This decision arises from a motor vehicle accident that occurred on February 8, 2011. The trial took place in January 2019 before Trimble J. After the jury retired to deliberate, the defendants brought a motion for a declaration that the plaintiff’s injuries did not meet the threshold under section 267.5(5) of The Insurance Act. This decision provides a useful summary of the applicable case law and the facts that will likely affect the outcome of a threshold motion.
As Trimble J. stated “Mr. Mann’s case is a little more complex than others.” The plaintiff was involved in a motor vehicle accident on October 15, 2008 in which he injured his neck, shoulders and low back, among other things. His evidence at the trial related to his 2011 accident was that while those injuries were still symptomatic at the time of the 2011 accident, he had generally improved by 50% at that time.
The Effect of the Jury’s Verdict on the “Threshold” Motion
The defendants argued their threshold motion on January 30, 2019 while the jury was deliberating. The jury returned its verdict on February 1, 2019, awarding the plaintiff $15,000 for general (non-pecuniary) damages, $0 each for past and future income loss, past and future health care costs, and for past and future housekeeping expenses.
The question became whether, and to what extent, the trial judge may consider the jury’s verdict on a threshold motion?
While some some judges have held that threshold motions should be decided before the return of the verdict, so that there is no perception that the judge was influenced by the findings of the jury (Chrappa v Ohm,  O.J. No. 1663 (S.C.J.), others have held that the trial judge may consider the verdict on the threshold but is not bound by it (Bishop-Gittens v Lim, 2016 ONSC 2887 (S.C.J.).
Trimble J. determined that the jury’s verdict does not determine threshold and it is not binding (Jugmohan v Royale, 2015 ONSC 1497 (S.C.J.) (CanLll) especially where the finding depends on credibility (Kasap v MacCallum, 2001 Can Lll 7964 (ONCA). His Honour went on to state: “The trial judge may not abandon to the jury his or her statutorily imposed duty to make findings of fact necessary to decide the threshold.”
The Role of Credibility (Where there are no Objective Signs of Injury)
As in any personal injury action, proof of the plaintiff’s claimed injuries and impairments come from the plaintiff’s own subjective evidence. In this case, Trimble J. found that the plaintiff’s credibility was a key issue and “the success of the threshold motion (if not the entire action) may hang upon it.”
In his reasons, Trimble J. stated that plaintiffs generally lose threshold motions where the plaintiff is an unreliable historian, gives contradictory evidence, is not candid with his doctors, gives inaccurate or incomplete information to doctors, does not follow doctors’ recommendations, where surveillance clearly contradicts the plaintiff’s report of pain, injury and disability, and/or the plaintiff’s performance as a witness shows him to be argumentative and uncooperative (Rajic v Atking, 2011 ONSC 1024 (Can Lll) and Smith v Declute, 2012 ONSC 3308 (CanLll).
Trimble J. allowed the defendants’ motion and held that the plaintiff had not met his burden to establish, on a balance of probabilities, that he suffered a permanent, serious impairment of an important bodily function. Accordingly, he was barred from recovering damages for health care costs and non-pecuniary general damages.
With the exception of Dr. Berbrayer, all doctors accepted that the plaintiff had no objective signs of injury on examination. Because no other doctor supported Dr. Berbrayer’s view and all doctors diagnosed the plaintiff based on his subjective complaints, his credibility was critical to the threshold motion. Interestingly, but for one instance, Trimble J. found the plaintiff to be honest and trustworthy. The one exception related to the plaintiff’s post 2011 income. The plaintiff claimed that, following the accident, to survive financially he had borrowed from credit cards and lines of credit, took out loans, and relied on money his children were giving him. According to Trimble J. “the picture was of a man scrambling, financially, to maintain his household.”
This “picture” was not accurate as, on cross-examination, the plaintiff admitted that in March 2013 he had settled his accident benefits claims (for both his 2008 and 2011 accidents) for $125,000, in 2018 he had sold some rental property netting over $400,000 from that sale, and the home he and his wife were living in had a value of about $800,000 with a remaining mortgage of only $112,000. The plaintiff had been making his mortgage payments from 2008 to 2019 on both the rental property and his home. The fact that he received $125,000 in March 2013 and $400,000 only six months before the start of the trial was important to Trimble J. who found that “this could hardly have slipped his mind.”
The plaintiff was also found to be an unreliable historian. What he told one doctor about his state of health and function was often at odds with what he told another doctor. The contractions were described as “significant.” For example, he reported numerous pain complaints including headaches, severe neck pain, shoulder pain, arm pain, hand pain, leg pain, arm numbness, leg numbness, mid-back pain, and fatigue. Yet, he gave a much reduced injury list to other doctors and his reports to various doctors were not consistent. He told one doctor he lost consciousness in his accident, yet makes no mention of this to other doctors. He reported a shift in pain from his right to his left arm, to one doctor, but to no one else. He told some doctors that he no longer did any activities around the house which contradicted his evidence at trial.
Further, following his 2011 accident, the plaintiff applied for CPP disability benefits. In his application, he provided statements in support of his claim where he reported that he stopped working following his prior accident, in 2008, and made no mention of the 2011 accident that was the subject matter of the trial. He also reported limited function and abilities which related to the 2008 accident, and not the 2011 accident, contrary to his evidence at trial and to most of his doctors.
The defendants had commissioned surveillance video footage showing the plaintiff walking for 49 minutes with no signs of difficulty or the need to stop to rest. A second video showed the plaintiff grocery shopping, alone, lifting 3 L bags of milk from the refrigerator into his buggy, pushing the buggy out to his car, unloading the bags into the trunk and back seat of his car, and carrying some of the bags into his home. Later the plaintiff was seen entering his garage, retrieving a gasoline powered lawn mower, using the pull cord to start it, and mowing his front lawn for about 20 minutes. He pushed, pulled and turned the lawnmower without any difficulty. A few moments later he was seen dragging the hose around the back yard and hosing down lawn furniture. At no time did he show any signs of discomfort.
Trimble J. held that the plaintiff’s unreliability as a historian undermined the opinions of the doctors who testified on his behalf (Drs. Berbrayer and Getahun). Further, both doctors conceded that they accepted the history and complaints the plaintiff gave them and that much of their opinion depended on the plaintiff’s credibility. And, importantly, the plaintiff’s doctors were not given copies of the surveillance.
The plaintiff’s position is that his chronic pain since his 2011 accident has created a serious permanent impairment of an important bodily function.
Trimble J. stated that, due to the plaintiff being an unreliable historian, he would not have found that the 2011 accident caused any injuries or aggravated any pre-existing conditions, and at a minimum, he suffered an aggravation of his neck, shoulder and lower back symptoms, originally caused by the 2008 accident. His Honour did hold that the plaintiff suffered an impairment of a bodily function as a result in the 2011 accident.
According to Trimble J., the word “permanent” does not mean “forever.” The impairment must last into the indefinite future as opposed to a predicted time period, with a definite end (Brak v Walsh, 2008 ONCA 221 (CanLll). In this case, it was held that the plaintiff failed to meet his onus of establishing that the aggravation of his 2008 injuries in the 2011 accident was permanent. This decision was based on the fact that His Honour did not find the plaintiff’s doctors, Drs. Berbrayer and Getahun reliable and preferred the evidence of the defendant’s doctors, Drs. Czok, Chang and Finkelstein. Their views were accepted: at best, the plaintiff suffered a temporary aggravation of his 2008 accident related neck, shoulder, and back injuries in the 2011 accident and the aggravation would have lasted not more than 8 to 12, or 14 to 20 weeks after the 2011 accident.
To determine the importance of the bodily function in issue one must ask “Is it one that plays a major role in the health, general well-being, and way of life of the plaintiff?” This is a subjective analysis and what must be considered is whether the injured person, as a whole, and the effect which the bodily function involved has upon the person/s way of life (Vandenberg v Montgomery,  O.J. No. 2789 (S.C.J.) and Ahmed v Callenger,  O.J. No. 4188 (S.C.J.).
Trimble J. did find that the functions that were impaired (the plaintiff’s ability to do work around the house or to go to the Temple often) were important to his life and wellbeing as it existed at the time of the 2011 accident and, therefore, were important.
To determine whether the impairment is “serious” the court is required to consider the seriousness of the impairment to the person, as opposed to the injury in isolation (Mayer v 14744879 Ont. Inc., 2013 ONSC 6806 (CanLll) and Mohammed v Lafleur-Michelacci,  O.J. No. 2476 (S.C.J.). Further, the impairments must go beyond the tolerable. Interference may be frustrating and even unpleasant, but if it does not go beyond tolerable it is not serious (Frankfurter v Gibbins, (2004) CanLll 45880 (ON SCDC) and Branco v Allianz Ins. Co. of Can.,  O.J. No. 3056 (S.C.J.).
In this case, the court did not find that the plaintiff had met the burden or proving, on a balance of probabilities, that his impairment was serious as defined in the legislation and case law, as compared to his condition immediately before the 2011 accident. The notes of the plaintiff’s family doctor showed little change in his condition before and after this accident.
The Take Away
This decision is a reminder when a plaintiff has not suffered any objective injuries, his or her credibility is key. Surveillance, in such situations, should definitely be arranged and, if helpful, used at trial. The defence should consider bringing a threshold motion in cases where there are inconsistencies between the plaintiff’s discovery evidence, what the plaintiff reports to various doctors, and the plaintiff’s evidence at trial, as this case suggests there will be a relatively strong chance of success in such situations.
A recent decision of the Divisional Court has confirmed that the ‘but for’ test was the correct causation test to be applied in accident benefit cases.
In Sabadash v. State Farm et al, prior to the subject accident in March 2011, Mr. Sabadash had a pre-accident history of anxiety, depression and insulin dependent diabetes. When he was terminated from his employment seven months after the subject accident, he applied for income replacement benefits from his accident benefits insurer.
The insurer took the position that based on the assessments of their medical experts, the claimant’s impairments were not caused by the subject accident. Mr. Sabadash initiated a FSCO dispute arguing that he was unable to work due to collision-related impairments.
At the initial hearing the Arbitrator held that “I cannot accept State Farm’s submission that the ‘but for’ test endorsed by the Courts in accident negligence cases is to be applied to a determination of causation in statutory accident benefits context.” Instead, the Arbitrator applied the’ material contribution’ test.
On Appeal, the Director’s Delegate found that the Arbitrator had applied the incorrect test of causation. The Director’s Delegate concluded that the appropriate test was the ‘but for’ test.
The matter was then appealed to the Divisional Court. On appeal, while the parties agreed that the ‘but for’ test was the correct test to be apply in the accident benefits cases, the parties asked the Court to provide an articulation of the causation analysis to be applied.
The Divisional Court referred back to the both the Clements v Clements and Monks v. ING insurance Company decisions summarizing the proper analysis and approach to applying the ‘but for’ test:
Causation is a factual determination made on a balance of probabilities;
The test for establishing causation is the “but for” test;
The Supreme Court in Clements held that, “As a general rule, a plaintiff cannot succeed unless she shows as a matter of fact that she would not have suffered the loss “but for” the negligent act or acts of the defendant. A trial judge is to take a robust and pragmatic approach to determining if a plaintiff has established that the defendant’s negligence caused her loss. Scientific proof of causation is not required.”
“There is no indication in the SABS of a legislative intent that an insurer’s liability for the accident benefits in issue in this case should be subject to discount for apportionment of causation due to an insured’s pre-existing injuries … The SABS simply states, in clear and unambiguous language, that an insurer ‘shall pay an insured person who sustains an impairment as a result of an accident, medical, rehabilitation and attendant care benefits.’”
In exceptional circumstances, where (i) the plaintiff establishes that her loss would not have occurred “but for” the negligence of two or more tortfeasors, each of whom could be responsible for the loss; but (ii) the plaintiff is unable through no fault of her own, to show that one tortfeasor is the “but for” cause of her injuries because each tortfeasor can point to the other as the possible “but for” cause of the injury, a plaintiff may establish liability against one defendant if that defendant’s conduct materially contributed to the plaintiff’s risk of injury;
This is because public policy dictates that a defendant should not be permitted to escape liability by pointing the finger at another wrongdoer, thereby defeating a finding of causation on a balance of probabilities against anyone; and,
A material contribution to the risk of impairment is one that falls outside the de minimis range.
Ultimately, the Court ordered that the matter be referred back for a new hearing before a new Arbitrator for a proper analysis of the ‘but for’ test in regards to the claimant’s injuries.
This was a much needed clarification on the proper approach to undertake where causation is an issue in accident benefits cases.
Suzanne has represented clients at arbirations and mediations as well as prepared written submissions for accident benefit disputes In addition she has represented clients at CPP tribunal hearings regarding CPP disability benefit applications and appeals. Read more ...
Authored for and Published in CICMA March 2019 Newsletter.
Your child has been invited to her best friend’s birthday party at Charlie’s Pizza Palace.
You drop her off at the party. Before you can leave to enjoy the next two hours of freedom, the clerk at Charlie’s hands you a piece of paper and says, “sign here”. Of course, it’s a Release of Liability Waiver, whereby in exchange for allowing your exuberant child to play with her friends in the arcade, or enjoy one of Charlie’s famous pizza rolls, you agree to absolve Charlie’s (and his employees, family members, friends, enemies, and anyone in Canada named Charlie) from liability if your child gets hurt.
Do you sign?
If no, will your child ever speak to you again after you and she are escorted off the property?
If yes, and she gets hurt, can she sue Charlie’s?
Waivers and Liability Release Clauses
Let’s take a step back and discuss these Waiversappearing every time you try to do an activity with an operator/occupier, from skydiving, to laser tag, to arts & crafts.
The general rule on Waivers in Canada is that they are valid and effective if the language of the exclusion refers to the circumstances of the accident and, in the case of negligence, the language excludes liability for risks or injuries caused by negligence. Furthermore, the operator must take reasonable steps to bring the exclusion or Waiver to the attention of the participant so that its effect is understood. Where the evidence confirms that an adult knowingly signs a form that completely absolves the operator or his or her agents, the exclusion will be effective.
In theOntario Superior Court of Justice case of Isildar v. Rideau Diving Supply, a 28-year old had a tragic accident while participating in a scuba diving activity. He drowned. His family sued the operator, who relied on a Waiver and Liability Release. Roccamo J. reviewed the jurisprudence on waivers/liability releases and summarized it as follows:
Based on case law as it has developed, a three staged analysis is required to determine whether a signed release of liability is valid. The analysis requires a consideration of the following:
Is the release valid in the sense that the plaintiff knew what he was signing? Alternatively, if the circumstances are such that a reasonable person would know that a party signing a document did not intend to agree to the liability release it contains, did the party presenting the document take reasonable steps to bring it to the attention of the signator?
What is the scope of the release and is it worded broadly enough to cover the conduct of the defendant?
Whether the waiver should not be enforced because it is unconscionable?
She held, on the facts of that case, that the release in question was valid and, accordingly, the action was dismissed.
Waivers and Children
We know that Waivers can be enforced against adults, because Waivers are contracts and adults are allowed to enter into contracts. This principle was recited in Isildar, as follows:
It is a general principle of contract law that where a party signs a document which he knows affects his legal rights, the party is bound by the document in the absence of fraud or misrepresentation, even though the party may not have read or understood the document.
But what happens if a child signs a Waiver?
My Grade 8 daughter recently brought home a permission slip from school so she could go skating with her class at a local arena. Unsurprisingly, included with the forms from school was a two-page Waiver form from the arena. The form asked us to agree to absolve the arena (and pretty much everyone who lives within 100 kilometres of it) from any and all liability if my daughter was hurt on their premises. The way the document was worded, we would be absolving them from anything and everything that could possibly happen that day, including falling on ice, getting knocked down by a Skate Patrol person, getting stabbed by skates, drowning, and falling through the black hole at Centre Ice.
My options were to sign the form and send her to school that day wearing my hockey equipment, or saying “nope, sorry”. Fearing significant backlash from my 13-year-old (who was already getting her skates ready for sharpening), I said “You sign it.” She did. And she went skating and, thankfully, returned unharmed.
Why did I tell her to sign it? Because a contract signed by 13-year-old is most likely unenforceable in these circumstances. If heaven forbid something would have happened to her, I would have challenged the arena to try and enforce the alleged contract.
This isn’t to say that we would have won.
After the skating trip, I did some research and was surprised to learn that Canadian case law on minors and Waivers doesn’t really exist. Except in British Columbia, where the Legislature put it right into their Infants Act that a contract made by a minor at the time the contract was made is unenforceable against her, except in specified circumstances that in most cases wouldn’t apply to Waivers.
There is no authority anywhere else in Canada that states that a Waiver signed by a child is unenforceable against her. But I would be surprised if a judge enforced a Waiver against a child, given the hurdle of satisfying a court that the contract was not detrimental to the child’s interest.
The other option of course is to sign a Waiver on your child’s behalf. Most smart operators/occupiers won’t allow a child to sign a Waiver. They insist the parent/guardian sign it.
Is this enforceable against the parent of child if the child is injured?
It would likely be unenforceable in British Columbia because of another provision in the Infants Actthat bars parents and guardians from entering into binding contracts on behalf of infants, except in strict accordance with the provisions of the Act.
As for elsewhere in Canada, it remains unknown if a parent/guardian can waive a minor’s rights to claim against anyone protected by a Waiver. My own opinion on this issue is that a parent/guardian cannot waive a child’s legal rights to sue an operator/occupier.
I find comfort for my (non-binding) opinion in the rules of court and jurisprudence dealing with children in litigation. Among other things, generally speaking a minor cannot bring an action without a litigation guardian (an adult). Moreover, a settlement of an infant claim needs court approval. Therefore, I find it difficult to accept that a parent/guardian would be able to sign away a child’s rights to sue (usually at a busy counter with children running and screaming nearby) to the child’s detriment but would otherwise be precluded from settling a court action to the child’s benefit without court approval.
That isn’t to say that a parent can’t sign away their own legal rights to claim for loss of care, guidance, or companionship. Whether that Waiver is enforceable against the parent would be subject to the same enforceability principles discussed above.
Do you Sign?
So, having now read about everything you were afraid to learn about Waivers, do you sign Charlie’s Pizza Palace’s Waiver? Or do you move to British Columbia?
[Insert here image of your child staring up at you with those big puppy-dog eyes]
For the purpose of this article, the term “Waiver” is used to include liability release clauses.
Under the common law, contracts which are detrimental to the interests of an infant (person under 18) are void. See for example Altobelli v. Wilson,1957 CarswellOnt 43,  O.W.N. 207, 5 R.F.L. Rep. 326.
This is my opinion for the purpose of this article and is notto be construed as legal advice. By reading these next few paragraphs, you are hereby waiving your rights to sue me or my firm for anything whatsoever. It doesn’t matter if you are a child or a parent/guardian of a child. You can’t sue us. Thank you.
Note that under section 40 of the BCInfants Act:
40. A guardian may make a binding agreement for an infant,
(a) if the agreement involves a consideration not greater than $10 000, with the consent of the Public Guardian and Trustee, or
(b) in a case other than one referred to in paragraph (a), with the approval of the court by order made on the petition of a party to the agreement.
In what can only be described as a Pyrrhic victory, a recent Ontario Superior Court summary judgment decision highlights the employment risks present in temporary lay-offs during a business downtown....
In what can only be described as a Pyrrhic victory, a recent Ontario Superior Court summary judgment decision highlights the employment risks present in temporary lay-offs during a business downtown. This decision is a strong reminder that lay-offs are not an automatic contractual right and can trigger a constructive dismissal claim. This decision also confirms that employees must take offers of re-employment seriously when alleging constructive dismissal.
The facts of the case are straight forward and likely all too familiar to many small business owners. The plaintiff was a 53 year old Health & Safety Training Specialist employed with Strone Inc. for 23 years. Strone was an emergency restoration company that experienced an economic downturn in 2014. This caused permanent lay-offs in 2015.
On October 15, 2015 the employer temporarily laid off the plaintiff along with two other employees. As part of the temporary lay-off, the employer agreed to maintain the plaintiff’s benefits but asked him to return company property. They also asked the plaintiff to keep them updated on his availability in case they needed to recall him.
Also on October 15, the plaintiff advised Strone that he was available for work “as always”. He sent a similar e-mail on October 19, 2015 affirming his availability to work. The next day, Strone was retained to repair significant damage to a hotel. There was apparently some internal discussion of recalling the plaintiff given his particular expertise and the scope of project.
Before any recall occurred, the plaintiff retained counsel. On October 27, his lawyer informed Strone that they considered the temporary lay-off to constitute a constructive dismissal. At some point, Strone’s own counsel advised that there was a possibility he would be recalled shortly. The plaintiff’s counsel immediately wrote back advising that the plaintiff felt the relationship had broken down and that he would not be returning to work.
On November 10, Strone’s counsel sent a letter recalling the plaintiff to “active employment” as of November 16, 2015. This was followed up by e-mail on November 12, 2015 with no response. The plaintiff subsequently commenced the action alleging constructive dismissal. The plaintiff argued that there was no term in his contract of employment that allowed Strone to lay him off temporarily and that the offer of re-employment was a sham. He claimed for 24 months of pay in lieu of reasonable notice.
In addressing the constructive dismissal claim, Pollak J., agreed that the plaintiff had been constructively dismissed by the employer’s failure to provide him with work and compensation contrary to the fundamental terms of his employment. In very short reasons, Pollak J., found that the plaintiff’s alleged agreement to the lay-off or his understanding of the business difficulties had the effect of altering this significant term of employment.
The main battleground in this claim, as with many constructive dismissal claims, was whether the plaintiff had failed to mitigate his damages by refusing the offer to return to work. Reviewing the seminal case of Evans v. Teamsters, Local 31, Pollak J., confirmed that when assessing the reasonableness of a re-employment offer, one should look at whether the salary offered was the same, the working conditions were substantially similar, the work was not demeaning, and the relationships involved were not acrimonious. Most importantly, an employee was not obliged to accept re-employment in an atmosphere of hostility, embarrassment or humiliation.
Pollak J. concluded that the employer’s offer of re-employment was reasonable and should have been pursued by the plaintiff. He noted that the plaintiff had provided no compelling evidence that a return to work after 3.5 weeks was too embarrassing, humiliating and/or degrading.
Because of the plaintiff’s failure to mitigate his losses by accepting re-employment, his damages were capped at 3.5 weeks of pay in lieu of notice. For completeness, Pollak J., found the claimant would have been entitled to 18 months of pay in lieu of notice.
While he was ultimately successful in proving he was constructively dismissed, the employee’s refusal to accept a return to work after a 3.5 week lay off resulted in the forfeiture of 17 additional months of notice. It is obvious that the judge did not accept the plaintiff’s bald statement that a return to work after 3.5 weeks would have been demeaning or embarrassing. Employees reviewing this decision should take note that their obligations to mitigate when faced with a constructive dismissal are the same, if not arguably more onerous, than those permanently dismissed. Absent concrete evidence of a hostile work environment, they may be obligated to accept an offer of re-employment.
Employers reviewing this decision should also take note that simple awareness of the on and off again nature of the business will be insufficient to read in a contractual term allowing temporary lay offs. Although not specifically mentioned, it is likely the plaintiff did not have a written contract of employment. In an age of increasing judicial scrutiny and legally savvy employees, it is essential that employers and employees sit down and set their agreements in writing to avoid the risk of misunderstandings and potential claims.
On a final note, and speaking generally, statutory notice and severance are not subject to the obligation to mitigate. I would argue that regardless of the plaintiff’s failure to mitigate, the finding of a constructive dismissal would have entitled the plaintiff to the minimum statutory notice of 8 weeks notice pay, and potentially 23 weeks of severance pay if the employer’s payroll was large enough.
In Ferro v. Weiner, the late Enid Weiner owned a house on Lake Eugenia. From the late 1980s or early 1990s, it was Enid’s sole residence, before she moved to a nursing home in 2008 or 2009. Although she never resumed full-time residence at the house, her three adult children and their families all continued to use it as a cottage. She would occasionally stay there with them. At all relevant times she was the sole owner of the house.
In May 2010, a young man drowned at the house while attending a party. Enid’s daughter Regan, son Scott, and daughter-in-law Sandy were at the house during the incident. The victim’s parents and sister sued Enid, Regan, Scott, and Sandy.
Scott’s insurer, TD Insurance, defended and settled the plaintiffs’ claims. TD then brought a summary judgment motion, seeking a declaration that Intact Insurance was bound to defend and indemnify all defendants against the claims advanced by the plaintiffs. Intact insured Enid as the sole named insured under a Homeowners – Broad Form policy. TD argued that the defendants were insured under the Intact policy because they were all “living in the same household” as Enid at time of the incident.
The motion was granted, and the motion judge ordered a declaration that Scott, Sandy, and Regan were insured under the Intact Policy. She found that Scott and his family were not visitors to the house. She noted that Scott attended at the house when he wished and cared for it, as an owner would, and that he later took an ownership interest in it. Referring to Canadian Universities’ Reciprocal Insurance v. Halwell Mutual Insurance Co. (2002), 2002 CanLII 27712 (ON CA), she held that “household” can have a flexible meaning, and that “the meaning must be gleaned from interpreting its use in the policy of insurance using the rules of interpretation of contracts and of insurance policies, including that any ambiguity is to be resolved in favour of the insured.” She found that in the context of the intact policy and the property in question, Scott and his family were included in Enid’s household.
The Court of Appeal disagreed and allowed Intact’s appeal. The Court of Appeal held that the phrase “living in” was relevant to the question of whether the house was Scott’s residence. It was not.
The Court also held that the word “household” in the context of a homeowners policy refers to a community, most readily understood by analogy to a family unit:
A household is constituted not only by its members’ patterns of living with each other, but also by their settled intentions. Accordingly, courts have found that a person can maintain membership in a household despite lengthy absences from a common residence, provided there is continued self-identification as a member of the household, with a settled intention to return to the common residence. For example, university students do not necessarily cease to be members of their parents’ household when they move away for the academic year, provided they continue to view the parental home as home base and have an intention to return: Canadian Universities’. Similarly, a parent who is absent from the family home for extended periods because of the requirements of work does not therefore cease to be a member of the household during those absences as long as the parent intends to return…
On the facts of this case, the Court held that applying the established common law understanding of “household,” the facts found by the motion judge were incapable of supporting a finding that Enid and Scott, Sandy, and Regan had a “common life with the intimacy, unity, and permanence required to constitute a household.” At the time of the accident, Enid was living in a nursing home. Scott lived with his family in the city and had organized his life around his urban household. Prior to entering the nursing home, Enid lived with Scott’s brother, and not with Scott and his family.
It is also interesting to consider how the Court of Appeal rejected the respondents’ argument calling for a broad interpretation of the coverage clause at issue:
Whether a case involves a coverage clause or exclusion clause may influence the result in borderline cases, but this is not a borderline case. Where the facts are inconsistent with a person being a member of a household in accordance with settled jurisprudence, the fact that the case involves a coverage clause provides no assistance.
Mr. Demetriou claimed he was robbed of a $550,000.00 ring (a family heirloom) that he was wearing on a gold chain around his neck while walking alone on a beach in Punta Cana. He had added the ring to his insurance policy with AIG prior to the trip and, upon returning to Canada, he reported the theft and made an insurance claim.
AIG commenced investigations which included meeting with Mr. Demetriou, performing several examinations under oath and obtaining affidavits from Mr. Demetriou and various family members. However, prior to completing these investigations, AIG had already determined that litigation would be required to resolve this claim and had even advised a company that collects and supplies information to the insurance industry that nothing was owing on the claim and the claim file was closed. Ultimately, the claim was formally denied on the basis that there was insufficient information to substantiate the claim. Notably, during the course of its investigation, AIG identified some suspicious circumstances surrounding the loss and also discovered that Mr. Demetriou had made a prior (and extremely similar) claim under a different policy with a different insurer.
Mr. Demetriou subsequently sued AIG. At an early stage in the litigation, counsel for Mr. Demetriou sought to confirm, by way of obtaining an order for particulars, whether AIG was alleging fraud. This was due to the fact that AIG’s statement of defence was largely boilerplate and there were several exclusion clauses in the policy stating that intentional or dishonest acts committed by an insured were not covered. AIG specifically denied that it was relying on the exclusion clauses and refused to provide any particulars of fraud. However, it also advised that it reserved the right to rely on those provisions should further information become available.
Mr. Demetriou brought the subject motion for summary judgment, which was granted, as the judge found he had complied with his obligations under the policy to prove his claim. The judge refused to place any weight on the suspicious evidence put forward by AIG, stating that AIG had “expressly disclaimed any reliance on fraud or deliberate acts”. The judge also refused to allow AIG to amend the statement of defence at the motion and specifically noted that the case to date had been conducted on the basis that no fraud was being alleged and it was “simply too late to reverse course now”.
Punitive damages were awarded against AIG in the amount of $50,000.00. AIG was criticized on the basis that it had no intention of paying the claim from an early stage but still required Mr. Demetriou and members of his family to submit to EUOs and provide numerous documents. The judge was also unimpressed that AIG had refused to admit that it intended to allege fraud, despite being ordered to do so by the court. These actions offended the court’s sense of decency and warranted punitive damages.
Notably, the case was silent on whether or not, on a balance of probabilities, the plaintiff had proven that the theft occurred. While such a conclusion is arguably implied, it is not specifically stated. This raises some concern that the judge may have conflated the distinct issues of the insurer’s allegations with respect to fraud and the plaintiff’s burden to prove that the loss actually occurred. It will be interesting to see whether any appeal is forthcoming.
This case truly highlights the importance of always dealing with an insured in good faith and also pleading fraud in the right circumstances. Notably, Rule 25.06(8) of the Rules of Civil Procedure specifically requires a party alleging fraud to provide sufficient particulars, in other words, the material facts upon which the party alleging fraud relies. Had AIG provided particulars of the alleged fraudulent circumstances in its statement of defence or when ordered to do so by the court, the outcome of this summary judgment motion may have been different. Ultimately, insurers need to be careful when navigating suspicious claims. Proper investigations need to be undertaken as soon as possible, and, insurers should not prejudge a claim prior to the completion of these investigations. If an insurer is in a position to deny a claim based on fraud, the pleadings must be clear. The insurer should set out the material facts and advise of policy exclusions that it intends to rely on in order to position itself properly when proceeding in litigation. An insurer who attempts to allege fraud covertly does so at its own peril.
Julianne defends insurance claims covering all aspects of general insurance liability including motor vehicle accidents, occupiers’ liability, slip and falls, subrogated losses and general negligence claims. Read more...