February 2015

Case Study - Ontario Court of Appeal Decision

Sanofi Pasteur Limited v. UPS SCS, Inc. 2015 ONCA 88

Hillel David, the senior appellate lawyer at McCague Borlack LLP, was one of several counsel responding to the appeal by the plaintiff in Sanofi Pasteur Limited v UPS SCS, Inc. 2015 ONCA 88. The major issues on the appeal were the effect of an insurance covenant in a contract made between the plaintiff and one of the defendants (UPS) in a significant claim involving damage to vaccines stored in a temperature-controlled environment, and whether the defendants other than UPS, including Hilly's client, were entitled to take the benefit of the insurance covenant.

The Court of Appeal held both that the insurance covenant applied so as to bar any claim by the plaintiff, other than one limited to the sum of $100,000 which the contract excepted from the operation of the covenant, and that the defendants other than UPS were entitled to shelter under the covenant despite the fact that they were not parties to the contract.

One of the questions on the issue of whether the other defendants could rely on the covenant was whether that would have the result either of nullifying the protection the covenant was intended to provide to UPS, or of creating an injustice to the other defendants. The Court adopted Hilly's argument that the failure to extend the benefit of the covenant to the other defendants would, because of the principle established in Dominion Chain Co. v Eastern Construction Co. [1978] 2 S.C.R. 1346 regarding the operation of s. 2 of the Negligence Act, have the result of imposing liabilities on the other defendants which they would not otherwise have, and would thereby create an injustice.

Read the full decision from the Court of Appeal for Ontario.

Should you wish to obtain further information concerning this decision, please contact Hillel David.

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