Guarantee Co. v. Gordon Capital Corp. (1999), 247 N.R. 97 (SCC)
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[French language version follows English language version]
[La version française vient à la suite de la version anglaise]
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Temp. Cite: [1999] N.R. TBEd. OC.008
Guarantee Company of North America (appellant) v. Gordon Capital Corporation (respondent) and Chubb Insurance Company of Canada and Laurentian General Insurance Company Inc. (respondents)
(26654)
Indexed As: Guarantee Co. of North America v. Gordon Capital Corp.
Supreme Court of Canada
L’Heureux-Dubé, Gonthier, Iacobucci, Major and Bastarache, JJ.
October 15, 1999.
Summary:
Guarantee and Chubb issued fidelity bonds to Gordon. The bonds agreed to insure Gordon for loss resulting directly from dishonest or fraudulent acts of an employee. Gordon claimed a loss and sued Guarantee in Quebec. Guarantee raised a limitation defence and denied coverage. Guarantee began an action against Gordon in Ontario, alleging it had rescinded the policy for misrepresentation in the application. The Quebec action was stayed. Guarantee and Chubb sought summary judgment in the Ontario action declaring that they were not liable to Gordon under the bonds.
The Ontario Court (General Division), in a decision reported at 31 O.T.C. 325, allowed the motion and granted summary judgment declaring that Guarantee and Chubb were not liable to Gordon. Gordon appealed.
The Ontario Court of Appeal, in a decision reported at 108 O.A.C. 43, allowed the appeal. Guarantee appealed.
The Supreme Court of Canada allowed the appeal. The trial judge applied the correct test and properly granted summary judgment.
Contracts – Topic 3664
Performance or breach – Repudiation – What constitutes repudiation – [See
Contracts – Topic 3742
].
Contracts – Topic 3742
Performance or breach – Fundamental breach – Rescission – Repudiation – The Supreme Court of Canada discussed the meaning of the terms rescission and repudiation and the distinction between the two terms – See paragraphs 39 to 47.
Contracts – Topic 4182
Remedies for breach – Rescission – What constitutes – [See
Contracts – Topic 3742
].
Insurance – Topic 3368
Payment of insurance proceeds – Limitation of actions – Repudiation – To bar defence – Guarantee issued fidelity bonds to Gordon – The bonds agreed to insure Gordon for loss resulting directly from dishonest or fraudulent acts of an employee – Gordon claimed a loss and sued Guarantee in Quebec – Guarantee raised a limitation defence and denied coverage – Guarantee began an action against Gordon in Ontario, alleging it had rescinded the policy for misrepresentation in the application – The Quebec action was stayed – Guarantee sought summary judgment in the Ontario action declaring it was not liable to Gordon under the bonds – The Supreme Court of Canada held that the limitation period survived Guarantee’s wrongful rescission as a defence to Gordon’s claim for coverage – See paragraphs 48 to 64.
Practice – Topic 5702
Judgments and orders – Summary judgments – Jurisdiction or when available – [See
Practice – Topic 5708
].
Practice – Topic 5708
Judgments and orders – Summary judgments – Bar to application – Existence of issue to be tried – Guarantee and Chubb issued fidelity bonds to Gordon – The bonds agreed to insure Gordon for loss resulting directly from dishonest or fraudulent acts of an employee – Gordon claimed a loss and sued Guarantee in Quebec – Guarantee raised a limitation defence and denied coverage – Guarantee began an action against Gordon in Ontario, alleging it had rescinded the policy for misrepresentation in the application – The Quebec action was stayed – Guarantee and Chubb sought summary judgment in the Ontario action declaring that they were not liable to Gordon under the bonds – The trial judge held that Gordon did not show a genuine issue for trial and granted Guarantee and Chubb summary judgment – The Supreme Court of Canada held that the trial judge applied the proper test and correctly granted summary judgment – See paragraphs 27 to 36.
Cases Noticed:
Ross v. Scottish Union and National Insurance Co. (1918), 58 S.C.R. 169, refd to. [para. 26].
Hercules Management Ltd. et al. v. Ernst & Young et al., [1997] 2 S.C.R. 165; 211 N.R. 352; 115 Man.R.(2d) 241; 139 W.A.C. 241, refd to. [para. 27].
Dawson et al. v. Rexcraft Storage and Warehouse Inc. et al. (1998), 111 O.A.C. 201; 164 D.L.R.(4th) 257 (C.A.), refd to. [para. 27].
Ungerman (Irving) Ltd. et al. v. Galanis and Haut (1991), 50 O.A.C. 176; 83 D.L.R.(4th) 734; 4 O.R.(3d) 545 (C.A.), refd to. [para. 27].
Rogers Cable TV Ltd. v. 373041 Ontario Ltd. (1994), 22 O.R.(3d) 25 (Gen. Div.), refd to. [para. 31].
Confederation Trust Co. v. Alizadeh (1998), 54 O.T.C. 226 (Gen. Div.), refd to. [para. 32].
Abram Steamship Co. v. Westville Shipping Co., [1923] A.C. 773 (H.L.), refd to. [para. 39].
Clausen v. Canada Timber & Lands Ltd., [1923] 4 D.L.R. 751 (P.C.), refd to. [para. 40].
Keneric Tractor Sales Ltd. v. Langille, [1987] 2 S.C.R. 440; 79 N.R. 241; 82 N.S.R.(2d) 361; 207 A.P.R. 361; 43 D.L.R.(3d) 171, refd to. [para. 41].
Sail Labrador Ltd. v. Ship Challenge One – see Sail Labrador Ltd. v. Navimar Corp. et al.
Sail Labrador Ltd. v. Navimar Corp. et al., [1999] 1 S.C.R. 265; 235 N.R. 201, refd to. [para. 41].
Mills v. S.I.M.U. Mutual Insurance Association, [1970] N.Z.L.R. 602 (C.A.), refd to. [para. 42].
Syncrude Canada Ltd. et al. v. Hunter Engineering Co. and Allis-Chalmers Canada Ltd. et al., [1989] 1 S.C.R. 426; 92 N.R. 1; 57 D.L.R.(4th) 321, refd to. [para. 45].
Photo Production Ltd. v. Securicor Transport Ltd., [1980] A.C. 827 (H.L.), refd to. [para. 52].
Linton (B.G.) Construction Ltd. v. Canadian National Railway Co., [1975] 2 S.C.R. 678; 3 N.R. 151, refd to. [para. 52].
Beaufort Realties (1964) Inc. v. Belcourt Construction Ottawa Ltd. and Chomedey Aluminum Co., [1980] 2 S.C.R. 718; 33 N.R. 460, refd to. [para. 52].
Port Jackson Stevedoring Pty. Ltd. v. Salmond & Spraggon (Australia) Pty. Ltd., [1981] 1 W.L.R. 138 (P.C.), refd to. [para. 57].
Authors and Works Noticed:
Cheshire, Fifoot and Furmston, The Law of Contract (12th Ed. 1991), pp. 287, note 12 [para. 41]; 541 [para. 40].
Fridman, G.H.L., The Law of Contract in Canada (3rd Ed. 1994), p. 807 [para. 39].
Treitel, G.H., The Law of Contract (9th Ed. 1995), p. 341 [para. 41].
Waddams, S.M., The Law of Contracts (4th Ed. 1999), paras. 427 [para. 44]; 620 [para. 40]; 629 [para. 41].
Williston, S., A Treatise on the Law of Contracts (3rd Ed. 1970), vol. 12, pp. 13, §1454A [para. 41]; 347 [para. 43].
Counsel:
Kenneth W. Scott, Q.C., James D. Patterson and Sharon C. Vogel, for the appellant;
Thomas G. Heintzman, Q.C., R. Paul Steep and Darryl A. Cruz, for the respondent, Gordon Capital Corp.;
Jamieson Halfnight, Glynis Evans and Ian H. Fraser, for the respondents, Chubb Insurance Co. of Canada and Laurentian General Insurance Co.
Solicitors of Record:
Borden and Elliot, Toronto, Ontario, for the appellant;
McCarthy Tétrault, Toronto, Ontario, for the respondent, Gordon Capital Corp.;
Poss and Halfnight, Toronto, Ontario, for the respondent, Chubb Insurance Co. of Canada;
Ogilvy Renault, Ottawa, Ontario, for the respondent, Laurentian General Insurance Co.
This appeal was heard on June 17, 1999, before L’Heureux-Dubé, Gonthier, Iacobucci, Major and Bastarache, JJ., of the Supreme Court of Canada. On October 15, 1999, Iacobucci and Bastarache, JJ., delivered the following decision for the court in both official languages.
