Enter your email address for updates:

April 25, 2012

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

April 18, 2012

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

April 11, 2012

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

April 4, 2012

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