Perell J. discusses permissible scope of cross-examination on affidavits

Posted on May 5, 2011 by Stephen Cavanagh

In Ontario v. Rothmans Inc., 2011 ONSC 2504 (CanLII), Mr. Justice Paul Perell has analyzed in depth the proper bounds of cross-examinations on affidavits. He allowed an appeal from a ruling by Master Donald Short, in which the Master had ordered the defendants to attempt to retrieve records going back 40 to 50 years, about which the plaintiff had questioned those defendants’ deponents on their cross-examinations.

This lawsuit, which Perell J. described as a “humongous action”, is a claim by the Ontario government against fourteen tobacco companies, both domestic and international. The damages sought total $50 billion, representing health care costs for the treatment of tobacco-related disease. The government had prepared the ground for its lawsuit by passing the Tobacco Damages and Health Care Costs Recovery Act, 2009. The statute was made retroactive.

The lawsuit is still at a procedurally early stage. Several of the foreign defendants brought a motion, challenging the jurisdiction of the Ontario courts to entertain this action against them. In support of that motion, affidavits were sworn on behalf of the moving parties, basically to the effect that those companies had not carried on business in Ontario, were not incorporated here and owned no property in this province. Counsel for the Crown cross-examined. The deponents were asked to look for and produce a number of documents that the Crown alleged were in their possession. Most of the documents evidently dated back to the 1950’s, 1960’s and 1970’s. The defendants refused, arguing that the cost of looking for these documents was disproportionate to their value in the suit and that they were under no obligation to undertake to do so on a jurisdiction motion.

A refusals motion was brought before Master Short and he ordered the defendants to make efforts to retrieve the documents sought by the Crown. It was his view that in light of the wording of the Tobacco Damages and Health Care Costs Recovery Act, 2009, the court hearing the jurisdiction motion should have as much information as possible. The defendants ought to be required, he thought, to look for all documents that might be relevant. He rejected the defence argument, that millions of pages of documents would have to be searched, saying that “[w]hile it perhaps is possible that corporations the size of these defendants may only have un-indexed, paper filing cabinets, it is more likely in my view that modern document management systems may well be available to assist and facilitate the searches directed”.

Justice Perell came to the opposite conclusion and allowed the defendants’ appeal. He felt that in making the ruling he had, the Master had moved from an adversarial to an inquisitorial approach to the lawsuit.

Justice Perell undertook a lengthy and detailed analysis of the nature of cross-examination on an affidavit, in which he compared and contrasted it with examinations for discovery and cross-examination at trial. Although this litigation is quite exceptional, His Honour’s observations regarding the permissible scope of cross-examination on affidavits filed on interlocutory motions will have broad relevance in other cases.

Justice Perell noted that unlike examinations for discovery, cross-examination at trial does not involve the giving of undertakings. He also observed that while undertakings voluntarily given on a cross-examination on an affidavit will be enforced by the court, it was not entirely clear to what extent a deponent can be compelled to give an undertaking on a cross-examination: “If the deponent confines his or her evidence to personal knowledge, there is no apparent basis to compel him or her to obtain information about what others know about the case.”

From his review of the authorities, Justice Perell distilled the following principles governing examinations for discovery and cross-examinations on affidavits:

Examinations for discovery

  • The scope of the discovery is defined by the pleadings; discovery questions must be relevant to the issues as defined by the pleadings.
  • The examining party may not go beyond the pleadings in an effort to find a claim or defence that has not been pleaded. Overbroad or speculative discovery is known colloquially as a “fishing expedition” and it is not permitted.
  • Under the former case law, where the rules provided for questions “relating to any matter in issue,” the scope of discovery was defined with wide latitude and a question would be proper if there is a semblance of relevancy.The recently amended rule changes “relating to any matter in issue” to “relevant to any matter in issue,” which suggests a modest narrowing of the scope of examinations for discovery.

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Providing surveillance to defence medical expert constitutes waiver of privilege over it

Posted on May 4, 2011 by Stephen Cavanagh

In Aherne v. Chang, 2011 ONSC 2067 (CanLII), Master Donald E. Short considered the question of whether sending privileged surveillance videos to a defence medical expert in a personal injury action results in the loss of privilege on the surveillance. He concluded that it does. (The Master described this decision as “the third instalment of a trilogy of decisions by me dealing with the duties and responsibilities of expert witnesses appointed by counsel for defendants, with respect to the appropriate manner of conducting what historically have been referred to as ‘defence medicals’ under the ‘new’ Rules.” The other two decisions are Girao v. Cunningham, [2010] O.J. No. 3642; ONSC 4607 and Bakalenikov v. Semkiw, [2010] O.J. No. 3877; 2010 ONSC 4928.

This was a medical malpractice case. At the time of the defendant’s examination for discovery, no surveillance had been undertaken. However, his counsel refused to answer questions about disclosure of surveillance that might be undertaken in the future. A specific question arose as to the effect of providing such surveillance to an expert retained to conduct a defence medical examination.

The Master prefaced his reasons with a discussion of the role of masters in interpreting the Rules and he said that “when opportunities for giving an indication of direction to the bar present themselves, they ought to be taken”.

Interestingly, he began his analysis by saying that “[a]s of January 1, 2010, entirely new obligations are placed upon all experts. [Emphasis added] In particular, it is made explicit that their duty is to the court, rather than to any party or their insurer (or any otherwise financially responsible party).” He referred to the decision of Moore J. in Beasley v. Barrand. In our post yesterday, about the decision of Madam Justice MacLeod-Beliveau in McNeill v. Filthaut, we noted that that judge had come to the opposite conclusion. She held that the new obligations, which are set out in Rule 53.03, do not apply to all experts. (The McNeill case turned largely on the interpretation to be given to the phrase, “expert engaged by or on behalf of a party in preparation for contemplated or pending litigation”.)

The Master went on to discuss, at some length, the obligations of expert witnesses. Although he felt that experts are required to be objective and unbiased, he thought that these qualities were mandatory even apart from the wording of Rule 53.03. (It does appear though, that throughout his reasons, Master Short had in mind only experts who had been retained by a party to the litigation.)

The Master moved from there to a discussion of the amendments to the Rules and said that “[t]he Court now expects and relies upon frank and unbiased opinions from its experts” and that “[t]his is a major sea change which requires practical improvements to past opaque processes”.

After considering some caselaw, Master Short came to the conclusion that an expert retained to conduct a defence medical examination “owes his or her primary duty to the court”. He held that if the defendant were to conduct surveillance on the plaintiff and if that surveillance were to be provided to an expert retained to conduct a defence medical examination under Rule 37, then privilege on the surveillance will have been waived and the surveillance should be sent to counsel for the plaintiff at the same time that it is given to the defence medical examiner.

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Rules 4.01 and 53.03 Held Not To Apply To Experts Retained by Non-parties

Posted on May 3, 2011 by Stephen Cavanagh

Madam Justice Helen MacLeod-Beliveau has released a decision that might have very significant implications for civil litigation. Although the action involved a personal injury claim, its implications extend to expert witnesses in any civil lawsuit.

In McNeill v. Filthaut, 2011 ONSC 2165 (CanLII). Her Honour was considering the scope of Rule 53.03 of the Rules of Civil Procedure, which imposes certain obligations on “every expert engaged by or on behalf of a party to provide evidence in relation to a proceeding under these rules”. Those obligations include providing a written report that summarizes the expert’s opinion and signing a written acknowledgement of the duty to provide objective unbiased evidence. Also under consideration was Rule 4.1, which sets out the duty of an expert.

Specifically, in this case, she had to decide whether the defendant in a personal injury action could call as witnesses at trial several experts who had all been retained by the accident benefits insurer, not by the insurer that was seeking to call them at trial. Readers will recall that this issue arose last year in what Justice MacLeod-Beliveau referred to as “the seminal case of Beasley v. Barrand, [2010] O.J. 1466 (S.C.)”. In that case, to the dismay of the defence bar and their clients, Justice Moore held that experts retained by accident benefits insurers had to first comply with Rule 53.03 before they could give evidence in a tort action and that those requirements had not been met in that case. In practical terms, it would be at least difficult, although perhaps not impossible, to comply with Rule 53.03 in the case of non-retained experts.

Justice MacLeod-Beliveau reviewed the Beasley case, as well as Anand v. State Farm, (23 April 2010, unreported) Court File No. 04-CV-266354CM1, Slaught v. Phillips (18 May 2010, unreported) Court File No. 109/07, Jeffrey v. Baker, [2010] O.J. No. 4415 (S.C.) and Kusnierz v. Economical Mutual Insurance Co., [2010] O.J. No. 4462 (S.C.), most of which had followed Beasley.

After considering the authorities, Her Honour declared that “the requirements outlined in Rule 53.03, as they relate to expert witnesses, do not apply to individuals retained by non-parties to the litigation”. She also found that Rule 4.01 and Form 53 (acknowledgement of expert’s duties) apply only to experts retained by parties. So, in this case,  the defendant was free to call at trial the experts retained by the accident benefits insurer. (The trial is to be held next month, so this will happen quickly.)

Discussion

The implications of this ruling might extend further than is apparent at first blush. Rule 53.03 requires that before a party can call an expert witness, a report, summarizing that expert’s opinion, must be served on the opposing parties not less than 90 days before the pre-trial conference. Rule 53.03(2.1) sets out what the report must contain:

(2.1) A report provided for the purposes of subrule (1) or (2) shall contain the following information:

1. The expert’s name, address and area of expertise.

2. The expert’s qualifications and employment and educational experiences in his or her area of expertise.

3. The instructions provided to the expert in relation to the proceeding.

4. The nature of the opinion being sought and each issue in the proceeding to which the opinion relates.

5. The expert’s opinion respecting each issue and, where there is a range of opinions given, a summary of the range and the reasons for the expert’s own opinion within that range.

6. The expert’s reasons for his or her opinion, including,

i. a description of the factual assumptions on which the opinion is based,

ii. a description of any research conducted by the expert that led him or her to form the opinion, and iii. a list of every document, if any, relied on by the expert in forming the opinion.

7. An acknowledgement of expert’s duty (Form 53) signed by the expert.

And Rule 4.01 provides:

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Upon Payment of Policy Limits, Insurer No Longer Owes Duty to Defend

Posted on February 25, 2011 by Stephen Cavanagh

In a very significant decision, released yesterday, Justice Harrison Arrell has ruled that an automobile insurer that had paid its policy limits plus costs no longer owed any duty to defend its insured. In Dominion of Canada v. Kingsway Insurance, His Honour said, “I conclude that there is nothing in the Ontario Automobile Policy obligating an insured to continue to defend an insured when it has paid its limits and costs in full. The case law, in my view, is clear that if there is no possibility of a duty to indemnify then there is no duty to defend.”

This decision will be of considerable interest to insurers. The ramifications are interesting. Is an insurer free to pay its policy limits to a plaintiff at an early stage without trying to obtain a full and final release of its insured? What if the limits have been paid but no agreement has been reached on costs; is there a mechanism whereby the issue of costs payable by the insurer can be determined, even if the lawsuit is going to continue against the insured?

It is unlikely that this case will be appealed because the insured himself made no submissions on the motion. The argument came instead from Dominion of Canada, the underinsured insurer in this case. But Justice Arrell also ruled that DoC had no status to contest the motion, brought by counsel appointed by Kingsway, seeking to be removed as lawyers of record. So, it seems that this case represents the law, for now at least…

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On Motions for Summary Judgment, File Only Those Portions of the Opposing Party’s Discovery Transcript on Which You Mean to Rely

Posted on October 24, 2010 by Stephen Cavanagh

In Lawless v. Anderson, 2010 ONSC 2723 (CanLII), Mr. Justice David M. Brown dealt with a small but potentially significant practice point: the appropriate use to be made of an opposing party’s examination for discovery transcript on a motion for summary judgment. In this medical malpractice case, the defendant physician moved for summary judgment on the basis that the plaintiff had failed to sue within the applicable limitation period. Discoverability was a key issue.

The moving party filed the transcript of the plaintiff’s examination for discovery. When counsel for the plaintiff sought to rely on the same transcript, the defendant’s lawyer objected, arguing that on a motion for summary judgment, a party cannot rely upon the transcript of his or her own examination for discovery. Justice Brown referred to Rule 39.04(2), which provides that “[o]n the hearing of a motion, a party may not use in evidence the party’s own examination for discovery or the examination for discovery of any person examined on behalf or in place of, or in addition to, the party unless the other parties consent.”

However, His Honour noted that in this case, the moving party had filed, in its entirety, the transcript of the plaintiff’s examination and that [a]As a general rule when a party places into evidence answers given by an opposite party on her examination for discovery, such evidence is available to either party in the same manner as any other evidence”.

Counsel for the defendant submitted that although he had filed the whole transcript, he had only intended to refer to certain portions of it. However, Justice Brown said that “I must confess such an intention is not apparent from the face of Dr. Anderson’s motion record” and that as a result, the plaintiff could refer to the evidence that had been filed by the defendant. His Honour summarized the applicable law this way:

Absent a clear statement by the moving party that he only intended to rely on certain portions of Ms. Lawless’ discovery transcript, it reasonably was open to the responding party to operate on the assumption that the entire transcript was in evidence as part of the moving party’s record and to take that into consideration in determining the contents of the responding party’s record. With the entire transcript in evidence, the responding party could use that evidence as she could any other evidence in the record. All of which is to say, if a party on a motion for summary judgment wishes to rely on limited portions of the examination for discovery of an opposite party, it should only include in its record the passages it intends to “read-in”. Otherwise, in the absence of a statement of limited use, the entirety of a filed transcript becomes part of the record available for use in the same manner as any other evidence filed on the motion.

The first and fourth sentences of this passage suggest that a moving party can limit the use to be made of a discovery transcript that he or she is filing, by making a “clear statement” of the intention to rely on only certain portions of that transcript. However, the third sentence appears to take a more restrictive view and suggests that a moving party should file only those parts of the transcript on which he or she plans to rely.

Presumably, it would always be open to the responding party to argue that the parts of the transcript that the moving party has chosen to file are incomplete without other portions of the transcript and to force the moving party to file those portions as well.

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Pro Bono Lawyer Brings U.S. Foreclosure Wave to Grinding Halt

Posted on October 15, 2010 by Stephen Cavanagh

We saw a fascinating story in today’s New York Times, about Thomas A. Cox, a retired lawyer whose zealous representation of a pro bono client exposed serious and widespread improprieties in the avalanche of mortgage foreclosures now going on in the United States. Our hats are off to Mr. Cox, whose efforts remind us what lawyers are supposed to do.

According to the Times’ story, “From a Maine House, a National Foreclosure Freeze”, the 66-year old Mr. Cox worked for a bank in the 1980’s and it was his job to call in small business loans. He described the work as “extraordinarily unpleasant”. After leaving the practice of law and working for a time building houses, he decided to volunteer his legal  services at a nonprofit organization called “Pine Tree Legal Services”. There, he looked at a file for an unemployed Maine woman who was facing foreclosure proceedings brought by her mortgagee, GMAC. When Mr. Cox scrutinized the documents, he concluded that something “did not look right”. Although the foreclosure proceedings were fairly advanced, Mr. Cox pressed for and ultimately received leave to depose the “limited signing officer”  whose affidavit had been filed by GMAC in support of the foreclosure order that it was seeking.

(According to the Times article, the limited signing officer acknowledged that he was processing some 400 foreclosures a day for GMAC and that contrary to his sworn testimony, the documents had not been reviewed by him or by anyone else. It turns out that this practice of having foreclosure documents signed by “robo-signers”
is disturbingly widespread.)

Mr. Cox conducted the deposition of GMAC’s robo-signer in June of this year. Judging by his own succinct but devastating summary of the results, it went rather well:

When Stephan [the robo-signer] says in an affidavit that he has personal knowledge of the facts stated in his affidavits, he doesn’t. When he says that he has custody and control of the loan documents, he doesn’t. When he says that he is attaching ‘a true and accurate’ copy of a note or a mortgage, he has no idea if that is so, because he does not look at the exhibits. When he makes any other statement of fact, he has no idea if it is true. When the notary says that Stephan appeared before him or her, he didn’t.

Ouch.

GMAC has now halted foreclosure proceedings in 23 states while it tries to correct its procedures. Other mortgage companies and banks that followed similar practices have also had to put on the brakes.

Well done Mr. Cox.

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Div. Ct. Takes Liberal Approach to Affidavits on Information and Belief

Posted on June 3, 2010 by Stephen Cavanagh

In Carevest Capital Inc. v. North Tech Electronics Ltd. et al., 2010 ONSC 1290 the Divisional Court allowed an appeal from a ruling by Mr. Justice Ted Matlow, in which he had refused to admit two affidavits on a motion for summary judgment, on the basis that they failed to comply with the requirements of subrule 39.01(4). That subrule says: “An affidavit for use on a motion may contain statements of the deponent’s information and belief, if the source of the information and the fact of the belief are specified in the affidavit.”

(Carevest is one of at least two 2009 decisions by Matlow J., in which he refused to admit into evidence affidavits that, in his view, did not satisfy the requirements of subrule 39.01(4). The other was Kailayapillai v. Azzam 2009 CanLII 11812 (ON S.C.). Justice Matlow’s original decision in Carevest can be found here.)

In Carevest, the claim was on a guarantee. The plaintiff moved for summary judgment and relied primarily on two affidavits. Both contained assertions by the deponents that were to the following effect:

The facts set forth herein are within my personal knowledge or determined from the face of the instruments and documents attached hereto as exhibits, from my review of the relevant documents comprising the files of CareVest and from information and advice provided to me from others. Where I have relied upon such information and advice, I verily believe same to be true.

Justice Matlow said:

In my view, it is not sufficient for a deponent to state that he or she was informed by one or more documents. The source of the information must be a named person. There is no assurance that facts inferred from a document created by others in circumstances unknown to the deponent that is not otherwise admissible can be relied upon.

Nor is it sufficient for a deponent to state that his or her evidence is a combination of personal knowledge and hearsay evidence without distinguishing which parts of his evidence are personal knowledge and which parts are hearsay. Each piece of hearsay evidence must be clearly identified as such and the source of the information and the fact of belief must be stated.

The Divisional Court held that Justice Matlow was in error. The panel (Justices Greer, Lederman and Sachs) said that the respondent had not argued before Matlow J., that the affidavits were inadmissible and, as a result, the appellant had not had an opportunity of making any submissions on this issue.

Secondly, the Divisional Court said that Justice Matlow had “ignored the principles as set out in subrule 1.04(1)”.

But most importantly, the Court held that the findings of the motions judge were “contrary to case law which sets out the appropriate legal principles in determining the sufficiency or otherwise of the affidavit material before the Motions Judge on a summary judgment motion”.

The Court referred to Abco Box & Carton Co. v. Dafoe & Dafoe Inc., [1987] O.J. 2395 (Dist. Ct.] at paras. 112 to 19 and D’Angelo v. Maco Security Monitoring Inc., [2006] O.J. 3542 (S.C.J.) at para. 27 and said that the principles that emerge from those cases are:

(1)               The rules of civil procedure are to be liberally construed so as to secure the most just, expeditious and least expensive determination of a proceeding.

(2)               Where an affidavit relied upon in support of a motion for summary judgment does not state the source of the information and the fact of the deponent’s belief, the court may nevertheless rely upon the substance of the exhibits to the affidavit in evaluating the merits of the applicant’s case.

(3)               Statements in affidavits based on information and belief that fail to state the source of the information are not automatically struck out. Statements that deal with non-contentious matters can be saved through the application of rule 1.04 of the Rules of Civil Procedure.

The Court allowed the appeal and granted summary judgment.

We have some difficulty with the Divisional Court’s analysis of the rules governing the use of affidavits on motions and applications. Our concern is mostly with the second of these three principles.

The first of the above “principles” does not actually emerge from the caselaw, but is drawn directly from the language of Rule 1.04. There is no doubt that this provision applies, regardless of what the jurisprudence might say.

The third principle does raise some questions. The Rules deal separately with affidavits on information and belief that are used on motions and applications. The applicable subrules are 39.01(4) and (5). The language in the two is different. In the case of applications, the subrule says: “An affidavit for use on an application may contain statements of the deponent’s information and belief with respect to facts that are not contentious, if the source of the information and the fact of the belief are specified in the affidavit.” The words in bold do not appear in the subrule applicable to motions.

(It should also be noted that subrule 20.02 deals specifically with affidavits on information and belief used on motions for summary judgment.)

However, returning to principle #3, the Divisional Court’s statement of the law would appear to result in subrules 39.01(4) and (5) being equivalent. (In fairness, this case is not the first time that principle #3 has been held to be the law. In Cameron v. Taylor (1992), 10 O.R. (3d) 277 (Ont. Ct. (Gen. Div.), Granger J. made the same statement and cited as authority Abco Box & Carton Co. v. Dafoe & Dafoe Inc. (1987),  20 C.P.C. (2d) 128 (Ont. Dist. Ct.).

The Divisional Court principle #3  is also fairly uncontroversial. While there is an abundance of caselaw that has held that a court cannot receive an affidavit that fails to state the source of the deponent’s information and the fact of belief, this has been confined to matters which are contentious.

Principle #2 though, strikes us as problematic. Perhaps it is simply the way in which the principle has been phrased: “Where an affidavit relied upon in support of a motion for summary judgment does not state the source of the information and the fact of the deponent’s belief, the court may nevertheless rely upon the substance of the exhibits to the affidavit in evaluating the merits of the applicant’s case.”

Actually, this language was taken almost verbatim from D’Angelo v. Maco Security Monitoring Inc., one of the cases referred to by the Divisional Court. (The other two principles stated by the court also came from that case.) For principle #2, the main difference in wording was that D’Angelo referred to “evaluating the merits of the affiant’s case” and the Divisional Court said, “evaluating the merits of the applicant’s case.”

Stated this broadly, principle #2 would suggest that on a motion for summary judgment, even on a contentious point, the absence of any identified source of the evidence and the failure of the deponent to say that he or she believes the information that has been conveyed to him or her, is not fatal. The court could look to the exhibits to the affidavit in order to judge the case.

How can this be? Surely an exhibit that is attached to a hearsay affidavit in which neither the source of the information nor the fact of belief has been specified, has no probative value at all for any substantive proposition, unless the exhibit is admissible on its own in some other way (e.g., a medical report, a business record). But in the latter case, what would be the point of having filed an affidavit in the first place?

The D’Angelo case relied on Abco Box (another decision cited by the Divisional Court) as support for the statement of law that became the Divisional Court’s principle #2. In Abco Box, an affidavit filed by the president of the plaintiff company, on a motion for summary judgment, failed to specify the source of his information and the fact of his belief about the quantity of goods manufactured, shipped and paid for. The motions judge, however, said that “exhibits to this affidavit have completely persuaded me as to the quantity of goods manufactured and shipped and paid for”. (The nature of the exhibit was not specified.) This would suggest that the judge was able to fill in the missing pieces of the affidavit (at least in relation to the source of information) by looking at an exhibit. Summary judgment was granted.

If principle #2 was intended to mean only that a court can fill in the source of information if it is contained in an exhibit (and perhaps infer the unstated fact of belief), that would perhaps be acceptable. But as worded, the principle suggests that sworn testimony is not really necessary if the exhibits themselves are persuasive. In our view, that would invite rulings based on wholly inadmissible evidence.

It is to be hoped that principle #2 can be re-stated in future jurisprudence, so that its meaning is clearer.

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As A Matter of Interest…

Posted on May 6, 2010 by Stephen Cavanagh

In Agribrands Purina v. Kasamekas, 2010 ONSC 2597 (CanLII), Mr. Justice Michael G. Quigley wrote fairly extensive reasons on the issue of how prejudgment interest should be calculated on a cause of action that arose in 1992 and in which judgment was given on January 6, 2010. This case and the present economic conditions make a consideration of the law of prejudgment interest timely.

Agribrands Purina v. Kasamekas

Here, Justice Quigley awarded damages of $954,213 to the plaintiffs by counterclaim. The damages were stated to be compensation for one full year of lost revenue caused by conspiracy and breach of contract by the defendants by counterclaim. In his reasons, His Honour dealt with prejudgment interest and awarded interest at 6.65% for 18 years, resulting in interest totalling $1,142,193. However, he came to this conclusion without counsel having made submissions on the issue of interest so when the defendant by counterclaim sought permission to argue the issue, Justice Quigley agreed. In the result however, he did not change his decision.

The counterclaim that gave rise to the award of damages was commenced during the fourth quarter of 1992. According to s. 128 of the Courts of Justice Act, the rate of interest for actions commenced during that quarter was 5.1 percent. (Under the provisions of s. 128, interest at that rate would then be applied to the damages from the date the cause of action arose to the date of judgment. Justice Quigley concluded that the cause of action here arose in early 1992.)

As noted above, His Honour had used a rate of 6.65%, rather than the “presumptive” rate of 5.1% prescribed by s. 128. The rate of 6.65% was the average of the Courts of Justice Actrates for the four quarters of 1992. The defendants by counterclaim urged him to use instead either the average of the rates for the entire period from 1992 to the date of judgment (4,29%) or the “presumptive” rate of 5.1 percent. Justice Quigley’s justification for using the average of rates for 1992 only was as follows:

[S]ection 128(1) of the Courts of Justice Act shows that the appropriate starting point for the calculation is not the date on which the claim was actually filed, but rather the date on which the cause of action arose: see also Sedigh v. Lange, [2000] O.J. No. 3606 (S.C.J.) at para. 11. I focused on when the cause of action arose as the relevant time and found as a fact that the plaintiffs’ cause of action arose at some point in 1992 at or about the time that the business failed owing to the actions of the defendants, rather than focusing on the date upon which the plaintiffs filed their claim. As such, I continue to regard it as appropriate to average the quarterly rates for 1992 in the manner that I did at paragraph 219 of my Reasons for Judgment.

Oddly, His Honour rejected the submission of the defendant by counterclaim, that the rate should be averaged over the period from 1992 to 2009, to 4.29%, saying, “a variance from the prescribed rate should arise only where the court exercises its discretion to deviate from the prescribed regime”. We say, “oddly” because Justice Quigley did not seem to think that using a rate that represented the average for all quarters of 1992 constituted “a variance from the prescribed rate”, even though, according to the reasons, the result was to increase prejudgment interest by 23 percent over what it would have been, had the “presumptive rate” of 5.1% been used.

In other words, Justice Quigley refused to exercise his discretion to vary the rate of interest in the manner advocated by the defendant by counterclaim, but did not seem to think that by using a rate other than the one prescribed by statute, he had exercised his discretion in favour of the plaintiff by counterclaim. At paragraph 11, he said:

Here, the defendants have advanced a range of reasons for their claim that a lower rate should be applicable, but I find that they have done nothing to discharge the onus that rests upon them of persuading me that it is appropriate that I should exercise discretion in this case to deviate from what would otherwise be the applicable interest rate specified by the Courts of Justice Act. The very nature and existence of such a discretion recognizes that the Court may quite properly choose not to exercise it to alter the applicable interest rate: see Norton v. Kerrigan, [2004] O.J. No. 165 (S.C.J.) at paragraph 11.

The defendants in this case had asked Justice Quigley to exercise his discretion pursuant to the power conferred upon him by s. 130 of the Courts of Justice Act. That section allows the court to disallow interest or to vary the prescribed rate or period. Subsection 130(2) sets out seven factors that the court, in exercising its discretion, “shall” take into account. That subsection reads as follows:

For the purpose of subsection (1), the court shall take into account,

(a) changes in market interest rates;

(b) the circumstances of the case;

(c) the fact that an advance payment was made;

(d) the circumstances of medical disclosure by the plaintiff;

(e) the amount claimed and the amount recovered in the proceeding;

(f) the conduct of any party that tended to shorten or to lengthen unnecessarily the duration of the proceeding; and

(g) any other relevant consideration.

Here, the defendants by counterclaim relied on paragraphs (a), (c), (e), (f) and (g).  Justice Quigley rejected all of their arguments and we haven’t summarized them in this commentary because, for the most part, they are specific to this case. One, however, is of more general application and deserves mention.

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Court Finds Insurer Not Bound in Tort Action By Positions It Took in SABS Dispute

Posted on April 29, 2010 by Stephen Cavanagh

In Anand v. Belanger, Justice David Stinson considered whether State Farm Insurance, which had been sued in this case by virtue of its uninsured motorist coverage, was bound by admissions that it had made about the plaintiff’s condition in its capacity as accident benefits insurer. He concluded that it was not.

As AB insurer, State Farm had terminated the plaintiff’s claim for income replacement benefits. The plaintiff disputed the termination and the parties eventually settled for a lump sum payment of $100,000 plus costs. The release signed by the plaintiff contained an acknowledgment by her, that the payment “is deemed to be no admission of liability on the part of the insurer, State Farm Mutual Automobile Company, and further that such liability is expressly denied.”

At the trial of the tort action, the plaintiff argued that because of the position that State Farm had taken in settling the AB claim, it could not, in the tort trial, dispute that the plaintiff’s injuries and disabilities had been caused by the motor vehicle accident. In the alternative, the plaintiff raised arguments of issue estoppel and abuse of process.

Justice Stinson rejected these arguments. He pointed to the provision in the release signed by the plaintiff, quoted above, and said that “having agreed to and benefited from the terms of settlement, she cannot now resile from them.” He also noted that the relationship between the plaintiff and  State Farm as no-fault insurer was quite different from the relationship with that company as tort insurer. A duty of utmost good faith existed in the first situation but not in the second.

His Honour also rejected the issue estoppel argument, pointing to the fact that there had been no adjudication of the issues in the AB claim and referring again to the provision in the release that the plaintiff had signed.

Finally, on the abuse of process argument, Stinson J. observed that “it is mere happenstance that State Farm is a named defendant: it would not have been joined at all had the at-fault driver been properly insured.” As the no-fault insurer, State Farm owed certain contractual obligations to the plaintiff but as tort insurer, it was stepping into the shoes of the uninsured motorist who, of course, owed no such obligations.

Accordingly, the motion was dismissed.

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C.A. Splits 3-2 Against Routinely Allowing Recording of Defence Medical Exams

Posted on April 29, 2010 by Stephen Cavanagh

In Adams v. Cook, a five-member panel of the Court of Appeal declined to change the ground rules laid down in 1992, in Bellamy v. Johnson (1992), 8 O.R. (3d) 591(C.A.), as to when an audio recording of a defence medical examination is permissible. Justices John Laskin and Robert Sharpe agreed with Justice Robert Armstrong in allowing an appeal from a Divisional Court ruling, which had ordered that the examination be recorded. Justices Susan Lang and Eileen Gillese dissented and would have upheld the Divisional Court decision.

The case was a personal injury action arising out of a motor vehicle accident. The plaintiff was diagnosed by her family doctor as having “cervical whiplash”. The defence sought to have the plaintiff examined by a physiatrist. The plaintiff agreed, on condition that the examination be audio recorded, a condition to which the defendant did not agree. As a result, the defendant moved for an order compelling the plaintiff to attend to be examined without conditions.

In opposition to the motion, the plaintiff’s lawyer filed an affidavit in which he made no allegations about the particular physiatrist whom the defendant’s counsel had selected. However, he claimed in his affidavit that health practitioners who perform defence medical examinations are often “hired guns” and that a systemic bias against personal injury plaintiffs exists among them. He said that the “temptation to use corrupt practices and ulterior strategies”, which he said “is rife within the industry” could be “precluded by audio taping and videotaping the assessments”. This would, he said, be “an exercise to preserve the integrity of truth, justice and fairness”.

There was no evidence that the doctor in question objected to the use of an audio recorder at the examination.

The defendant’s motion was dismissed by Justice John Brockenshire, who felt that the affidavit of the plaintiff’s lawyer (who was not cross-examined) showed “the potential for a bona fide concern — that could be construed as compelling”.

The defendant obtained leave to appeal to the Divisional Court, but the appeal was dismissed.

In the Court of Appeal, the Court elected to sit as a five-judge panel. The majority rejected the conclusion of Brockenshire J. and the Divisional Court, that it was unnecessary for the plaintiff to demonstrate a concern about the particular doctor whom the defendant had chosen to conduct the examination. The Court said: “It is not enough simply to allege general bias on the part of doctors who do defence medicals in order to obtain such orders [i.e., orders permitting audio taping of the examination]”. That, in a nutshell, was the basis for the majority’s decision to allow the appeal. The majority felt that its earlier decision in Bellamy had made clear the need for evidence of a basis for concern in the particular case. (And the majority observed that “there is not a scintilla of evidence that [the physiatrist chosen by the defence] is a ‘hired gun’.”)

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