The plaintiff in the underlying action was a passenger in a golf
cart operated by a fellow guest at a golf tournament hosted by the
Canadian Litigation Counsel Inc. ("CCLI"). The plaintiff
was injured while a passenger in the golf cart and sued the
operator and the owner of the golf course, Clublink Corp. Clublink
Corp. claimed over against CCLI seeking to be indemnified pursuant
to their agreement.1 The agreement read as follows:
The Customer and/or their guest(s)
agree to hold Clublink Corporation and its
officers and employees free and harmless from any damage or
claims of any nature that may arise from or
through the use of a golf cart.
It is the
Customer/s and/or their guest(s)
responsibility to fully understand the safe operating
instructions of the golf cart and to return it immediately
following completion of the round of golf in as good condition as
was received. [emphasis added]
CCLI argued that the indemnity did not expressly cover claims
made against Clublink Corp. by third parties, claims for personal
injury or claims for loss based on Clublink's own negligence.
CCLI took the position that the indemnity was limited to damage to
Clublinks' property by CCLI or its guests, particularly to golf
carts. To read the indemnity otherwise was to allow Clublink Corp.
to escape liability and transfer the burden of risk to an innocent
The court disagreed entirely with CCLI's interpretation of
On a general level, the Court was not persuaded that an
indemnity is the "the most onerous contractual provision in
existence" or that it allowed a guilty part to escape
liability. An indemnity simply allows for an allocation of risk and
dictates which party needs to (or ought to) insure the risk. A
right to indemnity is not a defence to liability – it simply
determines who will bear the cost of that liability.
In interpreting the indemnity, the Court stressed the importance
of discerning what was in the reasonable contemplation of the
parties in context. CCLI's undertaking to be responsible for
the guest's understanding of the safe operation of a golf cart
put the risk of safe driving on CCLI. To have held otherwise would
be to exclude the dominant type of claim the parties could expect
to see arise "from or through the use of a golf cart" and
render the indemnity virtually meaningless.
The Court also looked to the rules of construction and held that
CCLI's narrow reading of the indemnity left the phrase "or
claims" without meaning. The term "damage" protected
Clublink Corp. from damage to its own property so the phrase
"or claims" had to refer to something else.
CCLI also argued that an indemnity cannot obligate a party to
indemnify another for its own negligence unless negligence is
expressly mentioned or, there is no other possible interpretation
of the clause. While the Court agreed that such an obligation
should not be inferred absent a clear and express contractual term,
there is no requirement that the term "negligence" must
be used – just a consideration of whether the words used
(whatever they are) extend to include it.
While this decision does not break new ground, it serves as a
strong reminder to companies and individuals about the importance
of drafting and the potential impact of a broad indemnity.
1. Neely v. MacDonald, 2014 ONSC
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