Damages for Intentional Tort Survive Bankruptcy

The Court of Appeal recently released a decision that looks at the interplay of tort law and bankruptcy.

In Dickerson v. 1610396 Ont. Inc. (c.o.b. Casey's Pub & Grill), 2013 ONCA 4955 (C.A.), a jury awarded the plaintiff damages against the defendant in excess of $1 million arising out of an assault.  The defendant punched the plaintiff once in the head, causing the plaintiff to lose consciousness, fall to the ground and sustain brain damage.  As a result of the judgment, the defendant declared bankruptcy.  The plaintiff brought a motion for an order that the award of damages survived bankruptcy, based on s. 178(1)(a.1) of the Bankruptcy and Insolvency Act, which provides:

178(1) An order of discharge does not release the bankrupt from 

 (a.1) any award of damages by a court in civil proceedings in respect of 

(i) bodily harm intentionally inflicted, or sexual assault or 

(ii) wrongful death resulting therefrom.

The motions judge held that although the jury found the defendant "deliberately punched the plaintiff in the head", the verdict did not provide a framework to assess whether it was an "intentional infliction of bodily harm". She dismissed the motion and the plaintiff appealed.

The Court of Appeal allowed the appeal, holding that s. 178(1)(a.1) will apply where there is direct proof of intentional infliction of bodily harm or where it can be reasonably inferred.  As long as there is intent, the section will apply; there is no requirement to show the circumstances were sufficiently offensive to social mores to justify withholding the protection of bankruptcy.

Municipality Not Liable in Recreational Trail Case

Recently the Ontario Courts found a municipality not liable, under section 4(1) of the Occupier’s Liability Act, for the plaintiff’s fall off the edge of a ravine. In coming to this finding the court took an expansive view of when this section applied and indicated what is required to meet the lower standard of care under this section.

In Pierce v. Hamilton(City), 2013 ONSC 6485 (S.C.J.), the plaintiff entered the park on a marked recreational trail near the edge of the Niagara Escarpment, he then left the trail and proceeded on an unmarked dirt path and fell off the edge of the ravine sustaining physical injuries. The City of Hamilton acknowledged that they were the occupier of the premises, but asserted they had met the standard of care.  The trail itself qualified as a recreational trail and was clearly marked as such, but the issue was whether the dirt path also qualified.  The Court held that the standard of care was the same as if the plaintiff was on a marked trail, stating:

“If that owner is given the benefit of the lower standard of care in return for allowing the public to enjoy the recreational trail on the land, it makes no sense to saddle the owner with the higher standard of care the moment a hiker or cyclist or skier moves off of the recreational trail. Further, it makes no sense for two different standards of care to alternately apply as a trail user hops on and off of the recreational trail.”

Given this, the plaintiff was deemed to have willingly assumed all risks associated with the premises and the lesser standard set out in section 4(1) of the Occupier’s Liability Act applied.

The Court accepted the evidence of the representative of the City that they had not received any previous complaints of people falling into the ravine and thus had no information that would suggest there was an unusual danger on any dirt path in the park area.   Justice Henderson rejected the plaintiff’s argument that the City failed to meet the standard of care for failing to conduct inspections of the park, for failing to have warning signs and for failing to construct a protective fence.  Justice Henderson held that it would be impossible for the City to conduct regular inspections of the 3,000 acres of natural areas. Regarding the signage and fencing, the Court held:

“As to signage, clearly a specific warning sign was not warranted if the City was not aware of any specific danger... I find that the failure of the City to erect a more general warning sign, such as "Caution. Uneven Ground in the Woods" does not constitute a breach of its duty. Such a warning sign would in fact be a sign stating the obvious; that is, that the terrain in the woods is uneven and unpredictable... I also reject the plaintiffs' submissions that the City ought to have built a barricade or a fence near the drop-off into the ravine. The danger of a sharp drop in elevation in a wooded area that was near the edge of an escarpment should be obvious to anyone who entered the woods.”

This case builds on the Ontario Court of Appeal decision in the Schneider v. St. Clair Region Conservation Authority case regarding when section 4(1) applies and highlights the lower standard of care under this section.

Leave Required for Refusals Motion After Set Down – Part II

We previously posted on the decision of Jetport v. Jones Brown, 2013 ONSC 2470 (S.C.J.), which held that leave is required for a refusals motion that is commenced after the action has been set down.  The Jetport decision has been followed in Hamilton v. Ontario(Minister of Transport), 2013 ONSC 4536 (S.C.J.).

In Hamilton, a representative of the defendant was examined for discovery on March 30, 2012.  In response to a status notice, the plaintiffs delivered a trial record and set the matter down for trial on January 22, 2013.  The plaintiff then brought a motion seeking answers to refusals on March 7, 2013.  The motion was dismissed by Master Haberman on the basis that the plaintiff had not sought leave for as required by rule 48.04 and the plaintiff appealed.

On appeal Firestone J. held that although there was disagreement in the case law on the issue of whether leave is required, Master Haberman was not in error when she chose the line of authority that appeared most persuasive.  The line of authority followed by Master Haberman and approved of on appeal was that of Jetport v. Jones Brown.     

Because leave was not sought, the Master was correct in not considering the issue of refusals. 

It may have been that the Master’s decision was meant to be a procedural slap on the wrist to the plaintiff.  The decision notes that the requirement for leave was neither sought nor addressed by the plaintiff in their original motion material.  The Master’s decision did not preclude the plaintiff from bringing a motion for leave to have their refusals motion heard.  Counsel should be cautious about setting a matter down if they wish to pursue refusals.  They should also seek leave of the court, and address this in motion materials when in doubt.  

Limitation Periods in Insurance Contracts

Can a one year limitation period in an insurance contract override the two year limitation period?

 The Ontario Court of Appeal says it can. In Boyce v.The Co-Operators General Insurance Company, 2013 ONCA 298, the Boyces owned and operated a boutique insured by the Co-Operators. A foul odour was discovered on October 30, 2010 and the Co-Operators took an off coverage position on the basis the smell was caused by a skunk.

The Boyces claimed that the business had been vandalized, a peril covered by the policy, and they filed a proof of loss claim in December 2010 and commenced an action in February 2012, more than one year, but less than two years after the incident. The Co-Operators moved for summary judgment, claiming that the action was time barred by a one year limitation period set out in the insurance contract.

The motion judge held that the one year limitation period in the contract did not override the statutory two year limitation period set out in s. 4 of the Limitations Act, 2002. The Co-Operators appealed.

A term in a contract purporting to vary an otherwise applicable limitation period under the Limitations Act has to comply with s. 22 of the Limitations Act. That section allows parties to vary or exclude, by agreement, the otherwise applicable statutory limitation period. The Co-Operators relied on s. 22(5) which applies only to business agreements.

The Court of Appeal stated at paragraph 20:

A court faced with a contractual term that purports to shorten a statutory limitation period must consider whether that provision in ‘clear language’ describes a limitation period, identifies the scope of the application of that limitation period, and excludes the operation of other limitation periods. A term in a contract which meets those requirements will be sufficient for s. 22 purposes, assuming, of course, it meets any of the other requirements specifically identified in s. 22.

In order for s. 22(5) to apply the contract must be a “business agreement” defined by the Limitations Act as “an agreement made by parties none of whom is a consumer”. The Court of Appeal found that the Boyces contracted with the Co-Operatos for insurance covering various risks related to the operations of their business and the contract was not for personal, family or household purposes. As such the contract was a “business agreement”. The appeal was allowed.