Quebec Court of Appeal narrows scope of tender document’s indemnity clause

Quebec’s Court of Appeal has limited the application of a fairly broad indemnity clause that would have effectively transferred all of a municipality’s risk to a contractor as part of a tendered contract.
In Ville de Montréal c. C.M.S. Entrepreneurs Généraux inc., the court found the City of Montreal could not receive compensation for damages arising from a snow removal accident involving a contractor, because the city was at sole fault.
The case concerned an incident in which an employee of a snow removal contractor accidentally pulled up a post hydrant while carrying out a contract for the municipality.
Ogilvy Renault’s bulletin, Information, notes a Quebec Superior Court judge found the snow removal method imposed by the City was intrinsically unsafe, since, after the snowstorm, curb-side post hydrants ended up temporarily buried under snow.
The court added the city should have planted stakes, which the city said it refused to do because of budget constraints.
The City of Montreal tried to obtain compensation from the contractor under an indemnity clause in the tender specifications, which stated the contractor was required to indemnify the city from and against [translation by Ogilvy Renault]: “any claims whatsoever arising out of the performance of or relating to this contract.”
The Court of Appeal limited the scope of the clause. It then clarified the clause cannot result in the city being compensated for damages resulting from its sole fault, which has nothing to do with performance of the contract.
“Even though the facts of this decision are particular to this case, this decision clearly shows that municipalities, and other clients of contract work, cannot necessarily transfer all the risks related to contract performance to the contractor,” Jean-Francois Michaud of Ogilvy Renault wrote in his article for Information. The article is entitled: ‘Tender Document Indemnity Clauses May Not Have the Scope you Think They Do.’