Executive Summary: Key Legal and Evidentiary Issues

• Interpretation of “arising from the use” in indemnity clauses was critical in establishing liability.

• Fire caused by a third-party arsonist was deemed sufficiently connected to the defendant’s use of the parking area.

• Court applied a commercially reasonable reading of the indemnity provisions, favoring broad risk allocation.

• Expert report on repair costs was accepted due to the plaintiff’s failure to challenge it with competing evidence.

• Plaintiff’s decision not to cross-examine or rebut the defendant’s expert weakened its damages claim.

• Damages awarded were reduced based on findings that the repair exceeded what was necessary to make the plaintiff whole.

Facts of the Case

Veritiv Canada Inc., a logistics company, leased a premises on Annacis Island, British Columbia, and allowed Western Pacific Transport Ltd., a trucking company, to park its vehicles on a designated portion of the parking lot for a monthly fee. This arrangement was formalized in a written contract, which included indemnity clauses assigning responsibility for damage to the premises arising from Western Pacific’s use.

On the night of March 11, 2018, a fire—determined to be deliberately set using gasoline—engulfed six of the defendant’s vehicles parked in the lot, causing significant damage to the asphalt, curbs, adjacent landscaping, and soil. Veritiv sought to recover $92,819.31, the cost incurred by its landlord, Dayhu Investments Ltd., to resurface and repair the lot.

Court’s Analysis and Interpretation

The central legal issue was whether the damage to the parking lot could be said to have “arisen from” Western Pacific’s “use” of the area under the terms of the contract. The court conducted a detailed interpretation of the indemnity clauses, focusing on their plain meaning, the context of the agreement, and the commercial intent of the parties.

It rejected the defendant’s argument that no liability could arise because the fire was caused by an unknown third-party arsonist. Instead, the court found that the mere act of parking vehicles constituted a “use” of the premises. The connection between the vehicles and the fire damage was sufficient to trigger liability under the broad indemnity terms, even without fault or negligence by Western Pacific.

The court emphasized that the inclusion of insurance requirements in the contract and the commercial context supported this interpretation. It noted that the plaintiff, as lessee of the property, was contractually liable to its landlord and reasonably shifted that risk to the defendant through the indemnity provisions.

Assessment of Damages

While the court upheld the defendant’s liability, it found that the plaintiff had not proven the full amount of its claimed loss. The defendant submitted an expert report suggesting that only half of the parking lot had been damaged, estimating reasonable repair costs at $69,781.01. The plaintiff did not present a competing expert opinion or cross-examine the defendant’s expert.

Given the uncontested expert evidence and the court’s own assessment that the plaintiff may have used the situation to upgrade the entire lot rather than simply repair the damaged portion, the court concluded that the proper quantum of damages was $69,781.01.

Outcome

The court found Western Pacific liable for damage to the parking lot under the indemnity clauses of the contract and ordered it to pay Veritiv $69,781.01. The plaintiff was also awarded costs at Scale B, reflecting its substantial success in proving liability. Any remaining adjustments related to payments already made were left to the parties or, if necessary, to the court Registrar.