C.A. Finds that Award for Loss of Competitive Advantage Does Not Attract Prejudgment Interest

Posted on January 17, 2008 by Stephen Cavanagh

In our February 2, 2007 post about Cerilli v. City of Ottawa, we noted that the trial judge had awarded prejudgment interest on damages for loss of competitive advantage. We noted that in at least one other case, the trial judge had taken a different approach and had not allowed interest on that head of damages.

Today, the Court of Appeal’s decision in this case was released. The Court allowed the defendant’s appeal on this point and ruled that the award for loss of competitive advantage did not bear prejudgment interest. The Court accepted the submission of counsel for the City of Ottawa, that such an award “falls within s. 128(4)(a) of the Courts of Justice Act representing pecuniary loss arising after the date of the order” and that “[t]he award for loss of competitive advantage looked entirely to the future”. Accordingly, the award of prejudgment interest was set aside.

Posted in Damages, Practice and Procedure | Comments Off on C.A. Finds that Award for Loss of Competitive Advantage Does Not Attract Prejudgment Interest

Court Reverses Master’s Finding of “Special Circumstances” (But No Mention of s. 21(1) of Limitations Act, 2002)

Posted on January 10, 2008 by Stephen Cavanagh

Regular readers will remember numerous prior posts in which we have puzzled over the fact that despite the 2004 enactment of the Limitations Act, 2002, so many cases are still being argued on the basis of the common law power to add parties after the expiry of a limitation period, where “special circumstances” are found to exist.

Ioannou v. Evans is another such case. Mr. Justice Paul Perell allowed an appeal from a decision of Master Birnbaum, in which the Master had granted leave to the plaintiffs, in October, 2007, to add Honda Canada as a defendant in an action arising out of a 1999 motor vehicle accident. Perell J. ruled that special circumstances were not present. But no reference was made, in either decision, to s. 21(1) of the Limitations Act, 2002, which says:

If a limitation period in respect of a claim against a person has expired, the claim shall not be pursued by adding the person as a party to any existing proceeding.

It has been held in several 2007 decisions, that s. 21(1) has done away with the former power to add defendants on the basis of “special circumstances”: see for example, our post here.

But there have also been a number of cases, of which Ioannou is one, in which the courts have assumed that the “special circumstances” power still exists. In virtually all of those decisions, no mention has been made of s. 21(1).

(Actually, the one decision of which that is not true, to our knowledge, is one of our own cases. In Clarke v. Reich, released November 2, 2007, Madam Justice Pardu said, “despite the apparently unequivocal language of s. 21(2) [sic, should read “s. 21(1)”] of the Limitations Act, 2002, I am not persuaded that it is ‘plain and obvious’ that there could never be a discretionary extension of the Trustee Act time limit because of special circumstances”. However, Justice Pardu also mentioned, in the course of argument, that it would be desirable that this issue be resolved by an appellate court. We have brought a motion for leave to appeal her decision to the Divisional Court. That motion is to be heard at the end of this month.)

But back to today’s ruling. The facts are not unusual. The action arose out of a 1999 motor vehicle accident. The police report incorrectly indicated that the defendant was the owner of the vehicle that he had been driving. In fact, the vehicle had been leased and was owned by Honda Canada Finance Inc.

In mistaken reliance upon the information in the police report, the plaintiffs’ solicitor did not name Honda as a defendant when commencing action on behalf of the plaintiffs. The plaintiffs later changed solicitors and the new lawyer discovered the error. An action was commenced against the original solicitor, for the failure to name Honda as a defendant within the limitation period and the plaintiffs moved to add Honda as a defendant.

Continue reading →

Posted in Auto, Insurance News, Limitation Periods, Practice and Procedure | Comments Off on Court Reverses Master’s Finding of “Special Circumstances” (But No Mention of s. 21(1) of Limitations Act, 2002)

Judge Upholds Master’s Refusal to Order Plaintiff To Undergo IME Involving “Adjunctive Testing”

Posted on January 10, 2008 by Stephen Cavanagh

Scissons v. Lajoie is scheduled to go to trial on May 12, 2008. The action, arising out of a 1999 MVA, has apparently had a long and somewhat tortured life, having been administratively dismissed twice. The amount claimed exceeds the defence policy limits. As a result of today’s decision, the defence might have to scramble in order to marshal evidence for trial.

The defendants had obtained two independent medical reports (“IMEs”) in 2003, from an orthopaedic surgeon and a psychiatrist. According to the motions judge, Madam Justice Giovanna Toscana Roccamo, the plaintiff’s claim “evolved” over time, such that the plaintiff now claims to suffer from chronic pain that has given rise to a total inability to work or to carry out domestic duties.

The defence now wants a further medical examination to be done by Dr. Matthew Faris, a Kingston physiatrist.

In response to a question from defence counsel, Dr. Faris told her that “in order to provide any opinion he required an in-person assessment of Ms. Scissons, a comprehensive vocational rehabilitation assessment and a functional capacity evaluation including an in-home assessment by an occupational therapist.”

Counsel for the plaintiff took the position that, as a result of the exchange of correspondence between Dr. Faris and the solicitor for the defendants, the plaintiff would only attend an IME with a physician other than Dr. Faris. The plaintiff’s solicitor contended that the exchange “suggested he [Dr. Faris] could no longer be considered objective in terms of the scope of his assessment.”

The defendants moved before Master Beaudoin, for an order under r. 33 of the Rules of Civil Procedure, requiring the plaintiff to attend both the examination by Dr. Faris and what is referred to in the decision as the “adjunctive testing” that Dr. Faris had requested. The Master dismissed the motion and the defendants appealed to Justice Toscano Roccamo.

The appeal was also dismissed.

Her Honour did a rather extensive review of the jurisprudence relating to the standard of review on an appeal from a Master’s order. She summarized the results of her analysis this way:

What I distill from the caselaw is that the applicable standard of review turns on the particular facts of each case, having regard for whether or not the decision is an exercise of discretion, and whether it is dispositive of any of the issues raised in the proceedings.  If it is not, a Master’s decision is reviewed by way of simple appeal, entitled to extreme deference unless it is clearly wrong or, as expressed in Housen is based on a palpable and overriding error.

Continue reading →

Posted in Discovery, Insurance News, Practice and Procedure | Comments Off on Judge Upholds Master’s Refusal to Order Plaintiff To Undergo IME Involving “Adjunctive Testing”

Court Orders Home Insurer to Defend Claim Arising Out of ATV Accident

Posted on January 10, 2008 by Stephen Cavanagh

In Economical Insurance Group v. Fleming, Mr. Justice Keith A. Hoilett heard an application brought by Economical Mutual Insurance, for a declaration that it owed no duty to defend its insureds against a claim brought on behalf of a teenaged girl who had been injured at their cottage while driving an all-terrain vehicle (“ATV”). The policy contained an exclusion for “claims made against you arising from the ownership, use, or operation of any motorized vehicle, trailer or watercraft, except those for which coverage is shown in this form” and EMI argued that the claim was excluded.

The suit against the insureds included allegations of failure to supervise the young victim. Justice Hoilett reviewed the jurisprudence and appears to have concluded that it was possible that those allegations could give rise to liability on the part of the insureds that was separate from the ownership, use or operation of a motorized vehicle and therefore, might not be caught by the exclusion. He ordered EMI to defend.

His Honour gave a second basis for his decision. EMI had originally written to the insureds and said that it would defend them. Months later, it wrote again, this time saying, “under no circumstance will Economical appoint defence counsel, or pay your own counsel for defence costs, arising from this Claim”. Counsel for the insureds argued that EMI had waived any right to rely on the “motorized vehicle” exclusion. Justice Hoilett agreed. He said, “the facts in the present case strongly support the respondents’ contention that the applicant has waived its rights and may not now repudiate that position”.
 

 

Posted in Duty to Defend, Insurance News | Comments Off on Court Orders Home Insurer to Defend Claim Arising Out of ATV Accident

Judge Says, “Plaintiff’s Evidence Is Not Credible” But Awards $400,000 for Loss of Competitive Advantage

Posted on January 10, 2008 by Stephen Cavanagh

In a decision that will alarm insurance companies, Mr. Justice Bernard Manton has awarded damages of $400,000 for loss of competitive advantage to a plaintiff who was injured in an accident at a Home Depot store. This award is more than twice as much as the highest previous assessment we’ve seen for loss of competitive advantage. But what makes the ruling even more striking is that Justice Manton found that the plaintiff was not credible and that, contrary to her testimony, she “could have continued working”.

The case is St. Prix-Alexander v. Home Depot of Canada Inc. It arose out of a 1999 accident at an Ottawa Home Depot store. An employee was retrieving a box from a shelf, turned and struck the plaintiff in the head and neck area (with the package, apparently).

Justice Manton found that Home Depot’s employee had been negligent. Most of his reasons dealt with the issue of damages.

The plaintiff was 42 at the time of trial. She had worked at the Treasury Board, although she was on parental leave at the time of the accident. She went back to work in 2000. She began working four days a week in 2000 and, in 2006, left work and applied for long term disability benefits.

Following the accident, she complained of neck pain and headaches, as well as difficulties in lifting. She attended for physiotherapy and chiropractic treatments, but did not find these helpful.

The plaintiff began to experience tingling and other neurological symptoms in her extremities and insisted that her family doctor arrange for her to have an MRI. She was diagnosed as requiring spinal decompression surgery, whcih was done in 2003. The plaintiff continued to experience symptoms, including severe headaches.

The medical experts differed as to the cause of the plaintiff’s ongoing problems. Doctors called on behalf of the plaintiff said that the 1999 accident had been causative, the defence doctors said no. Justice Manton preferred the evidence of the plaintiff’s doctors, largely because one defence doctor had done only a “paper review” and had not actually examined the plaintiff.

As noted above, the plaintiff stopped working in 2006. At trial, she took the position that she could never work again. She apparently claimed damages for loss of competitive advantage in the amount of $4,000,000.

In the last part of his reasons, which dealt primarily with income loss, Justice Manton was highly critical of the plaintiff’s testimony. Among his observations:

  • when she underwent a two-day vocational assessment, she told the examiner on the first day, that she could no longer speak after a few hours. On the second day, she said that she could not continue after an even shorter period, due to an inability to concentrate. Justice Manton found this strange, saying, “I find it strange that the plaintiff did not display similar difficulties when testifying in this court for more than 13 hours at the trial. In fact, I found that she had a very good memory and was able to remember details of illnesses and jobs going as far back as her college days. She had no difficulty whatsoever testifying in a very effective manner.”
  • when the plaintiff extended her parental leave in 2000, she did not tell her employer about the accident. Instead, she said that the reason for the extension was “care and nurturing”. Manton J. said “She was therefore not honest with her employer thinking that it would be to her advantage in the workplace to give an untruthful reason for extending her leave.”
  • His Honour went on to observe, “I agree with the solicitor for the defence who said in his argument that it seems that at every opportunity, the plaintiff exaggerated her medical condition. I find that on several occasions, she was not entirely truthful in her answers.”
  • “Because of several reasons, I find that the Plaintiff’s evidence is not credible.”
  • The plaintiff’s family doctor had seen her on approximately 40 occasions since the accident and she had mentioned her pain to him on only two of those. She claimed at trial that she had complained at almost every visit. Justice Manton said, “I find it difficult to believe that Dr. Morris was told about the pain and headaches at almost every visit and referred to this only twice in his notes.”
  • He rejected the plaintiff’s claim, that she was entitled to damages for loss of income: “Except for the time she was on maternity leave and the leave of absence that she took when she was operated in 2003, she worked mostly on a full-time basis until the month of June 2006…I have therefore come to the conclusion that the Plaintiff could have continued working as a public servant. No effort was made by her to find a less stressful job or to find out if she could be accommodated by her employer by working regular hours at a job with less responsibilities.”

Continue reading →

Posted in Damages, Insurance News | Comments Off on Judge Says, “Plaintiff’s Evidence Is Not Credible” But Awards $400,000 for Loss of Competitive Advantage

Important Ruling on Litigation Privilege

Posted on December 18, 2007 by Stephen Cavanagh

In what appears to have been a longstanding battle between Coseco Insurance Company and one of its insureds, Mr. Justice John Macdonald has released an important decision on the issue of litigation privilege. He dismissed the insurer’s appeal from a master’s decision, requiring Coseco to produce a portion of its claims file in litigation relating to accident benefits. Along the way, he discussed, in some detail, the law governing litigation privilege, particularly in the context of bad faith litigation against insurers. He has made some interesting proposals about how these kinds of cases should be dealt with in the future.

Mamaca v. Coseco Insurance Company was an appeal to Justice Macdonald from a March 30, 2007 decision of Master Dash. The action arose out of a 1998 motor vehicle accident. The plaintiff had made a claim to his insurer, Coseco for income replacement and other kinds of accident benefits. Most, but not all of the claim was rejected and this led to the litigation. In addition to the claim for benefits, the plaintiff claimed damages against Coseco for bad faith.

In the documentary discovery phase of the proceedings, the insurer claimed litigation privilege as of August 3, 1999 (the date on which, it said, it had first reasonably anticipated that there would be litigation between it and its insured). The Master rejected Coseco’s argument, finding instead that the company had not had a reasonable anticipation of litigation until September 5, 2001. That would have meant that about two years’ of documents for which Coseco had claimed privilege would have to be produced to the plaintiff.

Not only that, but Coseco had provided the Master with copies of the documents of which its insured sought production, so that the Master could consider whether or not a prima facie case of actionable misconduct had been made out against the insurer. The Master reviewed the documents and, without receiving any submissions about them from counsel for Coseco, released a decision that contained a finding that the documents in question constituted prima facie evidence of bad faith:

I have however examined the Schedule B documents over which the defendant claims litigation privilege. I have agreed not to refer to the specific contents of these documents except in a general way since any decision that I make may be appealed. Some of these documents reveal the process by which the defendant arrived at its various decisions. I take particular notice of one document, a report from Patricia Riopelle dated November 29, 2000, and in particular the section entitled “Recommendations”, which gives substantial insight into the defendant’s past and ongoing strategy with respect to determination of the plaintiff’s benefits. In my view at a minimum this is evidence of an approach to the determination of Mr. Mamaca’s claim that could be seen as unfair and not balanced and in my view is prima facie evidence of bad faith. It will be up to the trial judge to determine whether this document, together with the other evidence, establishes bad faith that would warrant the imposition of punitive damages.

The insurer appealed to Justice Macdonald, who concluded that the Master had been in error in certain respects but upheld, on other grounds, the Master’s finding that the documents in question were not privileged. The reasons of Macdonald J. bear careful review, as the case is certain to be referred to by other courts, grappling with the issue of litigation privilege in bad faith claims. (And the decision is not limited, in its application, to insurance cases.)

The Master’s Two Errors

Justice Macdonald found that the Master’s analysis of the law of litigation privilege had been mistaken in two respects. First, the Master had held that once there was a real prospect of litigation, the next question to be answered, in relation to any particular document, was whether the dominant purpose for which it had been prepared was to investigate the accident or to assist the insurer in the contemplated litigation. Justice Macdonald said that the Master appeared to have felt that there was necessarily a difference between investigation and preparing for litigation and in that, he had been wrong.

His Honour also made it clear that a document can be prepared for more than one purpose; so long as the dominant purpose is for reasonably-anticipated litigation, a claim of litigation privilege can be maintained, regardless of what other purposes there might have been.

The second (and probably more important) error in the Master’s reasons, according to Justice Macdonald, was the Master’s apparent finding that, in cases involving bad faith claims against insurers, insureds require the evidence in the insurer’s file in order to prove their case and so, that need “trumps” litigation privilege. Master Dash referred back to a 2000 decision of Justice Brockenshire (that we don’t hear too much about any more): Samoila v. Prudential of America General Insurance Co. (Canada) (2000) 50 O.R. (3d) 65. (Samoila was a case in which an insurer was ordered to produce its entire file, including the legal opinion received from its solicitor.)

Justice Macdonald said of Samoila, that it had been based entirely on the principle of relevance of the documents in question and had not contained any discussion of litigation privilege. Referring to the more recent decision of the Supreme Court of Canada in Blank v. Canada (Minister of Justice), Justice Macdonald said that the law in Ontario is that “litigation privilege overwhelms or ‘trumps’ relevance in most cases, even if that deprives the plaintiff of necessary proof.” He went on to hold that “The Blank decision therefore overrules the conclusion in Samoila [supra] that, in bad faith claims between insured and insurer, the nature of their relationship, the insurer’s responsibilities and the insured’s need for proof of bad faith are a sufficient basis for ordering disclosure of the insurer’s claims file, despite its assertion of litigation privilege.”

Blank creates an exception to this principle, however. If the insured (or the party seeking production of the privileged document) can make a prima facie showing of “actionable misconduct” on the part of the insurer (the party asserting the claim for privilege) in the litigation in which the claim for privilege has been advanced, the court may still order production. In other words, although litigation privilege trumps relevance, actionable misconduct may trump privilege.

One Step or Two Step?

Justice Macdonald concluded that the Master had misapprehended the evidence about the date on which Coseco had reasonably anticipated that there would be litigation. (We haven’t bothered to summarize that part of the decision, as it turns on the particular facts of this case.) Suffice it to say, that Macdonald J. was satisfied that Coseco had reasonably anticipated litigation in 1999, not 2001, as the Master had held.

Of more interest is the legal analysis on which His Honour then embarked. The court having satisfied itself that August 3, 1999 was the date on which litigation privilege was triggered, were all of Coseco’s documents created after that date protected by privilege or did the insurer have to go on to prove, in the case of each document for which privilege was claimed, that the dominant purpose for its creation was the anticipated litigation? As Justice Macdonald put it, is the test a “one step” or “two step” one?

He ruled that in this case, a two-step test was called for. Essentially, his analysis was this. If there were only one issue beween the parties so that after litigation was anticipated, all subsequent documents related only to that one issue, it would be reasonable to conclude that all of those documents are protected by litigation privilege. Going through them individually would not be necessary.

Continue reading →

Posted in Discovery, Insurance News, Practice and Procedure, Privilege | Comments Off on Important Ruling on Litigation Privilege

Cheifetz Comments on “Joint Tortfeasors” vs. “Concurrent Tortfeasors” Who Are Jointly Liable

Posted on December 17, 2007 by Stephen Cavanagh

David Cheifetz, author of the well-known text, Apportionment of Fault in Tort and of numerous articles in legal journals, is a frequent commentator about posts on this site. Today, he sent us a comment about the recent decision of the Court of Appeal in Hockley v. Riley in which he has discussed what he says is “another example of a court seemingly confusing ‘joint liability’ with ‘joint tortfeasor’ status.” What follows is Mr. Cheifetz’ remarks about the decision, since we did not post anything about this particular decision. (This is a first for us: posting a case comment that originated entirely outside our firm. However, we welcome other contributions, with the caveat that we will retain editorial control over what appears on the site.)

Mr. Cheifetz had this to say about the ruling:

It’s another example of judges missing the point about the distinction between joint tortfeasors and concurrent tortfeasors who aren’t joint tortfeasors and missing what this means to joint liability.

Look at para 18. Did Cronk J.A. mean that Mrs. R. was both a “joint tortfeasor” and not a “joint tortfeasor” but only a “concurrent several tortfeasor”? Either she had the common purpose or design to abuse or she didn’t.

[Para. 18 of the reasons is reproduced below.]

[18]  On the findings of the trial judge, therefore, the appellant engaged in tortious conduct against the respondent distinct from that of her husband and acquiesced in or furthered her husband’s wrongful conduct.  These findings are sufficient to fix the appellant with liability on a joint and several basis, rendering her fully liable to the respondent for the damages awarded by the trial judge.  Her actions, as found by the trial judge, were those of a joint or an independent concurrent tortfeasor.

Cronk J.A. must have meant “concurrent several tortfeasors” by the phrase, “independent concurrent”. In order to be a joint tortfeasor, there must be a common design (purpose). Was there actually a finding that it was Mrs. R’s purpose to abuse the plaintiff? If not, then the first two sentences recapitulate s. 1 of the Negligence Act, which makes concurrent several tortfeasors (i.e., tortfeasors who cause the same damage) jointly (and severally) liable but doesn’t turn them into joint tortfeasors. (See Reaney v. National Trust Co., [1964] O.R. 461 (H.C.J.). There are more recent cases, too.)

It’s not clear if the C.A. and the trial judge meant “or” as “and” or as “alternative”. The evidence recounted shows that the trial judge found independent fault on Mrs. R’s part. Joint tortfeasor status, however, would mean she and Mr. R had a common purpose or design – his abusing the plaintiff. Maybe that’s what they and the trial judge meant by referring to her deliberate failure to prevent the abuse.
  
If the Rs were “joint tortfeasors”, then his acts would be deemed to have been hers. In that case, the whole analysis of whether she should be held liable for punitives is somewhat different. The bad enough acts are deemed to be hers (legal fiction) but she still didn’t actually carry out the assaults. Is she still going to be punished for what she did? Does the fact she’s also deemed to have committed the assaults (if a joint tortfeasor) make a difference to the analysis? If so, why? The joint liability of joint tortfeasors isn’t vicarious liability (since the act isn’t imputed in vicarious liability) and the S.C.C. and the C.A. have said there’s no vicarious liability for punitive damages. Nonetheless, there are fictions involved in both types of liability and the less involved the “innocent” joint tortfeasor is in the conduct that merits punitive damages, the more the situation approaches vicarious liability and punishment for the conduct of others.

There is Ont. C.A. authority for punitive damages being awarded against joint tortfeasors but even there, the evidence has to be considered against them separately. See: Townsview Properties Ltd. v. Sun Construction and Equipment Co. (1974), 7 O.R. (2d) 666 at 669 where, in respect of what should be characterised as either a joint tort (joint venture) situation or a principal-agent relationship, Kelly, J.A. wrote:”… the trial judge erred in failing to consider the evidence against each of these defendants separately.”

So, either Hockley affirms (without mentioning) the proposition in Townsview – mere status as joint tortfeasor is not enough for punitive damages on the assumption the Rs were joint tortfeasors; or, on the assumption they were not joint tortfeasors, says nothing new. It merely confirms orthodox law that punitive damages require appropriate misconduct by the defendant from whom they’re sought.

Posted in Practice and Procedure, Tort News | Comments Off on Cheifetz Comments on “Joint Tortfeasors” vs. “Concurrent Tortfeasors” Who Are Jointly Liable

C.A. Says “No” to Risk Premiums in Costs

Posted on December 14, 2007 by Stephen Cavanagh

The Court of Appeal today released its decision in Ward v. The Manufacturers’ Life Insurance Company. We are familiar with this case because local lawyers Eric R. Williams and Jaye E. Hooper, who acted for the plaintiff Ward, won at trial before Ottawa judge Mr. Justice Denis J. Power. The case was a complex commercial matter, undertaken at great risk by Mr. Williams and Ms. Hooper, against a formidable team of lawyers acting for ManuLife. The trial was conducted with great skill by Mr. Williams and Ms. Hooper and produced an extremely favourable result for their client Ward (including a punitive damages award of $250,000). If ever a case warranted a “risk premium” in relation to costs, this was it.

But today, although the Court of Appeal upheld every other part of the decision of Power J., it reversed his award of a $50,000 risk premium. Justice Power had distinguished the decision of the Supreme Court of Canada in Walker v. Ritchie, holding that because of changes in the wording of Rule 57.01, such that courts may now award costs on a “full indemnity” basis, the Walker decision is no longer applicable.

Not so, said the Court of Appeal. Justices Weiler, Rosenberg and Rouleau held that “the concerns underlying the decision in Walker apply equally to the new language of Rule 57.01″.

However, we suspect that Mr. Ward and his solicitors are not too upset about having lost that part of the case, as they were able to sustain a large judgment against ManuLife. (The exact amount cannot be ascertained from the judgment, because it includes payment of various commissions in unspecified amounts. However, in addition to those commissions and the punitive damages award of $250,000 the Court of Appeal upheld awards of $150,000 for breach of fiduciary duty and $267,000 for one type of commission.) We have not summarized the remainder of the case here because, as the Court of Appeal observed, “this is a fact-driven appeal”. In a nutshell though, Ward had sold life insurance for ManuLife for 30 years. He was then fired. The trial revolved around whether ManuLife owed to Ward commissions on policies sold by him. Allegations of breach of fiduciary duty were made against ManuLife and upheld by Power J. As noted above, he also awarded punitive damages of $250,000 against ManuLife.

(It should be noted that the Court went out of its way to praise Justice Power, saying that his reasons concerning one issue “demonstrate a strong command of the trial record and contain a detailed analysis of the evidence”.)

Posted in Commercial Litigation, Costs, Insurance News | Comments Off on C.A. Says “No” to Risk Premiums in Costs

C.A. Overturns Summary Judgment Against Lessor of Car Being Operated by Unlicensed, Drunk Driver

Posted on December 14, 2007 by Stephen Cavanagh

In Henwood v. Coburn, the Court of Appeal today overturned the summary judgment that had been granted by Mr. Justice Barry MacDougall back in 2006 (see our post about the decision appealed from).

In this case, a company had leased a car for the use of one of its salesmen (Henwood). On the day in question, the company had asked that salesman to take along with him another employee (Coburn), for training purposes.

The two ended up at a tavern. Coburn got drunk and demanded that Henwood drive him to Barrie, several hours away. Henwood refused. Coburn punched him in the face, took the keys and began driving away. Henwood managed to get back into the vehicle as Coburn drove off. After about twenty minutes, Coburn lost control of the car and it crashed, injuring Henwood. In this action, Henwood sued for damages for his injuries.

The lessor of the vehicle moved for summary judgment before MacDougall J., arguing that it was not liable for Coburn’s negligence because under s. 192 of the Highway Traffic Act, Coburn had not been operating the car with its consent. Not only did Justice MacDougall dismiss that motion, he granted summary judgment in favour of Henwood, against the lessor of the car. He concluded that since Coburn was driving the car while Henwood was still in possession of it, the lessor was liable for Coburn’s negligence.

The Court of Appeal, made up of Justices Rosenberg, Armstrong and Juriansz, held that summary judgment ought not to have been granted in favour of either side and sent the case on to trial. It reaffirmed one of its decisions from 1933, in which it had been held that “an owner will be liable under s. 192(2) where the person to whom the owner entrusted possession of the vehicle is in possession of the vehicle at the time of the collision, even if that person was not actually driving at the time” (Thompson v. Bourchier, [1933] O.R. 525 (C.A.)). But the panel was of the view that whether or not Henwood was in possession of the car at the time was a question of fact that would have to be resolved at trial.

Posted in Auto, Auto (Tort), Insurance News | Comments Off on C.A. Overturns Summary Judgment Against Lessor of Car Being Operated by Unlicensed, Drunk Driver

Court Refuses to Extend 90-day Period for Notice of Accident Benefits Priority Dispute

Posted on December 14, 2007 by Stephen Cavanagh

Liberty Mutual Insurance Company v. Zurich Insurance Company involved an accident benefits “priority” dispute between two auto insurers. A claim for benefits had been submitted to Liberty on behalf of a 13-year old boy who had been struck by a car while riding his bicycle. Under a regulation to the Insurance Act, Liberty had 90 days within which to dispute its liability to pay benefits by serving notice on any other insurers that it claimed were primarily liable to pay.

The regulation contains a saving provision though, pursuant to which an extension of the time for giving notice can be ordered where it is determined that 90 days was not enough time for the insurer to determine that another insurer is liable to pay the benefits and that the insurer has done a reasonable investigation within the 90-day period, to see if another carrier might be liable.

In this case, Liberty was originally told that the child lived with his mother. Later, it learned that the child had actually been living as a dependent of his natural father, who had owned a vehicle insured by Zurich Insurance. However, Liberty was late in obtaining this information and as a result, served its notice on Zurich 55 days after the expiry of the 90-day period set out in the regulation.

An arbitrator ruled that Liberty was not entitled to an extension. On appeal to Mr. Justice Paul Perell, Liberty’s appeal was dismissed.

The arbitrator had found that Liberty had satisfied the requirement of showing that it had made a reasonable investigation. In fact, he noted that nineteen different types of investigation had been undertaken.

Justice Perell reviewed in detail the various steps taken by Liberty to investigate the claim. During the 90-day period, Liberty received the police report, which showed the claimant living at an address different from the one that had appeared in the application for benefits. Liberty asked the plaintiffs’ solicitor to explain this discrepancy but received no answer.

Justice Perell agreed with the arbitrator, that the information could have been obtained within the 90-day period. He quoted from the arbitrator’s ruling:

There is no doubt that the information was obtainable within the 90 days. The police report clearly indicated that Steven lived at 81 Baylawn [the father’s residence] and had a Liberty representative attended at that location they would, in all likelihood, have seen the father’s car there, obtained its licence plate number, done a Ministry of Transportation and Communication search and eventually obtained the insurance particulars which would have indicated that Zurich insured his car.

 A cautionary tale for accident benefits insurers.

Posted in Auto, Insurance News | Comments Off on Court Refuses to Extend 90-day Period for Notice of Accident Benefits Priority Dispute