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.
A weekly update of cases pertaining to the practice of insurance defence.
June 27, 2012
June 20, 2012
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.
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.
June 13, 2012
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.
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.
June 6, 2012
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.
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.
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