Happy Holidays

Happy holidays from the Ontario Insurance Law Blog.  We'll be back in January with our weekly posts.  We wish you all the best in 2013.

When Has FSCO Mediation Failed - Part 2

Last week, we blogged on the Court of Appeal`s decision in Hurst v. Aviva, which held that insureds may proceed to bring court actions or arbitration proceedings if 60 days have passed since an application for mediation at FSCO has been filed and no mediation has taken place.

The Court released its decision in Younis v. State Farm Insurance Company, 2012 ONCA 836 (C.A.) concurrently with Hurst.  In the Hurst actions, the 60 day period had elapsed prior to the insured filing a court action.  In Younis, however, the claimant applied for mediation on July 14, 2011 and filed a court action a few days later. State Farm`s motion to stay the action took place well after the 60 day period had elapsed.  Justice Sloan refused to stay the action. 

The Court of Appeal allowed the appeal.  The Court held that the insured commenced his action in contravention of the statutory requirement by not waiting 60 days.  Since Younis had not waited until mediation had failed, his action was barred.  To allow otherwise would permit insured person to immediately commence civil actions and the statute did not permit this tactic.

When Has FSCO Mediation Failed - Part 1

We previously blogged on the decision in Cornie v. State Farm, in which Justice Sloan held that insureds may commence claims against their accident benefits carriers if 60 days have elapsed since an application for mediation has been filed, even if mediation itself has not occurred.  The Court of Appeal has now released its appeal decision in Hurst v. Aviva, 2012 ONCA 837 (C.A.).

Section 281(2) of the Insurance Act prevents insured persons from commencing court actions or arbitrations against their insurers unless they first seek mediation and mediation has failed.  The claimants waited 60 days after applying for mediation and when no mediation had taken place, they commenced actions.  FSCO`s position was that the prescribed 60 day time limit for conducting mediation did not begin to run until an application for mediation had been assessed by FSCO and found to be complete.  FSCO refused to issue a report declaring the mediations had failed.  The insurers in four actions brought motions to have the actions stayed on the basis that they were barred by s. 281(2) as mediation had not taken place.  Justice Sloan dismissed the motions and the insurers appealed. 

The Court of Appeal dismissed the appeals.  The Court concluded that the process is intended to be completed with 60 days after an application for mediation has been filed; however, if mediation has not taken place within 60 days, insured persons are free to pursue either court action or arbitration. 

The Court rejected the insurers` arguments that the cost to the industry could be $83 million as a result of the interpretation of the Act that does not require mediation to actually take place.  The insurers submitted statistics that 75% of claims are resolved by mediation at FSCO.  One has to expect a flood of court proceedings as a result of this decision, along with significant costs to insurers.

Appellate Jurisdiction

Under the Courts of Justice Act, appeals relating to amounts greater than $50,000 must be made to the Court of Appeal.  Appeals of judgments relating to amounts under $50,000 are to the Divisional Court.  Where only a portion of a judgment is appealed, does the jurisdiction change?

In Grammatico v. Chambers, 2012 ONSC 6518 (Div. Ct.), the parties disagreed on whether the proper court to hear an appeal was the Divisional Court or the Court of Appeal.  The substantive judgment involved sums greater than $50,000, the threshold imposed by s. 19(1.2) of the Courts of Justice Act for appeals to the Court of Appeal. The defendant argued that it sought to appeal an interest component relating to costs, rather than the substantive judgment.  Since the amount would be less than $50,000 the defendant's position was that the appeal was to the Divisional Court.

Justice Eberhard held that the appeal was to the Court of Appeal.  The jurisdiction for appeal must be determined by the aggregate of the sums awarded.  The fact that only one part of the decision was under appeal did not determine jurisdiction.

Costs on a Summary Judgment Motion

In Mo v. Johnson, the defendant successfully moved for summary judgment dismissing the plaintiff's claim.  Justice Morgan's decision on costs is reported at 2012 ONSC 6307 (CanLii). 

One of the arguments made by the plaintiff was that the defendant was only entitled to costs of the motion, not the entire action.  Justice Morgan disagreed, holding that:

[24]      I agree with Mr. Bizezinski that where summary judgment dismisses the action, it is the costs of the action in its entirety that are at issue. To hold otherwise would allow a party who brings spurious litigation to cause the opposing side to incur substantial costs with no means of compensation. 

The defendant was awarded costs of the entire action on a substantial indemnity basis due to the plaintiff's conduct, which was described as "aggressive and high-handed".  The decision is a nice synopsis of some of the basic principles relating to costs. 

Cost of Productions

Who pays for the cost of producing documents?

In Veillette v. Piazza Family Trust, 2012 ONSC 4782 (S.C.J.), the plaintiffs brought a motion to compel the defendant to answer undertakings and refusals he gave on an examination in aid of execution.  The defendant took the position that the plaintiffs must pay any charges for obtaining the documents.

The Court cited two cases dealing with production of documents before trial, Ho v. O’Young-Lui, 2002 CanLII 6346 (ON SC), and Traverse v. Turnbull, [1996] N.S.J. No. 212 N.S.C.A. which held that the general rule is the party in possession or control of the documents is to produce them at their expense, although the court has residual discretion to depart from that rule where fairness and justice so require.  The general rule may be altered if its application would prevent a party from presenting its case.  Justice Kane held that there was no reason to depart from the general rule.

Although this case deals with an examination in aid of execution, disagreement over who pays for documents can often arise in the context of examination for discovery.  The Veillette case is useful in providing a succinct argument as to why plaintiffs should bear the cost of producing their documents.

Martin v. Fleming - Deductibles

The Court of Appeal has now released its decision in Martin v. Fleming, which can be found at the following link: Martin v. Fleming, 2012 ONCA 750 (C.A.)

At issue was the operation of the deductible where a plaintiff has been in multiple accidents.  The motions judge ruled that where the plaintiff has been involved in two accidents and the actions are tried together, there is a deductible for each action.

In a brief endorsement, the Court of Appeal dismissed the appeal. They followed the motion judge's reasoning that s. 267.5(7) is unambiguous and the plaintiff is subject to two deductibles.

Although this is a brief endorsement, it is important to those defending claims where the plaintiff has been in multiple accidents.  Insurers for each defendant retain the benefit of the deductible.

Expert Independence

Do the new rules pertaining to expert evidence impose a higher duty than at common law?  When an expert is alleged to be biased due to a connection to one of the parties or a matter in issue, does it go to admissibility or weight? 

In Henderson v. Risi, 2012 ONSC 3459 (S.C.J.), the defendant proffered an expert, Mozessohn, to give testimony at trial regarding irregularities in the financial records of Timeless Inc., provide an opinion on the value of shares in Timeless held by the plaintiff, and critique the plaintiff expert's opinion.  The plaintiff objected to the admissibility of Mozessohn's evidence on the basis that he was not independent or impartial since he was a partner in the accounting firm that acted as Timeless' Trustee in Bankruptcy.  Mozessohn testified that there had been no communication between members of his firm about the case.

Justice Lederman quoted the Newfoundland Court of Appeal in Gallant v. Brake-Patten 2012 NLCA 23 (CanLII), which summed up the law regarding the admissibility of expert evidence where the allegation is the expert lacks institutional independence as opposed to personal advocacy:

In summary, in civil cases, if expert evidence meets the Mohan criteria for admissibility, it is admissible.  Bias or partiality in expert evidence which is based on the expert having a connection with a party or issue or a possible pre-disposition or approach in the case is a reliability issue which is best determined when the whole of the expert evidence is considered in the context of all of the trial evidence.  As such, the issue is one of weight and not admissibility.

Plaintiff's counsel argued that the new r. 4.1 and the changes to r. 53 imposed a higher level on duty on an expert in Ontario, and that the question of institutional independence must be determined at the admissibility stage rather than leaving it to be considered as a matter of weight.

Justice Lederman disagreed and allowed the expert to give testimony.  Rules 4.1 and 53 simply remind experts of their already existing obligations to provide opinion evidence that is fair, objective and non-partisan.  Any lack of institutional independence went to weight rather than admissibility.  The new rules impose no higher duties than already existed at common law.

Restricting Summary Judgment

Are courts beginning to restrict the use of summary judgment?

Justice Brown took the opportunity to comment on summary judgment in a decision encompassing two cases, George Weston Limited v. Domtar Inc and 1318214 Ontario Limited v. Sobeys Capital Inc., 2012 ONSC 5001 (S.C.J.).  These were two cases from the Commerical List in Toronto where counsel sought to schedule summary judgment motions.  In George Weston, the plaintiff sought to schedule a summary judgment motion prior to examinations for discovery.  In 1318214 Ontario, discoveries were mostly complete and when the plaintiff sought to set the matter down for trial, the defendant advised it intended to bring a motion for partial summary judgment to limit the issues for trial.

Justice Brown laments the motion culture in Toronto and what he sees as a reluctance of counsel, especially counsel who have practiced for less than 15 years, to bring cases to trial.  He suggests that instead of bringing summary judgment motions, counsel should take more cases to trial and that courts should facilitate the process by approving innovative ways of proceeding to trial; for example, evidence could be a hybrid of written and viva voce evidence.

It will be interesting to see if other judges share Justice Brown's concerns and if courts will start restricting the use of summary judgment motions.  Defence counsel and insurers will need to carefully assess each case to determine whether the appropriate way is to proceed by way of summary judgment or whether it might be more beneficial to simply proceed to trial. 

Second Independent Medical Examination - Evidence

What evidence is necessary on a motion to compel the plaintiff to attend a second independent medical examination?

In Nasir v. Kochmanski, 2012 ONSC 4088 (S.C.J.), the plaintiff was a minor who was injured in a motor vehicle accident.  The claim alleged the plaintiff was struck while a pedestrian and sustained a head injury and various psychological impairments.  He had been assessed by a number of medical doctors and psychologists, both treating and arranged by plaintiff`s counsel.  He had been assessed by a paediatric neurologist on behalf of the defendant, although no report had been prepared.  The defendant sought to have the plaintiff assessed by a psychologist.  The proposed assessor wrote a letter to defence counsel outlining the assessment, its length, information she would require from the plaintiff`s parents, and test results from other assessments she required.

Justice Daley permitted the assessment.  The proposed assessment was outside the scope of expertise of the neurologist, according to the psychologist`s letter.  There was no evidence the assessment would delay trial or prejudice the plaintiff.  Since the plaintiff was very young, his evidence would be of limited evidentiary value, and the most probative and reliable evidence would have to come from experts.  Trial fairness favoured the second examination.

It should be noted that the evidence in support of the motion appears to come from a letter from the proposed assessor.  Justice Daley stated that it would have been preferable to have an affidavit or report from the neurologist outlining the need for a further examination, but accepted that there was enough evidence to support the motion.  There is some inconsistency in the case law as to the form of evidence needed on a motion for a further examination, and counsel should carefully consider whether it would be beneficial to have affidavit evidence. 

  

Catastrophic Impairment: Aviva v. Pastore

The Court of Appeal has released an important decision relating to catastrophic impairment:

Aviva Canada Inc. v. Pastore, 2012 ONCA 642 (C.A.)

The insured was injured in a 2002 motor vehicle accident as a pedestrian and sustained an ankle injury. She alleged her gait had been altered and was diagnosed with a pain disorder.  A DAC found her to be catastrophically impaired in 2005 due to a marked mental or behavioural impairment under s. 2(1.1)(g) of the SABS.  An assessment under s. 2(1.1)(g) is carried out with reference to the AMA Guides, which provide for an assessment of function in four categories:

(1)              Activities of daily living (ADL);

(2)              Social functioning;

(3)              Concentration, persistence and pace; and

(4)              Deterioration or decompensation in work or work-like settings.

Pastore was diagnosed with a number of psychological disorders and the DAC concluded that she had a class 4 marked impairment in activities of daily living.  The DAC concluded she was catastrophically impaired on the basis of the one class 4 impairment.  The insurer did not agree with the assessment and the matter proceeded to mediation then arbitration.

At arbitration, the arbitrator agreed with the DAC assessors and held that one marked impairment was enough to comply with the Guides approach to impairment.  In addition, it was appropriate to consider physical pain in assessing mental disorder, as it was not possible to factor out all physically based pain since it was intertwined with mentally based pain. The Director's Delegate upheld the decision, but the Divisional Court overturned the arbitrator.

The Court of Appeal allowed the appeal and reinstated the arbitrator`s decision.  The conclusion that only one marked impairment is sufficient to meet the definition of catastrophic impairment was a reasonable one. In addition, it was not an error for the DAC assessors to consider both physical and mental pain.

Pastore appears to have lowered the bar for catastrophic impairment based on a mental disorder and more claimants may be able to fit themselves into a catastrophic designation than prior to this decision.

Motion to Add Municipal Defendant Dismissed

A motion to add a municipality as a defendant was recently dismissed.

In Temporin v. DiVincenzo, 2012 ONSC 5213 (S.C.J.), the plaintiff was injured in a 2007 motor vehicle accident. Although the City of Burlington had been named as a third party, the plaintiff did not move to add it as a defendant until 2012. The plaintiff ordered the police report in 2007, but did not receive officer's notes as counsel had inadvertently neglected to send payment.  The notes were ultimately received in 2010 when a follow up request was made.  They referred to road conditions consisting of "fierce" black ice. The plaintiff argued that the two year limitation period for adding the municipality began in 2010.

Parayeski J. dismissed the motion. The failure to follow up for police notes until 2010 did not give rise to a discoverability issue. The plaintiff had not exercised reasonable diligence and even though there was no prejudice to the municipality, this did not justify it being added as a defendant post-limitation.

This decision is a good example of the maxim that limitation periods are not enacted to be ignored.  The burden is on plaintiffs to act diligently to identify defendants within the appropriate limitation period.

Election of Arbitration or Court Proceeding

Gordyukova v. Certas Direct Insurance Company, 2012 ONCA 563 (C.A.)

The subject of this appeal is s. 281.1(1) of the Insurance Act, which provides that an insured shall commence a court proceeding or arbitration within two years of the insurer's refusal to pay benefits.

The plaintiff was in a motor vehicle accident in 2001.  She applied for accident benefits and a dispute arose over certain medical benefits.  After mediation failed, she issued a Statement of Claim in 2002. In 2005, the insurer advised her she had exhausted her non-catastrophic limits for medical and rehabilitation benefits.  Her application for a catastrophic designation was rejected so she commenced an arbitration at FSCO in 2008.  Certas brought a motion to stay the arbitration on the grounds that the CAT dispute should be added to the court action. The arbitrator ruled the plaintiff could not proceed with both the court action and the arbitration, but could proceed with arbitration if she discontinued the court action.  The arbitrator ruled he was not ruling on the limitation issue.  The plaintiff gave notice of her intention to discontinue the court action and proceed with arbitration, and the insurer brought a motion seeking a ruling on the limitation issue.  The arbitrator ruled the plaintiff could add all of the matters pending before the Superior Court to the arbitration.

Certas appealed, arguing that the plaintiff could not re-elect the method of proceeding eight years after the court action was commenced. The matter was appealed to the Director 's Delegate then the Divisional Court.

The Court of Appeal held that the arbitration should be stayed.  Section 281.1(1) of the Insurance Act requires an election between a court action and an arbitration. It provides that a proceeding shall be brought within two years. The insured has the choice of forum, but cannot switch forums after the expiry of the limitation period.  Since the court proceeding included a claim for "continued accident benefits", it would necessarily include a determination of the CAT issue. 

Threshold Motion Successful

Surveillance evidence can be useful in showing that the plaintiff does not meet the Insurance Act threshold.

In Dahrouj v. Aduvala, 2012 ONSC 4090 (S.C.J.), the plaintiff was injured in a minor rear end collision.  She was a homemaker and alleged she developed chronic pain which impaired her functioning in the home and her social interaction in the community.

The evidence at trial was that the plaintiff visited her family doctor on multiple occasions prior to the accident complaining of head, neck and back pain.  She made similar complaints post-accident.  The defendant obtained surveillance showing the plaintiff engaged in a variety of activities, including scraping snow and ice off her car, pumping gas, reaching for groceries on an upper shelf and carrying groceries.  Justice Hackland described the video as “particularly devastating” to the plaintiff’s credibility, as it showed the plaintiff stretching and lifting, the activities she alleged restricted her functioning as a homemaker.

The plaintiff’s expert diagnosed her with “central sensitization”, based on a 45 minute interview and relying only on the plaintiff’s self reports.  Justice Hackland preferred the defence expert, who conducted a more thorough assessment and whose opinion was corroborated by the surveillance evidence.

Justice Hackland held the plaintiff had not proved she sustained a serious, permanent impairment of an important physical function.  As a result, she was not entitled to general damages and her recovery was limited to $32,000, the amount the jury awarded for past housekeeping. 

Surveillance of the plaintiff can be extremely important in defending claims, especially those alleging chronic pain.  When surveillance can be combined with expert opinion, it can be effective in showing that the plaintiff’s claim does not meet the threshold.

Adding an Insurer as a Defendant Rather than a Statutory Third Party

Can an insurer add itself as a defendant rather than as a statutory third party?

In Azad v. Dekran, 2012 ONSC 4257 (S.C.J.), the Personal insured the defendant and brought a motion pursuant to r. 13.01 to intervene as an added defendant.  It wished to allege that the accident did not occur or was staged and to crossclaim against its insured.  It preferred this route rather than being added as a statutory third party since s. 258(14) of the Insurance Act prohibits a statutory third party from taking a position incongruous to its insured.

Master Dash dismissed the motion, holding that it was not a proper use of r. 13.01.  One of the purposes of s. 258 is to permit an insurer to contest the plaintiff’s claim in a situation where it denies coverage.  The plaintiff’s action is not the appropriate forum to decide issues between the insured and insurer.  Any dispute could be decided in subsequent proceedings, including a proceeding to recover the statutory minimum paid to the plaintiff. 

Master Dash noted that if the accident was staged, the plaintiff would not be entitled to damages; on the other hand, if the trial court did award damages, it would mean there was a legitimate accident and there would be no basis for a crossclaim against the insured.  In addition, as a statutory third party, the insurer would have a right to discover its insured.

Master Dash refused to follow the decision in Esho v. Dekran, 2012 ONSC 3638 (S.C.J.), where the insurer was added as a defendant.  Now that there are conflicting decisions on this issue, perhaps it will be up to the Divisional Court to provide clarity.

Production of Statements Made Following an Accident

A recent motion decision deals with two issues that can arise in defending claims: the extent of litigation privilege with respect to statements made following an incident, and whether reviewing such a statement prior to examination for discovery waives privilege.

In Knox v. Applebaum Holdings, 2012 ONSC 4181 (CanLii) the plaintiff brought a motion seeking production of a statement prepared by the defendant’s property manager following an accident in its parking lot.  The accident occurred at 8:55 p.m..  The property manager was quickly notified, travelled to the parking lot, took pictures and called her risk manager to report what she had found at 12:35 a.m.  At this point, she was aware that two people had been injured.  She typed up a statement detailing her recollection of what she had seen and learned of the accident while it was fresh in her mind.  The statement was delivered to the adjuster later that day.

On the motion, the issues were whether the statement was protected by litigation privilege and whether privilege was lost when the property manager reviewed it when she prepared for her examination for discovery.

Justice Hockin held that litigation privilege attached to the document.  The property manager knew there was an accident and that two people had been injured.  She believed that litigation would follow.  It did not matter that the defendant was not represented by counsel at the time.  The dominant purpose of the document was to facilitate her employer’s defence and to assist in her forensic involvement of the case. 

Privilege was not waived.  Justice Hockin relied on Wronick v. Allstate (1997), 7 C.P.C. (4^th) 285 (Gen. Div.) where Justice Leitch held that reviewing a privilege document to refresh one’s memory in preparation for examination for discovery does not amount to a waiver of privilege.

Failure to Add Property Owner as Additional Insured

Many winter maintenance contracts require the contractor to add the property owner as an additional insured on its policy.  But what happens when the contractor fails to do so and the owner is sued?

In Papapetrou v. 1054422 Ontario Ltd., 2012 ONCA 506 (C.A.), the plaintiff sued the Cora Group, alleging she slipped and fell on black ice on its property.  Cora contracted with Collingwood Landscape for winter maintenance services.  In the service contract, Collingwood agreed to name Cora as an additional insured on its CGL policy, but failed to do so.  On a motion for summary judgment, Collingwood was ordered to assume Cora's defence and indemnify it for damages.  Collingwood appealed.  Cora conceded that the order to indemnify was premature so the primary issue on appeal was whether the motions judge erred in ordering Collingwood to assume Cora's defence.

The Court of Appeal set aside the original Order and substituted an Order that Collingwood pay for Cora's defence.

Simmons J.A. held that Collingwood's breach of its contractual obligation to name Cora as an additional insured did not create a duty to defend; rather, it gave rise to a remedy in damages.  The quantum of such damages is the amount Cora will be required to pay for a defence of the claims that Collingwood's insurer would have paid had Collingwood fulfilled its contractual obligations.  The costs would include all of the costs of Cora's defence except for those incurred exclusively to defend claims that do not arise from Collingwood's performance or non-performance of the contract.  Cora was entitled to separate counsel given there were distinct claims against the two parties, which meant there would be an inherent conflict between them.

Withdrawing Deemed Admissions

When will a party be permitted to withdraw deemed admissions arising from the failure to respond to a Request to Admit?

In Epstein Equestrian Enterprises Inc. v. Cyro Canada Inc., 2012 ONSC 4653 (S.C.J.), the plaintiff served a Request to Admit eleven days before trial was scheduled to begin in 2010.  Trial was adjourned initially for one week and then again until 2012.  One of the defendants, Jonkman, failed to respond to the Request to Admit.  Rule 51.02(1) provides that a party is deemed to admit the contents of a Request to Admit if it does not respond to it within 20 days after it is served.  Jonkman sought to either set aside the Request to Admit or to withdraw the admissions.

Justice Morgan held that even though the Request to Admit was not served 20 days before trial, once the trial was adjourned and did not start for 20 days, the deeming provision applied. The main issue therefore centred on whether Jonkman was entitled to withdraw its admissions. The court may grant leave to withdraw the admissions if the following conditions are met:

1. The proposed change raises a triable issue;
2. There is a reasonable explanation for the change of position; and
3. The withdrawal will not result in any prejudice that cannot be compensated for in costs. (citing Antipas v. Coroneos, 1988 CarswellOnt 358)

Justice Morgan permitted the admissions to be withdrawn. At the time the Request was served, Jonkman was basically without legal representation as its counsel was in the process of being removed from the record. It had instructed counsel not to respond to the Request to Admit.  It subsequently brought a coverage application and was now being defended by an insurer.  The plaintiff supported the coverage application and must have understood that if coverage was achieved, a defence would be pursued. Jonkman's new counsel and insurer were unaware of the Request Admit and it would be unable to defend itself if the admissions stood.  The coverage application had been settled, and Justice Morgan speculated that the insurer's position may have been different had it known that Jonkman had effectively deprived itself of a defence by failing to respond to a wide ranging Request to Admit.

Justice Morgan was of the view that any prejudice to the plaintiff would not be inordinate as a trial would have been needed to canvas issues with the co-defendant in any event. The plaintiff further argued it was prejudiced as it had entered into a Pierringer Agreement with the remaining defendants and was concerned Jonkman would attempt to pin liability on those parties at trial. Justice Morgan held that the plaintiff had previously assumed Jonkman was insolvent when it entered the settlement and so this factor was to the plaintiff's benefit not prejudice.  The admissions were withdrawn.

Action Dismissed for Failing to Comply with Municipal Act Notice Requirement

Argue v. Tay (Township), 2012 ONSC 4622 (CanLii)

A municipality was recently successful in having a case dismissed based on the failure of the plaintiff to comply with s. 44(10) of the Municipal Act.  The section requires written notice be given to the clerk within ten days of the incident.  Section 44(12) provides that the failure to give notice can be excused if the plaintiff has a reasonable excuse and the defendant is not prejudiced by the lack of notice.

In Argue v. Tay (Township), the plaintiff alleged she sustained soft tissue injuries in a motor vehicle accident caused by potholes in the defendant municipality's road.  She provided written notice through her lawyer almost two years after the incident.  By that time, the surface of the road had changed materially.  The plaintiff argued the municipality had either actual or constructive knowledge of the accident as the municipal volunteer fire department attended the scene and would have received a copy of the police report.  The municipality brought a summary judgment motion seeking to have the action dismissed for failing to comply with the Municipal Act notice requirement.

DiTomaso J. held the plaintiff did not comply with the notice requirements.  Section 44(10) requires written notice be given to the clerk and the fact that the fire department attended or may have received a copy of the police report was insufficient to comply with the section.  There is no support in the jurisprudence that actual or construction notice pre-empts the requirement to give written notice to the clerk, and the section cannot be dispensed with in favour of notice to a different municipal department.

The plaintiff had no reasonable excuse for the failure to give notice.  She was discharged from hospital the same day as the accident, had no broken bones and was able to return to work two to three weeks after the accident.  She was aware people could bring lawsuits and believed the state of the road contributed to the accident, yet took no steps to inform herself about the law.  She was physically and mentally able to instruct counsel. 

The municipality had been prejudiced by the lack of notice.  There is a presumption of prejudice where notice has not been provided and the plaintiff bears the onus of showing there was no prejudice.  She failed to do so.  Neither she nor the municipality had photos or measurements of the road, the condition of the road had changed materially since the accident and the municipality had lost the opportunity to interview witnesses.  As a result, summary judgment was granted.

Argue is a useful summary of the relevant authorities relating to s. 44(12). Those defending municipal claims with notice issues should consider whether it would be useful to bring a summary judgment motion in the circumstances.

Costs of Compliance Are Not Defence Costs

General Electric Canada Company v. Aviva Canada, Inc., 2012 ONCA 525 (C.A.)

At what point do costs of compliance become defence costs?

GE sought a declaration that its insurer, Aviva, had a duty to defend it in respect of a request by the Ministry of the Environment to provide information regarding contaminated groundwater near a property once owned by GE.  The Ministry asked GE to delineate the source area on its property.  GE did not oppose the request and incurred significant costs in complying.  GE argued that the costs associated with complying with the Ministry’s request were defence costs and therefore were payable under its insurance policy.  The application judge dismissed the application and GE appealed.

The Court of Appeal dismissed the appeal.

One of the key factors was that GE did not oppose, defend or investigate the Ministry’s request.  Since it voluntarily complied with the request, it did not suffer any defence or investigation costs.  The Court held that the costs incurred were compliance costs, not defence costs, and therefore were not covered by the policy.

The Importance of Objecting to an Improper Jury Charge

Vokes Estate v. Palmer, 2012 ONCA 510 (C.A.)

This appeal decision illustrates the importance of objecting to a judge's charge to the jury, as well as the difficulty in overturning jury verdicts on appeal.

The case involved a fatal motor vehicle accident.  The defendant appealed the jury`s verdict, arguing that the trial judge failed to properly charge the jury with respect to s. 139(1) of the Highway Traffic Act (concerning the duty owed by the deceased on entering a highway) and failed to instruct the jury on the proper range of damages for loss of care, guidance and companionship.  The defendant also argued the jury award was gross and excessive.

The trial judge advised that he intended to charge the jury by omitting the words underlined below.

That section therefore imposes a very positive duty on Michelle Vokes in this case, breach of which would clearly constitute negligence. On the other hand, this positive duty on Ms. Vokes does not relieve Mr. Palmer who was operating his motor vehicle on the [through] highway from exercising ordinary care in the circumstances.

Counsel for the defendant did not object to the charge and in fact described the charge as an

“exercise in perfection”.  The Court of Appeal held that while the failure to object is not fatal, in most cases, an alleged misdirection or non-direction will not result in a new trial unless a substantial wrong or miscarriage of justice has occurred.

The remainder of the appeal was also dismissed, as under s. 118 of the Courts of Justice Act the judge may give a range of damages, but is not obligated to do so.  In addition, the threshold for overturning a jury`s award of damages is very high.  The assessment must be so inordinately high as to constitute a wholly erroneous assessment of the loss of care, guidance and companionship, which was not the case. 

Extrinsic Evidence in Duty to Defend Applications

1540039 Ontario Limited v. Farmers Mutual Insurance Company (Lindsay) 2012 ONCA 211 (C.A.)

The primary issue in this duty to defend application was the admissibility of extrinsic evidence regarding a lease. The applicant was the owner of a plaza. It was sued after a worker was electrocuted while installing a sign. The deceased had been hired to install the sign on behalf of a tenant of the plaza, Design Depot. Under the lease between 1540039 and Design Depot, the landlord was added as an additional insured. 1540039 brought an application seeking to be defended by Design Depot's insurer. It sought to introduce evidence that the deceased was hired by Design Depot.

The application judge refused to admit the evidence and the Court of Appeal dismissed the appeal.  It cited the Supreme Court decision of Monenco that held that extrinsic evidence will rarely be allowed in duty to defend applications. In addition, the evidence did not assist in any event as the allegations against 1540039 related to its ownership of the plaza and the lease agreement did not extend coverage in the circumstances.

The door is still open to allow extrinsic evidence in certain cases, but in general the primary focus on duty to defend applications will be on the policy itself.

Limitation Periods in Actions Under the OPCF

Roque v. Pilot Insurance Company, 2012 ONCA 311 (C.A.)

The plaintiff was injured in an automobile accident in 1996. He commenced an action against the defendant driver in 1998 for $1.75 million.  He commenced an action against his own insurer in 2002.   Section 17 of the OPCF provides an.action against one's own insurer under the underinsured provisions of the policy must be commenced within one year from when the claimant knew or ought to have known the quantum of claims exceeds the defendant's motor vehicle liability limits. The plaintiff argued the limitation did not begin to run until his damages were quantified by settlement or judgment.  This interpretation had previously been accepted in Hampton v. Traders General Insurance Company (1996), 27 O.R. (3d) 285 (Gen. Div).  On the insurer's motion for summary judgment, the motion judge dismissed the action.  The Court of Appeal dismissed the appeal, overruling Hampton.  Justice Juriansz preferred the reasoning of Master Dash in McCook v. Subramaniam (2008), 172 A.C.W.S. (3d) 344 (S.C.) at para. 5:

The plaintiff’s case runs from when he has a body of evidence accumulated that would give him a “reasonable chance” of persuading a judge that his claims would exceed $200,000.

Roque had a DAC, medical reports and an economic loss report going back to 1998 and more than two years passed after he knew or ought to have known his claims exceeded $200,000. As a result, the action was statute barred. 

The Court did not accept the plaintiff`s submission that applying s. 17 would amount to a multiplicity of proceedings, since s. 258.4 of the Insurance Act requires an insurer to advise of the defendant`s policy limits.  Where an insurer fails to comply, the Court stated it would be prudent for a plaintiff to commence an action against its own insurer.

This decision should help to provide greater certainty with respect to the timing for claims under the underinsured provisions of the motor vehicle policy. 

Duty to Defend - Winter Maintenance Contractor

Minto Developments Inc. v. Carlsbad Paving, 2012 ONSC 1574 (S.C.J.)

Minto brought an application seeking a declaration that Carlsbad and its insurer, Intact, were obligated to provide it with a defence.  Minto was a property owner that was named as a defendant in a slip and fall action.  Carlsbad contracted with Minto to provide winter maintenance on the property.  In the contract, Carlsbad agree to indemnify and save harmless Minto, to maintain a CGL policy with $2,000,000 limits and to add Minto as an additional insured.

Carlsbad refused to assume the defence.  It argued that the claim included allegations of negligence with respect to snow and ice removal, inspection, warning signs, breach of lease agreement and occupier's liability.  Its position was that the majority of the claims did not fall within the scope of coverage and stood on their own.

Justice Kershman held that the true nature of the Statement of Claim was that of a negligence case where the plaintiff slipped on snow and ice in the parking lot.  It therefore fell within the scope of coverage and Intact had a duty to defend Minto. 

Duty to defend issues arise fairly often in slip and fall cases where the property owner hires a contractor to maintain the property.  It is important to look closely at the Statement of Claim to determine the true nature of the claim; the mere insertion of a number of different allegations by the plaintiff will not necessarily be enough to take the claim outside of the scope of coverage.

SABS - Pursuing Litigation without a Mediator's Report

Cornie v Security National, 2012 ONSC 905 (S.C.J.)

This motion involved plaintiffs in four actions who commenced actions against their insurers for statutory accident benefits.

The Insurance Act imposes a mandatory mediation scheme in accident benefits cases.  Rule 19 of the Dispute Resolution Practice Code (DRPC) provides that mediation must be concluded within 60 days of the filing of an application.  Once mediation has failed, the plaintiff may pursue litigation.  In all four cases, the plaintiffs filed mediation applications and after 60 days passed without a mediator being appointed, they wrote to FSCO requesting a mediator's report confirming mediation had failed.  FSCO refused, taking the position that the 60 day period does not begin to run until a mediator is appointed.

The insurers brought motions to dismiss on the basis that mediation had not failed.  Justice Sloan dismissed the motion.  The 60 day period in the DRPC is mandatory.  The plaintiffs did not require a report from FSCO in order to claim that mediation failed through non-compliance with r. 19.  The plaintiffs were therefore able to show that mediation had failed and they were entitled to proceed with litigation.

This decision is a clever way to get around the lengthy back-up taking place at FSCO; however, does it transfer the backlog to the court system?

Supreme Court will not hear Giuliani appeal

The Supreme Court of Canada has refused leave to appeal the decision in Giuliani v. Halton.  A link to our commentary on Giuliani is found at http://ontarioinsurancelaw.blogspot.ca/2012/02/minimum-maintenance-standards-ruled.html.  In Giulini, the trial judge held that the Minimum Maintenance Standards did not provide a defence where the snow accumulation  was less than 5 cm (as provided by s. 4 of the MMS for a Class 2 road).  In addition, s. 5 of the MMS did not establish a minimum standard for conditions that had not yet become icy. The Court of Appeal decision is found at: http://www.ontariocourts.ca/decisions/2011/2011ONCA0812.htm.

Giuliani leaves municipalities vulnerable to additional claims.  If the gap in the MMS is to be addressed, it will have to be done through legislation.

Trial Adjournments

Graham v. Vandersloot, 2012 ONCA 60 (C.A.)

In this case, litigation had proceeded at a leisurely pace since 2005. Trial had previously been adjourned when plaintiff's counsel erroneously advised the plaintiff had been in a second accident. Even though a trial date had been selected in 2009, the plaintiff did not arrange medical examinations until shortly before the trial was scheduled to occur in 2010. The plaintiff then sought a six month adjournment, which was denied.  She appealed the decision.

The Court of Appeal allowed the appeal. It held that a key factor was that liability was admitted. Fading memories were less a concern where the primary evidence would be expert opinions. In addition, the defendant would not suffer non-compensable prejudice if a six month adjournment was granted. The failure of plaintiff's counsel to advance the litigation was not to be held against the plaintiff.

Many of the changes to the Rules in 2010 were aimed at ensuring that cases move efficiently through the system and it would seem that late requests for adjournments should generally be avoided. The Graham decision seems to suggest, however, that courts will be generous in granting adjournments to ensure cases are determined on their merits, especially where liability is not an issue.

Subrogated Claim not Barred by Lease Provision

Designer Collection Sales Inc. v. 161 Spadina Inc., [2012] O.J. No. 2026 (S.C.J.)

In the commercial context, it is common for lease agreements to have clauses that transfer risk from the landlord to the tenant. The Superior Court of Justice recently considered whether such a clause absolves a landlord from a property damage claim by the tenant.

In this case the plaintiff company sued its landlord after water damage occurred due to a broken pipe. The plaintiff recovered more than $600,000 under its insurance policy for the damage. The insurer then brought a subrogated claim to recover the sums it paid out.

Under the contract between the parties, the plaintiff was required to take out a liability policy. The contract contained the following provision:

The Landlord is not liable for any damage to the Tenant's property or for any injury to any person in or coming to or from the Premises, however caused, and the Tenant agrees to indemnify the Landlord against the financial consequences of any such liability. In this regard, the Tenant shall purchase and maintain public liability insurance in the amount of no less than one million dollars ($1,000,000) and shall provide proof of this insurance to the Landlord on request.

The landlord brought a motion for summary judgment arguing that the effect of the clause was to transfer the risk of damage or loss to the plaintiff, even if it was due to the landlord’s fault or neglect. The plaintiff argued that the clause was intended to relate to risks covered by public liability rather than property insurance.

Justice Duncan summarized the case law as follows:

[19] The decisions that have been rendered establish this principle: contractual language may create an overwhelming obstacle to recovery against a negligent party whether the claim is asserted directly or on a subrogated basis. An action will fail to the extent a lease expressly or by necessary implication obligates the innocent party to obtain insurance which covers the risk and claims in issue.

The Court dismissed the motion on the basis that there was insufficient evidence regarding whether the parties meant to forfeit the right to sue. Justice Duncan held that merely agreeing to obtain liability insurance did not necessarily mean the plaintiff was agreeing not to sue especially given that property insurance is not the same as liability insurance. There had to be an underlying contractual obligation in the lease that insulated the landlord from liability.

The Standard of Care in Pedestrian Cases

Annapolis County District School Board v. Marshall, 2012 SCC 27

A four year old boy was injured in an automobile accident when he ran out into the road in front of a school bus. A jury found there was no negligence on the part of the defendant. The trial judge instructed the jury there could be no contributory negligence given the boy’s age but instructed them on s. 125(3) of the Nova Scotia Motor Vehicles Act, which provides a duty on pedestrians to yield the right of way to vehicles when crossing outside of a crosswalk. The judge’s charge included instructions that the standard of care owed to children on a highway is the same as to adults, but there may be circumstances that should put motorists on guard that a child could dart out onto the road. The Court of Appeal reversed the jury’s decision on the basis that the trial judge erred in referring to the right of way provisions. The defendant then appealed to the Supreme Court, which allowed the appeal.

The Supreme Court held the statutory provision was relevant to the consideration of whether the driver was negligent. Justice Deschamps held:

[7] I agree with the appellant that the Court of Appeal failed to appreciate the dual function of statutory right-of-way provisions. Not only do such provisions inform the assessment of whether a pedestrian was contributorily negligent by failing to yield a right of way, they can also help determine whether a driver breached the applicable standard of care in the circumstances. In this case, even though Johnathan’s contributory negligence had been ruled out as a matter of law, the statutory right-of-way provisions continued to inform the standard of care that Mr. Feener owed to all pedestrians. The jury needed to be told that, absent special circumstances, where the driver has the right of way, he or she can reasonably proceed on the assumption that others will follow the rules of the road and yield the right of way to drivers.

The jury’s dismissal of the action was upheld.

Many provinces have similar provisions to the Nova Scotia Act. The Supreme Court’s decision helps to inform the standard of care for motorists in “darting” cases involving children.

Definition of "Accident" Under the SABS

Downer v. Personal Insurance Co., 2012 ONCA 302 (C.A.)

The issue on this appeal was whether the plaintiff was in an “accident” that entitled him to accident benefits.

On February 26, 2000, the plaintiff was physically assaulted by several unidentified assailants while parked at a gas station sorting his money. He escaped by putting his car in gear and driving away. He believed he may have run over one of his assailants in the course of fleeing. He claimed he sustained psychological and physical injuries as a result of the incident.

The insurer initially paid benefits, but then took the position that the injuries were not caused by an accident within the meaning of s. 2(1) of the SABS, which defines an "accident" as “an incident in which the use or operation of an automobile directly causes an impairment”. The motion judge granted a declaration that the plaintiff was involved in an “accident” within the meaning of the SABS. The insurer appealed.

The Court of Appeal allowed the appeal with respect to the physical injuries, holding that the physical assault did not constitute an “accident”. The Court held that a trial was required to determine whether the psychological injuries were caused by the ordinary use of a motor vehicle.

The proper test to be applied is the modified causation test set out in Greenhalgh v. ING Halifax Insurance Co. (2004), 72 O.R. (3d) 338 (C.A.):

1. Was the use or operation of the vehicle a cause of the injuries?
2. If the use or operation of a vehicle was a cause of the injuries, was there an intervening act or intervening acts that resulted in the injuries that cannot be said to be part of the “ordinary course of things?” In that sense, can it be said that the use or operation of the vehicle was a “direct cause” of the injuries?

At paragraph 39, Justice LaForme held that under the modified causation test, it is not enough to show that an automobile was the location of an injury inflicted by tortfeasors, or that the automobile was somehow involved in the incident giving rise to the injury. Rather, the use or operation of the automobile must have directly caused the injury. Justice LaForme held that an assault on the plaintiff as he sat in his vehicle sorting money cannot be considered a normal incident of the risk created by the use of operation of the car. With respect to the psychological injuries, he held that running someone over could be considered a normal incident of the risk created by the use or operation of a vehicle.

One has to wonder whether this case has limited applicability due to its facts, or whether it will give rise to more claims of psychological injuries in order to fit an incident into the definition of “accident” within the SABS.

Deduction of Collateral Benefits at Trial

Brown v. Campbell, (2012) 109 O.R. (3rd) 306 (S.C.J.)

After a jury trial where the plaintiff was awarded damages for past income loss, the defendant asked the judge to reduce the amount by long term disability benefits received the plaintiff. The plaintiff was self-employed and had purchased a long term disability policy for himself. The request for the deduction had not been made at trial, and had first arisen when the final judgment was being taken out. Both parties had addressed the issue in their evidence. The jury award for past income loss did not match either the amount suggested by the plaintiff or the defendant. Justice Nolan refused to make a deduction post trial. She held the defendant should have made be request at trial so she could have charged the jury on it. In addition, since the jury's verdict was less than the amounts submitted by both parties, it appeared the jury had in fact made the deduction in their assessment of the damages.

One issue left open by the Court is whether the disability benefits would have been deductible in any event, given that the plaintiff was self-employed and Justice Nolan noted the law is not settled with respect to whether LTD benefits purchased privately are captured by s. 267.8 of the Insurance Act.

Duty to Defend - Exclusion Clause did not Apply

Durham District School Board v Grodesky 2012 ONCA 270 (C.A.)


This appeal highlights the importance of carefully crafted exclusions in insurance policies.

In the underlying action, the school board alleged the appellants' son intentionally set fire to the school. The appellants were added as defendants based on allegations that they failed to impose a curfew and to supervise their son. Their insurance company refused to defend them based on the following exclusion in their home owner’s policy:

We do not insure your claims arising from (6) Bodily injury or property damage caused by any intentional or criminal act or failure to act by: (a) any person insured by this policy; or (b) any other person at the direction of any person insured by this policy.


The motion judge held there was no duty to defend. He relied on G.P. v. D.J., 26 C.C.L.I. (3d) 76 (Ont. S.C.), a case interpreting the same exclusion clause, which held any tortious failure to act (not just an intentional or criminal one) triggered the exclusionary clause.

The Court of Appeal allowed the appeal. The exclusion clause could be read in two ways: 1) where the words “intentional” or “criminal” modify the phrase “act or failure to act”, or 2) excluding an intentional or criminal act, or any failure to act. Juriansz J.A. held the exclusion could have been read as excluding a mere negligent failure to act; however, such an interpretation would have the effect of excluding almost every negligence action, rendering coverage useless. He cited Non-Marine Underwriters, Lloyd’s of London v. Scalera, [2000] 1 S.C.R. 551, where the Supreme Court considered a similar clause and held that reading the clause to exclude negligent failures to act would lead to absurd consequences.

The Court also considered whether the negligence claim was derivative of the intentional tort claim in order to determine whether it was excluded by the clause. Juriansz J.A. held that the negligence claim was not derivative of the intentional tort claim as the elements alleged against the parents were distinct. As a result, the exclusion did not apply and the parents were entitled to a defence.

Enforcing Settlement

Amyotte v. Wawanesa, [2012] ONSC 2072 (S.C.J.)


The issue on this motion was whether a settlement entered into by counsel could be upheld.

The defendant served a r. 49 offer to settle the plaintiff's accident benefits claim shortly before trial. The offer was sent by email in the following terms: "Payment to the Plaintiff of the sum of $15,000.00 inclusive of interest in full and final settlement of all accident benefits claims of the Plaintiff and all claims as against the Defendant in the within action" and partial indemnity costs. Plaintiff counsel responded with “We accept the offer and the action is settled…”. Defence counsel asked plaintiff counsel what was wanted for costs. Plaintiff counsel e-mailed back “15 k all in”. The next day, defence counsel e-mailed “How would you like the settlement broken down for Release purposes? $10,000 past and future rehab and $5,000 for costs and disbursements?” The reply was “Yes thx”.

Upon receiving a release and settlement disclosure notice from the defendant, the plaintiff took the position that the settlement did not include all accident benefits and that she was entitled to rescind the offer under the rescission provisions of the SABS. The Court disagreed, holding that if the plaintiff meant to restrict the settlement she should have done so rather than unconditionally accepting it. Once she chose to pursue litigation she could not avoid the consequences of r. 49 by falling back on the rights afforded by the SABS.

The settlement was upheld.

- Tara Pollitt

Independent Medical Examinations - Second IME Ordered

Walsh v. Newland, 2012 ONSC 2123 (S.C.J.)

Motions to compel a plaintiff to attend at an independent medical examination are often dependent on their facts, as can be seen in Justice Eberhard's decision in Walsh v. Newland.

In this case the plaintiff had previously been assessed by the defendant's neurologist. The defendant sought to have a second neurologist assess the plaintiff. Trial was scheduled for April 2012. In February 2012, the plaintiff served a report which linked the plaintiff's Bell's Palsy to the motor vehicle accident. At the time of the first IME, no link had been made so the first neurologist did not comment on it.

At paragraph 4, Justice Eberhard stated the basic test for compelling additional IMEs:

a) Whether the moving party established a need for the further examination;
b) Any new symptoms or complaints or a change in the landscape of the case as a result of a new medical report from the plaintiff. This is often used as a basis to justify a further defence medical examination; and
c) The overriding test of fairness and both sides having the ability to put the best evidence before the court at trial.

Justice Eberhard concluded that although the trial would be adjourned in order to allow for the examination to take place, the defendant was entitled to the IME. There was no real prejudice and it was important the defence be permitted to assess the new allegation.

- Tara Pollitt

Limitation Periods in Loss Transfer Claims

Markel Insurance Co. of Canada v. ING Insurance Co. of Canada, 2012 ONCA 218 (C.A.);

The issue in this appeal was the date from which the limitation period begins to run in loss transfer claims.

The appeal arose out of two arbitration decisions that reached different conclusions on the start date for the limitation period. In Federation v. Kingsway, the arbitrator held the limitation period begins to run on the day after the request for loss transfer is made; in Markel v. ING, the arbitrator held the limitation period begins to run when the second insurer refuses to indemnify. On appeal to the Superior Court of Justice, the court favoured the Federation approach. The matter was appealed to the Court of Appeal.

The Court of Appeal dismissed the appeal. Justice Sharpe held that the limitation period begins to run on the day after the request for indemnification is made by the insurer who paid accident benefits.

Lawyers and insurance professionals should be aware of this decision when diarizing their files so that claims can be brought within the correct limitation period.

- Tara Pollitt

Actions by Insured against Insurer – Limitation Period not always Certain

Shaver v. Co-operators General Insurance Co. [2011] AJ No. 1411

Mr. Shaver was injured in a three vehicle accident on July 14, 2000 with one other identified driver. The Motor Vehicle Accident Claims Fund accepted liability for the accident and consented to a partial judgement in Mr. Shaver’s favour for $100,000.00. This judgement was entered on January 19, 2010.

Mr. Shaver found this compensation to be inadequate and issued a claim against his insurer, the Co-operators, on July 29, 2010 based on the SEF 44 endorsement in his policy:

Every action...against the insurer...under this endorsement shall be commenced [within 2 years] from the date upon which the eligible claimant...knew or ought to have known that the quantum of the claims with respect to an insured person exceed the minimum limits for motor vehicle liability insurance in the jurisdiction in which the accident occurred.

The Co-operators brought a summary judgment motion in Alberta arguing that Mr. Shaver was out of time as more than 10 years had passed since the claim arose. Mr. Shaver argued that his claim against the Co-operators arose only on January 19, 2010.

The court held that the limitation period in this endorsement allowed an injured person to sue later than the ultimate 10 year statutory limitation period in cases where the insured learned of inadequate insurance or of total claims exceeding the insurance limits after the expiry of that limitation period. The Co-operators appealed this decision to the Alberta Court of Appeal.

The Alberta Court of Appeal upheld the lower court’s decision, citing the principle provided by the Alberta Court of Appeal in Wawanesa Mutual Insurance Co., [1994] AJ No. 126:

An insured’s claim against his own insurer arises not at the time of the accident, but when he knows, or should have known, that the tortfeasor’s coverage will be inadequate to cover the insured’s damages.

In the case at hand, both parties agreed that it was not until January 19, 2010 that Mr. Shaver knew that the torfeasor’s coverage would not be sufficient.

- Kristen Dearlove, Student-at-Law

In rear end collisions, liability is often considered to be automatic. But the Court of Appeal has reminded us that there is no such fixed rule.

In Martin-Vandenhende v. Myslik, 2012 ONCA 53 (C.A.), the plaintiff alleged the defendant rear-ended her vehicle as she slowed to make a left turn. She testified she activated her left turn signal prior to slowing down and commencing the turn. The defendant’s version of events was that the plaintiff activated her right turn signal and pulled to the right, which he interpreted to mean she was pulling over to allow him to pass. As he pulled around her vehicle, she turned left into him.

The trial judge found in favour of the plaintiff. He held that “taken at its highest”, the signal was “perhaps confusing” and the plaintiff was “perhaps giving [the defendant] inconsistent signals”. The Court held that this was not taking the defendant’s evidence at its highest, as his evidence was unequivocal: he was not confused or being given inconsistent signals, as he testified the plaintiff indicated she was going right, not left.

Justice Blair cited Beaumont v. Ruddy , [1932] O.R. 441 (C.A.) for the proposition that generally speaking, where one car runs into another from behind, the fault lies with the driver of the rear car, and he must satisfy the Court that the collision did not occur as a result of his negligence. Since the trial judge did not make factual findings to resolve the conflicting testimony between the parties, it could not be said one way or another whether Beaumont had been satisfied. Justice Blair held:

31 In addition, the trial judge's approach was wrong in law, in my view. The common law principle enunciated in Beaumont v. Ruddy does not prescribe that a following driver is always at fault if he or she runs into another from behind. It simply states that generally speaking this will be the case, and shifts the onus to the following driver to show otherwise. There is no principle of law of which I am aware that automatically fixes a following driver who runs into another vehicle from the rear with liability "no matter what [the lead driver] chooses to do, within [his or] her own lane." Subject to the law's general bias in favour of fault on the part of the following driver and the "following too closely" jurisprudence, liability - as in any negligence case - depends upon whether the following driver was acting reasonably in the circumstances and, conversely, whether the lead driver was as well.

The Court allowed the appeal and ordered a new trial.

- Tara Pollitt

Kusnierz - Combining Impairments in Determining Catastrophic Impairment

Kusnierz v. The Economical Insurance Company (2012) 108 O.R. (3d) 272 (C.A.)

Kusnierz is an important Court of Appeal decision regarding catastrophic impairment under the SABS.

Mr. Kusnierz suffered a below the knee amputation and clinical depression in a 2001 accident. The parties disagreed as to whether he met the criteria to be declared catastrophically impaired, and the trial judge held that he did not. The key issue was whether physical and psychological impairments can be combined in evaluating whether a person is catastrophically impaired under the SABS.

The Court of Appeal held that it is permissible to combine physical and psychological impairments for the following reasons:

1. The legislator did not expressly forbid the combination;
2. The AMA Guides aim to assess the total effects of a person’s impairments on daily activities;
3. The Guides describe a number of situations where physical impairments should take into account mental and behavioural impairments;
4. The combination of impairments is consistent with the purpose of the SABS. The Court noted that the respondent conceded that there are few cases where physical and psychological impairments are catastrophic when combined but not when assessed separately. The class of persons who are CAT will therefore remain small; and
5. Combination promotes fairness and the objectives of the statutory scheme.

Although Kusnierz has the potential to open up the floodgates for catastrophic claims, it may be that the class of cases that fit into this situation remains small, as predicted by the Court of Appeal. It may take time before the full effects of Kusnierz are truly known.

- Tara Pollitt

Material Changes in Risk – Duty of Insurers to Communicate to Insureds

Thomas v. Aviva Insurance Co. [2011] N.B.J. No. 371

A fire occurred in an elderly insured’s home which was caused by a wood stove. When the insured had applied for insurance seven years earlier, he had indicated that he had electric heat as his primary heating source. One year later, a wood stove had been installed as a secondary heat source.

The insurer voided the policy and denied coverage on the basis that the insured failed to notify them of the installation of the wood stove. The insurer took the position that the installation of the wood stove constituted a material change in risk.

The insured was sent renewal policy notices that contained a caution to ensure that all information in the policy was accurate. The insured had dropped out of school at the age of 16 and never read the policy and was unaware of the obligation to inform the insurer of the installation of the wood stove.

The insured sued for breach of contract and was successful at trial. The trial judge held that the “insured’s knowledge was the determinative factor and the lack of guilty knowledge on the part of the insured supported the conclusion that the wood stove, as a supplementary or auxiliary heating unit, was not a material change of risk”.

The insurer appealed to the New Brunswick Court of Appeal. The appeal was dismissed. Chief Justice Drapeau found that the insurer had treated the matter of auxiliary heating sources as inconsequential “and effectively advised [the insured] in its various renewal notices that only the information provided in the original application was material to the risk”. In the original application for insurance, the insured was only asked about his home’s primary heating source. This suggests that the insurer did not consider the installation of the wood stove to be a material circumstance requiring disclosure. Lastly, Chief Justice Drapeau held that even if the installation of the wood stove constituted a change material to the risk, the insurer’s duty of good faith to the insured required that the insured be advised of this in plain language. This last point seemed to be especially important in this case as the insured had “very limited formal education”.

- Kristen Dearlove, Student-at-Law

Invasion of Privacy Recognized as a Tort

The Ontario Court of Appeal has recognized a tort of invasion of privacy.

In Jones v. Tsige, 2012 ONCA 32 (C.A.), the plaintiff discovered the defendant had been surreptitiously looking at her banking records. The parties worked at the same bank and Tsige was in a relationship with Jones’ ex-husband. Despite these connections, the parties did not know each other. Tsige claimed she had a financial dispute with Jones’ ex-husband and was accessing the account to confirm whether he was paying child support to Jones. Tsige was contrite and apologized for her actions.

A motions court judge dismissed the action on a motion for summary judgment on the basis that Ontario does not recognize a tort of invasion of privacy. The Court of Appeal allowed the appeal.

Justice Sharpe cited Professor Prosser in setting out four categories of invasion of privacy:
1. Intrusion upon the plaintiff’s seclusion or solitude, or into his private affairs.
2. Public disclosure of embarrassing private facts about the plaintiff.
3. Publicity which places the plaintiff in a false light in the public eye.
4. Appropriation, for the defendant’s advantage, of the plaintiff’s name or likeness.

This case falls within the “intrusion on seclusion” category. In order to make out a cause of action, a plaintiff must show:
1. an unauthorized intrusion;
2. that the intrusion was highly offensive to the reasonable person;
3. the matter intruded upon was private; and,
4. the intrusion caused anguish and suffering.

Justice Sharpe held that damages for intrustion on seclusion should be modest, and up to the range of $20,000. The quantum will depend on factors such as the nature of the intrusion, the effect on the plaintiff, the relationship between the parties, distress or embarassment suffered by the plaintiff, and the conduct of the parties, including any apology by the defendant. Justice Sharpe granted summary judgment to Jones in the amount of $10,000.

Will we see the floodgates open with these types of claims now? Privacy seems to be a “hot button” issue right now, and it seems that we may see more cases involving breaches of privacy in the future.

- Tara Pollitt

Police Personnel File Not Subject to Production

Andrushko v. Ontario, [2011] O.J. No. 3693 (Div. Ct.)

This decision will be of interest to those defending claims against police officers.

The plaintiff was suing for wrongful arrest and assault. He sought production of the officer’s personnel file on the basis that it might reveal a pattern of using unnecessary and excessive force. The Crown resisted on the basis that Part V of the Police Services Act contains a statutory prohibition against production. The motions court judge ordered production.

Part V of the Police Services Act contains the following provisions:

69.(8) No person shall be required to testify in a civil proceeding with regard to information obtained in the course of his or her duties, except at a hearing held under this Part. 1997, c. 8, s. 35.

(9) No document prepared as the result of a complaint is admissible in a civil pro-ceeding, except at a hearing held under this Part. 1997, c. 8, s. 35.
(10) No statement made during an attempt at informal resolution of a complaint is admissible in a civil proceeding, including a proceeding under subsection 64(15) or 65(17) or a hearing held under this Part, except with the consent of the person who made the statement.

...
1. Every person engaged in the administration of this Part shall preserve secrecy with respect to all information obtained in the course of his or her duties under this Part and shall not communicate such information to any other person except,

(a) as may be required in connection with the administration of this Act and the regulations;
(b) to his or her counsel;
(c) as may be required for law enforcement purposes; or
(d) with the consent of the person, if any, to whom the information re-lates.


The Divisional Court overturned the lower court decision. It held that any documents prepared as a result of a Part V complaint are not subject to production or admissible in a civil proceeding. If any documents in the personnel file were not prepared directly as a result of a Part V complaint, they would not be protected by its confidentiality provisions.

- Tara Pollitt

Costs - Reasonableness of Disbursements

Hamfler v. 1682787 Ontario Inc., [2011] O.J. No. 6190 (S.C.J.)

This is a useful case with respect to recovery of disbursements for expert reports following a trial. Justice Edwards applied a deep discount on several of the plaintiff's doctors’ and accountant’s fees for reports and trial preparation.

The jury awarded the plaintiff $188,000 in damages. He sought $87,600 in fees and $93,500 in disbursements. The main issue was the reasonableness of the disbursements.

Justice Edwards quoted Justice Borins in Moon v. Sher (2004), 246 D.L.R. (4th) 440 (C.A.) in holding that “a disbursement will be recoverable provided that it is both reasonable, not excessive and has been charged to the client." The following factors should be taken into account in determining reasonableness:

1. Did the evidence of the expert make a contribution to the case, and was it relevant to the issues?
2. Was the evidence of marginal value or was it crucial to the ultimate outcome at trial?
3. Was the cost of the expert or experts disproportionate to the economic value of the issue at risk?
4. Was the evidence of the expert duplicated by other experts called by the same party? Was the report of the expert overkill or did it provide the court with the necessary tools to properly conduct its assessment of a material issue?
(paragraph 17).

- Tara Pollitt

Costs in Cases Where There are Multiple Defendants

Lawson v. Vierson, 2012 ONCA 25 (C.A.)

How will a court apportion costs where both the plaintiff and a co-defendant fail to accept offers to settle/contribute?

Lawson was in two motor vehicle accidents seven months apart. The actions were consolidated and proceeded to trial. The first defendant, Hart, offered to settle for $300,000. The second defendants, the Viersons, offered to settle or contribute by making a $100,000 payment to Lawson. Lawson’s offer was $1,250,000.

The jury found the injuries suffered were separate and distinct, and made separate damages assessments for each accident. The net amount awarded against the Viersons was $7,926.71 and $344,260.37 against Hart. The trial judge awarded Lawson costs of $482,000 apportioned 35% against the Viersons and 65% against Hart. The Viersons appealed.

At issue was the interplay of the costs consequences of r. 49.10 and r. 49.11. Rule 49.11 provides that where there are multiple defendants “alleged to be jointly or jointly and severally liable to the plaintiff in respect of a claim and rights of contribution or indemnity may exist between the defendants, the costs consequences prescribed by rule 49.10 do not apply to an offer to settle”.

The Court of Appeal held:

[49] In the circumstances of this case, it is significant that the combined Viersens and Hart offers exceeded the Lawsons’ recovery. The reason that the combined total exceeded the Lawsons’ recovery was because of the Viersens offer. When the Viersens offer is viewed in context rather than in isolation, it is therefore apparent that the offer was a genuine and generous offer to settle and, particularly when taken together with the Hart offer, complied with the spirit of rule 49.10. In these circumstances, the Viersens offer is the type of offer that, as contemplated by rule 49.13, ought to be given considerable weight in arriving at a costs award.

[50] Further, the trial judge appears to have discounted the fact the Viersens offer far exceeded the amount of the award made against them. Although the allegation of joint and several liability meant that pursuant to rule 49.11 the presumption of costs consequences in rule 49.10 did not apply, it would not, as the trial judge found, have been “impossible” or “negligent” for Ms. Lawson to have accepted the Viersens offer. The claim of joint and several liability that made the Viersens offer non-compliant with rule 49.11 was not made out at trial. In light of the jury’s award, the Viersens offer can, therefore, only be seen as having been very reasonable. Contrary to the view expressed by the trial judge, it would have been no more impossible or negligent for Ms. Lawson to have accepted the Viersens offer, than for any plaintiff to accept an offer to settle for an amount substantially less than the amount claimed. Given the outcome at trial, an accurate assessment of Ms. Lawson’s claim was that there was no joint and several liability. As a result, accepting the Viersens offer would not have prejudiced the claim against Mr. Hart and, therefore, would have been the correct decision.

Justice Rouleau awarded costs against the Viersons up to the date their offer was served equal to 35% of Lawson’s costs incurred to the date of the offer. The Viersons were entitled to their partial indemnity costs from the date of their offer payable by Hart since their offer was also an offer to contribute.

Although this case may have somewhat unusual circumstances, I suggest that those defending cases where there are multiple defendants should take it into consideration when making offers.

- Tara Pollitt

Minimum Maintenance Standards Ruled Inapplicable

Giuliani v. Halton (Municipality), 2011 ONCA 812 (C.A.)

The Giuliani decision was released by the Court of Appeal on December 21, 2011. The plaintiff lost control of her vehicle when the road she was travelling on was covered with snow and ice. Approximately two centimetres of snow had fallen on the road which impacted and turned to ice.

The weather forecasts beginning the afternoon prior to the date of the accident indicated that snow would fall beginning the next morning. The trial judge found that the Town had ample time to schedule a person or crew to monitor the weather and road conditions and to place a maintenance crew on standby.

Salting operations did not begin until fifteen minutes after the accident occurred. It was not clear when the icy road conditions were first discovered. It was held that the Town “failed to inspect the roads when it ought to have known that an inspection was necessary to trigger the remedial steps necessary to maintain [the road in question]”.

The trial judge held that the defendants had complied with the Minimum Maintenance Standards (MMS) with respect to treating the icy roadway within the required time after becoming aware of its icy condition. However, the trial judge held that this was not a defence.

The Court of Appeal upheld the decision and held that sections 4 and 5 of the MMS do not establish minimum standards to address the accumulation of 2 centimetres of snow on a Class 2 roadway (they apply when there is a 5 cm accumulation), nor do they establish a minimum standard for the treatment of a highway before ice is formed and becomes an icy roadway. The Town was liable for failure to monitor the weather and the failure to deploy resources to prevent the road from becoming icy. Therefore, the analysis did not centre on the MMS as the MMS does not establish a minimum standard for the treatment of a highway before ice is formed and becomes icy.

The analysis turned to section 44(1) of the Municipal Act, 2001 requiring municipalities to take reasonable steps. The Court of Appeal agreed with the trial judge that reasonable steps were not taken with respect to monitoring the weather and lining crews up in advance.

This case raises the bar significantly with respect to what the courts require of municipalities to meet the reasonableness standard. It also takes away much of the certainty that was provided to municipalities by way of the MMS. An increased proactive approach to maintenance of roadways will be required.

̶ Kristen Dearlove, Student-at-Law

Court of Appeal - Striking a Jury Notice

There is an interesting recent Court of Appeal decision in which the court discusses the appropriateness of a jury notice where there is a significant pre-accident medical condition. In Placzek v Green, (January 26, 2012, Ontario Court of Appeal) the plaintiff was injured in a rear end collision. The plaintiff had suffered from "severe fibromyalgia" for many years before the accident. The defendant argued that, to the extent that the plaintiff's physical problems interfered with her life after the accident, both problems were attributable in whole or in the main to the serious pre-existing condition and not to the relatively minor accident involving the vehicle driven by the defendant.

The trial judge struck the jury at the outset of the trial and held that, with respect to damages, despite the plaintiff's prior physical problems, the injuries suffered as a result of the car accident had caused significant problems for the plaintiff. The trial judge awarded damages in the amount of $919,237.

The defendant appealed on the basis that the trial judge should not have discharged the jury and that she did not quantify the damages on the basis of a rational analysis of the evidence.

With respect to discharging the jury, the Court of Appeal pointed out that the decision to discharge a jury is a discretionary one and that the court will defer to the exercise of that discretion unless it is shown that it was exercised on a wrong principle or that the exercise in the circumstances can be properly characterized as arbitrary, capricious or unreasonable.

In this case, the trial judge dismissed the jury on the basis of the anticipated complexity of the evidence to come relevant to the damage assessment. The complexity arose out of the plaintiff's pre-existing medical condition and the need to determine the impact of that condition on the plaintiff's post accident medical condition. In addition, there was competing expert evidence relating to the plaintiff's lost income and loss of future income claims. The plaintiff was a self-employed realtor and there were several factual variables relevant to her lost income claims. Finally there was competing and somewhat complex medical, engineering and biomedical evidence.

The Court of Appeal acknowledged that the defendant had made a powerful argument in support of his position that this was not really a complicated case at all, but found that they were unable to describe the trial judge's characterization of the evidentiary complexity as arbitrary, capricious or unreasonable. The Court of Appeal acknowledged that other judges might have reached a different assessment of the complexity of the evidence and declined to strike the jury, but that is not a basis upon which the trial judge's exercise of her discretion can be interfered with.

Of interest, the Court of Appeal went on to discuss other factors which the trial judge thought supported the exercise of her discretion in favor of striking the jury. For example, the Court of Appeal was of the view that the manner in which some of the evidence might be put before the jury and the advantages or disadvantages that one side or the other might have as a consequence, is irrelevant to the decision as to whether the jury should be struck before the trial started. Also, concerns about the position taken by the defendant with respect to liability could not provide any basis for striking a jury.

However, because the trial judge made it clear in her reasons that she struck the jury because of the anticipated evidentiary complexity on matters relating to damages, errors in respect of other matters considered did not taint the exercise of the trial judge's discretion.

With respect to the second ground of appeal, the defendant argued that the trial judge did not attempt to quantify the damages based on a critical assessment of the evidence, but instead simply picked a point somewhere in the middle between the various scenarios advanced by the parties. The Court of Appeal gave short shrift to that argument which apparently did not have much basis in evidence.

This case should be of some concern to defendants who believe that their cases are best determined by a jury. In most injury cases, certainly most cases which proceed to trial, there are issues relating to pre-existing medical conditions and there are issues relating to the calculation of future lost income. We certainly hope that Courts will not develop the habit of striking juries on those types of cases.

- Colin Osterberg