canada 2015 ONCA 842 had previously arrived at this correctness standard, which is different than set out in 2014 by the Supreme Court of Canada in Sattva Capital Corp. v. Creston Moly Corp. 2014 SCC 53 [see the Fernandes Hearn LLP article in the firm’s August 2014 Newsletter]. In Sattva the Supreme Court of Canada held that contractual interpretation involves mixed questions of mixed fact and law rather than pure questions of law and the standard of review is reasonableness, not correctness.

(*2) at paragraph 33