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The Subrogator Strikes Back

 Jul 23, 2018 3:00 PM
by Tim Gillibrand

Insurer Permitted to Subrogate Despite Builders’ Risk Policy

Builders’ risk policies have historically been given broad interpretation, extending coverage to all parties involved in a construction project. When property damage arises, the insurer paying the loss may be inclined to subrogate against the at-fault party, who is usually a party involved in the project.  Almost invariably, however, the insurer is prevented from doing so by the principle that it cannot subrogate against its own insured (the Anti-Subrogation Rule).

Whenever a builders’ risk policy is involved, defendants become justifiably excited at the opportunity to have a subrogated claim dismissed. However, the recent Superior Court decision of Maio v. Mer Mechanical places limits on this tactic, which is good news for insurers who subrogate. 

The Maios acted as their on general contractor when building their new home and obtained a builder’s risk policy in the process.  As part of the project, various plumbing work was done by a subcontractor, Mer Mechanical. Shortly after the plaintiffs moved into the property, a sink faucet line separated resulting in a leak and over $3M in damage.

The plaintiff’s made a claim under their homeowners’ policy and their insurer brought a subrogated action against Mer Mechanical.  Mer brought a summary judgment motion, arguing that the plaintiffs’ builders’ risk policy provided coverage for the loss and that they ought to have sought coverage under that policy since it was deemed “primary” for the project. If the policy responded to the loss, the builders’ risk insurer would not have been permitted to subrogate against Mer, who would have been considered an insured.

The plaintiffs resisted the motion, arguing that the loss was not covered by the builders’ risk policy. Much of the analysis focused on the term “occurrence” in the builders’ risk policy:

… any one loss, casualty or disaster or series of losses, casualties or disasters, arising out of one event.  If the inception of the event causing the loss occurs prior to the estimated completion date of the project, then the Insurer shall be liable for any loss incurred after the estimated completion date of the project, as a result of the event.

Mer argued that the “inception of the event” was the initial installation of the faucet, which occurred during the construction project and within the coverage period. It was critical to Mer’s argument that the loss originated from the initial installation, which set in motion a process called “creep/stress relaxation”.

The court rejected the argument, finding that the “event” was the separation of the pipe which occurred after construction was complete. The court distinguished the applicable definition of “occurrence” from other cases which used more expansive wording (e.g. “continuous or repeated exposure to substantially the same harmful conditions”).

The court ultimately found that the loss was not captured by the builders’ risk policy.  As such, there was no discussion as to whether the policy was primary or whether the plaintiffs would have been required to seek coverage under it prior to their homeowner’s policy. Nonetheless, the decision is a positive development for subrogation insurers, who should keep in mind the overall purpose of builders’ risk policies: to provide coverage during the construction project in order to ensure that the project is not interrupted by disputes and litigation.

Maio v. Mer Mechanical Inc., 2018 ONSC 4426 (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 ...


Payback Time: Property Insurer Entitled to Repayment

 Jul 18, 2018 11:00 AM
by Devan Marr

The recent Ontario Court of Appeal decision of Gore Mutual insurance Company v. Carlin confirms that contracts of indemnity are meant to indemnify an actual loss and not provide a windfall.

The facts, surprisingly, are straight forward. The respondents carried on a dental practice. A fire destroyed the building in which the practice was run. The fire also destroyed the contents. Gore had issued a policy for the building and its contents. Prior to determining the total loss, Gore made a series of advance payments to the Respondents. A dispute over the value of the total loss arose. Gore and the respondents participated in an appraisal as provided for in section. 128 of the Insurance Act, R.S.O. 1990, c. I.8 (“the Act)”. The amount found to be payable by the Gore under the appraisal was $713,767.33. To that amount was added an agreed sum for business interruption loss, being $205,444, and $7,465.70 for professional fees. The total amount payable by Gore was $926,677.03. However, by this time Gore had already paid out $1,030,187.04. It sued to recover the overpayment of $103,510.01.

A summary judgment motion was brought to resolve the issue. The motion judge found that the advance payment was deliberate and not the product of mistake. He noted as well that both the policy and the Actwere silent regarding what happens when an overpayment has been made. He contrasted this to the Schedulethat had specific repayment provisions. He found no repayment was owed and unjust enrichment was not available. Gore appealed.

Gore was successful on the appeal. The Court of Appeal found the motion judge had ignored the fundamental principle that a contract of insurance is a contract of indemnity; it is not a vehicle for turning misadventure into profit.

The Court of Appeal found it was insufficient to engage in an analysis of the policy that is limited to a search for a specific provision that dealt with an overpayment. The motion judge was obliged to determine what the parties bargained for in entering into their contract of insurance. Had he done so, it would have been clear that the respondents’ retention of the overpayment was antithetical to the bargain the parties struck. Contracts of insurance are to be interpreted in a manner that results in neither a windfall to the insurer nor an unanticipated recovery to the insured. The policy provided only for indemnification for a loss suffered. The reference to Schedulewas inapt, as itcontemplates payments made by insurers to both insureds and third parties. It makes sense that the Schedulewould specifically address repayment to the insurer of erroneous payments given that they could potentially be made to third parties who have no contractual relationship with the insured.

Additionally, the motion judge erred in law in the unjust enrichment analysis. To successfully make an unjust enrichment claim, a plaintiff must prove three things: (1) the defendant must have received an enrichment, (2) the plaintiff must have suffered a corresponding deprivation, and (3) there was no juristic reason for the benefit and loss. The Court found where money is transferred from a plaintiff to a defendant, there is an obvious enrichment. In this case, there was no issue that the insured received a benefit and that the appellant suffered a corresponding deprivation.

This decision represents helpful clarification from the Court of Appeal. While insurers are bound to act in good faith to their insureds, they are only obligated to indemnify them for the actual loss suffered. Where good faith advance payments lead to an overpayment not contemplated by the contract, an insurer is entitled to repayment for this excess amount.

See Gore Mutual Insurance Company v. Carlin, 2018 ONCA 628

Devan Marr’s practice has focused on bodily injury, long term disability, statutory accident benefits, and employment claims.


Mind the Gap: Walk Backwards At Your Own Risk

 Jul 16, 2018 12:00 PM
by Shalini Thomas

This action was brought against the Village of Kaslo (B.C.) by a plaintiff who sustained damages after falling down an embankment off Water Street (an unpaved alleyway). The Village had erected concrete barriers at the mouth of the street/alley in order to bar vehicles from entry and to demarcate the embankment. However, there were gaps between the barriers. Although the plaintiff was familiar with the area, she had her back to the barriers while helping her husband park their motor home. As a result, she stepped between one of the gaps before falling down and injuring herself.

In determining liability, the Court relied on the Supreme Court’s decision of Ryan v. Victoria (City), 1999 CanLII 706 (SCC) in which conduct was defined as negligent where it created “an objectively unreasonable risk of harm”. In this case, the Court noted the following factors: the embankment was patently obvious, the area was rarely used, the plaintiff knew of the embankment and there had been no other incidents of falls down the embankment.

Court dismissed the action and found that the infrastructure placed in the area of the fall by the Village was adequate. It was not necessary to put up fencing or fall protection as it was obvious that the area was hazardous. The Court also found that the plaintiff would not have fallen if she watched where she was stepping. Namely the “proximate cause” of her fall was determined to be her inattention in walking backwards toward the embankment despite being aware of the hazard.

While this decision is not binding on an Ontario Court, the duty of care owed by an occupier is defined almost identically in the Occupiers Liability Act of B.C. and Ontario. As such, the decision would likely be persuasive in Ontario in suggesting that common sense and the principles of reasonableness should prevail in disputes over whether an occupier has discharged its duty of care to ensure that people (and/or their property) will be reasonably safe while on their premises.

See Herrington v. Kaslo (Village of)), 2018 BCSC 1077

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.

Occupiers' Liability, Tort  

Dude, Where’s My Cargo?

 Jul 9, 2018 11:15 AM
by Tim Gillibrand

The matter of Rosen Express v. Northbridge is yet another case of stolen cargo for which Rosen sought coverage. The case underlines for insurers that courts will often take a broad approach to coverage and they must provide supporting evidence when alleging misrepresentation.

This case involved electronic goods which were ultimately destined for Best Buy in Quebec. Affidavit evidence supported that Greenway Carriers transported the goods to Rosen Express by leaving a Greenway trailer in Rosen’s yard. Rosen ultimately was tasked with delivering the trailer to Quebec.  Notably, the Greenway and Rosen properties were directly beside one another.

The insurer argued that there should be no coverage for two reasons. First, it argued the goods were not in Rosen’s custody and thus not covered by the policy. In support of this, the insurer argued that the goods remained in Greenway’s trailer and it was a Greenway employee who completed the police report. The court rejected these arguments as speculative and accepted Rosen’s evidence that it intended to transport the goods using the Greenway trailer. 

The court also found, based on the policy wording, that the cargo would be covered regardless of whether they were dropped off at the Rosen property. Greenway was found to be acting as Rosen’s agent and therefore the goods were considered to be in Rosen’s custody even if on the Greenway property.  

Second, the insurer argued that Rosen made a material misrepresentation when it applied for insurance because it failed to disclose that it would be transporting electronic goods.  There was a space on the application to specify the type(s) of electronic goods being transported, which was left blank. The application described the types of goods very generally, including “consumer goods”. In the application, Rosen provided evidence that electronics comprised 1 to 2% of its shipments.

Morgan J. rejected the insurer’s submission that there was a material misrepresentation. It was significant that the insurer did not provide any evidence to support that it was induced by the misrepresentation or that it would have treated the application differently.  The court differentiated the case from one where an insured transports something drastically more dangerous or expensive than that declared on the application (e.g. explosives or gold bullion). 

Although the court rejected the insurer’s coverage arguments, Rosen was not entitled to any compensation. There was a lack of evidence to support the value of the cargo as no claim had been made against Rosen. While there was some evidence on the bill of lading and post-loss amounts had been withheld from Rosen, the court was not satisfied that the cargo claim value could be determined with accuracy. Therefore, the court left for another day the issue as to whether the policy would respond to a cargo claim and the amount of same. 

See Rosen Express v. Northbridge General Insurance Co., 2018 ONSC 4017 (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 ...

Coverage, Transportation  

Distracted – Does it rise to the level of Impaired Driving?

 Jul 9, 2018 11:00 AM
by Laura Emmett

The Supreme Court of Canada recently considered whether an individual can be impaired by reason of distracted driving in R. v. Suter. While the primary issue was the appropriate length of sentence for the criminal conviction, it also dealt with the concept of being impaired by distraction.

The facts of the case were tragic. Mr. Suter fatally injured a two year old when he drove his vehicle onto a restaurant patio. Following the incident, the accused was charged with impaired driving causing death, impaired driving causing bodily harm and refusing to provide a breath sample after causing an accident resulting in a death. Complicating the situation was the fact that sometime after the accident, Mr. Suter was attacked by a group of vigilantes who kidnapped him, beat him and cut off his thumb using a set of pruning shears.

In the moments leading up to the accident, the accused and his wife got into a fight in the parking lot in front of the restaurant patio. During this fight, his wife exclaimed “Maybe we should just get a divorce.” At about the same moment, the wife realized that the vehicle was inching forward and she yelled at the accused to stop. Unfortunately, Mr. Sutter’s foot had come off the brake pedal. Instead of hitting the brake, he pressed down on the gas pedal which caused the vehicle to launch forward onto the patio where he struck the child. Following this, Mr. Suter was pulled from the vehicle, thrown to the ground and beaten by witnesses at the scene. He was arrested, taken to the police station and a breath demand was made. It was after speaking with a lawyer to obtain legal advice that he ultimately refused to provide the breath sample.

The Supreme Court of Canada noted that the circumstances were unique as the reason the accused refused to provide the police with a breath sample was because he was given bad legal advice which he followed. The impaired driving charges were ultimately withdrawn when the accused plead guilty to one count of refusing to provide a breath sample.

The Court of Appeal of Alberta found that the sentencing Judge made several errors in his decision. One of these errors was that the sentencing Judge failed to consider the fact that the accused “cho[se] to drive while distracted in the context of his health and pre-existing alcohol problems.” The Court of Appeal found that this was an aggravating factor.

The Supreme Court of Canada was critical of the Court of Appeal for engaging in their own interpretation of the evidence by concluding that what happened was more than just a momentary driving error. Although it was accepted that the accused was not impaired by alcohol, the Court of Appeal concluded that the accused’s ability to drive was “knowingly impaired by health and other factors.” Specifically, the Court of Appeal concluded that the accused’s ability to drive was “impaired by the distraction offered by his argument with his wife, in the context of [his] health and drinking problems.”

The Supreme Court of Canada held that the concept of “impaired by distraction” was “both novel and confusing” and would not endorse it. The Supreme Court of Canada found that the Court of Appeal did so primarily to circumvent the lower Court’s finding that the accident was a result of a non-impaired driving error. The Supreme Court of Canada noted that in describing the circumstances of the accident, the Court of Appeal focused on the fact that the accused chose to drive (1) in a busy parking lot; (2) while angry and distracted; and (3) in the context of pre-existing martial/health/alcohol problems.

The Supreme Court concluded that the Court of Appeal:

[I]mproperly recast the accident as one caused by health and alcohol problems, anger, and distraction. It reweighed the evidence and looked to external factors that had no bearing on the gravity of the offence for which Mr. Suter was charged, nor on Mr. Suter’s level of moral blameworthiness.

The Supreme Court of Canada found that this was an error in principle that resulted in the imposition of an unfit sentence.

While impaired by distraction may not be sufficient for a criminal conviction, an individual’s state of mind while behind the wheel continues to play a significant role in motor vehicle tort claims. The standard to prove negligence is lower than the criminal burden of proof. Although the Supreme Court of Canada may not have been willing to assign criminal fault in these circumstances, the reasonableness of a driver’s actions in a similar civil setting is still fair game.

See R. v. Suter, 2018 SCC 34 (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 ...

Court Proceedings, Emerging Issues  

Red Card! - ONCA Confirms Summary Judgment in Soccer Assault

 Jul 6, 2018 3:30 PM
by Stas Bodrov

As the quarter-final round of the World Cup is happening, the Ontario Court of Appeal saw fit to release a decision about an altercation that occurred in the middle of a soccer game. For those not familiar with the sport, physical altercations are not typical: soccer is a technical sport which requires high physical stamina, incredible ball control, and a dash of theatrics to make a fall look more painful than it actually is (see Neymar Jr’s theatrics at the 2018 World Cup). However, when tempers rise and an altercation ensues, who should be held responsible for damages associated with an assault on the field? 

On September 9, 2010, the North Mississauga Soccer Club was playing against Hamilton Sparta in a game governed by the Ontario Soccer Association (OSA). In the middle of the game, Da Silva, a player on the North Mississauga club, was battling for the ball against a player from Hamilton Sparta. The referee decided that the battle was too physical and stopped the play. After the whistle blow, players from both teams ran onto the field from the benches. Among those players was Gomes, a player from Hamilton Sparta, who decided to punch Da Silva.

Gomes was criminally convicted of assault. Da Silva also commenced a civil suit against Gomes, Hamilton Sparta, the coach, team manager and vice president of Hamilton Sparta, and the OSA. The defendants (with the exception of Gomes) brought a summary judgment motion to dismiss the action against them.

At the summary judgment motion, Da Silva argued that the defendants breached the standards of care for coaches, on-field supervision, and player conduct. Fundamental to his claim was the argument that Hamilton Sparta, and its executive team, should have foreseen that Gomes would commit an assault and should have prevented him from playing. This was based on two previous occasions where Gomes had verbal altercations with referees.

The motion judge rejected this argument. She relied on case law from BC and concluded that, when dealing with sport coaches, “the standard of care is not that of a careful and prudent parent but whether the coach acted in accordance with the ordinary skill and care of a coach in the circumstances in which he or she find themselves”. The motion judge found that the assault was a “sudden and unexpected” event that was not foreseeable by the club, its staff, or the OSA. The judge also determined that the two past incidents were not predictive of Gomes’ conduct exhibited in this game.

Additionally, the FIFA Laws of the Game (the rules governing Ontario Soccer) specifically state that the coach and other team officials are not allowed to enter the field of play without the permission of the referee. Therefore, Hamilton Sparta staff could not do anything to prevent the assault from occurring.

The Plaintiff attempted to rely on Forestiere v. Urban Recreation Limited, wherein the court found that a coach had breached a standard of care when a player was injured as a result of a slide tackle. However, the motion judge distinguished this case as, in Forestiere, the slide tackle was performed by an unregistered player who was not aware of a rule unique to that league: no slide tackling. In that case, the court found that the coach breached the standard of care by not informing the unregistered player of this rule.

The motion judge found that there is no unique rule to soccer prohibiting one player from punching another – it’s simply a criminal act. A code of conduct prohibiting punching during a game would not be a unique rule and likely would not have prevented Gomes from committing the assault. The motion judge concluded that the OSA, Hamilton Sparta, and its coach, manager, and Vice President did not breach their respective standards of care. The judge therefore dismissed the action against these defendants.

The Ontario Court of Appeal

The Ontario Court of Appeal agreed with the motion judge.

The Court of Appeal found that the motion judge did not make any palpable and overriding errors and confirmed that supervising authorities are “not legally responsible for a sudden unexpected event in the midst of an acceptable, safe activity”.

The court also reiterated the importance of parties putting their best foot forward on summary judgment motions, noting that courts reasonably assume that “the parties have placed before it, in some form, all of the evidence that will be available at trial”. The court specifically noted that the plaintiff’s case “foundered on the absence of evidence”.

Takeaway – Raising the Standard

This case confirms that, in Ontario, athletic organizations and coaches will only be held legally responsible for acts that are foreseeable and that are ultimately preventable. An organization will be held to a higher standard of care if it creates unique rules, policies, and procedures. However, absent a self-implemented standard of care, an athletic organization will not be legally responsible for “sudden unexpected events” in an activity that is innately acceptable and safe. Happy Soccering!

See Da Silva v. Gomes, 2018 ONCA 610, aff’g Da Silva v. Gomes, 2017 ONSC 5841.

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...


Particulars or No Particulars: That is the Question

 Jul 6, 2018 2:00 PM
by Laura Emmett

The question of whether the jury in a negligence action is required to provide particulars of any finding of the Defendant’s negligence was considered by the Court in Poonwasee v. Plaza. After reviewing the relevant case law, the Court found that there was no such obligation.

The action arose as a result of a motor vehicle accident. Initially, Counsel proposed that the jury questions include a request that the jury provide particulars of the Defendant’s negligence, if there was a finding of negligence. Further, Counsel had proposed that the jury describe the Plaintiff’s injuries if they found that there were injuries caused by the accident. However, during the pre-trial conference, Counsel for the Plaintiff changed his position and did not want the questions to be submitted to the jury.

The Court noted that section 108(5) of the Courts of Justice Act provided that the Judge may require the jury to give a general verdict or answer specific questions. However, the Court noted that there was little case law with respect to the type of questions that ought to be left to the jury. Upon reviewing the case law, the Court acknowledged that there were both advantages and disadvantages to requiring a jury to provide particulars. The advantages were that (1) it allowed for the opportunity to “test” the jury’s understanding of the Court’s instructions; (2) it ensured that the jury did not disregard the law in favour of an emotional verdict; and (3) it concentrated the jury’s mind. 

The disadvantages were that (1) it failed to allow for the possibility that the jurors may not agree on the reasons for negligence; and (2) it risked revealing the substance of the jury’s deliberations. The Court also noted that there was a danger that by attempting to precisely articulate the particulars of their findings, the jurors may become distracted from their main tasks of determining liability and damages.

The Court found that the questions put to a jury are within the discretion of the trial judge. In making this determination, the trial judge should consider whether the advantages of asking the jury to provide particulars outweighs the disadvantages. This will depend on the circumstances of the case.

In the present case, the Court found that there was nothing to suggest a need to “test” the jury’s understanding of the instructions on negligence. In fact, the issue was not complex as the Defendant did not lead any evidence to explain her conduct. As such, it was likely that the jury’s focus would be on the issues of causation and damages, not liability. The Court found that nothing would be served by requiring the jury to articulate the nature of the Defendant’s negligence. With respect to the Plaintiff’s injuries, the Court was unable to see how asking the jury to list the injuries would test the jury’s understanding of the judicial instructions. There was conflicting evidence regarding the extent of the injuries. The Court noted that the jury was provided with the standard instructions on causation without objection. Particulars were not required in light of the specific circumstances of the case.

As a result of this decision, parties should not automatically assume that jurors are going to be required to provide particulars on negligence or the nature of the injuries. The parties need to consider whether the benefits of asking for particulars outweigh any disadvantages of same.

Poonwasee v. Plaza, 2018 ONSC 3797 can be found here.

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 ...


Can LTD Benefits Frustrate an Employment Contract?

 Jul 5, 2018 5:00 PM
by Devan Marr

The recent decision of Roskaft v. RONA Inc., 2018 ONSC 2934, sheds some light on when an employer can successfully claim frustration of contract when an employee is in receipt of long-term disability benefits.

The facts of this case were fairly straight forward. The Plaintiff began working for RONA in 2002 in a clerical role. In 2012, he started a leave of absence due to a medical condition. The Plaintiff had access to short term and long-term disability benefits provided by Sun Life. Sun Life approved the Plaintiff’s claim for LTD benefits. RONA had no involvement with the Plaintiff’s LTD claim. In December, 2014, Sun Life allegedly advised RONA that the Plaintiff was “permanently” disabled from his own occupation and any occupation. In September, 2015, three years after the onset of his disability, RONA terminated the Plaintiff’s employment due to frustration of contract. RONA relied on Sun Life’s December, 2014 letter and the fact the Plaintiff continued to receive LTD benefits. He was paid his statutory minimum entitlements under the Employment Standards Act, 2000. The Plaintiff commenced an action for wrongful dismissal. He alleged that RONA failed to obtain information from the Plaintiff which would have indicated his condition was improving at the time of dismissal.

On a summary judgment motion, Pollak J., found that the contract of employment between RONA and its employee of 13 years was frustrated by the employee’s 3 year absence.

Interestingly, Pollack J., concluded that the December, 2014 letter from Sun life, on its own, was insufficient to conclude that the Plaintiff was “permanently” disabled. Notably, there was apparently no reference to “permanent” disability in the correspondence. However, due to the following points, he found that it was reasonable to conclude that there was “no reasonable likelihood” that the plaintiff would return to work within a reasonable period of time:     

  1. Sun Life’s determination that the plaintiff was sufficiently disabled to receive long term disability benefits;
  2. The Plaintiff’s post termination representations to Sun Life that his medical condition had not improved; and
  3. The Plaintiff’s continued receipt of LTD benefits.

While employers are usually unable to rely on post termination medical documentation to support their claim for frustration, Pollack J., allowed the representations to Sun Life in as evidence. It is likely this post termination evidence that carried the day for the employer. Pollack J., specifically indicated it directly contradicted the plaintiff’s assertion that he would have provided further evidence had RONA asked and have been able to return to work in a reasonable period of time.

Closing Commentary

It is apparent that Pollack J., was unwilling to let the Plaintiff have his cake and eat it too. On the one hand, the Plaintiff was reporting to Sun Life that his condition remained stable and unchanged. On the other hand, he alleged that had RONA asked for additional medical information, he would have advised that he was improving. Both were unlikely to be accurate.

It is unfortunate that Pollack J. sidestepped the issue of which party had the obligation it is to submit or request medical information. Notably, the Plaintiff dropped his claim under the Human Rights Code, and so Pollack J., did not have to address the issue of accommodation by RONA. While there is case law that suggests an employer may suffer repercussions if they request information too frequently, many employment lawyers will vehemently argue that simply relying on the conclusion of the LTD insurer is insufficient to justify a claim of frustration without more. This decision would suggest that that a determination by the LTD carrier of ongoing disability, coupled with the continued receipt of LTD benefits may be a sufficient basis for employers to allege frustration of contract.

The Plaintiff’s receipt of long-term disability benefits for three years suggests his disability was severe enough that he was unable to engage in any employment for which he was reasonably suited. Those in the long-term disability industry recognize that this is a stringent test to meet and would be compelling evidence for employers to consider a frustration argument. However, as best practices, employers should request additional information from time to time from their employee and seek legal advice prior to making a final determination. While RONA was ultimately successful, their decision to dismiss the employee resulted in costly litigation.

The decision Roskaft v. RONA Inc., 2018 ONSC 2934, can be found here.

Devan Marr’s practice has focused on bodily injury, long term disability, statutory accident benefits, and employment claims.

Disability, Employment Practices Liability  

The Importance of Inviting the Proper Guests to the Party

 Jul 2, 2018 5:00 PM
by Fiona Brown

The plaintiffs’ claim relates to an incident that took place on September 8, 2013.  On that day, a car being driven by the plaintiff, John Bertolli, drove through a pothole located on McCowan Road, in the City of Markham and the Region of York.   Consistent with the requirements of the Municipal Act a notice letter was delivered to the City of Markham advising it of the accident, asserting it had been negligent in the upkeep of the road, was responsible for any damage suffered by the plaintiffs, asking that its property liability insurers be notified, and raising the prospect that an action would be commenced against it.   The letter began as follows:

Please be advised that I have been retained by the above noted individuals in connection with personal injuries sustained while driving on McCowan Road, north of Dennison Street, Markham, on September 8, 2013.

The City of Markham (“Markham”) immediately wrote to counsel for the plaintiffs advising that the location of the accident fell under the jurisdiction of the Region of York (“the Region)”, within which Markham is located.  Markham passed the letter it had received on to the Region.   Counsel for the plaintiffs followed up and sent a letter to the Region, containing the same advice as the letter it had sent to Markham.  In particular, it included the same introductory words as quoted above.

Brennan Paving and Construction Ltd. (“Brennan Paving”) was the road maintenance contractor identified as being responsible for the upkeep of the road at the location of the accident.  The Region passed on the letter it had received to Brennan Paving.

The Statement of Claim was issued on August 27, 2015 naming the City of Toronto and John Doe Maintenance Company as defendants.  The Claim notes the location of the accident as “northbound on McCowan Road, in the City of Toronto” and nothing more.   It is important to note that parts of McCowan Road are located in the Region (which includes Markham) and other parts in the City of Toronto.  At the time of the accident, and for the five years prior, Brennan Paving was not, and had not been, responsible for the maintenance on the part of McCowan Road that is located in the City of Toronto.

The Statement of Claim was served on the City of Toronto on September 1, 2015 and particulars of the exact location of the alleged accident were requested.  In response, counsel for the plaintiffs advised that the “pothole was located in the northbound curb lane of McCowan Road, approximately 49 feet north of the white line/traffic lights at the intersection of McCowan Road and Dennison Street.”

Thereafter counsel for the plaintiffs began the process of bringing a motion to substitute the Region for the City of Toronto as a defendant in the action.   Counsel also wrote to the Region asking for “…the legal name of the maintenance company”.  No such letter was written to the City of Toronto prior to the issuance of the Statement of Claim.

Once Brennan Paving was identified, the plaintiffs served a Fresh as Amended Notice of Motion to amend the Statement of Claim to substitute the defendant City of Toronto with the Region  and to substitute or add Brennan Paving. 

The Master granted the motion allowing both the Region and Brennan Paving to be the defendants named in the action, based on the principle of misnomer.

Brennan Paving appealed the Master’s Order.

On setting aside the Master’s Order, the motion judge reviewed the doctrine of misnomer that states:

5.04(2)        At any stage of a proceeding the court may by order add, delete or substitute a party or correct the name of a party incorrectly named, on such terms as are just, unless prejudice would result that could not be compensated for by costs or an adjournment.

The court held that the words “add” “delete” and “substitute” as found in the rule should be read each as modifying the authorization to “correct the name of a party incorrectly named”.  The test, for misnomer, according to the court must start with the question:

How would a reasonable person receiving the document take it?  If, in all of the circumstances of the case and looking at the document as a whole, he would say to himself:  “Of course it must mean me, but they have got my name wrong,” then there is a case of mere misnomer.  If, on the other hand, he would say:  “I cannot tell from the document itself whether they mean me or not and I shall have to make inquiries”, then one is getting beyond the realm of misnomer.

Justice Lederer relied on the reasoning in the Court of Appeal decision, Essar Algoma Steel v Liebherrr (Canada) Co. to conclude that there are two questions to be answered:

  1. Whether the failure of the plaintiffs to correctly name the Region as a defendant is a misnomer, and
  2. Even if a misnomer occurred, should the Court exercise its discretion to refuse to permit the requested correction?

The court was clear that the onus or responsibility for identifying an otherwise unrecognized defendant lies with the plaintiffs and not the Region.  The court also felt that it was incumbent on the plaintiffs to do something to figure out who, or what, John Doe Maintenance Company actually was, and they could have done so before issuing the Statement of Claim.   It was relevant to the court that the accident occurred on September 8, 2013 and the Statement of Claim was not issued until August 27, 2015, nearly two years later.   The court noted there was no reason why, during that time, a request could not have been made to the City of Toronto to determine the name of the maintenance company, and allowed the appeal.

The plaintiffs/respondents appealed.   In dismissing the appeal, the Court of Appeal reviewed both the Master’s decision and the Superior Court’s decision and found that although the site of the accident, as identified in the Statement of Claim, was not particularized beyond alleging that it occurred on McCowan Road, in the City of Toronto, the Master concluded that the substituted defendants (the Region and Brennan Paving) would have known they were the intended defendants upon reading the Statement of Claim.   The Master also assumed that the substituted defendants would have received a notice letter, delivered to them within days of the alleged accident, which would have identified the precise location of the alleged accident at a particular point on McCowan Road, which was in the Region when, in fact, the notice letter identified Markham as the relevant municipality.  Markham forwarded the letter to the Region who, in turn, forwarded it to Brennan Paving.

The Court of Appeal held that even when read in combination, the notice letter and Statement of Claim were not capable of supporting an inference that the substituted defendants (City of Toronto and Brennan Paving) were the intended defendants.  Without reference to the pothole in the notice letter and without particulars of the precise location of the accident alleged in the Statement of Claim, the reasonable reader could not know, without further inquiry, that the documents referred to the same accident.   As the court states:

Put simply, the Master’s inference that the substituted defendants would know they were the intended defendants was not available on any reasonable view of the evidence.  The Master’s order was properly set aside.

This decision clarifies the test for misnomer and makes it clear that it is the plaintiff’s responsibility to identity the proper defendant(s) and to take steps to make that determination before issuing a Statement of Claim.

See Bertolli v Toronto (City), 2017 ONSC 7534, aff’d 2018 ONCA 601

Fiona Brown has an insurance law practice that has focused exclusively on insurance defence for almost 22 years. Read more ...



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