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Justice Morgan permitted the admissions to be withdrawn.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.