The digital age has brought about significant benefits in our everyday lives. We can settle disputes by searching for an answer on our smartphones; get inspiration for some interior decoration through Instagram; and who can resist a midnight McDonalds delivery with Uber Eats? The thought that the modern toothbrush was not invented until 1938, makes today look like something out of a science fiction novel and makes our day to day lives considerably easier. However, the damaging effects of technological advancements have been largely ignored until recent years. The widespread availability of technology and online platforms reveals a darker side of humanity and allows people to use technology for nefarious purposes, rather than the positive ones we would like to believe it was created for.
Twitter is a great source for recent news and social commentary; however, in 2017, a Maryland man was arrested for sending a reporter a Twitter message containing a flashing strobe-light image in an attempt to trigger the reporter’s epilepsy. Instagram is a great platform to share your experiences with friends and gain inspiration for design; however, earlier this year, a man in Perth Australia became the first individual charged under a new revenge porn legislation after posting intimate images of his ex-girlfriend on Instagram. In 2015, Canada passed a similar Bill C-13, which created the new offence of non-consensual distribution of intimate images. Facebook is a great way to stay connected with classmates and colleagues; however, earlier this year its live stream service aired the New Zealand Christchurch mosque attack. Technological advances are creating a more cohesive, well-connected, and more convenient world, but the same technology has the potential to be used to cause significant harm to others.
A question arises: who is responsible for monitoring and controlling the content that is posted and how this technology is used? Should private companies be policing what users are posting or should the government be stepping in to place a greater burden on organizations? Prime Minister Trudeau believes that Canadians should have more control over their own data and the government should be taking steps to place a greater onus on organizations to combat adverse uses of the technological advances.
On May 16, 2019, Prime Minister Trudeau spoke in Paris, France, regarding the Christchurch attach in New Zealand. He committed to creating a “digital charter” that will restore the faith of citizens while holding online platforms accountable. Trudeau said that he is looking “to working alongside internet companies, but indeed, if they do not choose to act, we will be forced to continue to act in ways that protect Canadians…”.
Prime Minister Trudeau’s commitment demonstrates the inextricable link between technology and privacy. Organizations must keep up with the slow moving government changes and shift their organizational strategies to reflect the importance placed on the way they handle users’ data. Organizations will also be called on to take on a greater societal obligation to protect citizens and their data. If organizations do not want to commit to such a standard, the government seems committed to forcing them to do so through judicial means.
Stas practices in insurance-related litigation. He has a broad range of experience including tort claims, accident benefits, subrogation, priority and loss transfer disputes, WSIB matters, and fraudulent claims. Read more...
On December 31, 2013, the plaintiff, Kathryn Owens, had a slip and fall outside the Blue Canoe Waterfront Restaurant (the “Restaurant”), in Stevenson, BC, while walking on the boardwalk adjacent to its entrance. She shattered her right patella in the fall. The actual entrance is concrete which extends from the street. Abutting the concrete is a wooden plank ramp which leads to the boardwalk, which is also composed of wooden planks.
Subsequent to her fall, the plaintiff brought an action against a number of parties. All actions were discontinued but for the action against the Restaurant.
The trial took place in January 2019 before The Honourable Madam Justice Maisonville, whose judgment, in favour of the plaintiff, was released on May 14, 2019.
The main issue in this case was whether the defendant failed to meet the standard of care owed to the plaintiff, under the Occupiers Liability Act (“OLA”) and whether, but for that breach, the accident would not have occurred.
The Trial Evidence
The plaintiff and her husband went to the Restaurant for a light meal before going home to celebrate New Year’s Eve. They frequented the Restaurant fairly regularly but mostly during the summer months. After their meal they decided to look at the boats in the harbour. Neither were feeling the effects of alcohol when they left the Restaurant.
The couple exited the restaurant onto a concrete path walkway at the door. To get to the boardwalk, they were required to descend a wooden ramp. The plaintiff was following her husband. She looked at the ramp before stepping onto it. It appeared to be dry. After safely descending the ramp, the plaintiff stepped onto the boardwalk, took one, two, or three to four steps, then fell forward onto her right knee.
After she fell, the plaintiff noticed that the wood was wet where she was lying as her clothing on the right side was soaking wet.
The plaintiff had not seen any signs on the boardwalk and testified, at trial, that had there been a sign, she would have grabbed her husband’s arm or taken a different way down to see the boats. The plaintiff was vigorously cross-examined, at trial, on whether she had noticed that the boardwalk was wet. The plaintiff was adamant that had she seen it was wet, she would not have gone down the ramp.
There were no warning signs at the ramp leading to the boardwalk; however, there were a number of places, in other areas on the boardwalk, that had warning signs and grates on it to make it safe. In fact, on the neighbouring property was a sign that stated: ‘CAUTION. BOARDWALK MAY BE SLIPPERY DUE TO VARIABLE WEATHER.”
The witness for the defendant had never heard of any safety issues around the Restaurant. He testified that thousands of people come through the area and it was very busy in the summertime. He had never had any complaints about the surface of the ramp being slippery. He did admit that there are times, mainly during the winter, when the surface of the ramp could be slippery, mostly when there was frost (there was no frost on the date of loss). At the time of the trial, the Restaurant still had not erected any signs, applied any abrasive paints, put down sandwich board signs or metal grates on the walkway, or made any changes to address the potential slipperiness of the ramp or the boardwalk.
According to the OLA, the Restaurant was required to ensure that the plaintiff would be reasonably safe while using the boardwalk. The issue, for the court, was whether or not the Restaurant breached that duty and, if so, whether, but for the breach, the incident and damages flowing from it, would not have occurred.
As the court noted, the Restaurant was not expected to achieve “perfection” – the standard is “reasonableness”. In considering whether or not the Restaurant met this standard, four factors were considered:
Whether there was a recognizable risk of injury;
The gravity of the risk;
The ease or difficulty with which the risk could be avoided; and
The burden or cost of eliminating the risk.
In addition to establishing a breach of the standard of care, the court confirmed that the plaintiff must prove that the Restaurant “caused” the incident or “but for the defendant’s actions, the incident would not have happened.”
Breach of the Standard of Care
The court held that the Restaurant had not met the standard of care imposed by the OLA, based on the following trial evidence.
Although the plaintiff’s evidence on how she came to fall was “imprecise”, the court found that it was more likely than not that she fell on the boardwalk because it was wet. Although there were no witnesses to the fall, the court found the plaintiff’s evidence to be credible and her description of what occurred leading up to and after the fall to be reliable. The court accepted her evidence that neither the wooden planks of the boardwalk nor of the ramp appeared to be wet from a visual scan, but that she noticed the boardwalk was wet while lying on its surface after her fall.
The court also accepted that the plaintiff had looked at the boardwalk before she walked and was unaware that the wood was wet or that the planks may have been slippery.
The Restaurant argued that, regardless of whether the boardwalk was wet, its duty was not to achieve perfection and the fact that the boardwalk was wet did not constitute an unreasonable risk of harm.
The court held that the Restaurant had a positive duty to take reasonable care to make sure the boardwalk was safe to be walked on. An important factor, for the court, in determining that this duty had not been met was that other occupiers along the neighbouring boardwalks had mounted signs warning of the potential slipping hazard. This persuaded the court that the boardwalk could be slippery when wet and that this wetness would not always be visually noticeable to visitors. This fact, amounted to a recognizable risk that required some positive action on the part of the Restaurant: “a sign should have been erected at the top of the ramp to warn that it could be slippery given the variable weather conditions at the site.”
Another factor the court clearly found relevant was that the costs of reducing the risk of slipperiness would have been minimal and held that the Restaurant breached its duty under the OLA to the plaintiff in failing to take any steps to reduce or eliminate the risk posed by the boardwalk becoming slippery when wet.
The court accepted the plaintiff’s evidence that had there been a sign warning that the ramp and the boardwalk surfaces could be slippery, she would not have gone down the ramp that day and her evidence that “If there had been a sign, I either would have grabbed Rodger’s arm to go down the ramp or we would have turned and gone a different direction.”
To be successful against the Restaurant, the plaintiff also had to prove “but for” the Restaurant’s actions, the accident would not have happened. Or, put another way, the plaintiff must prove that the Restaurant’s failure to warn of the potential slipping hazard caused her fall.
The Restaurant argued that a sign would have made no difference and, therefore, the plaintiff had not proven causation. The court rejected this argument as the question to be answered is whether a sign would have changed the plaintiff’s behaviour and, thus, prevented her fall? The court accepted the plaintiff’s evidence that she had looked for such a sign and other indicators of the safety of taking the ramp, including checking for whether it was wet. As the court found the plaintiff to be a credible and reliable witness, it accepted that the presence of a sign would have dissuaded her from taking the ramp or prompted her to take additional precautions.
The breach of duty, of the Restaurant, was its failure to put up a caution sign and had such a sign been visible to the plaintiff, this accident would not have occurred.
This case is a reminder that occupiers are required to take positive steps to ensure that visitors are safe while on their premises. A few factors that likely affected the court’s finding include the presence of warning signs on other areas on the boardwalk and the cost of erecting such a sign would have been minimal. It certainly did not help the Restaurant’s case that the trial evidence was that it was known that the surface of the ramp could become slippery during the winter and that, at the time of trial, no warning sign had been erected. Lastly, even though there were no witnesses to the fall the court made it clear that the plaintiff was credible and, as a result, was able to prove her case through her evidence, alone, a reminder that credibility is always key.
In Kaplan v. Casino Rama, released May 7, 2019, Justice Belobaba dismissed the plaintiffs’ motion to certify a class action arising from the 2016 cyber-attack on Casino Rama.
In November 2016 Casino Rama’s computer system was hacked and a variety of personal information relating to the casino’s employees, customers and suppliers was stolen. The hacker made a ransom demand, which was not paid, following which the hacker posted the personal information of close to 11,000 people online.
The representative plaintiffs included employees of the Casino, members of the Casino’s loyalty program, and people who had joined OLG’s self-exclusion program.
In considering whether to certify the class action, Justice Belobaba made specific reference to the steps taken by the Casino, including notifying the authorities, notifying thousands of people potentially affected by the breach, taking steps to shut down the websites containing the stolen information and providing free credit monitoring for a year to many of the people affected. He also noted that there was no evidence that anyone had experienced fraud or identity theft or that anyone had suffered financial or psychological loss because of the attack.
In reviewing the five requirements for certification, as set out in s 5(1) of the Class Proceedings Act, Justice Belobaba concluded the class action “collapse[d] in its entirety at commonality” [5(1)(c)]. Despite this finding, Justice Belobaba also made substantive comments with respect to 5(1)(a) and (b), which are summarized below.
5(1)(a) Cause of Action
The plaintiffs asserted five causes of action: negligence, breach of contract, intrusion upon seclusion, breach of confidence and publicity given to private life.
Of note, the hacker remained unidentified and was not a party to the action. Traditionally, some of the causes of action pleaded are aimed at recovery from the party who breached the plaintiff’s privacy (i.e. the hacker). Justice Belobaba commented that this left class counsel “trying to force square (breach of privacy) pegs into round (tort and contract) holes”.
The Court found the claims for breach of confidence and publicity given to private life were doomed to fail and should be struck. It is also questioned whether intrusion upon seclusion could be sustained against the defendants on the basis of their alleged recklessness. However, considering the infancy of the tort of inclusion upon seclusion, Justice Belobaba was not prepared to find that the claim was bound to fail. He found the same with respect to the claims in negligence and breach of contract.
5(1)(b) Class Definition
The Court found the proposed class was overly broad and imprecise. Justice Belobaba made a point of agreeing with the defendants, that the class definition could not include the Casino’s unionized employees. The Court lacked jurisdiction over their complaints for the privacy breach, whether in negligence or contract, as they fell within the ambit of the collective agreement. Such matters fall within the exclusive jurisdiction of the Ontario Labour Relations Board.
5(1)(c) Common Issues
Justice Belobaba deliberated on the appropriate test under s. 5(1)(c), which for years required satisfying two inquiries: (1) whether there was some evidentiary basis that the proposed common issue actually existed; and, (2) whether there was some evidence that the proposed issue could be answered in common across the entire class. However, in the 2013 decision of the Supreme Court of Canada, ProSys Consultants Ltd v. Microsoft Corp, the first part of the test was eliminated, no longer requiring evidence that the alleged acts occurred. Justice Belobaba found himself to be bound by the SCC’s direction; however, he performed the two-step analysis, noting that an appeal was likely forthcoming.
Getting to the heart of the common issues analysis, Justice Belobaba made the following comments at paragraph 56 of the decision:
The problem here, with almost all of the PCIs [proposed common issues] is that there is no basis in fact for either the existence of the PCI or its overall commonality or both. Further, many of the PCIs require so much in the way of individual inquiry that any commonality is overwhelmed by the need for individualized assessments.
Justice Belobaba found that the proposed causes of action that could possibly proceed –negligence, breach of contract, and intrusion upon seclusion – could not serve as the basis for common issues. His conclusion hinged on a not so subtle finding that privacy breach cases are inherently individual in nature. In this case, the stolen information varied amongst the victims; ranging from mundane information (e.g. addresses) to more sensitive data (e.g. bank records). Justice Belobaba found that, whether each of the alleged causes of action could be made out, required a look at the individual circumstances of each plaintiff. For instance, the standard of care in data breach cases is a sliding scale based on the sensitivity of the stolen information. Intrusion upon seclusion also requires consideration as to whether the breach is “offensive” to the specific plaintiff. Finally, there was no evidence of any class-wide contractual terms or conditions to support a common issue in that regard.
The Court acknowledged that it should not refuse certification merely because the damages would require individual assessments. However, Justice Belobaba found that there were no common liability issues, which made the issue of damages moot.
Finding that there was a lack of commonality, the Court dismissed the motion for certification.
Lisa has an insurance law practice that has focused exclusively on insurance defence for 15 years. Her practice focuses on complex insurance-related litigation, including accident benefits and bodily injury. Read more ...
The recent decision by the Court of Appeal in clarifies the developing concept of individuals’ privacy rights. The appellant was in a long distance romantic relationship with the complainant. During...
The recent decision by the Court of Appeal in clarifies the developing concept of individuals’ privacy rights. The appellant was in a long distance romantic relationship with the complainant. During their relationship, the parties engaged in an intimate webcam video chat where both were naked. The appellant, unbeknownst to the complainant, took still photographs of her. After the relationship ended, the appellant emailed the nude photos to many people. At trial, he was convicted of voyeurism and he appealed this conviction.
On appeal, the Court noted that there were five elements that must be satisfied under the charge of voyeurism – (1) the accused observed or recorded the subject; (2) the accused’s observation or recording was done surreptitiously; (3) the subject was in circumstances that gave rise to a reasonable expectation of privacy; (4) the subject was nude or exposing sexual parts of her body or engaged in sexual activity; and, (5) the observation or recording of the subject was done for the purpose of recording them in such a state. The issues on appeal was whether the complainant had a reasonable expectation of privacy in the circumstances and whether the appellant acted surreptitiously.
With respect with the complainant’s subjective expectation of privacy, the Court explained that she expected that the appellant would see a fleeting image of her on her computer screen in real time. She did not know and did not expect that the appellant would make any permanent recording of her naked body. The trial judge accepted the complainant’s evidence that at no point during their relationship did the appellant advise that he was capturing permanent still images.
The Court explained that the next question was whether the complainant’s subjective expectation was reasonable in the circumstances. This question should be considered in light of the norms of conduct in our society. The Court noted that there were two norms that were particularly relevant. First, an individual’s privacy expectation for some body parts are reasonably higher than for others. The exposure of intimate body parts in the privacy of the bedroom attracted a high expectation of privacy. Second, there was a distinction between mere observation and recording a permanent image.
The Court of Appeal was satisfied that the complainant was entitled to reasonably expect the appellant would not record their sexual activities in “virtual space” without her consent. The complainant had a reasonable expectation of privacy.
The final issue was whether the recording was done “surreptitiously.” The Court noted that there was little judicial consideration of the term. The Court found that the term, within the context of a voyeurism offence, must be given its ordinary meaning - including intent. Specifically, the Court held that the mental state required by the term was the intent that the subject not be aware that she was being observed or recorded. To prosecute the charge, the Crown may prove the accused acted surreptitiously by proving that he observed or recorded the subject with the intention that they be unaware that it was happening.
The conviction was upheld.
Although the result is seemingly apparent, the legal system has not developed to a point where privacy rights are innately preserved. This decision, along with the Supreme Court of Canada’s R. v. Jarvis, illustrate the importance and societal shift toward our expectation of privacy in both the public and private sphere. In the criminal context, Courts are agreeing to punish individuals who invade another’s privacy – civil courts are likely to follow.
After implementing stricter privacy laws in 2018, Canada has joined a number of countries with a shifting mentality regarding privacy rights. Individuals are becoming more aware of the information they...
After implementing stricter privacy laws in 2018, Canada has joined a number of countries with a shifting mentality regarding privacy rights. Individuals are becoming more aware of the information they are disclosing. Users of applications and services are becoming more cognizant of what data they are providing to organizations and more curious about how that information is being used. For the first time, people are paying close attention to what businesses are using their information for and expect that businesses will be transparent in their privacy policies.
Last week, the Office of the Privacy Commissioner of Canada released a report after conducting a lengthy investigation into Facebook. In sum, the report found that Facebook contravened Canadian privacy laws and failed to take responsibility for protecting the personal information of Canadians. The release noted that Facebook’s privacy framework was “empty” and their “vague terms were so elastic that they were not meaningful for privacy protection”. Part of the investigation revealed that an app called “This is Your Digital Life”, which was used by around 300,000 Facebook users around the world, potentially disclosed the personal information of approximately 87 million users, 600,000 of which were Canadian. The report revealed that Federal and British Columbia privacy laws were violated including unauthorized access (which included superficial and ineffective safeguards), lack of meaningful consent, no proper oversight over privacy practices, and an overall lack of responsibility for personal information.
More shocking than the findings was Facebook’s response to the reports and the recommendations contained therein. Facebook denied that they contravened privacy legislation and rejected the findings and recommendations. This response fueled the claim that Facebook lacks responsibility, especially considering that a 2009 Investigative Report, which largely revealed similar issues, proposed mechanisms to mitigate risk of unauthorized access and use of Canadians’ personal information – recommendations that were seemingly ignored by the organization. Interestingly, a March 2019 Edison Research Infinite Dial Report revealed that Facebook lost around 15 million active users since 2017 (6% of its active users).1 This may be in part as a result of the negative publicity the company has been receiving due to its handling of users’ personal information (the Cambridge Analytica Scandal for example).
One issue that Facebook’s reception of the report revealed was that the amendments in PIPEDA appear to lacks teeth. For instance, PIPEDA does not make a Privacy Commissioner’s recommendations mandatory, nor does the legislation grant a Commissioner the power to issue an order. This, however, does not stop the Office of the Privacy Commissioner of Canada from bringing an application to the Federal Court to compel Facebook to correct its privacy practices. This process, however, will likely be lengthy and it is currently unclear whether any Commissioner will take this step.
What information is needed for the organization to provide the service they are undertaking?
Who has access to that data?
How is that data handled (shared and used)?
How and how often is the data destroyed?
It is without doubt that the Privacy Commissioners throughout Canada will be lobbying to make PIPEDA more aggressive including providing executive power to the entities tasked with protecting the privacy rights of Canadians. Until that time comes, users will make their voices heard by giving their business to organizations that are more conscious about data use. In order to achieve greater success in this realm, organizations must be more transparent in their privacy policies and take a more conscious approach to data use than they have in the past.
Stas practices in insurance-related litigation. He has a broad range of experience including tort claims, accident benefits, subrogation, priority and loss transfer disputes, WSIB matters, and fraudulent claims. Read more...
The Federal Court recently released the decision of Black & White Merchandising Co. Ltd. v. Deltrans International Shipping Corporation. The case involved the transportation and theft of over 8000 pairs...
The Federal Court recently released the decision of Black & White Merchandising Co. Ltd. v. Deltrans International Shipping Corporation. The case involved the transportation and theft of over 8000 pairs of children's shoes. While the decision is silent as to the brand of the shoes, we can only assume the perpetrator was disappointed with his luck on the black market. The cargo loss resulted in a lawsuit brought by the consignee, with some interesting findings regarding liability and jurisdiction of the Federal Court.
Black & White Merchandising Co. Ltd ("B&W") purchase the shoes from a Chinese manufacturer and hired Delmar International Inc. to transport the shoes from China to Montreal. Behind the scenes, Delmar hired Deltrans International Shipping Corporation as well as a logistics company, which in part arranged for storage.
Delmar dealt directly with B&W as to the various details of the shipping. Deltrans issued a through Bill of Lading on January 12, 2017, which indicated that the cargo was to be delivered to Montreal and the type of move was "CY/CY" ("container yard to container yard").
The goods made their way from China to Quebec, where they were then stored at Canchi's warehouse. Next, the cargo was to be "de-stuffed", repackaged, and transported to the B&W warehouse which was also in Quebec. The cargo, however, was stolen from the Canchi warehouse.
B&W asserted that Deltrans was responsible under the BoL and that it was reckless in hiring the storage facility. Deltrans denied liability as it no longer had possession of the cargo at the time of loss and had no role in arranging for the warehousing. It further argued that its contract of carriage ended upon delivering the goods to the CN yard, prior to being taken to Canchi.
B&W argued that the BoL, on its face, did not fully capture the entire delivery. It was standard practice in its dealings with Delmar that deliveries would go to the B&W warehouse. Deltrans argued that, if there was some agreement between Delmar and B&W for further delivery beyond the Canchi warehouse, that was beyond the scope of its contract of carriage.
Deltrans brought a motion to strike the Statement of Claim. It argued that the contract of carriage had ended and thus the Federal Court did not have jurisdiction over the claim. Secondly, Deltrans brought a motion for summary judgment on the basis that it had discharged its obligations under the BoL. Deltrans also relied upon a clause in the BoL that relieved it of liability for events beyond its control. The two motions were intertwined as they depended on a finding as to when Deltrans' contract of carriage ended.
B&W argued that the Federal Court had jurisdiction over the matter in accordance with Section 22(2)(f) of the Federal Courts Act, which provides jurisdiction over the following:
"any claim arising out of an agreement relating to the carriage of goods on a ship under a through bill of lading, or in respect of which a through bill of lading is intended to be issued, for loss or damage to goods occurring at any time or place during transit".
In responding to the motions, B&W argued that Delmar and Deltrans were effectively "one in the same". Deltrans put forth evidence that the two were at least distinct corporate entities. B&W did not specifically argue what the legal effect would be of the two entities operating together; however, the thrust of its position was that Deltrans' BoL should be extended to cover the entire delivery up to the point it would be delivered to the B&W warehouse, which would mean that the through BoL was still in effect at the time of loss.
Issues and Findings
Strickland, J. found in favour of Deltrans, concluding that the Federal Court did not have jurisdiction over the matter. Although it was moot, given the decision on jurisdiction, the court also granted summary judgment.
The court found that the contract of carriage ended when Deltrans delivered the cargo to the Canchi warehouse. It was important that the BoL specifically stated the delivery was to be from one container yard to another and did not state that delivery would be to the B&W warehouse. The court was not convinced by B&W's argument that Delmar and Deltrans were "one in the same" and seemed satisfied that B&W's initial dealings were with Delmar. Therefore, any dispute as to what "ought to have been" in the BoL was a dispute between B&W and Delmar - who was not a party.
The court surmised that, even if Delmar usually arranged for transport to the B&W warehouse, this did not necessarily mean that such deliveries were part of the through BoL. They may very well have been part of some other arrangement.
It is notable that the BoL had a specific clause granting the Federal Court jurisdiction over any disputes. Here the court reiterated the status of the common law: parties cannot confer jurisdiction upon the court which it does not otherwise have.
Importantly, the court found that there was no genuine issue for trial because the through BoL had been completed and did not include transport to the B&W warehouse. The court did not comment on whether it would have had jurisdiction had Delmar been named as a defendant.
This case highlights the importance of ensuring bills of lading accurately reflect the intended delivery destination. It further highlights the need to investigate the roles of each party involved in a shipment to best frame a cause of action.
Can an Ontario insurer treat an automobile policy as being void ab initio and deny a claim in its entirety as a result? The Court of Appeal for Ontario says “no”.
Merino v. Intact involved a pedestrian who was catastrophically injured when she was struck by a car insured with Intact. Intact’s insureds (husband and wife) applied for automobile insurance coverage over three months before the accident and Intact had issued a one-year policy to them. However, because of misrepresentations in the application regarding the wife’s driving record, Intact purported to rescind the policy shortly after issuing it, a couple of months before the accident.
Of note, Intact did not terminate the contract pursuant to the Statutory Conditions. It did not give 15 days notice of termination. There was no return of premiums (because no premiums had been paid).
After receiving judgment against Intact’s insureds, the pedestrian and her family brought an action against Intact under section 258(1) of the Insurance Act. On summary judgment, the motion judge was required to determine whether the insurer was entitled to rescind the insurance contract with the tortfeasors, and if so, whether the purported rescission had the effect of precluding the injured pedestrian, as an innocent third party, from making a claim against Intact under s. 258(1) of the Insurance Act.
The motion judge dismissed the pedestrian’s action on summary judgment. He found that the respondent insurer was entitled to rescind the insurance contract based on material misrepresentation, making it void ab initio; that it had done so effectively; and that, as a result, section 258(1) was not available to the appellants, as there was no contract with Intact that provided indemnity to the at-fault driver or owner at the time of the accident.
The Court of Appeal disagreed with the motions judge on all issues.
The most interesting issue (in an insurance coverage sort of way) was the motion judge’s finding that an automobile insurer could treat a policy as void ab initio. The Court of Appeal held that the highly regulated auto insurance scheme in Ontario prevents an insurer from treating a policy as void ab initio. The Court found that the purpose of these requirements under the Insurance Act and Compulsory Automobile Insurance Act is:
to ensure that a person who drives a car always knows whether they are insured, so that they can take steps to bridge any gap in their coverage, both for their own benefit and for the benefit of other drivers. If they are not able to secure alternate coverage, they must not drive the vehicle or allow it to be driven.
With respect to section 233 of the Insurance Act (Misrepresentation or violation of conditions renders claim invalid), the Court cautioned that the section does not render a contract void:
While a number of cases still express the effect of s. 233 as rendering the contract “void” as between the insurer and the insured, it is clear that that language is intended to do no more than reflect the express consequences of s. 233, which makes claims by the insured for personal loss or indemnity invalid and unrecoverable.
In short, the Court of Appeal has confirmed that the statutory scheme mandating auto insurance in Ontario has supplanted an insurer’s common law rights to treat a policy as void ab initio.
This means that if an insurer wants to get off risk because of a misrepresentation or other approved ground, it must terminate the contract in accordance with Statutory Condition 11. It cannot treat the contract as being void ab initio. It will still be (limitedly) liable for a loss that occurs during the policy period, pursuant to section 258 of the Insurance Act and the SABS, subject to any available exclusions under section 31 of the SABS.
When a builder negligently repairs a school’s gymnasium roof, which causes rain to spill into the gym and damage the wooden floor below, does the builder’s All Risk Builder’s policy cover the damage to the floor?
Pre-Eng v. Intactinvolved a coverage battle between the builder’s All Risk Builder’s policy with Northbridge and CGL policy with Intact. The Builder’s Risk policy provided the following coverage:
3. Insured Property
This Form insures the following items for the amount of insurance specified on the Coverage Schedule of Part I and II;
A. At the “project site”, provided that the value of the described property, whether owned by you or by others, is included in the amount of insurance:
(a) property in course of construction, installation, renovation, reconstruction or repair other than property described in 3.A(b),all to enter into and form part of the completed project including expendable materials and supplies, not otherwise excluded, necessary to complete the project;
The parties agreed that the Project Site included the entire school, disagreed over whether the gym floor was “property in course of construction, installation, renovation, reconstruction or repair…”
Meanwhile, the builder also held a CGL policy, which was intended to exclude coverage for what was covered under the Builder’s Risk policy. The exclusion clause reads as follows:
“Property damage” to:
5. That particular part of real property on which the Named Insured or any contractor or subcontractor working directly or indirectly on the Named Insured's behalf are performing operations, if the property damage arises out of those operations; or
6. That particular part of any property that must be restored, repaired or replaced because the Named Insured's work was incorrectly performed on it.
Northbridge argued that the Builder’s Risk policy explicitly covered “property under construction” and the gym floors were not under construction. They were damaged as a result of construction, but they were not under construction and were therefore not covered by the Builder’s Risk policy.
Intact argued, among other things, that there was ambiguity in the Builder’s Risk policy because, in this case, the builder was hired to do a variety of tasks at the school, which could inevitably lead to property damage to other areas in the school.
Both insurers sought summary judgment in a coverage action that the builder brought against them.
Conflicting Case Law
The motions judge noted that there was a conflict in Canadian case law involving the scope of Builder’s Risk insurance. On the one hand, a 2007 case from Alberta (Medicine Hat College) held that the Builder’s Risk policy covered damage caused to a building’s penthouse after the builder had negligently moved a gas pipeline and an explosion ensued. The contractor had not been hired to do any work on the penthouse of the building but that happened to be the site of the damage caused by his negligence. The Alberta Queen's Bench judge concluded that the penthouse mechanical room was included in the phrase “property in the course of construction” and was covered under the Builder's Risk policy.
On the other hand, a 2015 case from Ontario (Osler Health) held that the Builder’s Risk policy did not cover flooding damage to several parts of the hospital, caused by a plumber’s negligent installation of pipes during a kitchen renovation at the hospital. Justice Firestone concluded that the Builder's Risk insurance held by the contractor only covered damages to the kitchen itself, not to the other areas of the hospital which had been flooded.
More recently, the Supreme Court of Newfoundland and Labrador reviewed the same issue in a case called Dominion v. Viking Fire (Team Mechanical Construction). In that case, a renovator negligently installed a water treatment system in a large health sciences complex, which lead to leakage and extensive damages to many areas of the complex. The renovator had obtained a Builder’s Risk insurance policy which was substantially the same as the policies used in Medicine Hat Collegeand Osler Health. The motion judge expressly disagreed with the ruling in Osler Healthand instead followed the reasoning in Medicine Hat College (Builder’s Risk policy covered losses to other property).
However, on March 6, 2019, the Court of Appeal of Newfoundland and Labrador released its decision in Dominion v. Viking Fire, overturning the motion judge’s decision and adopting Justice Firestone’s reasoning in Osler Health.
So what does the Builder’s Risk policy cover?
The motions judge followed Justice Firestone’s decision and held that the Builder’s Risk policy with Northbridge did not cover the damage to the gym floors:
If Intact’s argument were correct, it would lead to the conclusion that the Builder’s Risk insurance was intended to cover the entire Project Site. That interpretation cannot be reconciled with the Northbridge policy which specifically limits coverage to property in the course of construction which is located at the Project Site. If the intention of the parties was to extend coverage to the entire site, there would have been no need to include section 3 in the agreement which defines the “insured property” as property located at the Project Site.
The judge concluded that the words “property in course of construction, installation, renovation, reconstruction or repair” are sufficiently clear to exclude the gym floor from coverage under the Builder’s Risk policy. The gym floor was not being installed, renovated, or reconstructed and there was no evidence to suggest that it was.
It appears that any conflict in Canadian case law over the scope of coverage under the Builder’s Risk policy is close to being wrapped up (if it isn't already). To date, two Ontario Superior Court Judges and the NLCA have limited its scope to cover only property that is being in the course of “construction, installation, renovation, reconstruction or repair”. Any other property losses not covered by the Builder’s Risk policy would likely be covered under the builder’s CGL policy, subject to any other terms or exclusions.
It will be interesting to see whether Intact appeals to give the Ontario Court of Appeal a chance to review this issue. Stay tuned…
While at the Bramalea City Centre Mall with her mom and siblings, the plaintiff (a minor) fell backwards on an upward moving escalator. Unfortunately, her left hand got stuck in the step-to-skirt gap of the escalator resulting in a severing of her left index finger.
The plaintiff and her mother commenced a lawsuit against the owners of the mall, the Schindler Elevator Corporation and the Technical Standards and Safety Authority (the “TSSA”). Schindler was hired to inspect and maintain the escalators at the mall. In their regulatory capacity, the TSSA also periodically inspected the escalators. The escalators were subject to the inspection and maintenance requirements adopted by the TSSA.
The TSSA brought a partial motion for summary judgment which was ultimately dismissed.
The plaintiffs produced an expert report which concluded that the subject step/skirt gap exceeded the upper standard and that the step/skirt performance index (“SPPI”) also exceeded the standard. The report opined that Schindler failed to take corrective measures to reduce the SPPI when it was discovered just a few months prior to the plaintiff’s injury. The report also opined that if the TSSA carried out inspections at the one-year frequency recommended by industry standards, they more likely than not would have discovered the SPPI issue, which in turn should have resulted in an issuance of a compliance order and a shutdown of the escalator.
While the TSSA were able to produce detailed logs of their inspections and reports/orders, it likely did not assist that TSSA provided conflicting evidence on how often the escalator was periodically inspected. Furthermore, TSSA’s own evidence supported that the escalator had recurring issues with the anti-friction skirt, which the plaintiff’s expert opined increased the risk for step/skirt entrapment.
The Court held that a trier of fact would benefit from hearing evidence of all witnesses in order to determine the issues and assess the strength of the evidence, as well as provide a fair and just determination on the merits. The Court determined that TSSA’s actions / responsibilities were not clearly severable from the balance of the case against the remaining defendants, which would remain even if the motion was granted.
This decision highlights that actions with multiple defendants who may be jointly and severally liable under the Occupiers' Liability Act are unlikely to be successful candidates for a partial summary judgment motion.
See Gallo v. Bramalea City Centre Equities Inc., 2019 ONSC 1443
Shalini defends insurance claims covering all aspects of general insurance liability including motor vehicle accidents, occupiers’ liability, slip and falls, as well as accident benefits litigation and arbitration and priority and loss transfer disputes.