May 22nd, 2018

Court Of Appeal Clarifies Interpretative Approach To Covenants To Insure In Commercial Leases

The Court of Appeal released the first appellate decision in recent history where a landlord’s covenant to insure was found to not bar a claim against a tenant for loss from fire allegedly caused by the tenant’s negligence. Jonathan Lisus and Andrew Winton, acting on behalf of the appellant landlord, successfully argued that the trilogy of Supreme Court decisions from the 1970s which, for decades, has been relied upon to bar such claims, did not enunciate freestanding principles and does not change the fundamental rules of contractual interpretation. The Court applied those rules to interpret the lease at issue and agreed with the appellant that the parties created a contract where ordinary principles of negligence continued to apply, notwithstanding the landlord’s covenant to insure against damage caused by fire. The Court’s decision can be found here: http://canlii.ca/t/hs39p.