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In March, 2015, in recognition of the growing concern about cyber bullying and more particularly, the increasing number of incidents of “revenge porn”, the federal government made it a criminal...
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In March, 2015, in recognition of the growing concern about cyber bullying and more particularly, the increasing number of incidents of “revenge porn”, the federal government made it a criminal offence to share intimate images. The recent case of R. v. JS provided a thorough review of the relevant case law dealing with this offence.
The charges stemmed from the offender’s decision to post a nude photograph of his wife in a men’s chat group at his church. The photo was posted after the couple separated. At issue was the appropriate sentence for the offence following the accused’s guilty plea.
The Court noted although the criminal charge was relatively new, the case law had begun to proliferate. In considering the nature of the offence, the Court cited the decision of R. v. AC (2017 ONCJ 317), which held:
The provision protects privacy. At its core, privacy is about a person’s ability to control access to something, whether it is private information or a private image. As in this case, someone like [the victim] may agree to have private photographs or videos taken that will not be seen by anyone apart from a romantic partner. Where someone shares an intimate image without consent, he violates the depicted person’s privacy because he has gone beyond that limited, consensual use. The more people to whom the image is exposed, the greater the invasion of privacy and the greater the harm caused to the victim.
The Court noted that the majority of the sentences for these types of cases involved a period of incarceration. However, the ultimate goal for the sentencing for this charge was denunciation and deterrence of this type of behaviour.
The Court found that this case was not on the low end of the spectrum as the intimate image was accessible to a chat group; the accused did not voluntarily remove the image; and, the victim was identifiable to viewers. The actions were designed to humiliate and degrade the victim. The most significant mitigating factor was the limited number of people in the group so it was not disseminated more widely. Although the victim had not provided a statement, the Court inferred substantial harm to the victim as a result of the actions. The Court found that an appropriate sentence was a two year suspended sentence.
Privacy rights are strengthening with every privacy case being heard in Canada, and the definition of “appropriate use” continues to be refined on a regular basis. The modern reality is that individuals will use technology for personal, private, and sometimes intimate purposes. The Court’s interpretation and application of privacy principles must continue to clarify the appropriate use of the private information and data. This case, the line is quite clear.
See R v JS, 2019 ABPC 134 (CanLII)
Laura has a diverse practice where she focuses on accident benefits, bodily injury claims, product liability, cyber liability, privacy law and drone liability. Read more ...
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Can the insurer, who is required to waive reliance on the priority rules and pay accident benefits, still pursue indemnification from the priority insurer? A Superior Court judge says “yes”. ...
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Can the insurer, who is required to waive reliance on the priority rules and pay accident benefits, still pursue indemnification from the priority insurer? A Superior Court judge says “yes”.
In Continental Casualty Company v. Chubb, the claimant was catastrophically injured when he was struck by a motor vehicle as a pedestrian. He ended up applying to Chubb for accident benefits. Chubb insured his personal vehicles and he was a named insured on that policy.
At the time of the accident, the claimant was the owner, President, and CEO of a forest products company. Its vehicles were insured with Continental (CNA). The CNA policy included optional coverage that provided up to an additional $1 million for medical and rehabilitation expenses, thus increasing the total available coverage to $2 million.
The claimant eventually submitted an OCF-1 to Chubb, who initiated a priority dispute against CNA. In a decision, dated April 4, 2018, Arbitrator Kenneth Bialkowski concluded that CNA was the priority insurer, and thus responsible to pay the claimant’s benefits. The arbitrator found that the claimant was a deemed named insured under the CNA policy because his company made its vehicles available for his regular use at the time of the accident. Accordingly, the arbitrator found that the claimant had coverage equally under both policies and that he would have chosen to claim from CNA to take advantage of the optional benefits.
On appeal, Stinson J disagreed with the arbitrator.
Before delving into the decision, some background information is necessary on the interplay between optional benefits and priority disputes.
Why are We Interested in Optional Benefits and Priority Disputes?
The SABS contains various “standard” accident benefits that are part of every motor vehicle liability policy in Ontario. However, insureds can purchase “optional benefits” that enhance the standard coverages.
Meanwhile, section 268 (2) of Ontario’s Insurance Act contains a priority pecking order:
- An accident victim first has recourse against any policy that insures her as an insured (named insured, spouse, dependent, listed driver).
- If she is not insured under such policy, she next has recourse against the insurer of the vehicle she was in (occupant) or insurer of the vehicle that struck her (non-occupant).
- If there is no recourse under #2 (i.e., in the case of an uninsured or unidentified vehicle), she next has recourse against the insurer of any other vehicle involved in the accident.
- If there is still no insurer under #3, she finally has recourse against the Motor Vehicle Accident Claims Fund.
Sections 268 (4) – (5.2) of the Act contemplate situations where a claimant might have recourse against more than one insurer for accident benefits under the priority rules. For example, Tim could be a listed driver on one policy and a dependant of a named insured (Fiona) on another. Section 268 (5) would break the tie and would make Fiona’s insurer the priority insurer (named insured, spouse, or dependant trumps listed driver). Likewise, suppose Krista and Mike each have their own vehicles and insurance with different policies. If they were involved in an accident while occupants of Krista’s vehicle, Krista’s insurer would have priority over Mike’s insurer because they were occupants of her vehicle.
But what if Tim and Mike had optional benefits on their respective policies? The priority rules would preclude them (and Krista) from receiving the optional benefits that they had purchased.
To solve this problem, the Superintendent of Insurance approved the OPCF 47 Endorsement called Agreement Not To Rely On Sabs Priority Of Payment Rules. As the endorsement’s title states, the OPCF 47 requires an insurer who has sold a policy with applicable optional benefits to waive the priority rules and pay the claim for standard and optional benefits purchased.
In sum, the OPCF 47 endorsement entitles claimants to receive the optional benefits they have purchased from their insurer, despite any priority rules mandating that they have recourse elsewhere. The insurer that has sold the optional benefits must pay accident benefits (standard and optional) to its insured(s) and cannot rely on the priority rules to defeat coverage.
Does this mean that the actual priority insurer gets a free pass?
Why do We Care about Priority if the OPCF 47 Says we Must Pay?
Having found that the claimant was not a deemed named insured of CNA (more on this below), the appeal judge found that Chubb had priority over CNA for accident benefits because, at best, the claimant was only a listed driver on CNA's policy (recall that named insured trumps listed driver). However, as a listed driver on the CNA policy, the OPCF 47 applied to the claimant and CNA, meaning CNA was precluded from relying on the priority rules to deny the claim.
However, the judge referred to another arbitrator’s decision in Echelon v. Co-operators (2015), wherein the arbitrator found, among other things:
It seems to me that the insurer paying a claim in conjunction with an OPCF-47 endorsement would have the right to reimbursement from a higher ranking insurer, at least to the extent of the mandatory benefits … . Simply put, nothing whatsoever has been done to limit or restrict the optional benefit insurer from pursuing the reimbursement aspect under the priority rules as they exist.
The appeal judge agreed with and adopted the arbitrator’s reasons from Echelon. Accordingly, CNA was required to handle and pay standard/optional benefits for this claim. However, CNA was entitled to reimbursement from Chubb for the cost of all mandatory SABS benefits paid by CNA to the claimant, and reimbursement from Chubb for all expenses associated with administering the mandatory SABS benefits.
It is unknown at this time whether Chubb will be seeking leave to appeal the decision.
What Does this Mean???
The law in Ontario, as it relates to optional benefits and priority is, as follows:
- Where a claimant has applicable optional benefits on their policy, they have recourse against their insurer despite the priority rules. The insurer must accept the claim and pay the claimant mandatory and optional benefits, in accordance with the terms, limits, etc. in the SABS.
- However, the insurer responsible for paying optional benefits can now seek reimbursement from the priority insurer for any mandatory benefits it has paid on the claim, plus apparently any administration expenses (which could mean surveillance, adjusting fees, etc.).
What Should We Do?
If you are the insurer that receives an application for benefits under a policy with applicable optional benefits (“Optional Benefits Insurer”):
- Accept the claim and pay the standard/optional benefits pursuant to the various provision in the SABS.
- Investigate priority and give any higher-ranking insurer a priority dispute notice.
- Any disputes as to whether the other insurer has priority (under sections 268(2) - 5(1.2) would be resolved in arbitration.
- The priority insurer would be obligated to reimburse you for any standard benefits paid, and administration expenses.
If you are the insurer who actually has priority (“Priority Insurer”):
- You are required to reimburse the Optional Benefits Insurer for any standard benefits paid, and administration expenses incurred.
- There will likely be issues as to whether the Priority Insurer could challenge the way the Optional Benefits Insurer has handled the claim and paid benefits, much like we see in loss transfer disputes.
What Should We Do Now?
If you are the Optional Benefits Insurer, consider bringing a new claim against the Priority Insurer for reimbursement, keeping in mind there might be a 90-day notice issue to overcome (this is a topic for a future blog).
If you are the Priority Insurer, you can expect to receive new notices for reimbursement.
What does the Future Look Like?
Appeal opportunities aside, in my opinion this decision could cause an administrative nightmare for insurers going forward, especially if more consumers continue to purchase optional benefits:
- It will be extremely difficult for Priority Insurers to set reserves properly, to capture not only benefits that another insurer is paying (like in loss transfer), but also the cost of insurer assessments and administration expenses (which is not an issue in loss transfer because those expenses are not recoverable).
- There is no process in place now governing how the Optional Benefits Insurer could seek reimbursement from the Priority Insurer. Likewise, there is no process in place now governing how the Priority Insurer could dispute the reasonableness of payments made (both benefits and administrative expenses).
- There will undoubtedly be a significant increase in reimbursement claims, which will not only lead to significant legal costs but also place a burden on already-busy claims handlers, who will now need to consider a new reimbursement process for ongoing priority dispute claims.
- What about reimbursement for legal expenses arising from any LAT disputes between the Optional Benefits Insurer and the claimant? Must the Priority Insurer reimburse the Optional Benefits Insurer for those expenses too?
What was that About Regular Use?
Continental v. Chubb will be forever known as the optional benefits case, but the appeal judge’s decision on regular use is also very noteworthy. The judge wrote:
…[I]n the present case, the evidence is uncontradicted that at no time did Mr. Ekstein make use of any of the company vehicles. Indeed, most of the vehicles insured by the CNA policy were tractor-trailers, although some were smaller trucks used in the business operations of the company. Although, because he was the President, CEO and owner of the company, it was theoretically open to Mr. Ekstein to have access to and choose to drive any of the insured vehicles, he never did so. The only vehicles that he actually drove were expressly insured under his personal Chubb policy.
[26] Thus, while there was an element of so-called "residual control" over the vehicles covered by the CNA policy, what is missing in this case is any evidence of those vehicles "being made available for [Mr. Ekstein's] regular use".
[27] In my view, it was unreasonable for the Arbitrator to impute regular usage to Mr. Ekstein when none existed. His decision contains no proper analysis of the evidence before him addressing the regular use provisions of s. 3(7)(f) in relation to the facts of this case. The Arbitrator failed to consider Mr. Ekstein's evidence that he never used a company vehicle prior to or at the time of the accident, or that a company vehicle was not being made available to him at the time of the accident. In so doing, the Arbitrator failed to follow the analytical approach set out in such cases as ACE INA Insurance v. Co-operators General Insurance Co., [2009] CanLII 13625.
[28] I conclude that the Arbitrator's decision is unreasonable because he failed to carry out the proper analysis, it is inconsistent with underlying legal principles, and the outcome ignores or cannot be supported by the evidence. To the contrary, the evidence supports the finding that no automobiles that were subject to the CNA policy were made available for Mr. Ekstein's regular use by the company.
It appears the appeal judge imputed into the regular use provisions in the SABS a requirement that there be evidence of actual use of a vehicle.
Does regular use require evidence of actual use? Contact me.
See Continental Casualty Company v. Chubb Insurance Company of Canada, 2019 ONSC 3773 (CanLII)
The son of a plaintiff lawyer, Daniel decided in law school that he wanted to work for the insurance industry. Read more...
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Ontario courts have been signalling for some time now that a failure to treat pre-trial conferences seriously will have consequences. A recent Superior Court of Justice decision may be read...
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Ontario courts have been signalling for some time now that a failure to treat pre-trial conferences seriously will have consequences. A recent Superior Court of Justice decision may be read as increasing the standard to which insurers will be held for their participation at pre-trial conferences. Rule 50.05(2) of the Rules of Civil Procedure states as follows:
A party who requires another person’s approval before agreeing to a settlement shall, before the Pre-trial Conference, arrange to have ready telephone access to the other person throughout the Conference, whether it takes place during or after regular business hours.
The Rule does not explicitly require insurers to engage in settlement negotiations, so one would think that an insurer could safely take a no-liability position without any adverse effects. The insurer was not so lucky in the decision of Al-Khouri v. Hawari. In that matter, Aviva attended the pre-trial conference as the defendant's insurer along with counsel.
Aviva had taken a no-liability position throughout the claim and did not partake in settlement negotiations. At the pre-trial, Justice Trimble probed the Aviva adjuster as to her authority and Aviva's decision-making hierarchy. The adjuster advised that she did not have another decision-maker available by phone and that she reported to a committee in advance of the pre-trial. Defence counsel clarified that the committee is simply for oversight.
Justice Trimble was not convinced that the Aviva adjuster satisfied the requirements of 50.05(2), finding that she was not the "effective decision maker". The court ordered Aviva to pay $1,000.00 in costs for its conduct.
On one hand, Al-Khouri seems unfair to Aviva, which at some point must have made a decision to take a no-liability position. Presumably, that decision was made within the authority of an Aviva employee (i.e. an "effective decision maker"). The decision also calls into question who an effective decision maker is, which will vary amongst insurers, depending on their internal structures. Insurers who proceed to a pre-trial conferences ought to be prepared to answer questions about their internal decision-making structures and have superiors available, even when having no intentions of settling a claim.
See Al-Khouri v. Hawari, 2019 ONSC 3681 (CanLII)
Tim Gillibrand has been practicing insurance litigation since 2012. He has dealt extensively with property-related claims, including subrogation and coverage matters. Read more ...
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The Alberta Office of the Information and Privacy Commissioner (“Commissioner”) recently considered whether it had jurisdiction to deal with a privacy complaint. The Complainant alleged that De Beers Canada Inc....
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The Alberta Office of the Information and Privacy Commissioner (“Commissioner”) recently considered whether it had jurisdiction to deal with a privacy complaint. The Complainant alleged that De Beers Canada Inc. collected his passport information in contravention of Alberta’s Personal Information Protection Act (“PIPA”).
The facts were relatively straightforward. The Complainant lived in Ontario and was hired by Memory Tree Video productions in Ontario as a subcontractor to provide television camera production services. The job required him to attend a De Beers diamond exploration site in northern Saskatchewan. Upon being hired, Memory Tree requested the Complainant’s passport information. When asked, he was told that De Beers needed this information and it was necessary in order to book the flight for him. This fact was disputed by a representative from De Beers. The Complainant provided the documentation but then filed a complaint with the Commissioner in Alberta.
In considering whether De Beers was subject to PIPA, the Commissioner noted that the company had its head office in Calgary. As such, when it collects, uses or discloses personal information within Alberta, it must comply with PIPA. However, if the information was collected outside of Alberta, PIPA would not apply. In such instances, either other provincial privacy legislation or the Personal Information Protection and Electronic Documents Act, federal legislation that protects privacy interests, would apply.
The Commissioner concluded that the subject matter of the complaint did not take place within Alberta but within Ontario. As such, PIPA did not apply and the Commissioner did not have jurisdiction.
Like in any civil case, the Commissioner will assess whether they have jurisdiction over the individuals/companies involved in the dispute. It is important to identify the correct venue and legislation that applies to a specific case and appeal to the proper entity that maintains jurisdiction over the dispute. Failure to do so may be fatal to a privacy infringement claim.
See De Beers Canada Inc. (Re), 2019 CanLII 49751 (AB OIPC)
Laura has a diverse practice where she focuses on accident benefits, bodily injury claims, product liability, cyber liability, privacy law and drone liability. Read more ...
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When I graduated law school, I never expected to practice in an area where waivers of subrogation came up so frequently (or at all). Even today, I’m surprised by the...
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When I graduated law school, I never expected to practice in an area where waivers of subrogation came up so frequently (or at all). Even today, I’m surprised by the number of times an unattended stovetop can lead to complex coverage issues. Coincidence or not, here we are again; another stovetop, another disputed waiver of subrogation.
The recent Superior Court decision, Rocky Heights v. Judith Biber, involved an application to determine whether subrogation was barred by the language of a CGL policy. The decision does not devote significant space to the background of the claim but the below facts can be deciphered.
Rocky Heights Development Ltd. was the landlord, while Judith Biber and her husband were tenants. Biber also happened to be a corporate officer of Rocky Heights. The Bibers left hot oil on the stove unattended resulting in fire damage to the premises. Rocky Heights had a CGL policy with Optimum, which presumably paid for some of the damage. Optimum sought to subrogate versus Biber in the name of its insured, Rocky Heights.
The Optimum coverage included a "Commercial Building, Equipment and Stock Broad Form", which contained the following language:
The insurer, upon making payment or assuming liability therefore under this Form, shall be subrogated to all the rights of recovery of the Insured against others and may bring an action to enforce such rights. Notwithstanding the foregoing, all rights of subrogation are hereby waived against any corporation, firm, individual, or other interest with respect to which insurance is provided by this Form. [Emphasis added]
The policy's definition of "Insured persons" included:
[If the named insured is an] organization other than a partnership or joint venture, the said organization is an insured. The executive officers and directors are insureds, but only with respect to their duties as officers or directors. [Emphasis added]
Rocky Heights (i.e. Optimum, as subrogated insurer) argued that Biber was not in the course of her duties as an officer at the time of the incident causing the fire. As such, it submitted that the insurance was not "provided by [the] form" and the subrogation clause did not extend to Biber in the circumstances.
The court found that the subrogation waiver did extend to Biber, relying heavily on a prior decision, Tony and Jim's Holdings Ltd. v. Silva, 1999 CanLII 969 (ON CA). In that decision, the Court of Appeal dealt with a very similar situation involving a corporate landlord attempting to subrogate against Mr. Silva who caused a fire while cooking. He was arguably in the course of employment and asserted that he was President of the corporate tenant. The landlord's insurance policy contained a virtually identical subrogation clause to the Rocky Heights policy.
The Court of Appeal in Silva held that the waiver of subrogation clause applied to Mr. Silva, despite him not being named on the policy or a party to the commercial lease. The decision was largely driven by the fact that the lease impliedly required the landlord to insure the premises. The court found that the lease combined with the subrogation clause supported that Mr. Silva was an intended beneficiary of the waiver.
The court in Rocky Heights fully adopted the conclusions from Silva, although it is not entirely clear that the two are on even footing. Unlike Rocky Heights, the Silva decision did not deal with a similar definition of "insured person", which appears to limit coverage for officers/directors to acts performed in the course of their corporate responsibilities. As a potential contrasting factor, it seems that in Rocky Heights Ms. Biber may not have been in the course of her employment or her corporate duties. Additionally, in Rocky Heights, it is not clear whether the lease required the landlord to insure the premises and the relevant terms, which were important in extending coverage to Mr. Silva.
Altogether, the recent Rocky Heights decision reinforces the well-established precedent that third parties can benefit from limitations of liability provisions, including waivers of subrogation. However, it would be helpful to have more particulars about the underlying facts. The decision gives application to the prior Silva decision, which on its face might be broader than intended by the Court of Appeal. This may raise some interesting deliberation if Rocky Heights appeals.
See Rocky Heights v. Biber, 2019 ONSC 3593 (CanLII)
Tim Gillibrand has been practicing insurance litigation since 2012. He has dealt extensively with property-related claims, including subrogation and coverage matters. Read more ...
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This action arises from a fall that occurred on January 14, 2014 on common property owned by the defendant Strata Plan LMS2286 (the “Strata”). Strata retained the defendant Markic Development...
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This action arises from a fall that occurred on January 14, 2014 on common property owned by the defendant Strata Plan LMS2286 (the “Strata”). Strata retained the defendant Markic Development & Restoration Ltd (“Markic”) to perform some remediation work on its premises. The plaintiff alleges that the remediation work created a hazard that caused his fall.
The plaintiff and defendants filed summary trial motions (aka summary judgment motions) so the issue of liability could be determined before their 12-day jury trial scheduled to commence in December 2019. The plaintiff sought an order that the defendants were liable for the plaintiff’s injuries arising from the fall, while the defendants applied for an order that the plaintiff’s action be dismissed on the basis they were not liable for the plaintiff’s injuries.
After considering all of the evidence the court found in favour of the defendants and dismissed the plaintiff’s action.
Background
At the time of the fall, the plaintiff had been a tenant of a unit in one of the buildings owned by Strata for about a year. At some point prior to January 2014 the bricks at the top of the stairs on a walkway (the “walkway”) had become uneven as a result of pressure from roots of a nearby tree. It was anticipated that the tree that was causing the problem would eventually be removed and a permanent repair to the walkway would follow. The Strata retained Markic to perform temporary remediation which consisted of removing the uneven bricks and replacing them with gravel (the “Temporary Remediation”).
On the morning of January 14, 2014, the plaintiff took the walkway to access his unit. He ordinarily did not use this particular walkway and could not recall the last time, prior to the fall, that he had used it. The plaintiff was ultimately found by a Markic employee, unconscious, and lying face down on the walkway some distance (an estimated 15 – 20 feet) away from the three steps on the walkway. Nothing was on the ground where the plaintiff was lying that might have explained his fall. Initially, it was thought that the plaintiff had had a heart attack or stroke.
Evidence
The plaintiff did not know what caused him to fall and “speculated” that he tripped on something as “that’s what makes the most sense.” His theory is that he must have tripped on a “lip” between the loose gravel that was placed as part of the Temporary Remediation and the paving stones on the walkway. The court was provided with photographs of this lip which depicted a small lip between the loose gravel and the paving stones; it was, according to the court, very difficult to determine the exact measurement of this lip from the photographs and “it could certainly not be characterized as pronounced.”
The Occupiers Liability Act
The plaintiff’s position was that the Strata owed him a duty of care under the Occupiers Liability Act (“OLA”) to ensure he would be reasonably safe in using the premises and that Markic owed a common law duty to persons walking in the remediation area to carry out the Temporary Remediation in a manner that did not constitute a hazard.
The court noted that the fact the plaintiff could not recall the precise mechanism of his fall was not determinative and direct evidence of causation was not required, so long as the evidence as whole led to the drawing of a reasonable inference of causation.
The court ultimately concluded that the evidence did not logically support an inference of causation for the following reasons:
- The photographs show a slight unevenness in the surface of the walkway that could hardly be described as a recognizable risk, or even objectively unreasonable in terms of the degree of evenness that one might expect of a walking surface
- The Temporary Remediation was in place for a number of months without incident or complaints about it
- The plaintiff, himself, never reported his fall to the Strata until three months later and after he had moved out of his unit
- There was no expert evidence in this case to support the inference that the condition of the remediation area was hazardous
- The patient care hospital record quotes the plaintiff as reporting that the fall was due to him “tripping on an unanticipated step”
In light of these facts, the court was unable to conclude on a balance of probabilities that the plaintiff’s fall was caused by the Temporary Remediation as the evidence did not support the drawing of a rational inference of causation, and dismissed the plaintiff’s action
Take Away
The photographs produced made a significant impact on the court’s decision. Her Honour was clear that the slight unevenness of the walkway did not represent a risk. It did not help the plaintiff’s case that he could not provide any evidence as to what could have caused him to fall. While the court pointed out that that, in itself, is not crucial, the evidence as a “whole” must permit the drawing of a reasonable inference on causation. The above factors, taken all together, dissuaded the court from making such a finding. One wonders if engineering evidence had been presented whether that would have been enough to sway the court in the plaintiff’s favour.
See Barr v Strata Plan et al, 2019 BCSC 917 (CanLII)
Fiona Brown has an insurance law practice that has focused exclusively on insurance defence for almost 22 years. Read more ...
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