The recent decision of Van Huizen v. Trisura Guarantee Insurance Company, reinforces that Courts have little interest in protracted coverage battles between parties.
The facts of the case are important but straight forward. There were three main entities. Mr. Barkley, Hastings Appraisal Services (“Hastings”), and Mr. Van Huizen. Mr. Barkley was a property appraiser. He was employed by Hastings. Mr. Van Huizen operated Hastings. Both Mr. Barkley and Mr. Van Huizen had their own professional liability insurance certificates.
In 2008, Mr. Barkley was hired to do an appraisal. It was alleged that he was negligent in his appraisal, resulting in an eventual loss for the property’s insurer when the mortgagor defaulted. The insurer commenced a claim against Mr. Barkley and Hastings for negligent appraisal. A second claim was commenced against Mr. Van Huizen alleging that Mr. Barkley was either his employee or agent and was therefore vicariously liable.
Mr. Van Huizen reported the claim to Trisura, which subsequently denied coverage claiming that the “wrongful act” of Mr. Barkley did not trigger coverage under the policy insuring Mr. Van Huizen.
Trisura alleged that Mr. Van Huizen had coverage only for a negligent act or omission committed by him personally. Their position was that because Mr. Barkley who prepared the appraisal, he could have coverage under the certificate of insurance issued to him but not Mr. Van Huizen. Although the policy included coverage for the vicarious liability of an employer, it required that the negligent act or omission be committed by the member to whom the certificate of insurance was issued. Alternatively, Trisura argued that if an employer was entitled to coverage for the vicarious liability that arose out of the professional services rendered by a member other than the one named in the certificate, Mr. Barkley was not an employee of Mr. Van Huizen or Hastings as both had denied same in their respective statements of defence that he was.
Mr. Van Huizen viewed the case in simpler terms. In the main action and the third party claim, he was alleged to have been Mr. Barkley’s employer and therefore vicariously liable for his negligent acts or omissions. He was insured both for legal claims arising from his personal actions and from his status as an employer. The denial that he was Mr. Barkley’s employer in his statement of defence or that he was vicariously liable did not have an impact on the duty to defend because it was the allegations in the statement of claim and third party claim that matter.
The court cited Coast Capital Equipment Finance Ltd v. Old Republic, 2018 ONCA 540, for the following principles of law on the interpretation of insurance contracts:
The court must search for an interpretation from the whole of the contract which promotes the true intent of the parties at the time of entry into the contract.
Where words are capable of two or more meanings, the meaning that is more reasonable in promoting the intention of the parties will be selected.
Ambiguities will be construed against the insurer.
An interpretation which will result in either a windfall to the insurer or an unanticipated recovery to the insured is to be avoided.
Applying these principles and viewing the insurance contract as a whole, the court found Mr. Van Huizen had coverage for a legal claim arising from his own actions and also when it flows from his legal status as an employer of the alleged wrongdoer.
The Court found that under the policy, an insured does not have to be an appraiser; but he or she has to be an employer of someone who is and, if they are, the policy granted them coverage if they were alleged to be vicariously liable for the negligent acts or omissions of that member. As a result, Trisura had a duty to defend Mr. Van Huizen.
In parting, the court left the parties with this comment:
At its core, the liability issue is simple: did Mr. Barkley fall below the standard of care in preparation of the appraisal? Both he and Mr. Van Huizen carried insurance coverage for just this type of claim and yet, 10 years after that appraisal was done, litigation over coverage persists. I make this comment not in criticism of counsel but to affirm why, as the Court of Appeal has opined, these types of disputes need to be resolved expeditiously to avoid unnecessary costs and delay.
It is worth noting that in a perfect world, coverage litigation should be short and to the point. In many cases the issue should be determined solely on the pleadings and the contract of insurance. Courts will look for the reasonable interpretation of the clause that satisfies the contract as a whole. While creative and technical arguments have their place and should always be advanced, Justice Hurley would suggest that the ultimate question will be whether coverage makes sense in the circumstances.
In Miglialo v. Royal Bank of Canada, the Federal Court considered an application where Ms. Miglialo claimed damages between $100,000 to $250,000 based on allegations that RBC, or its staff, accessed and disclosed her personal and financial information without her authorization. The Federal Court found that there was no unauthorized disclosure of Ms. Miglialo’s personal or financial information. She was not entitled to any damages as a result.
In light of the ever-increasing risk of personal information disclosure, it is worthwhile to explore Ms. Miglialo’s claim and the application of the sometimes-complicated Personal Information Protection and Electronic Documents Act (PIPEDA).
PIPEDA Dispute Resolution Procedure
In basic terms, PIPEDA was designed to protect individuals’ personal information when it is collected by a business. In a sense, the legislators sought to protect people’s personal data when it left their control. It does so by holding businesses accountable when they fail to adequately monitor and control the collection, use, and distribution of consumer data.
When organizations breach their statutory obligations, an individual can file a complaint with the Privacy Commissioner of Canada. The Commissioner conducts an investigation and renders a report. The Commissioner has the power to issue recommendations and attempt to settle the dispute between the parties.
Once the report is issued, an individual may apply to the Court for a hearing in respect of any matter in the report. This is exactly what Ms. Miglialo did.
The Court has three remedies available. The Court may 1) order that an organization correct its practices; 2) order that an organization publish a notice of its intention to correct its practices; or 3) award damages to the complainant. Damages may include compensation for any humiliation that the complainant suffered as a result of the organization’s failure to comply with their obligations.
Ms. Miglialo's Claim?
In this case, Ms. Miglialo lived in Calgary and did her banking with RBC. Ms. Miglialo alleged that her brother’s girlfriend, who worked at an RBC branch in Montreal, accessed her account which contained the names of her beneficiaries. According to Ms. Miglialo, this information was disclosed to her mother at some point between 2011 and 2012. Based on a lengthy investigation, the Commissioner concluded that this suspicion was based on – dramatic pause – “increasingly uncomfortable” conversations between Ms. Miglialo and her mother. These conversations occurred in 2012 and consisted of Ms. Miglialo’s mother questioning her financial plans in the event of her death. There was no specific discussion with her mother about her RBC account.
Although the court found that Ms. Maglialo’s brother’s girlfriend did access her account on one occasion, this access occurred around February 24, 2013, which was after the dates that Ms. Miglialo alleged the disclosure occurred. The “suspected” disclosure was not based on any evidence present before the Court.
The Court concluded that there was no malice on the part of RBC and there was no evidence of hardship (including humiliation) on the part of Ms. Miglialo. The court noted that PIPEDA aims to compensate, deter, and vindicate. However, one unauthorized access is unlikely to result in a need to deter. More importantly, Ms. Maglialo did not tender any evidence that she suffered any damages because of the breach, which left the court handcuffed and unable to order an award.
PIPEDA is legislation that protects individual’s information from unauthorized collection, use, and distribution. The Act also prescribes a dispute resolution system that must be engaged to receive compensation when an organization behaves contrary to the principles enunciated in PIPEDA. In Miglialo, the court reminds individuals that a single infraction may not be enough to award damages. The burden of proof remains with the complainant to prove not only that a violation occurred, but that they also suffered damages as a result of the breach. Suspicion is not enough.
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...
In S.S. v. Economical, the Licence Appeal Tribunal found the claimant missed the limitation period to dispute the denial of attendant care and housekeeping benefits, which had been denied at 104 weeks, despite the claimant later being deemed catastrophically impaired. The Tribunal also found that subsequent payments of attendant care and housekeeping benefits, made in error by the insurer after the claimant was deemed catastrophically impaired, were irrelevant because the limitation period had expired well before the subsequent payments were made.
The claimant, S.S., was involved in a motor vehicle accident on July 29, 2009. The insurer paid the claimant attendant care and housekeeping benefits until the benefits were terminated pursuant to s. 18(2) and s. 22(2) of the SABS. This refusal to pay further attendant care and housekeeping benefits was communicated via a letter, dated October 4, 2011.
The claimant submitted an initial Application for Determination of Catastrophic Impairment (OCF-19), dated March 23, 2010, claiming impairment under criterion 1(e). The insurer assessed the claimant and found he was not catastrophically impaired under this criterion.
The claimant submitted two further OCF-19s, dated June 17, 2013 and January 8, 2014, under Criterion 8 and Criterion 7, respectively. On September 3, 2014, following the completion of s. 44 examinations, the insurer advised the claimant of their determination that he was catastrophically impaired. The insurer also mistakenly advised the claimant that he was entitled to attendant care and housekeeping benefits and paid him these benefits for approximately six months. Upon identifying the mistake, the insurer advised the claimant that benefits were paid in error and requested a repayment.
The claimant did not dispute the insurer’s denial of attendant care and housekeeping benefits until May 5, 2017.
Adjudicator Johal determined that the denial of October 4, 2011 was clear and unequivocal and complied with the principals set out in Smith v. Cooperators and the SABS. While the Adjudicator agreed that subsequent payments can negate a denial in certain cases, she agreed with the insurer’s position that, in this case, the claimant’s claim for ongoing attendant care and housekeeping benefits was already statue barred at the time of the subsequent payment. In other words, subsequent payments cannot revive a right that has been extinguished.
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 ...
In Kapoor v. Kuzmanski, on the eve of a trial, the Plaintiff brought a novel motion to exclude potential jurors who drive and pay for automobile insurance or who have insurance premiums paid on their behalf from the jury pool. The Plaintiff suggested that an inherent conflict of interest arose for these potential jurors due to the widespread and publicly known fact that increased court awards and settlements increased automobile insurance premiums. The Plaintiff alternatively sought orders that these same residents should be excluded from the jury selection process as being ineligible or based on widespread bias in the community. In the further alternative, the Plaintiff sought to strike the jury notice.
The motion was opposed by the Defendants. Additionally, the Attorney General of Ontario and The Advocates Society were invited to make submissions and render assistance as friends of the court. The motion proceeded before Regional Senior Judge Daley. Following lengthy submissions, the Court wholly dismissed the motion.
The selection and eligibility of jurors is mandated by the Juries Act. The Court noted that section 32 to 34 of the Juries Act deals with challenges and does not permit a broad/general challenge for cause. Rather, the Juries Act only allows for challenges for cause in civil cases on two grounds: (1) for want of eligibility; and (2) for ratepayers and officers/servants of municipal corporations, where the municipal corporation is a party. The Court recognized that a broad/general challenge for cause should not be read into the legislation.
Given that none of the parties involved in this action were a municipal corporation, the only basis for a challenge for cause was want of eligibility, which is addressed in section 3 of the Juries Act. Section 3(3) states as follows:
Connection with court action at same sittings
(3) Every person who has been summoned as a witness or is likely to be called as a witness in a civil or criminal proceeding or has an interest in an action is ineligible to serve as a juror at any sittings at which the proceeding or action might be tried.
The Court noted that this provision does not automatically disqualify jurors with an interest in the action and, further, nowhere does the Juries Act expressly state that lack of impartiality is a ground to disqualify a juror based on ineligibility. The Court concluded that the proper interpretation of section 3(3) led to the conclusion that the word “interest” could only reasonably be construed contextually to refer to having a “connection” to an action. Specifically, “has an interest in an action” was limited to witnesses and prospective witnesses. As such, the Court concluded that only individuals who are or who are likely to be called as witnesses are ineligible to serve as jurors under section 3(3).
The Court held that the Canadian system presumes that jurors are capable of setting aside their views and prejudices and acting impartially upon proper instruction by the trial judge. The Court found that a number of safeguards exist to ensure the integrity of the civil jury process and trial fairness, including the ability of the Court to discharge a juror during the course of a trial on several grounds, including impartially. Therefore, the presumption of impartiality may be overcome or displaced by calling evidence or by asking the Court to take judicial notice of facts (or both). However, a successful challenge cannot be based on speculation or assumptions.
Notably, the Plaintiff tried to rely on a survey that had been commissioned by his counsel as evidence of widespread bias. The survey was conducted over two days in January 2017 in Brampton. The Plaintiff alleged that this survey was expert evidence. The questions posed in the survey dealt with (1) the impact of higher automobile insurance premiums on the persons interviewed and (2) whether they would seek to lower their own premiums by limiting the damages awarded in a motor vehicle case or whether they would award damages regardless of the impact it would have on their insurance premiums. Notably, the survey was submitted as an attachment to an affidavit sworn by a law clerk.
A Voir Dire was held to determine whether the survey was admissible. First, the Court held that the evidence in the survey was hearsay at best and that, generally, social science and survey evidence was of uncertain quality and reliability. Second, the Court noted that opinion evidence should not be in the form of reports attached to an affidavit of a deponent who has no personal knowledge of the contents of the reports, as this essentially insulates the expert from cross-examination.
Third, the Court expressed concern that the survey did not consider whether the respondents, as prospective jurors, would be capable of setting aside bias if instructed to do so, as these types of questions were not posed. Fourth, the survey only surveyed individuals who drove and paid for auto insurance. It did not survey a random or representative sample of people. As such, it was considered to have little to no relevance or probative value.
The Court ultimately concluded that survey did not meet the minimum requirements to constitute expert evidence. Accordingly, it could not be admitted as expert evidence. The Court went on to find that there was no evidence whatsoever that would demonstrate the presence of widespread bias among Brampton citizens against the Plaintiff.
This decision is important because it confirms that jurors are always presumed impartial. Parties are not able to exclude jurors based on an allegation of bias before trial has even commenced. It is certainly difficult to believe that juries would continue to be representative of the general population if large population groups, such as people who pay auto insurance premiums, could be routinely excluded from the jury pool.
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...
In Swampillai v. Royal & Sun Alliance Insurance Company of Canada, the Court dealt with the enforceability of a full and final release executed by the Plaintiff. A claim was commenced for long term disability (“LTD”) benefits. The action named the Plaintiff’s former employer, Royal and Sun Alliance Insurance Company of Canada (“RSA”), and Sun Life Assurance Company (“Sun Life”) which administered the LTD benefits that RSA provided employees.
In response, the Defendants argued that the Plaintiff had executed a full and final release which had included LTD benefits. The Plaintiff amended his claim to plead the doctrine of unconscionability and argued the release should be set aside. The Defendants brought summary judgment motions on the basis that the release was binding and enforceable. The summary judgment motions were dismissed. The Court found that the release signed by the Plaintiff was unconscionable and ought to be set aside.
The background facts were important. The Plaintiff had been employed as a distribution clerk. After several years of working in this physically demanding job, the Plaintiff went on disability. About three months before the two year mark (where entitlement to LTD changed to the “any occupation” test), Sun Life wrote to the Plaintiff and advised that (1) he did not meet the test for entitlement; (2) benefits would be terminated at the two year mark; (3) the Plaintiff could appeal the decision; and, (4) the appeal period expired three months after the benefits were terminated. The Plaintiff appealed the decision but Sun Life maintained its denial.
By separate letter (about one month before the test for LTD benefits changed), RSA advised that the Plaintiff’s employment would be terminated at the same time as the LTD benefits were to be terminated. A severance package was offered which would require the Plaintiff to also execute a full and final release. The release provided that it related to “benefit coverage under the Company’s applicable plans and/or policies ... including short term or long term disability benefits ...” The Plaintiff’s evidence was that he did not believe the offer had anything to do with Sun Life or his LTD benefits.
In determining whether the release was unconscionable, reference was made to the Court of Appeal’s decision in Titus v. William F. Cooke Enterprises Inc., (2007 ONCA 573) which sets out the four elements that must be satisfied:
A grossly unfair and improvident transaction; and,
Victim’s lack of independent legal advice or other suitable advice; and,
Overwhelming imbalance in bargaining power caused by the victim’s ignorance of business, illiteracy, ignorance of the language of the bargain, blindness, deafness, illness, senility, or other similar disability; and,
Other party knowingly taking advantage of this vulnerability.
With respect to the first element, the Court found that it was clear that in the period just before the Plaintiff was notified by RSA that his employment would be terminated, he was actively engaged with Sun Life in pursuing his claim for LTD benefits. He had provided medical evidence in support of his claim and retained Counsel because he did not agree with Sun Life’s decision. There was no dispute that this claim, if successful, would have substantial value which would have been known by both Defendants. Further, (1) Sun Life was not aware of the release until after the litigation commenced; and, (2) RSA acknowledged that its severance offer did not include any money with respect to the LTD claim. In these circumstances, the Court concluded that the settlement for the LTD claim as part of the severance settlement was grossly unfair and clearly improvident.
As to the second element, the Court found that the Plaintiff did not receive legal advice or any professional advice regarding the effect of the proposed settlement terms, including the release of his LTD claim. The Court concluded, particularly given that RSA knew the Plaintiff was appealing the denial of the LTD claim and RSA did not mention the impact on the LTD denial during the course of negotiations, that it was reasonable for the Plaintiff not to have obtained legal advice.
On the third element, the Court found that the Plaintiff was (1) in a vulnerable financial position; and (2) was suffering from health impairments that were sufficiently severe that he had qualified for LTD benefits. The Court concluded that the general vulnerability of the Plaintiff at the material time was not diminished by other circumstances. The Plaintiff did not know his options regarding the LTD claim. The Court concluded that there was an overwhelming imbalance in bargaining power.
Finally, the Court considered whether RSA knowingly took advantage of the Plaintiff’s vulnerability. The Court found that RSA offered the Plaintiff a severance package, but did not alert him to the fact that it required him to release his LTD claim. By failing to do so, RSA knowingly took advantage of the Plaintiff’s vulnerability.
The Court was satisfied that all four elements were established. The release was unconscionable and was set aside. This decision serves as a cautionary tale for parties negotiating a full and final settlement. Particularly where the Plaintiff is in a vulnerable position (which most people on long-term disability will be), it is imperative that the Plaintiff know what benefits they are resolving by signing a full and final release. Otherwise, there is a risk that the release will not be enforceable.
An application was brought under rule 14.05(3)(d) of the Rules of Civil Procedure to determine rights that depend on contract interpretation. The applicant was National Gallery of Canada (“National Gallery”) and the respondents Lafleur de la Capitale (“Lafleur”) and Intact Insurance Company (“Intact”).
The application relates to two underlying actions arising out of a fatal trip and fall accident that occurred on August 27, 2013 on the National Gallery’s premises. Conrad Lafreniere, an employee of Lafleur, was performing routine maintenance work, cleaning leaves and debris, near the entrance ramp to the National Gallery’s underground parking garage. As a vehicle approached to enter the garage, Mr. Lafreniere moved over to the edge of the entrance ramp, fell over a concrete ledge, and suffered fatal injuries.
The first underlying action, against the National Gallery, was commenced by Mr. Lafreniere’s widow, Ms. Arsenault. The Workplace Safety and Insurance Board (“WSIB”) had a subrogated claim in relation to the claim commenced by Ms. Arsenault and payments made, by the WSIB, to her. The second underlying action, against the National Gallery, was commenced by Mr. Lafreniere’s mother and siblings pursuant to the Family Law Act.
The National Gallery and Lafleur entered into a Service Contract under which LaFleur was required to supply all labour and equipment to complete the interior and exterior maintenance throughout the premises. Lafleur was also responsible for properly training and supervising its employees and ensuring that all employees wore safety equipment and were kept safe while carrying out their work.
Under the Service Contract, Lafleur also agreed to indemnify and save harmless the National Gallery from all claims, demands, losses, costs, damages, actions, suits, or proceedings arising out of or in connection with its work under the contract.
Lafleur also agreed to obtain a CGL insurance policy under which National Gallery would be added as an additional named insured. The policy was issued to Lafleur by Intact.
In both underlying actions, the plaintiffs claimed that Mr. Lafreniere’s fall, and subsequent death, was caused by the negligence or breach of duty of the defendants, National Gallery and the Attorney General of Canada. All of the particulars of negligence, set out in paragraph 8, in the Statements of Claim related to design issues of the building and the property, including the failure to install a fence, railing or protective barrier in the area where Mr. Lafreniere fell, for example.
The National Gallery commenced a third party claim, in both underlying actions, against Lafleur for its failure to properly train Mr. Lafreniere, and also claimed contribution and indemnity from Lafleur.
Intact issued a Commercial General Liability policy to Lafleur. The National Gallery was named as an additional named insured under the policy by way of endorsement. The policy was with respect to the legal liability arising out of Lafleur’s operations under the Service Contract.
The court went on to examine the wording of the Services Contract between the National Gallery and Lafleur, in particular the paragraph dealing with “Indemnification by Contractor”. This section stated that Lafleur shall indemnify and save the National Gallery harmless from all claims . . . . “based upon, arising out of, related to, occasioned by or attributable to the activities of the Contractor, the Contractor’s servants, agents . . . in performing the Work . . . ”
The issue for the court was whether Lafleur and Intact owed a duty to defend the claims against the National Gallery in the underlying two actions.
In ultimately deciding in the negative, the court reviewed the leading case law, in this regard:
an insurer is required to defend a claim on behalf of an insured when the facts alleged in the pleadings, if proven true, would require the insurer to indemnify the insured for the claim: Progressive Homes Ltd v. Lombard General Insurance, 2010 SCC 33 (CanLII)
the duty of defend should, unless the contract of insurance indicates otherwise, be confined to the defence of claims which may be argued to fall under the policy: Nichols v. American Home Assuance Co., 1990 SCC (CanLII)
where there are multiple claims, or where only some of them are potentially covered, a court must assess the substance or the “true nature” of each claim contained within the pleadings to see if it falls within the scope of coverage: Papapetrou v 1054422 Ontario Ltd.2012 ONCA 506 (CanLII)
Following its review of these cases, the court agreed that the question of whether the duty to defend extends to the whole claim depends on the specific pleadings at issue and the resulting determination of the “true nature” of the claims.
In terms of the facts, in this application, the court concluded that in the underlying action brought in the name of Ms Arsenault, for WSIB’s subrogated interest, there was no duty on Intact to defend the National Gallery, for the following reasons:
The nature of the claim was really one of a subrogated workplace claim
The CGL coverage contained an exclusion for “Worker’s Compensation and Any Obligation of the Named Insured under a Workers’ Compensation plan”
The CGL coverage also contained an exclusion for bodily injury to an employee of the Insured arising out of and in the course of employment; Mr. Lafreniere was not an employee of the National Gallery nor in the course of employment with the National Gallery at the time of the accident
The Services Contract required that the National Gallery would be added as an additional insured – it was not listed as a named insured
The Certificate of Insurance required that the National Gallery was an additional Insured but only insofar as Legal Liability arising vicariously out of the operations of the Named Insured
With respect to the underlying action brought by the FLA claimants, the claim alleged that Mr. Lafreniere’s death was caused by the negligence of the National Gallery as occupier. The court found that the allegations in the Statement of Claim related to design issues of the building and the property and that the indemnity provisions in the policy must be read in conjunction with the allegations in the Statement of Claim.
The wording of the indemnity provision made it clear, to the court, that indemnity was “based upon, arising out of, related to, occasioned by or attributable to the activities of the Contractor.” Lafleur was the Contractor and was not named as a party in the Statement of Claim. There were no allegations in the Statement of Claim that alleged negligence or tortious activities of Lafleur so no indemnification could be triggered. The allegations in the Statement of Claim related to design and control by the National Gallery as occupier and, therefore, could not be related to or attributable to the activities of Lafleur.
The court went on to state that, on its face, the CGL policy would cover bodily injury and would be for the type of loss that was sustained. Even though there were no exclusions that applied, the major challenge, for National Gallery, was that the allegations in the Statement of Claim fell outside of the indemnity agreement.
The court concluded that the allegations in the Statement of Claim did not arise out of the activities of the Contractor, Lafleur. There were no allegations in the Statement of Claim that Lafleur or its servants did anything wrong; that is why the claim falls outside of the indemnity agreement.
Based on this analysis, the court found that neither Lafleur or Intact owed the National Gallery a duty to defend.
While this case does not offer anything new about the duty to defend, it provides a good analysis of the issues that arise in duty to defend disputes and a reminder that the allegations in the Statement of Claim must be carefully considered, along with the wording in the indemnity provision of the contract.