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May 30, 2012

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.

May 23, 2012

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.

May 16, 2012

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

May 9, 2012

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

May 2, 2012

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