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December 28, 2011

Happy Holidays

Happy holidays from the Ontario Insurance Law Blog! Thanks for your support and we hope you continue to enjoy the blog in the new year. See you in 2012!

December 21, 2011

Summary Judgment - Oral Evidence

In this post, we continue our discussion of the Court of Appeal's decision in Combined Air Mechanical Services Inc. v. Flesch, 2011 ONCA 764.

Rule 20.04(2.2) permits a judge to hear oral evidence on a summary judgment motion. The Court provided guidance on when this discretion may be exercised.

The Court held that a party that moves for summary judgment must be in a position to present a case capable of being decided on a paper record. The motions judge can decide if he or she requires viva voce evidence under r. 20.04(2.2). The purpose of the rule is not to allow a party to enhance the record it has put before the court.

An order for oral evidence will generally be appropriate where the judge concludes the exercise of powers under r. 20.04(2.1) will be facilitated by hearing oral evidence of a limited number of witnesses on one or more specific, discrete and likely determinative issues.

An order under r. 20.04(2.2) may be appropriate where:

(1) Oral evidence can be obtained from a small number of witnesses and gathered in a manageable period of time;
(2) Any issue to be dealt with by presenting oral evidence is likely to have a
significant impact on whether the summary judgment motion is granted; and
(3) Any such issue is narrow and discrete – i.e., the issue can be separately decided and is not enmeshed with other issues on the motion.

- Tara Pollitt

December 14, 2011

Court of Appeal comments on the new summary judgment rule

The Court of Appeal has now released its decision regarding the new summary judgment rule. The appeal was heard before a five panel Court and pertained to five action. It is released under the name Combined Air Mechanical Services Inc. v. Flesch, 2011 ONCA 764.

The Court held that there are three types of cases that are amenable to summary judgment:

1. Where the parties agree it is appropriate to determine an action by way of summary judgment (para. 41);
2. Claims or defences that are shown to have no merit (para. 42); and
3. Where the trial process is not required in the interest of justice (para. 44).

It is not necessary for the judge to categorize the type of of case in question. In fact, the Court held that the latter two types of cases are not to be viewed as discrete compartments.

The test for summary judgment is the "full appreciation test". The motions judge must ask "can the full appreciation of the evidence and issues that is required to make dispositive findings be
achieved by way of summary judgment, or can this full appreciation only be achieved by
way of a trial?" (para. 50). In cases that call for multiple findings of facts emanating from a number of witnesses and found in a voluminous record, summary judgment is not a substitute for the trial process. On the other hand, the full appreciation test may be met in document-driven cases with limited testimonial evidence, cases with limited contentious factual issues or where the record can be supplemented to the requisite degree at the motion judge's direction by hearing oral evidence on discrete issues.

It remains to be seen how this will impact summary judgment motions going forward. Are judges going to be more reluctant to grant summary judgment?

- Tara Pollitt

December 7, 2011

Occupier’s Liability S.4(4)(f): Recreational Trail

In Turner v. Kitchener (City) [2011] O.J. No. 4803, the plaintiff was riding his bike along a recreational trail in Kitchener. It was his regular route and time of travel which put him on the trail at 5:15 am.

Earlier that day vandals had set fire to a bridge along the trail and after investigating, the police and fire personnel had blocked off the bridge with a wooden barricade and yellow caution tape.

The plaintiff was biking at a relatively high speed for the time of morning, was wearing a helmet but did not have any light affixed to his bike. As the plaintiff approached the barricade, he was not able to see it, and when he did notice it is was too late to stop safely. The plaintiff applied his brakes so hard that he flipped over the bike and suffered injuries.

In this case, the plaintiff must establish that the defendant acted with “reckless disregard” towards him.

The trail is a “recreational trail”, so that s.4(4)(f) of the Occupier’s Liability Act (“Act”) was triggered. Section 4(3)(c) of the Act is also triggered and the plaintiff is deemed to have willingly assumed all risks when he rode his bike on the trail that day.

The deputy trial judge cited Cormack v. Mara (Township) (1989), 68 O.R. (2d) 716 (C.A.) which defined “reckless disregard” as doing or omitting to do something which the occupier “should recognize as likely to cause damage or injury to [the person] present on his or her premises, not caring whether such damage or injury results”.

After the fire, police and fire personnel attended the scene the city dispatched a crew to erect an orange barrier with several lines of yellow caution tape blocking off bridge access. The bridge was blocked off in order to arrange an inspection to determine if the bridge was structurally safe.

The plaintiff’s expert report concluded that the city ought to have used either a reflective warning sign and/or a flashing beacon.

The city offered evidence that the recreational trails are closed between 11pm and 6am. There are signs posted which state this and there is a by-law which specifically prohibits presence in the park, including on the trails between those hours.

The deputy judge accepted the city’s evidence, although it only showed that the plaintiff was in violation of a city by-law. He held that the city did not act with “reckless disregard” for the plaintiff. The deputy judge further explained that,“it could not be deemed likely, from the city’s perspective, that a bicyclist riding a trail while it was closed, and more importantly, while it was almost completely dark, without a headlight, would fail to see the barricade until it was too late to stop safely. Nor do I find that the city did not care whether injury resulted from its erection of the barricade.”

The deputy judge also stated that a flashing light on the barricade would have increased the possibility of the plaintiff seeing the barrier, but that a light on his bike and riding at a slower speed in the dark would have done the same thing.

If the deputy judge had found for the plaintiff on liability, he would have reduced the damages by a factor of 70%.

Also see Kennedy v. London (City) (2009), 58 M.P.L.R. (4th) 244 (Ont S.C.J.) and Schneider v. St. Clair Region Conservation Authority (2009), 97 O.R. (3d) 81 (C.A.) on the issue of recreational trails.

- Alison McBurney

November 30, 2011

Admissibility of Expert Reports in Small Claims Court

In Turner v. Kitchener (City) [2011] O.J. No. 4803, there was a mid-trial ruling on the admissibility of an expert report in Small Claims Court.

The facts of this case involve a plaintiff who was riding his bike along a recreational trail in Kitchener. It was his regular route and time of travel which put him on the trail at 5:15 am.

Earlier that morning vandals had set fire to a bridge along the trail and after investigating, the police and fire personnel had blocked off the bridge with a wooden barricade and yellow caution tape.

The plaintiff was biking at a relatively high speed for the time of morning, was wearing a helmet but did not have any light affixed to his bike. As the plaintiff approached the barricade, he was not able to see it, and when he did notice it is was too late to stop safely. The plaintiff applied his brakes so hard that he flipped over the bike and suffered injuries.

At trial, the plaintiff attempted to admit into evidence a report from a professional engineer. Defence counsel objected and intended to cross-examine the expert and challenge the admissibility of his report based on the evidence of qualifications.

The deputy trial judge held that the report was admissible. He cited section
27(1) of the Courts of Justice Act which provides the Small Claims Court (“SCC”) with the general authority to “accept and act on lower-quality evidence than would otherwise be permitted under the common law rules of evidence”.

He then examined the SCC Rule 18.02 subsections (1) to (7) and held that the position of defence counsel as he intended to cross-examine the expert is not contemplated by the Rules and that the report had already been admitted into evidence by way of Rule 18.02 (1) to (3). Admissibility of documents under Rule 18.02 is to be determined at the initial stage under Rule 18.02(1) when the document is tendered - “Once the document is admitted, the witness may be-cross-examined using the summons procedure under rule 18.02(4). But since that is cross-examination,the rule presupposes that the report or document is already admitted into evidence. The report or document serves as the examination-in-chief of that

The deputy judge found no merit in the defendant’s objection to the expert’s qualifications. The expert was a professional engineer and his qualifications to provide the opinion evidence were of the highest quality generally seen in civil courts.

- Alison McBurney

November 23, 2011

OPCF 44R - Family Protection Endorsement

The Court of Appeal recently affirmed a lower court decision on the OPCF44R.

In Van Bastelaar v. Bentley, [2011] O.J. No. 4666 (C.A.), the plaintiffs were concerned that the defendant's $1,000,000 policy would be apportioned between four injured parties and there would be a shortfall. As a result, they added their own insurer pursuant to the inadequately insured motorist provisions of their policy. Their policy had a Family Protection Endorsement with limits of $1,000,000. The key provision read as follows:

The insurer's maximum liability under this change form, regardless of the number of eligible claimants or insured persons injured or killed or the number of automobiles insured under the Policy, is the amount by which the limit of family protection coverage exceeds the total of all limits of motor vehicle liability insurance, or bonds, or cash deposits, or other financial guarantees as required by law in lieu of such insurance, of the inadequately insured motorist and of any person any person jointly liable with that motorist.

The motions judge held that "An underinsurer's obligation to pay does not arise until the total amount of insurance held by the tortfeasor at the moment of the accident is less than the family protection coverage liability limit." He concluded that since "the policies of the parties are unevenly matched, so therefore, the underinsurer had no exposure to liability".

The Court of Appeal affirmed the decision.

- Tara Pollitt

November 16, 2011

McQueen v. Echelon General Insurance Co. [2011] O.J. No. 4563 (Ont CA)

Appeal by the insurer from an award of accident benefits and damages for mental distress.

At trial, the plaintiff sought housekeeping, transportation, costs of medical assessments and damages for bad faith and mental distress.

The insurer made three major arguments on the issue of damages for mental distress:

1. That there was procedural unfairness based on the trial judge’s
consideration of conduct unrelated to rejected claims for statutory
accident benefits;

2. That merely denying benefits does mean that there was bad faith; and

3. That the trial judge lacked jurisdiction to make an award for mental

The trial judge quickly dismissed the initial two arguments by concluding that the plaintiff was seeking to recover damages for more than the SABS benefits and that this was not a case where the insured simply denied benefits.

In regards to the allegation that there was merely a denial of benefits the appeal judge agreed with the trial judge on the following points:

• The insurer had a duty to act in good faith in all its dealings with the
insured and had an additional duty not to inflict unnecessary mental
distress. Fidler v. Sun Life Assurance Co. Ltd. 2006 2 SCR 3 (Fidler);

• That the insurer repeatedly refused to provide benefits noting that they
were not “reasonable and necessary”, but never provided and reasons why
they were not reasonable and necessary;

• That damages were warranted because benefits were denied contrary to
medical recommendations;

• That the insurer took an adversarial approach to the plaintiff in the

• That the one object of the insurance contract was to secure the plaintiff’s
peace of mind and that it was within the reasonable contemplation of the
parties that breach of peace of mind promise would bring about mental
distress; and

• That the plaintiff’s mental distress was palpable and accepted her evidence
that the change in her emotional and psychological conduct was the result
of her relationship with the insurer.

In regards to the jurisdiction argument, the insurer argued that the plaintiff was not a party to the insurance contract since it was her husband’s policy, and therefore, she was not entitled to claim for damages for mental distress.

It was further argued that Fider was distinguishable because Fidler dealt with LTD benefits not SABS benefits and that consequently, peace of mind cannot have been a contemplated term.

The appeal judge held that the reasoning in Fidler applies to an insured person under an automobile policy, whether the person is the named party or not.

“Mental distress to anyone insured under the policy upon breach would
have been within the reasonable contemplation of the insurer and the
insured and, thus, damages are recoverable pursuant to the basic
principle of compensatory damages.”


“People purchase motor vehicle policies to protect themselves from
financial and emotional stress and insecurity. An object of such
contracts is to secure a psychological benefit that brought the prospect
of mental distress upon breach within the reasonable contemplation of
the parties at the time the contract was made.”

In the end, the appeal judge affirmed all aspects of the trial judge’s decision only modifying the total awarded under the transportation head of damages as the trial judge provided inadequate reasons for the amount.

- Alison McBurney

November 9, 2011

Sheikh v. Pinheiro 2011 ONSC 6143

We thank M. Edward Key of O’Donnell, Robertson & Sanfilippo for this contribution to our blog.

The plaintiff was going westbound in her vehicle and the defendant taxi driver was travelling northbound in his taxi. They collided at an intersection. The defendant taxi then went on to collide with a southbound vehicle. That southbound vehicle did not collide with the plaintiff’s vehicle.

None of the drivers appeared to be hurt. They all went to the same Collision Reporting Center and filled out very detailed collision reports. There was no question who was driving what vehicle.

On the second anniversary of the collision, the plaintiff brought an action against the driver of the southbound vehicle, believing that he was the taxi driver. Essentially, the plaintiff got the other two drivers confused.
Two years after that (i.e. four years after the collision), the plaintiff commenced a separate action against the real taxi driver after realizing the mistake.

The taxi driver brought a motion for summary judgment on the basis that the action was limitation barred.

The plaintiff argued that there was a genuine issue regarding when the plaintiff knew or ought to have known the true identity of the driver that hit her vehicle. The motion judge made short work of that argument. In particular, for strategic reasons, the plaintiff did not swear an affidavit regarding the state of her personal knowledge of the issues, and the motion materials only included affidavits from their lawyers. The judge determined that the information was readily available in the form of the Self Collision Reports.

Alternatively, the plaintiff argued that there was a genuine issue for trial on the basis that she could not "discover" that her injuries were likely to satisfy the Insurance Act threshold until 2 years before she started the second action.
The motions judge rejected the plaintiff's argument. The trial judge considered that the medical evidence was clear that it was "reasonably discoverable" that the plaintiff's injuries met the threshold more than two years before the second action was commenced.

The motion judge looked not only at medical reports, but also relied on the fact that the first Statement of Claim (issued exactly 2 years after the accident) alleged that she sustained "serious and permanent injuries." The motion judge stated at paragraph 47 of his reasons that, "While this action was mistakenly directed against the wrong defendant, this assertion by the plaintiff in the Statement of Claim is akin to an admission that, by at least that time, if not earlier, the plaintiff viewed her injuries from the accident as serious and permanent, and that they had thereby discovered their potential cause of action."

November 2, 2011

Statutory Duty of Care

Morsi v. Femer Paving Ltd. [2011] O.J. No. 3960

This is an appeal from a trial decision that held York Region and Femer Paving Ltd each 25 % liable for a single car motor vehicle accident. The deceased was driving in excess of the speed limit, ignoring speed and construction signs and lost control of his vehicle when the road surface changed from fresh pavement to gravel.

The trial judge held that the plaintiff was 50% to blame for the accident, leaving the defendants with the other 50%.

York Region and Femer Paving appealed the decision.

York Region’s main submission was that after the trial Judge correctly stated the main issue and the test for resolving the issue …

“Whether at the material time Major Mackenzie drive was in a state of repair that was reasonable in the circumstances such that users of the road, exercising ordinary care, could travel upon it safely.”

… that he did not apply the test to the facts of the case.

“The evidence of Detective Stock and the Varicom tests as well as the evidence of Constable Herbert and the various engineering experts establishes that if Mark Morsi had operated his vehicle at the posted speed or even a speed modestly above it, he would have been able to successfully negotiate the transition area.”

The Ontario Court of Appeal found the driver to be reckless having accelerated to 117 km/h through a long curve and straightaway and ignoring two 60km/h speed signs, a reverse curve sign, a 40 km/h advisory sign and two construction signs. This was not a driver exercising ordinary care.

The appeal was allowed and the action by the driver’s family was dismissed.

- Alison McBurney

October 26, 2011

New Minor Injury Guideline

The new Statutory Accident Benefits Schedule (SABS) came into effect September 1, 2010. Among the key amendments, there has been a reduction of medical and rehabilitation benefits from $100,000.00 to $50,000.00. In some cases, this will be further reduced to $3,500.00 under the new Minor Injury Guideline (MIG).

The MIG applies to accidents that occurred on or after September 1, 2010, and replaces the Pre Authorized Framework for Grade I and II whiplash associated disorders. Section 268.3 of the Insurance Act requires that the MIG be considered in any determination involving the interpretation of the SABS.

An insured person’s impairment comes within this Guideline if the impairment is predominantly a minor injury. “Minor injury” is defined in the new SABS as a “sprain, strain, whiplash associated disorder, contusion, abrasion, laceration or subluxation and any clinically associate sequelae”. Each of these conditions are further defined to specify the severity of each to move it out of the “minor injury” category. For example, “whiplash associated disorder” is defined as “a whiplash injury that does not exhibit objective, demonstrative, definable and clinically relevant neurological signs, and does not exhibit a fracture in or dislocation of the spine”.

The objectives of the MIG are to speed access to rehabilitation for persons who sustain minor injuries in auto accidents, improve utilization of health care resources, provide certainty around cost and payment for insurers and regulated health professionals, and be more inclusive in providing immediate access to treatment without insurer approval for those persons with minor injuries.

Many accident victims may now find their benefits reduced to $3,500.00 and if they do not have a tort claim, they may have little alternative for additional medical coverage. The Financial Services Commission of Ontario expects the MIG to capture 30%-40% of accident claims.

Section 18(2) provides for an exclusion from MIG if the insured person’s health practitioner determines and provides compelling evidence that the insured person has a pre-existing medical condition that will prevent the insured person from achieving maximal recovery from the minor injury if subject to the $3,500.00 limit. This exception raises the question of what the courts will consider to be “compelling evidence”.

- Kristen Dearlove, Student-at-Law

October 19, 2011

Municipality attempts to exert rights to shoreline road after discovering a 150 year old By-law

Meaford (Municipality) v. Grist [2011] O.J. No. 4188

This is an interesting case regarding an 1854 By-law that had been found in 2004, which purported to create a municipal/public road along the shore of Georgian Bay.

Some of the named defendants brought two summary judgment motions claiming that there are no genuine issues requiring a trial. The action is disputed by the defendants because the road would take away approximately 66 feet of their shorelines lands.

The road had not been registered on title until 2007 after the Municipality discovered the By-law.

The Municipality’s argument, among other things included the doctrine of dedication and acceptance.

Justice Daley set out the test for the common law doctrine of dedication and acceptance/ long user:

Dedication depends on the intention of the donor and also acceptance of
the road by public authority.

There are three conditions:

1. An owner of the land on which the road is situated had formed the
intention to dedicate the land to the public road or highway;

2. The intention was carried out by the road being thrown open to the
public; and

3. The road was accepted by the public.

Dedication can occur by usurpation and long enjoyment.

Where members of the public continually use the road over a long period
of time, dedication may be inferred.

Justice Daley stated that the plaintiff bears the onus “upon a preponderance of probability to demonstrate that the conditions necessary for the establishment of dedication and acceptance were all present”. He then refers to the Reed v. Town of Lincoln [1973] decision where the “cogency of the evidence required to satisfy the burden … may vary … according to the nature of the issue with respect to which the burden must be met.”

Using this ruling, he bolsters the onus requiring the municipality to “satisfy the onus by a clear and substantial preponderance of evidence that the property owners have lost the title to a portion of their property which now constitutes a public road”.

Meaford argued that the public highway existed prior to the by-law. It was held that there was no genuine issue for trial; the plaintiff had not offered any physical/documentary evidence. Even if there had been a road, the time from the initial Crown grant in 1840 to the date of the by-law in 1854, is not enough time to find a “long user”.

It was further held that there was no dedication and acceptance in modern day, for many reasons, including:

1. The municipality graded the road approximately twice a year –
otherwise had no involvement in the upkeep.

2. The municipality entered into a maintenance agreement with the
cottage owners association.

3. In 1986, part of the road had washed away and the municipality had
not restored the road. In fact, the owner of the property had a
different portion of his property, severed, re-zoned and built a
private driveway (no dispute that this “inland” driveway was a
private road).

4. The “inland” driveway was maintained pursuant to the maintenance

5. The defendants were bona fide purchasers for value and the cottages
built on the lots comply with zoning by-laws in regards to set back
from the water’s edge and not from the disputed road.

6. There was no evidence of municipal funds or labour to build, maintain
or restore the road.

7. The municipality, in this action, was only trying to lay claim to a
very small potion of the road that the By-law purported to create.

Justice Daley held that there was no evidence of actual or implied dedication or acceptance and was held not to give rise to any issues requiring a trial.

He went further to state that the municipality had slept on their rights for over 150years and applied the doctrine of laches and acquiescence and that “quite apart from all of the other reasons expressed (in the 192 paragraphs), it would be unjust to grant Meaford’s claim”.

This post was prepared by our Associate Alison McBurney.

October 12, 2011

The Importance of Causation

In Lancaster (Litigation Guardian of) v. Santos, [2011] O.J. No. 3706, the County of Dufferin was added as a third party in an action arising out of a MVA on November 21, 2001 involving a fully-loaded pickup truck being driven by Mr. Santos and the plaintiff’s vehicle.

The transport had tipped over when coming around a curve and slid into oncoming traffic. It was alleged that but for the County’s failure to properly sign the portion of the road in issue, Mr. Santos would have been aware of the hazardous road condition and would have reduced his speed such that he could have managed the curve.

Lemon J., found the cause of the accident, on a balance of probabilities, to be the shifting of the truck’s load as a result of it not being properly secured. Mr. Santos had testified that the signs which existed provided some warning and he reacted to it by slowing down. As a result of this testimony, the road conditions and signage were not found to be the cause.

Lemon J., went on to determine whether the County could have been liable had there been causation. The plaintiff argued that when the County breached the Manual of Uniform Traffic Control Devices (MUTCD) by not properly signing the road, it breached its duty of care.

Lemon J., stated: “while I agree that this sign did not meet the standard set by the MUTCD, and that other drivers in other circumstances might have been mislead, that was not the case for Mr. Santos…The sign as posted was doing its job”.

This case is significant in that that court confirms an obvious yet often overlooked principle – If there is a breach of the duty of care, it must have contributed to or caused the MVA. Municipalities should keep in mind that although they perhaps made a mistake at some point in time, it must be considered whether this mistake caused or contributed to the MVA.

Thanks to our articling student, Kristen Dearlove, for this post.

October 5, 2011

Court of Appeal Comments on s. 132 of the Insurance Act

The Court of Appeal recently commented on s. 132 of the Insurance Act. Section 132 provides that a person who obtains a judgment against an insured person which has not been satisfied may recover that amount from the insured’s insurer.

In Walker v. Sovereign General Insurance Co., [2011] O.J. No. 4106 (C.A.), the Walkers obtained a judgment against Sun Shelters Industries Inc. for damages sustained in a parking lot slip and fall. Sun Shelters went bankrupt and could not pay the judgment, so the Walkers brought an action under s. 132 against Sun Shelters’ insurance company, Sovereign. Sovereign’s position was that it did not receive proper notice as required under the CGL policy and as a result was not required to defend the action or indemnify Sun Shelters or the Walkers.

The Court of Appeal held that notice of a claim can be given either by the insured or by a person on behalf of the insured. In this case, notice was given to Sovereign by a co-defendant. The Court noted that if notice is given by someone other than the insured, the person should have sufficient proximity to give adequate details of the claim:

36 Given its purpose and importance, if the notice is to be given for an insured instead of by the insured itself, the person giving it should have sufficient proximity to the claim to have knowledge of the information required by s. 3(a). Emshih was just such a person. It owned the property where the accident occurred; it was a defendant in the original action; and it cross-claimed against Sovereign's insured. In giving notice to Sovereign, Emshih was giving notice for Sun Shelters as contemplated by s. 3(a) of the policy.

Sovereign had actual notice of the claim and made a conscious decision not to defend. If the insurer had no knowledge of the claim, no opportunity to investigate or negotiate a settlement, it may be that the decision would be different.

- Tara

September 28, 2011

Information contained in written statement insured gave to insurer – is the insured required to provide this information at examination for discovery?

In Sangaralingam v. Sinnathurai, [2011] ONSC 1618, when examining the defendant for discovery, counsel for the plaintiff requested that the defendant provide information contained in the written statement he gave to his insurer following the motor vehicle accident. Defendant’s counsel refused to provide the statement or the contained information on the grounds that it was protected by litigation privilege.

A motion was made to a master who ruled that the defendant was not required to provide the information in the statement on the basis that the defendant had already been examined for discovery at length and the plaintiff also received a copy of the statement the defendant provided to the police following the accident. Therefore, such questioning would be solely with respect to the credibility of the defendant.

The master’s decision was appealed. The motions judge required the defendant to answer the question. The motions judge relied on the principle that questions on discovery seeking the facts of a party’s case do not offend privilege even though the source of the facts is a document over which privilege is being asserted.

There was a further appeal to the Divisional Court. Justice Herman referred to the test for when litigation privilege should be set aside as provided by Justice Ducharme in Kennedy v. McKenzie, [2005] O.J. No. 2060: where “the materials being sought are relevant to the proof of an issue important to the outcome of the case and [that] there is no reasonable alternative form of evidence that can serve the same purpose”.

Upon application of this test to the case at hand, Justice Herman concluded that in the course of the examination for discovery, counsel for the plaintiff had the opportunity to ask questions of the defendant that were relevant to the material issues. The defendant was co-operative and was not withholding information. Therefore, there was an alternative means available to obtain the relevant information and as a result litigation privilege should not be set aside.

Also, with respect to whether the request was directed solely to the credibility of the defendant, Justice Herman stated that it was his opinion that the sole purpose of the question being asked was to find out what the defendant told his insurer and therefore was asked for the sole purpose of credibility.

September 22, 2011

The Canadian Institute of Actuaries’ Recommendations to the Rules Committee on the Prescribed Discount Rate and Prejudgment Interest

On June 1, 2011 the Canadian Institute of Actuaries (CIA) submitted their observations and recommendations to the Civil Rules Committee with respect to the Committee’s review of rules 52.09 and 53.10 of the Rules of Civil Procedure (“the Rules”). The CIA reviewed these rules from the perspective of today’s economy − a low interest rate environment.

Rule 52.09(1) lays out how the discount rate is to be calculated for awards for future pecuniary damages in order to account for investment and price inflation rates. The CIA pointed out that the prescribed interest rate in Ontario for the first 15 years is lower than any other province or territory where discount rates are prescribed for this purpose. As a result, since interest rates are at historically low levels, a plaintiff will receive a higher settlement in Ontario than a plaintiff in another province or territory.

Rule 52.09(1) provides for a negative adjustment of 1%. This negative adjustment is a result of a belief in 2000 that rates of return for real return bonds were higher than the true underlying expected real rate of return. The CIA believes that this may not be a valid justification in today’s economic environment but noted that this negative adjustment could serve a valid public policy objective by providing a margin for adverse investment contingencies.

The CIA noted that there is a potential for misinterpretation of rule 53.09(1) and recommended that the wording be altered slightly to clarify that there is not only one discount rate to be applied to one particular loss under 53.09(1) and to make it clear that the rate prescribed by 53.09(1)(a) is to be used in discounting all losses.

Lastly with respect to rule 53.09(1), the CIA suggested that the Committee consider prescribing a nominal discount rate that could be used in situations when a real discount rate would be inappropriate.

Rule 53.10 sets the prejudgment interest rate for non-pecuniary damages at 5% per year. The CIA acknowledges that this rate is reasonable from a public policy perspective as it motivates settlement and compensates successful plaintiffs for delays in resolution. However, the CIA suggests that a floating rate based on yields on GICs with an adjustment may be a consideration. They recognize however that this would largely increase the complexity.

September 12, 2011

Summary Judgment Rule

(Canada) Attorney General v. Ranger, 2011 ON SC 3196

While we wait for the Ontario Court of Appeal to clarify the scope of the new summary judgment rule, the Honourable Justice Power has recently shown a preference for the interpretation of the new Rule 20 that expands the power of the court in making findings of fact.

Various Superior Court of Justice judges have interpreted the changes to Rule 2o differently, some suggesting that it does not give a motions judge the power to make findings of fact for the purpose of deciding an action on the basis of evidence while others (now including Power, J.) suggest that it does allow a motions judge to make findings of fact.

The ultimate resolution of these diverging points of view by the Ontario Court of Appeal will have a significant impact on insurance defence litigation. Often defendants are faced with having to decide whether to go through an expensive trial or just make a "smaller payment" to settle a claim, even where a defendant is fairly sure that there should not be a finding of liability. Given the extraordinary cost of trials, defendants often unfortunately decide to settle even where they should not if they can settle for a small sum and avoid the cost and risk of trial.

The recent decision of Power, J. in (Canada) Attorney General v. Ranger, 2011 ON SC 3196, granted summary judgment to homeowners who were being sued under the Occupier's Liability Act for injuries sustained by a postal worker who had slipped and fallen on ice and snow while delivering mail to their home. The evidence of the homeowners at their examination for discovery was that they had a routine whereby they shoveled snow and salted icy areas when needed. Power, J. found that no further evidence could be put before a trial judge and therefore it was not necessary to proceed to trial. Power, J. then dismissed the action in its entirety.

Defence lawyers and insurers may yet find the new summary judgment rule to be a helpful tool in addressing claims without merit.

August 23, 2011

Gross Negligence Standard for Municipal Sidewalks

In Richer v. Elliot Lake [2001] ONSC the plaintiff slipped and fell on ice on a sidewalk. In accordance with s. 44(9) of the Municipal Act, the standard of care is lowered from ordinary negligence to gross negligence.

Koke J. referred to the 1927 Supreme Court of Canada decision, Holland v. City of Toronto, that defined gross negligence as “very great negligence”. Thum v. Elliot Lake [1999] O.J. No. 3158 held that the degree of negligence is context specific and listed elements to consider: 1) notice of the existence of a dangerous condition which authorities actually had or which should be imputed to them; 2) their opportunity to remedy it; 3) the state of weather immediately before the accident; and 4) the relative situation of the place where the accident occurred.

In the current case, the court found as a fact that there had been a thaw-freeze cycle, there was a sheet of ice which caused the plaintiff to fall, there was no evidence of any sand at the scene, city crews had been sent out to clear and sand the streets and sidewalks following the snow fall, and there were not any other reported complaints that evening.

Koke J. appears to have given the most weight to the plaintiff’s own testimony that he walked to work that morning and walked about ¾ of a kilometer after leaving work before falling. He stated that he didn’t have any problems walking on the sidewalks prior to the fall.

The court held that overall the plaintiff was not able to show that on the evening in question the condition on the city’s sidewalks was generally slippery or icy. There was nothing to suggest this was not an isolated incident. Koke J. went on to say that even if the court were to find the city negligent for not spreading sand on the sidewalk at that location, this would constitute negligence, not gross negligence.

August 17, 2011

Supreme Court comments on motions to strike

The Supreme Court recently commented on motions to strike on the basis there is no reasonable cause of action. In R. v. Imperial Tobacco Canada Ltd., 2011 SCC 42, Imperial Tobacco is a defendant in two cases in British Columbia: one where the government seeks to recover the cost of medical treatment provided to smokers, and the second a class action pertaining to class members who purchased “light” or “mild” cigarettes. Imperial Tobacco issued third party claims against the federal government, alleging negligent misrepresentation, negligent design and failure to warn. In addition, Imperial alleges Canada was a “manufacturer” or “supplier” of cigarettes.

The Supreme Court held that all of the third party claims failed to disclose a reasonable cause of action and struck them. The Court confirmed that the test remains whether the claim has no reasonable chance of success. The purpose of the test is described as follows:

[19] The power to strike out claims that have no reasonable prospect of success is a valuable housekeeping measure essential to effective and fair litigation. It unclutters the proceedings, weeding out the hopeless claims and ensuring that those that have some chance of success go on to trial.
[20] This promotes two goods — efficiency in the conduct of the litigation and correct results. Striking out claims that have no reasonable prospect of success promotes litigation efficiency, reducing time and cost. The litigants can focus on serious claims, without devoting days and sometimes weeks of evidence and argument to claims that are in any event hopeless. The same applies to judges and juries, whose attention is focused where it should be — on claims that have a reasonable chance of success. The efficiency gained by weeding out unmeritorious claims in turn contributes to better justice. The more the evidence and arguments are trained on the real issues, the more likely it is that the trial process will successfully come to grips with the parties’ respective positions on those issues and the merits of the case.
[21] Valuable as it is, the motion to strike is a tool that must be used with care. The law is not static and unchanging. Actions that yesterday were deemed hopeless may tomorrow succeed. Before Donoghue v. Stevenson, [1932] A.C. 562 (H.L.) introduced a general duty of care to one’s neighbour premised on foreseeability, few would have predicted that, absent a contractual relationship, a bottling company could be held liable for physical injury and emotional trauma resulting from a snail in a bottle of ginger beer. Before Hedley Byrne & Co. v. Heller & Partners Ltd., [1963] 2 All E.R. 575 (H.L.), a tort action for negligent misstatement would have been regarded as incapable of success. The history of our law reveals that often new developments in the law first surface on motions to strike or similar preliminary motions, like the one at issue in Donoghue v. Stevenson. Therefore, on a motion to strike, it is not determinative that the law has not yet recognized the particular claim. The court must rather ask whether, assuming the facts pleaded are true, there is a reasonable prospect that the claim will succeed. The approach must be generous and err on the side of permitting a novel but arguable claim to proceed to trial.

Imperial argued that the motion to strike should be dismissed on the basis that future evidence might reveal more evidence against the government. The Court rejected this argument; the focus is on the pleadings, not the evidence and a judge cannot consider what future evidence might or might not show.

In addition to a useful summary of the test on a motion to strike, the Court goes through the Anns duty of care analysis. The decision is a good synopsis of these important principles.

August 10, 2011

Discoverability - Identity of Vehicle Owner

After determining vehicle ownership, is counsel required to continue looking for contrary information?

Velasco v. North York Chevrolet Oldsmobile Ltd., [2011] ONCA 522 (C.A.), involves a car accident that occurred in 2005. The appellant’s vehicle was struck by two other vehicles. The ownership of the one vehicle (the “Denyer vehicle”) is the subject of this appeal.

The appellant issued a statement of claim in 2006. Counsel relied on a statement in the police report to determine that Denyer was the owner of the Denyer vehicle. This belief was confirmed later that year by way of the pleadings delivered by Denyer’s insurer stating that Denyer was the owner of the vehicle.

Early in 2007, counsel for the appellant received a 732 page Crown Brief that contained a license plate search which showed that Denyer was not in fact the owner of the vehicle. This search did not come to the attention of counsel until two years later when preparing for discoveries. At that time, a statement of claim was issued against the respondents on the basis of their ownership.

The respondents brought a motion to dismiss the claim against them on the basis that the limitation period had expired. The motion judge held that counsel for the appellant should not have closed their minds to the ownership issue and should have reviewed the Crown Brief promptly to settle that issue.

The Court of Appeal disagreed with the motion judge and held that counsel had acted with reasonable diligence in continuing to rely on the initial information they had received “until contrary information actually came to their attention”. The court did not find a duty on counsel to positively search for contradictory information after they were satisfied as to the ownership.

Thanks to our articling student, Kristen Dearlove, for this post.

August 3, 2011

Leave to call nine witnesses denied

The rules of evidence allow for three expert witnesses to be called at trial. The plaintiff in Leonard v. Kline ,[2011] ONSC 2730 (S.C.J.) sought leave to call nine expert witnesses at her upcoming jury trial. The list of proposed experts included a psychiatrist, psychologist, vocational expert, vocational rehabilitation consultant, accountant/actuary and others.

The issue at the plaintiff’s upcoming trial was her earning capacity. The plaintiff sought to have each expert witness give an opinion on whether she would be able to engage in gainful employment. The plaintiff’s argument was two-fold: 1) each expert approaches the issue from a different area of expertise; and 2) the jury should know what the “weight of expert” evidence is on the issue.

The defendant argued that this would be duplicitous [sic - duplicative]. The defendant only intended to call two expert witnesses.

Ellies J. did not agree with the plaintiff’s “weight of expert evidence” argument expressing his concern with trials becoming battles of the experts. He went on to consider the eight factors listed in Burgess (Litigation Guardian of) v. Wu , [2005] O.J. No. 929. His decision focused on factor seven – the degree to which there is duplication in the proposed opinions of different experts.

Upon determining that some of the proposed expert witnesses were duplicitous [sic - duplicative]. , Ellies J. proceeded to divide them into groups based on shared opinions, whether they prepared joint reports, and whether they used similar tests upon the plaintiff in which their opinion was based. The plaintiff was then given the option to choose one expert witness from each group.

This decision seems to be a good example of the court fulfilling its "gatekeeper" role with respect to experts.

July 27, 2011

Deductibility of CPP Disability Benefits

The plaintiff in Demers v. B.R. Davidson Mining & Development Ltd. [2011] ONSC 2046 received CPP benefits following a car accident in 1999. A dispute arose as to the deductibility of these benefits.

Prior to November 1, 1996 it was clear that CPP benefits were not deductible. The law in this respect became less clear with the enactment of Bill 59. This Bill dealt with car accidents occurring after November 1, 1996 and before October 1, 2003. As a result of its enactment, s.267.8(1) of the Act provided for the deduction of benefits for “loss of earning capacity”. What wasn’t clear was whether this included CPP benefits.

To complicate matters further, there were two conflicting court decisions. The court in Meloche v. McKenzie ,[2005] O.J. No. 3761 (S.C.J.) looked to the 2003 amendments which specify that CPP benefits are deductible and concluded that this amendment must be a clarification of the original legislation. The court in Sonnenberger v. Creamer, [2009] O.J. No. 754 (S.C.J.) made the opposite finding as it took the position that the amendment did not provide for retrospective application.

There is also a Court of Appeal decision, Kosanovic v. Wawanesa Mutual Insurance Co., [2004] O.R. (3d) 161 (C.A.) which held that CPP benefits were not deductible for this time period. This case was not considered by the court in Meloche and arguments were made by the defendants in Demers that this case should not be considered.

Shaw J. found Kosanovic relevant and binding but also focused on two principals of statutory interpretation to settle the issue: 1) the ordinary meaning of a legislative provision should prevail absent a good reason to reject it; and 2) there must be something in the wording of the provision or in the circumstances in which it is enacted to indicate that the provision is meant to be retroactive. He concluded that the legislation in effect in 1999, when the accident occurred, does not expressly provide for the deduction of CPP benefits and the amended legislation does not indicate retroactivity.

As a result of this case there appears to be two distinct periods of time: 1) accidents which occurred between October 23, 1989 and September 30, 2003 (CPP benefits not deductible); and 2) accidents which occurred after October 1, 2003 (CPP benefits deductible).

July 21, 2011

Summary judgment in jury cases

Is summary judgment available in jury cases?

Cooke v. Toivonen (2011), 105 O.R. (3d) 232 (S.C.J.)

This case involved a multi-vehicle automobile collision. The Cooke vehicle was hit from behind by Price, and in turn Cooke hit Toivonen. Toivonen hit the vehicle in front of him.

The plaintiffs consented to an order releasing Toivonen from the action; however, the remaining defendants objected, arguing that to do so would amount to bifurcating the trial. Rule 6.01 permits bifurcation only if all parties consent. In Kovacs v. Kovacs, the Court of Appeal held that jury cases are an exception to the court’s inherent power to split a trial.

The Court held that it has the authority to order summary judgment in jury cases. Summary judgment is not at odds with a litigant’s right to a jury trial. There was no air of reality to a claim that the Toivonen vehicle could be liable and the action and crossclaims against Toivonen were dismissed.

July 14, 2011

Insurance Fraud

The front page of the Toronto Star today headlines "Shady clinics bilk $1.3 billion in bogus car insurance claims scam".

The related article states:

Ontario’s car insurance industry is under attack by bogus medical clinics that use fake accident treatment charges to milk the system...

Travel around Toronto and you will see more and more of these rehabilitation clinics popping up. Anybody can open one and they are not regulated. One New York man with an auto insurance fraud conviction is listed as administrator of a Mississauga clinic.

...Here’s how it typically works.

Tow truck drivers or paralegals direct accident victims — drivers and passengers — to rehab clinics. They might get a finder’s fee of $1,000 cash or, in the case of paralegals, a percentage of the payout. It is not uncommon for a clinic to bill an insurer $40,000 over the life of a claim.

The accident victims the Star found often spoke little or no English. At the clinic they were handed forms to sign that gave the clinic the right to submit claims to their insurance firm and receive payments.

Here is a link to the Toronto Star's website.

July 13, 2011

Deductibility of Statutory Accident Benefits

Sutherland v. Singh, [2011] O.J. No. 2901 (C.A.)

The plaintiff was eligible for income replacement benefits (IRBs) and caregiver benefits (CGBs). He elected to receive CGBs. Under s. 267.8(1) of the Insurance Act, damages are reduced by payments for statutory accident benefits that the plaintiff received or that were “available”. The issue on appeal was whether IRBs were “available” to the plaintiff (thus allowing the tort defendant to deduct them) even though he elected to receive CGBs. The Court of Appeal held that the answer is “no”.

Justice Gillese held that once the plaintiff elected to receive CGBs, IRBs were no longer available to him. The purpose of s. 267.8 is to prevent double recovery. The effect of allowing the defendants to deduct CGBs that the plaintiff received as well as IRBs that he never received would be to create a windfall for the defendant.

June 29, 2011

Disclosure of Surveillance - 2

Aherne v. Chang, 2011 ONSC 3846

This is an appeal from Master Short’s recent decision on the issue of ‘when is privilege waived?’.

The defendants argued that if they provided surveillance material to an IME doctor, the privilege was not waived until the doctor released the report. The plaintiff argued that the privilege was waived as soon as the surveillance was given to the IME doctor. The defendant seems to want to avoid having the plaintiff’s lawyer review the surveillance before the plaintiff goes to the IME to make sure that the plaintiff doesn’t embellish during the IME.

It seems that the defendant in this case could have avoided this entire problem if they simply held onto the surveillance materials and let the IME doctor assess the plaintiff and prepare the report. Then, after the report is released, the defendant can provide the IME doctor with the surveillance, and ask the IME doctor if the surveillance changes his/her opinion.

Thanks to M. Edward Key for bringing this appeal to our attention and for the comments.

June 22, 2011

Unidentified Motorist - Corroborating Evidence

In our post of July 27, 2010, we blogged about the case of Pepe v. State Farm Mutual Automobile Insurance Co., [2010] O.J. No. 2138 (S.C.J.) and whether a passenger in an insured’s motor vehicle was an “independent witness” who can corroborate the insured’s evidence concerning the involvement of an unidentified motorist for the purposes of the OPCF 44R Family Protection Endorsement. The motions judge held that the passenger could corroborate the insured’s claim for the purpose of OPCF 44R coverage, despite the fact that she was the insured's girlfriend and was also suing State Farm for damages caused by an unidentified driver.

The Court of Appeal has upheld the motions judge's decision.

Doherty J.A. reviewed the history of requiring corroboration and cited Chief Justice Dickson, in Vetrovec v. The Queen, [1982] 1 S.C.R. 811 at 826, for identifying the rationale for a corroboration requirement:

"The reason for requiring corroboration is that we believe the witness has good reason to lie. We therefore want some other piece of evidence which tends to convince us that he is telling the truth."

Doherty J.A. held that State Farm’s assertion that it is the witness who must be independent, in the sense of neutral to the outcome, was wrong. The independence requirement in the context of corroboration has always referred to the independence of the evidence and not to the neutrality of the witness. The witness’s neutrality or lack thereof is relevant to the ultimate credibility of the witness’s evidence, which is for the trial judge to assess.

June 15, 2011

Disclosure of Surveillance

If surveillance is provided to an independent medical assessor, does it have to be produced to the plaintiff, even if the assessor does not rely on it in forming his or her opinion?

In Aherne v. Chang, [2011] O.J. No. 1880 (S.C.J.), the plaintiff sued for injuries alleged to have been caused as a result of medical treatment provided by the defendant. On the defendant's examination for discovery, his counsel confirmed that there had been no surveillance undertaken but refused to answer questions pertaining to disclosure of any future surveillance that might be undertaken after the discoveries. Counsel for the defendant took the position that privilege over documents released to a medical examiner, is waived only if the document is relied upon by the medical examiner, and not at the time that the document is released to the medical examiner. The plaintiff sought to obtain copies of any surveillance that was released by the defendant to a physician or healthcare practitioner retained for purposes of a defence medical assessment.

Master Short held that from the moment of his retainer to conduct a Rule 33 examination, a defence medical examiner owes his or her primary duty to the court. It is inappropriate and unseemly for the court to prevent any party before it from having contemporary access to the information provided to that expert.

Master Short summarized the following principles emerging from the rules and previous jurisprudence:

(a) if information is sent to an expert, then the same information should be sent to the opposing party to allow that party to test the expert’s opinion;
(b) an opposing party is entitled to the facts on which the expert’s opinion is based;
(c) so long as an expert read a document sent to him or her, then that document was considered, such that it is a “finding” that must be produced;
(d) the privilege claimed over a document sent to an expert is waived at the time that it was decided to rely on that expert’s opinion or in circumstances where privilege is waived over the report, even if the waiver was inadvertent;
(e) by sending a defence medical assessor portions of surveillance, privilege over the full surveillance video or all photographs is waived.

Master Short held that privilege is lost at the point the material is sent to an expert retained for the purpose of a Rule 33 examination. It was therefore held that the defendant is obliged to provide a copy of any surveillance of the plaintiff concurrently with its release to any defence medical examiner.

June 8, 2011

Thanks to Barb Legate for this comment on our post on McNeill v. Filthaut, regarding the current debate over the testimony of accident benefits assessors:

"A point that seems to be missed in some of these analyses is that notwithstanding the provisions of Rules 4 and 53, those rules are merely a codification of the law that stated with Amertek. Rules 4 and 53 are part of the Mohan criteria, and fall under the "any exclusionary rule" branch. So, although there are exclusionary rules for experts a party retains, that does not end the analysis. If a witness is to give opinion evidence, the witness has to be qualified as an expert. Part of the qualification exercise is to enquire into bias. Bias also enters into the relevance assessment. See CA decision in Abbey.

IMHO, those cases that strain to differentiate treating opinions from AB opinions from DAC opinions and retained expert opinions have missed the basic law: you want to call a witness to give an opinion, then follow Mohan. No fancy differentiations needed."

June 6, 2011

Special Circumstances Doctrine

This is a case which comments on the Special Circumstances doctrine which we have been reviewing recently in our last two blog entries. This case was brought to our attention by Dana Paladino, legal counsel at the City of Windsor. Thanks Dana!

Wood Waste Solutions Canada Inc. v. Associated Paving Company, 2010 ONSC 6280 (CanLII). The court indicates that the special circumstances doctrine is potentially available where an old limitation period applies.

It is surprising that this wouldn’t have been mentioned in Chadowski.

June 4, 2011

This is further to our May 25th blog of last week on the Special Circumstances Doctrine.

Thanks to Edward Key of O'Donnell, Roberston & Sanfilippo, Toronto, for this comment:

My understanding is that “special circumstances” is still alive for causes of action that pre-date January 1, 2004.

For example, in Parent v. Janandee Management Inc. (2009) 82 C.P.C. (6th) 321 (Ont. Master), Master Short wrote:

[29] For cases dealing with events occurring after January 1, 2004, the Ontario

Court of Appeal has held in Joseph v. Paramount Canada's Wonderland (2008),

90 O.R. (3d) 401 (Ont. C.A.) (at paragraphs 27 and 28) that the equitable concept

of special circumstances permitting an extension of time for suit, no longer

applies in Ontario. As this case is based upon an occurrence that took place prior

to January 1, 2004, the Court of Appeal's decision in Meady v. Greyhound

Canada Transportation Corp., 2008 ONCA 468 (Ont. C.A.) does hold that the

doctrine of special circumstances may be available to the plaintiffs in this in

seeking the addition of a party to litigation after the expiry of the limitation


May 27, 2011

New Look for the Blog

This is the second anniversary of the Ontario Insurance Law Blog and so we have decided to make some minor changes that will hopefully make it more user friendly. We just wanted to let you know that there may be some changes to the look of the blog but the content and purpose will continue the same.

Our goal, as always, is to create a forum for discussing insurance law. The goal is not to provide only case summaries but also to encourage discussion and commentary. We really appreciate receiving your feedback. If you have a comment to make, please email us and (with your permission) we will post your comment to the blog for others to read.

Best regards!

John Norton and Tara Pollitt

May 25, 2011

Revival of the Special Circumstances Doctrine?

Has the special circumstances doctrine been revived for limitation periods? We thought the Courts have been clear that under the new statute of limitations there is no exception for special circumstances. However, Wood J. recently held that special circumstances applied and granted an extension of time. In the case the plaintiff was trying to add defendants who were already third and fourth parties. Perhaps the exception will apply then only to when third and fourth parties are being added as defendants?

The case of Chodowski v. Huntsville Professional Building Inc., [2010] O.J. No. 3773, looks at the issue of joining parties after limitation periods have expired. In Chodowski, the motion is the result of plaintiff’s counsel, who had brought a timely motion seeking leave to join the third and fourth parties as defendants. It was not until the newly retained plaintiff’s counsel set the matter down for trial, that the omission was realized.
Justice T.M. Wood held that the test to be applied is a two part one in which the moving party must first satisfy the court that “no prejudice would result that cannot be compensated for by costs or an adjournment”. The second part, having been developed through the case law, requires that where a limitation period has expired, the moving party must demonstrate “special circumstances” which would justify extending the limitation period.

Justice Wood wrote that:

[I]t must be remembered that both defendants have been aware of their exposure since the day after the incident. Both were aware of the order allowing them to be joined as defendants in the main action, and both participated fully in discoveries as third and fourth parties.

The Judge found that plaintiff’s counsel’s prompt move for leave to amend, and the fact that plaintiff’s first counsel was a generalist “whose practice was not attuned to the requirements of tort litigation”, lends credibility to the argument that this was a sin of omission rather than commission.

The Court found that the failure to join the defendants in a timely fashion was fully explained.

Wood J. held that: The conduct of the proceedings as a whole and the nature of the mistake in that context are in my view special circumstances sufficient when coupled with the lack of real prejudice to the defendants, to justify an extension of time to issue and serve a new statement of claim on the defendant number company and Mid-North to March 1, 2010, the date of service.

Thanks to Alex Lacko for reviewing this case.

May 16, 2011

Public Transit

This blog was prepared by Jennifer Stirton.

The Insurance Act has been amended by Bill 173, the Better Tomorrow for Ontario Act (Budget Measures), 2011, which received Royal Assent on May 12, 2011.

The amendments relate to incidents involving public transit and make two major changes. First, owners and drivers of public transit vehicles are not protected by subsections 267.5(1), (3) and (5) of the Insurance Act, which provide threshold protections and limit income loss claims, if the public transit vehicle does not collide with another automobile or any other object in the incident. In other words, public transit drivers and owners are not protected defendants unless there is a collision. The second major change is the addition of subsection 268(1.1), which provides that occupants of public transit vehicles who are injured are not entitled to statutory accident benefits if the public transit vehicle does not collide with another automobile or any other object.

These changes are clearly aimed at passengers who allege injury arising from incidents that do not involve collisions, such as sudden start/sudden stop claims. While it will reduce the cost of accident benefits being paid, it may result in an increase in tort actions against defendants who are no longer entitled to statutory protections.

May 11, 2011

Rule 53.03 does not Apply to Accident Benefits Assessors - Beasley not Followed

You may recall that we blogged about Justice Moore's decision in Beasley v. Barrand, which held that accident benefits assessors could not testify as they had not complied with the new r. 53 pertaining to experts. A new decision was released on April 26, 2011 which refused to follow Beasley.

In McNeill v. Filthaut, 2011 ONSC 265 (S.C.J.), the defendants sought to call DAC assessors to testify at trial. The plaintiff objected on the basis that they had not provided r. 53.03 compliant reports.

Justice MacLeod-Beliveau held that r. 53.03 does not apply to individuals retained by non-parties to the litigation.

Justice MacLeod-Beliveau held that since r. 4.1.01 (acknowledgment of expert's duty) refers to experts "engaged by a party", it does not apply to experts retained by non-parties, such as accident benefits assessors. Interpreting the rules otherwise potentially deprives the Court of relevant evidence.

There are now two different lines of decisions regarding the testimony of non-party experts. It will be necessary for the Court of Appeal to clarify this important area of the law.

May 3, 2011

Costs to Unrepresented Litigant

Mustang Investigations v. Ironside et al, 2010 ONSC 3444 (Div. Ct).

Thanks to Alex Lacko, articling student, for preparing this case summary.

The plaintiff appealed from a costs order in which the motion judge awarded the self-represented defendant a counsel fee of $20,000 on the basis that he had done work ordinarily done by a lawyer.

The parties made written submissions as to costs. Mustang submitted that Ironside should receive costs limited to disbursements in a net amount of $1,541. Ironside delivered two bills of costs, the larger one for $208,138.40, inclusive of disbursements. The motion judge disallowed $87,500 claimed by Ironside as being not a proper claim for costs. The motion judge then considered the leading authority on costs to be awarded to unrepresented litigants, Fong v. Chan (1999), 46 O.R. (3d) 330, (C.A.). The motion judge correctly set forth the two principles enunciated by Sharpe J.A. and the Court of Appeal in that case in the following language:

First, the self-represented litigant should not recover costs for the time and effort that any litigant would have to devote to the case. Second, costs should only be awarded to those litigants who can demonstrate that they devoted time and effort to do the work ordinarily done by a lawyer retained to conduct the litigation and that, as a result, they incurred an opportunity cost by foregoing remunerative activity.

The motion judge interpreted the second principle as requiring a self-represented litigant to simply show that he or she did work ordinarily done by a lawyer without any reference to incurring an opportunity cost by foregoing remunerative activity.

The issue on appeal was whether the motion judge applied the correct principles for awarding costs to a self-represented litigant.

Jennings J. delivered the judgment of the Divisional Court and found that a number of cases, while purporting to apply Fong, in fact introduced a “spin” on Sharpe J.A.’s proviso to the second principle which he found troubling.

Jennings J. found that the motion judge erred by ignoring the proviso regarding an opportunity cost and further, awarding the self-represented litigant the partial indemnity costs that the plaintiff could reasonably be expected to have paid to a lawyer had one been retained by Ironside.

Justice Jennings stated that the language used by Sharpe J.A. was clear and that in order to receive costs, a lay litigant must demonstrate (1) that he or she devoted time and effort to do the work ordinarily done by a lawyer, and (2) that as a result, the litigant incurred an opportunity cost by foregoing remunerative activity. He further stated that if an opportunity cost is proved, a self-represented litigant should only receive a moderate or reasonable allowance for the loss of time devoted to preparing and presenting the case.

Several trial judges as well as a master, seem to have interpreted Fong as saying that even in the absence of proof of an opportunity cost, one may assume that because the lay person was involved in the litigation preparing material that might otherwise be prepared by a lawyer, he or she should nevertheless be entitled to nominal costs. Jennings J. wrote that:

“With great respect to the master and those judges, I’m unable to find that the language in Fong permits an award to be made without the self-represented litigant demonstrating that, as a result of the lawyer-like work put in on the file, remunerative activity was foregone. Simply stated, no proof of opportunity cost, no nominal costs available.”

Jennings J. further stated that in the case that an injustice will result, he had two responses:

(1) It is difficult to see any injustices in compensating someone for a loss not incurred; and

(2) Regardless, the principle of stare decisis does not permit this court, or judges sitting in motions, or masters, to modify a decision of the Court of Appeal.

The appeal was allowed and the award of $20,000 for counsel fee on a partial indemnity basis was set aside.

April 27, 2011

Threshold Motion Successful

Rajic v. Atkins, [2011] CanLII O.N.S.C. 1024 (S.C.J.)

In this Bill 59 action, the defendant brought a motion to have the action dismissed on the basis that the plaintiff failed to meet threshold after the jury retired to consider its verdict.

Justice Wilson granted the motion and dismissed the action. She found that the plaintiff was an unreliable historian and that there were comments in numerous medical reports about exaggeration, psychogenic pain and illness behavior. She found that the plaintiff’s self report could not be used as a basis for diagnosis because of the many inconsistencies in statements that he made. Since the plaintiff’s experts relied to a great extent on the truthfulness of what the plaintiff reported to them, she did not attach significant weight to their opinions.

The defendant had obtained surveillance of the plaintiff showing him engaged in various activities such as walking without a limp, carrying a 10lb bag of potatoes, clearing snow off his car, working under the hood of his car for 45 minutes, mowing the lawn, raking and bending down to pull weeds. Justice Wilson did not accept the explanation that he was having “one of his good days” when he was filmed by the investigator. Justice Wilson held that his sworn evidence at trial concerning his pain and limitations were inconsistent with the level of function demonstrated on the surveillance tapes.

Credibility is extremely important in a threshold motion and tools such as surveillance can be invaluable, as was seen in this case.

April 20, 2011

Vicarious liability of employers for sexual assault

The Manitoba Court of Appeal has recently released a case dealing with vicarious liability of an employer for sexual assault by one of its employees. The Court provides a useful summary of the principles used in determining vicarious liability, as well as a summary of case law involving employers.

In Robertson v. Manitoba Keewatinowi Okimakanak Inc., [2011] M.J. No. 24 (C.A), the plaintiff was an executive assistant who made plans at work with her supervisor (Hart) to socialize after work to celebrate her birthday. They went to a restaurant for dinner and then to Hart’s residence where he sexually assaulted the plaintiff. The plaintiff notified the employer about the assault, who investigated the incident and terminated the Hart’s employment. The plaintiff sued both the Hart and the employer. The employer was successful in a motion to strike the Statement of Claim and the plaintiff appealed.

The test for a finding of vicarious liability was set out by the Supreme Court in Bazley v. Curry, [1999] 2 S.C.R. 534, which the Manitoba Court of Appeal summarized as follows:

1. The test for vicarious liability should focus on whether the employer’s enterprise and empowerment of the employee materially increased the risk of the sexual assault and hence the harm;
2. The enterprise and employment must not only provide the locale or the bare opportunity for the employee to commit a wrong, it must materially enhance the risk in the sense of significantly contributing to it;
3. The appropriate inquiry is whether the employee’s wrongful act was so closely connected to the employment relationship that the imposition of vicarious liability is justified in policy and principle;
4. In determining the sufficiency of the connection between the employer’s creation or enhancement of the risk and wrong complained of, subsidiary factors will be considered such as a) the opportunity that the enterprise afforded the employee to abuse his/her power; b) the extent to which the wrongful act may have furthered the employer’s aims; c) the extent to which the wrongful act was related to friction, confrontation or intimacy inherent in the employer’s enterprise; d) the extent of power; and e) the vulnerability of potential victims to wrongful exercise of the employee’s power.
5. An incidental attack by an employee that merely happens to take place on the employer’s premises during working hours will scarcely justify holding the employer liable because such an attack is unlikely to be related to the business the employer is conducting or what the employee was asked to do, and, hence, to any risk that was created.

The court held that the facts did not support a finding that the employment went beyond providing a bare opportunity, noting that the assault did not occur in the workplace or during work hours, there was no allegation of inappropriate behaviour on prior occasions, there was no allegation that Hart exercised any power in relation to the plaintiff beyond that which is required in every supervisory position, and there was no allegation that the plaintiff was particularly vulnerable to the wrongful exercise of the Hart’s power.

April 13, 2011

Motion to add defendants after limitation period dismissed

Higgins v. Barrie (City of), 2011 O.N.S.C. 2233 (S.C.J.)

This was a motion by the plaintiff to amend the Statement of Claim to add additional defendants after the expiry of the limitation period on the basis of discoverability.

The plaintiff slipped and fell on March 13, 2006 and alleged that the City of Barrie was negligent in failing to maintain the site of the slip and fall. Barrie’s defence was filed May 13, 2008. Examinations for Discovery took place August 5, 2010 and September 13, 2010. At the examination for discovery of the City representative, counsel advised that the proposed defendant had been contracted by the City to remove snow from the area where the plaintiff fell. The contractor had in turn subcontracted to the second proposed defendant. On November 25, 2010, Barrie’s counsel advised of the name of the subcontractor. Plaintiff’s counsel performed a corporate search on November 30, 2010 and brought a motion to add the proposed defendants December 14, 2010.

Justice DiTomaso dismissed the plaintiff’s motion. The court noted that the passing of the limitation period gives rise to a presumption of prejudice. There is a reverse onus and evidentiary burden on the plaintiff. In the circumstances, the plaintiff’s motion materials failed to disclose any evidence of pre-discovery diligence on the part of the plaintiff or his counsel to determine the identity of the proposed defendants. The motion materials failed to disclose any evidence of any reason why the plaintiff could not have taken any steps to discover the identity of the proposed defendants prior to the examination for discovery. Justice DiTomaso held that waiting 4 ½ years until the examination for discovery of a City representative to make inquiries about potential additional defendants did not amount to due diligent or reasonable efforts. The affidavit of the plaintiff’s legal assistant was totally deficient in providing evidence of due diligence or reasonable efforts made to ascertain the involvement of the proposed defendants or any other defendants. The plaintiff therefore had not met his onus and the motion was dismissed.

Justice DiTomaso’s decision is extremely useful for proposed defendants responding to a plaintiff’s motion to amend. There is a very helpful summary of the case law with respect to adding defendants and the due diligence requirement.

Thank you to Ted Key for bringing this case to our attention.

April 6, 2011

Gross Negligence

The Court of Appeal for Ontario has upheld a decision which found that the City of Mississauga’s response to a winter storm event was reasonable, Billings v. Mississauga (City), 2011 ONCA 247, [2011] O.J. No. 1449 (C.A.).

The plaintiff, Douglas Billings, claimed injuries suffered in a slip and fall accident on a City sidewalk following a major snow and ice storm.

The sidewalk in question had not been cleared of snow and ice within 36 hours after the winter storm.  The City’s snow removal policy required that snow and ice be removed from sidewalks within 36 hours and the City had failed to meet that target. Nevertheless, the trial judge found that the storm had been an extraordinary event. The trial judge carefully reviewed the City’s systems, personnel and policies for dealing with snow storms and concluded that the City’s response to the storm was "completely reasonable."  The City’s response to the storm did not amount to “gross negligence”, which is the standard mandated by statute.

The Court of Appeal agreed with the trial judge’s conclusion.

This case should assist municipalities in defending claims of personal injury caused by snow or ice on a municipal sidewalk. It is interesting that the City was found to have acted reasonably even though it did not meet its objective of clearing snow and ice from sidewalks within 36 hours after a storm event.

March 30, 2011

Action dismissed due to failure to comply with Municipal Act notice provision

Zogjani v. Toronto (City), [2011] O.J. No. 1002 (S.C.J.)

In this slip and fall case against the City of Toronto, the City brought a motion for summary judgment on the basis that the plaintiff failed to comply with the 10 day notice period provided by section 44(10) of the Municipal Act. The plaintiff slipped and fell on December 22, 2005 on snow and ice on a Municipal sidewalk. She consulted a lawyer in February 2006 and notice was provided to the City on March 1, 2006. The plaintiff swore that until she met with the lawyer on February 28, 2006, she was not aware of the 10 day notice requirement in section 44. Since the plaintiff failed to comply with section 44(10), it was her onus to show that she fit within subsection 44(12) of the Municipal Act, which provides that the failure to give notice is not a bar to the action if a judge finds that there is reasonable excuse and the Municipality is not prejudiced in its defence.

The City’s argument was that because it did not receive notice of the claim in a timely manner, the City’s investigator was unable to investigate the location promptly and could not observe or record the conditions of the location at the time of the accident. The plaintiff’s response was that snow would have melted in the days immediately following the incident and so even if the 10 day notice period had been met, there was no practical prejudice to the City.

The City’s field investigator swore an Affidavit indicating that he patrolled the area 4 days before the date of loss and 6 days after the date of loss. If he had been notified immediately, he would have been able to recall what the road and sidewalk conditions looked like during his patrols; however, because the City did not receive notice until 2 ½ months later, he was unable to recall what the location looked like at the time of his patrols.

Justice Lauwers was satisfied that the Municipality was practically prejudiced by the effect of the delay on the field investigator’s memory. He granted summary judgment.

At times it may seem that section 44(10) is a limitation period without teeth; however, in the right circumstances and with the right evidence proffered on a motion for summary judgment, section 44(10) can be a useful tool with which to dispose of an action at an early date.

March 23, 2011

The test for compensable psychological injury

Thank you to Jennifer Stirton for this week's contribution.

The Ontario Court of Appeal has recently confirmed that plaintiffs seeking damages for psychological injury independent of any claim for physical injury are required to show that they suffer from a “recognizable psychiatric illness”.

In Healey v. Lakeridge Health Corp., [2011] O.J. No. 231 (C.A.), the plaintiffs received notices to be tested for tuberculosis as a result of exposure to two infected patients at the defendants’ facility. The plaintiffs alleged that these notices caused them mental anxiety, depression, fear, shock, anger, distress and sleeplessness. They feared for the health and safety of friends and family and temporarily disrupted their social and family lives.

The plaintiffs admitted that the harm suffered fell short of a “recognizable psychiatric illness”. Rather, the plaintiffs alleged that the 2008 Supreme Court of Canada decision in Mustapha v. Culligan, in which the plaintiff found dead flies in an unopened bottle of water and was very upset by the idea that his family had been consuming tainted water, lowered the threshold for compensable psychological injury.

The Court of Appeal concluded that although there were some academic and judicial opinions to the contrary, there is a strong line of authority that to recover damages for psychological injury independent of physical injury, plaintiffs are required to show that they suffer from a recognizable psychiatric illness. The Court of Appeal concluded:

“As has been repeatedly stated in the case law, there are strong policy reasons for imposing some sort of threshold. It seems to me quite appropriate for the law to decline monetary compensation for the distress and upset caused by the unfortunate but inevitable stresses of life in a civilized society and to decline to open the door to recovery for all manner of psychological insult or injury. Given the frequency with which everyday experiences cause transient distress, the multi-factorial causes of psychological upset, and the highly subjective nature of an individual’s reaction to such stresses and strains, such claims involve serious questions of evidentiary rigour. The law quite properly insists upon an objective threshold to screen such claims and to refuse compensation unless the injury is serious and prolonged.”

The Court of Appeal acknowledged that the threshold for compensable psychological injury is the subject of debate and that it could be revisited on a proper factual foundation. For the moment, however, the test for compensable psychological injury remains unchanged.

March 16, 2011

The Appraisal Process in s. 128 of the Insurance Act

Letts v. Aviva Canada Inc., [2010] O.J. No. 5801 (S.C.J.)

This case deals with the appraisal process in s. 128 of the Insurance Act.

The plaintiffs made a fire loss claim and prepared a 56 page Request to Admit which contained an inventory of items they allege were destroyed or damage by the fire. They argued the insurer was required to specify the items took issue with as a condition precedent to the appraisal process.

Justice James disagreed:

While this may make sense in an appropriate case, I do not agree with the insureds that the insurer must provide a detailed response to the claim of the insureds before being able to invoke the appraisal mechanism contemplated by Section 128 of the Insurance Act.

Section 148 of the Act sets out what needs to be done prior to the appraisal process: a specific demand must be made and proof of loss delivered. Nothing else is required.

March 9, 2011

Proportionality in Discovery

Master Short recently conducted an exhaustive review of the principles of proportionality in discovery. In Warman v. National Post (2011), 103 O.R. (3d) 174 (S.C.J.), the defendant brought a motion seeking production of a mirror copy of the plaintiff’s computer hard drive. The action was a libel action brought under the Simplified Procedure.

Master Short held that the new rules changing the test from “relating to” to “relevant to” a matter in issue signal a shift away from the broad and liberal discovery practice that has existed in Ontario. The default rule should start with proportionality and a recognition that not all conceivably relevant facts are discoverable in every case. Master Short adopts an eight factor proportionality test for e-discovery used in an American case (Rowe Entertainment v. William Morris):

1. The specificity of the discovery requests;
2. The likelihood of discovering critical information;
3. The availability of such information from other sources;
4. The purposes for which the responding party maintains the requested data;
5. The relative benefit to the parties of obtaining the information;
6. The total cost associated with production;
7. The relative ability of each party to control costs and its incentive to do so;
8. The resources available to each party.

Master Short held that although relevancy should remain a threshold requirement, proportionality should replace relevancy as the most important principle guiding discovery.

This decision will no doubt garner attention as a guideline for discovery. It will be interesting to see if the eight factors become the new standard for discovery in general or limited to e-discovery.

February 23, 2011

The discoverability principle in third party claims

White v. Mannen, 2011 ONSC 1058 (S.C.J.)

This was a motion by the third party, Brant County, for summary judgment on the basis that the action against it was commenced out of time.

The main action arose out of a motor vehicle accident that occurred on May 22, 2004. The plaintiff was a passenger in the defendant's vehicle, which crested a hill and swerved to avoid a parked car, leaving the roadway and striking a tree. In the third party claim, the defendant alleged the road and hill obstructed his view.

The claim was issued December 2, 2005 and served on the defendant February 21, 2006. The third party claim was issued September 24, 2009. The defendant argued that it was only after examinations for discovery and receipt of an engineering opinion that he discovered he had a cause of action against the municipality.

Justice Gordon conducted a useful review of the case law with respect to discoverability, and specifically the due diligence required: a party must only learn of sufficient facts upon which to commence a claim and need not be in a position to prove it. Legal advice or an expert opinion is not necessarily required, and an examination for discovery may not be required. In resisting a motion for summary judgment, the responding party must address the due diligence requirement and provide full disclosure.

Justice Gordon held that the defendant knew at the time of the accident that there was restricted visibility on the hill. The failure of the defendant to tender evidence on due diligence was fatal to his position. The third party claim was well out of time and was dismissed.

This decision is a good review of the principles pertaining to discoverability and should be reviewed both by those pursuing third party claims and those defending them.

February 16, 2011

Tavern Liability - Section 39 of the Liquor Licence Act

Dickerson v. 1610396 Ontario Inc. (Carey’s Pub and Grill), 2010 O.N.C.A. 894 (CanLII)

Section 39 of the Liquor License Act creates civil liability for commercial establishments selling liquor. Section 39 reads as follows:

39. The following rules apply if a person or an agent or employee of a person sells liquor to or for a person whose condition is such that the consumption of liquor would apparently intoxicate the person or increase the person’s intoxication such that he or she would be in danger of causing injury to himself or herself or injury or damage to another person or the property of another person.

In Dickerson, the Court of Appeal had occasion to comment on the standard of care set out in section 39. The Court disagreed with the plaintiff’s assertion that the standard is breached by simply overserving a patron to the point of intoxication. The Court held that section 39 requires a risk assessment by the commercial establishment. The plain and ordinary meaning of the section describes the level of overservice that attracts liability because of the risk it creates. The overservice must produce the patron’s intoxication or increase it sufficiently that the patron will be in danger of injuring another person. Section 39 requires only that the risk of injury be reasonably foreseeable, not that the type or kind of injury actually suffered be reasonably foreseeable. In addition, this section requires only that there be a reasonably foreseeable risk of injury to another person, not that the person injured be within the category of persons foreseeably at risk.

Those involved in tavern liability cases before juries may want to review this decision as a useful precedent for the charge to a jury in a tavern case, as well as the appropriate questions to be put to the jury.

February 9, 2011

D&O Insurance: The Policy Prevails

The Ontario Courts have reiterated the old insurance law adage that the wording of a policy prevails.

In Dunn v. Chubb Insurance, 2011 ONCA 36, the Court of Appeal recently upheld an application judge's decision requiring the insurer Chubb to pay 90% of certain defence costs of the respondents Dunn and Beatty, pursuant to a directors’ and officers’ liability insurance policy.

This proceeding arose out of allegations against Dunn and Beatty, former Nortel directors and/or officers.  They allegedly committed some "Wrongful Acts" (a term defined in the policy) in 2001 and then again in 2003.  The policy was a "claims made" policy and covered the period 2001. 

The insurer Chubb agreed to provide defences for Dunn and Beatty for proceedings relating to the 2001 conduct.  However, the insurer refused to pay the full defence costs for other proceedings arising out of both the 2001 and 2003 conduct.  The insurer argued that it was not responsible for the defence costs to the extent that those costs relate exclusively to the 2003 conduct.

There was however in the policy a special endorsement requiring the insurer to pay 90% of defence costs where there is a claim that includes both covered and uncovered matters.  However, the insurer took the position that the claims still had to fall within the period of 2001 and that the endorsement applied to allegations against insureds of wrongful conduct engaged in by an insured which is excluded from coverage, e.g. allegations of wrongful conduct in some capacity other than as a director and/or officer.

In the result, the application's judge and the Court of Appeal agreed that the endorsement in the policy applies and that the insurer is to pay 90% of defence costs per the terms of the endorsement.

This case emphasizes once again the importance of the terms of the policy itself.

February 3, 2011

Negligent Supervision of Children

Can parents or grandparents be liable for negligently supervising children in their care?

In Connolly (Litigation guardian of) v. Riopelle, [2010] O.J. No. 5798 (S.C.J.), the eight year old plaintiff was injured in an automobile accident. The defendant driver brought a third party claim against the boy’s grandfather, alleging that the grandfather was negligent in his supervision of the child and this caused or contributed to the accident. The child was visiting his grandparents’ home and was left outside to play alone when the accident occurred.

The grandfather brought a motion to strike the claim. He alleged that the child had been taught appropriate safety rules, was generally well behaved and did not require a greater level of vigilance than other children his age.

The motion was dismissed.

The Court held that is was open to the trier of fact to conclude that the grandfather ought to have looked out from time to time to ensure the child was adhering to the rules that were set, and there was an absence of evidence as to the accepted standard of care of other caregivers in the neighbourhood where the accident occurred.

Justice James concluded that the question of negligent supervision was better assessed in a trial setting.