An indemnity against "any damage or claims" may not be
comprehensive. So ruled the Ontario Court of Appeal in Neely v.
MacDonald1, a decision containing important
guidance for drafters of indemnity provisions.
The case involved a golf cart accident. The plaintiff-passenger
("Neely") was injured when the driver
("MacDonald") lost control of a golf cart while driving
down a steep hill on a course owned by ClubLink. Neely sued
MacDonald for negligence in the operation of the cart and ClubLink
for failing – despite previous complaints – to correct
the grade of the hill.
ClubLink claimed over against the tournament host, Canadian
Litigation Counsel Inc. ("CLC"), on the basis of an
indemnity clause in the contract between ClubLink and CCL. The
clause provided as follows:
CUSTOMER IS LIABLE
FOR ALL DAMAGE CAUSED BY CUSTOMER AND/OR THEIR GUEST(S)
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.
The motion judge held that indemnity was not limited to damage
caused by the guests (as contemplated in the heading) themselves
but also extended to cover ClubLink's own negligence (as
contemplated in the body).2 Justice Myers ruled that CLC
was obligated, to indemnify ClubLink for all of the plaintiff's
personal injury claims – even those which might flow from
ClubLink's own negligent course design or operation.
Although the Court of Appeal noted that "appellate
deference to first instance deciders on points of contractual
interpretation is desirable", it reversed the motion
judge's decision. The three member appeal panel was
"unable to find that the contract clearly shifted to CLC the
risk of ClubLink's own negligence."
First, headings can colour the meaning of contractual
provisions. Thus, the heading "Customer is liable for all
damage caused by customer or guests" narrowed the scope of the
Second, if a party intends to obligate another to bear the costs
of its own negligence, the clearest possible terms must be used.
The Court followed Fenn v Peterborough (City)
(1979)3, which the motion judge had improperly
distinguished. In Fenn, the Supreme Court of Canada held
that an exemption from claims of negligence must use the clearest
possible terms. In this case, ClubLink's language was
Third, any ambiguity must be construed against the drafter.
Here, because ClubLink inserted an unclear heading/wording
combination, it was not entitled to a favourable
The Court of Appeal ultimately ruled that "it was arguable
that the hill was negligently designed and maintained by ClubLink,
and that this caused or contributed to the accident." Without
an indemnification from its own negligence, that became a question
for ClubLink to answer before a jury.
The Court of Appeal decision re-emphasizes the contra
proferentem principle: any ambiguity in a contract will be
interpreted against the party who drafted the contract. Drafters
should consider explicit language that states the type of damages
and classes of contributor that are covered. In particular, if a
party wants to be indemnified for its own negligence, it must
clearly signal such an intention. Highly specific language within
indemnity provisions is now par for the course.
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