It takes little effort to identify the international behemoth that was recently scrutinized for disclosing its users’ personal data (*cough* Facebook *cough*). As of today, many business, big and small, have the potential to be vilified and fined for the same type of inadvertent disclosures. The key distinction between Facebook and other companies are their resources to deal with the fall out such a disclosure.
What does it do?
The GDPR was developed in 2016 and intended to take effect this year. The Regulation aims to protect people’s information when it is shared with businesses. It also allows people to permit or deny the distribution of personal data with third parties. The Regulation places certain disclosure requirements on entities to inform their users of a potential breach.
Although this is a European regulation, it affects businesses that operate out of a European signatory state marketing to a foreign country (i.e. Canada), or a foreign business marketing to and operating within a European signatory state. In essence, any company that seeks to advertise to an international population, which by using the Internet most companies do, they must comply with the requirements set out in the GDPR.
Failure to comply
The failure to comply with the GDPR can lead to severe consequences. One of them is a fine of up to €20 million. The GDPR also allows signatory states to implement their own regulations to ensure compliance. Another significant repercussion is the potential of lawsuits stemming from a data breach. The GDPR establishes a standard of care that business must meet. Failure to satisfy this standard, will expose business to not only fines but financially devastating legal actions.
The “big” insurance companies like Chubb, Lloyds, and Northbridge are beginning to offer comprehensive cyber insurance policies to businesses. Other new companies such as Boxx Insurance have started to exclusively offer cyber insurance policies to small and medium sized businesses.
Cyber insurance policies are designed to protect businesses when a data breach occurs, and may include coverage for fines, legal services, and PR services.
Insurance adjusters’ will soon be confronted with a significant number of claims originating from cyber policies. Adjusters must be ready to not only ensure that their clients are protected but that the insurer is not being defrauded.
Adjusters will have to undergo technical training to verify that their clients are compliant with not only the GDPR but also with the requirements of their insurance policy. It will also be imperative that adjusters identify technical “red flags” that may signal a fraudulent claim.
Striking this balance will be difficult but necessary.
Companies like Facebook can rebound from a data breach given their vast pool of resources, however, small business can go bankrupt from a single cyber-attack. As a result of this dichotomy, cyber insurance policies will continue to develop and may soon be as common as an auto insurance policy. Insurance companies and their adjusters must be prepared to understand and “speak the language” of their consumers to meet their needs and expectations.
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 January 2012, the plaintiff was walking along the sidewalk in front of a newly built home when she allegedly tripped over the bottom of a construction fence that was covered in snow and fell into a depression in the road next to the sidewalk, injuring her ankle. She sued the homeowners, the builder, as well as Enbridge, who supplied the gas line to the home, and Link-Line Contractors Ltd., the contractor hired by Enbridge to install the line.
Enbridge and Link-Line brought a partial summary judgment motion to have the action and crossclaims against them dismissed. The Superior Court dismissed their motion.
Specifically, Enbridge and Link-Line argued that there was no genuine issue for trial because the plaintiff and co-defendants had failed to establish, based on the best evidence offered by them, that Link-Line’s work caused the depression in the road. They also argued that summary judgment should be granted as the parties failed to provide any expert evidence on the standard of care.
The Court held that, in summary judgment motions related to a professional negligence action, a defendant cannot rely on the plaintiff’s failure to proffer expert evidence unless the defendant has also put their best evidentiary foot forward. Only where the defendant discharges its burden of proving that there is no genuine issue on the merits of the defence does the burden shift to the plaintiff. In this case, Link-Line did not provide any evidence regarding whether its actions met the standard of care such that the evidentiary burden never shifted to the plaintiff or co-defendants.
The Court also found that the evidence offered by the parties did not allow for dispositive findings, which yielded a high risk of re-litigation and the prospect of inconsistent results. Since Link-Line’s crews of employees would likely be subpoenaed at trial, granting the partial summary judgment motion would also not allow for a fair and just resolution of the case or avoid the cost and expense of the trial process.
Key takeaway: If you are a defendant in a professional negligence action and want to bring a summary judgment motion, make sure you have your own ducks in a row before trying to point the finger at the plaintiff or a co-defendant. The right case will warrant obtaining your own expert report on how your actions met the applicable standard of care.
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.
In the recent decision of Helmer v. Belairdirect Insurance Company, the Divisional Court dismissed the appeal a LAT adjudicator’s decision addressing the contentious issue of when professional service providers provide care “but for the accident” in the context of the Statutory Accident Benefits Schedule 2010 (“SABS”).
The issue of “but for the accident” was the central issue in dispute. In the present scenario, the claimant’s care provider was properly qualified as a personal support worker (“PSW”) prior to the accident. It was unclear whether she had been working in the capacity of a PSW until she began providing care for the claimant after the accident. At first instance, the LAT adjudicators found that the service provider was a professional.
Under the SABS, attendant care benefits provide reimbursement for expenses incurred to provide claimants with attendant care services. Due to legislative amendments in 2014, there are two classes of service providers who qualify for reimbursement. They are professionals (such as a PSW) and non-professionals who have sustained an economic loss by providing care. The SABS requires that for someone to be a “professional” they must be providing care “in the course of the employment, occupation or profession in which he or she would ordinarily have been engaged, but for the accident”.
Macleod J., speaking for the Court, addressed two main issues. First, the Court confirmed that the applicable standard of review for appeals from the LAT to the Divisional Court was reasonableness. Notably, the Court found that even if the standard was one of “correctness” they would have still upheld the decision.
Second, he considered the adjudicator’s analysis of section 3(7)(e)(iii)(A) and its application to professional service provider. In addressing this issue the Court agreed with the adjudicators’ decision. It was their conclusion that section 3(7)(e)(iii) (A) required that the service provider was working or was looking for work at the time s/he performed the attendant care services, not at the time of the accident. The phrase “but for the accident” did not have a temporal requirement. The Court noted the intention of the section was to prohibit injured parties from capitalizing on their injuries by inventing jobs for friends and family members who were not legitimate providers of care. As long as the care provider would have been providing such services whether or not the applicant had been injured, then the claimant could be reimbursed for payments made.
On a positive note, this decision suggests that the LAT and the Courts are aware of the concerns regarding improper classification of “professional” service providers. Insurers should feel comfortable asking for additional information from claimants to establish whether service providers are appropriately classified as “professionals”. Secondly, this decision suggests that the characterization of a professional requires something more than simply having the qualifications to provide care. A provider must be actively working or looking for work. Accordingly, situations where an individual is qualified but otherwise engaged in another occupation at the time a claimant needs care may not meet the “but for the accident” requirement.
Does Uber’s fleet policy with Intact provide primary accident benefits coverage to passengers who do not have their own auto insurance policies? The first arbitration decision on this issue says “yes”.
In July 2016, FSCO approved a new standard fleet auto policy to provide primary coverage for private passenger vehicles engaged in “ridesharing” activities with a “transportation network company” or TNC. Intact Insurance then issued the fleet policy to Uber and Rasier Operations B.V., which contracts with individual “rideshare drivers” who use their own automobiles for Uber.
The policy was created to address a coverage gap in the standard OAP 1 auto policy in Ontario. Section 1.8.1 of the OAP 1 excludes coverage if the vehicle is being used to carry paying passengers. This meant that every time an Uber driver was operating a vehicle and engaged in Uber activities, he or she was violating the OAP 1 and driving without full coverage.
The policy purports to fill the coverage gap in the OAP 1 by eliminating the exclusion for “carrying paid passengers” noted in Section 1.8.1. Section 2 of the Endorsement under the policy (IPCF-6TN), specifies that the policy provides “primary coverage” for the automobile while it is being used for ridesharing purposes:
Ontario’s Accident Benefits Priority Scheme
Subsection 268(2) of the Insurance Act sets out a priority scheme for determining which insurer is responsible for paying a claimant statutory accident benefits after an automobile accident:
The claimant first has recourse against the insurer of an automobile in respect of which they are “an insured” (i.e., named insured, spouse, dependant, listed driver).
If recovery is unavailable under such policy, the claimant has recourse against the insurer of the automobile that they were in or which struck them.
If recovery in unavailable under such policy, the claimant has recourse against the insurer of any other vehicle involved in the accident.
Finally, if recovery in unavailable under such policy, the claimant has recourse against the Motor Vehicle Accident Claims Fund.
Ontario’s Priority Scheme and Uber
After Intact’s “Uber policy” was released, there was never any doubt that an Uber driver injured in an accident while driving for Uber would have recourse first against Intact, under the Uber policy, pursuant to section 2 of the Endorsement. There was also no question that a passenger who happened to have their own auto policy would have recourse against that policy for their accident benefits, pursuant to section 268 (2) of the Act.
However, Intact started taking the position that its policy did not provide “primary coverage” to passengers. Intact asserted that the second paragraph in section 2 of the Endorsement specifies that “for greater clarity…” Intact would be primary over any other policy insuring the rideshare driver. According to Intact, it followed that the policy was primary only with respect to the driver’s claims and not the passenger’s claims.
Intact also argued that any Uber vehicle was insured by two insurers at the time of an accident: The underlying insurer of the vehicle and Intact. Therefore, Intact asserted that passengers, who did not have their own policies, at the very least, would have coverage under both policies.
The First Uber Decision
In Northbridge v. Intact, the claimant passenger was involved in an accident while he was using an Uber to get from Point A to Point B. He applied to Northbridge for accident benefits, seeking recourse against the (underlying) insurer of the vehicle he was in. Northbridge then pursued a priority dispute against Intact, who took the position that it was not the primary payor of the passenger’s benefits.
Arbitrator Vance Cooper sided with Northbridge, finding that the wording in the Endorsement was clear, unequivocal, and unambiguous that the policy was primary for all accident benefits claims arising from passengers who did not have their own insurance:
However, the grant of coverage set out in Section 2. of IPCF 6TN - Coverage for Ridesharing Endorsement, goes further. It clearly, unequivocally and without ambiguity specifies that Intact, as the ridesharing insurer, provides primary coverage for the automobile only while the automobile is used in the pre-acceptance period and the postacceptance period. While Section 2 provides "greater clarity" for purposes of the rideshare driver's accident benefits coverage and the priority of third party liability coverage, this does not limit the grant of coverage specified in Section 2.
I am satisfied, on a plain reading of IPCF 6TN - Coverage for Ridesharing Endorsement, that Intact provides primary coverage for statutory accident benefits in relation to the claim of Romello B., being an occupant in the rideshare vehicle during the postacceptance period and by reason of Ramella B. having no access to any other policy of insurance (apart from the Northbridge policy).
Arbitrator Cooper also disagreed with Intact that the passenger could choose as between Intact and Northbridge. He held that Intact’s argument ignored the clear and unambiguous wording in the Endorsement, since it specifies that Intact is primary.
In my "humble" opinion, Arbitrator Cooper’s decision is right on the mark. Not only does it pay homage to the clear wording in the policy; it is consistent with the primary purpose of the policy, which is to fill the coverage gap in auto insurance during Uber activities. It also protects underlying insurers from paying benefits arising from risks they never intended to cover.
We expect Intact will appeal Arbitrator Cooper’s decision. In the interim, the Northbridge decision is a huge victory for underlying insurers, especially for those who not have any appetite for Uber risks.
My office is currently involved in several other arbitration cases against Intact on the same facts. Another hearing against Intact on the same facts is scheduled for June 18, 2018 before Arbitrator Philippa Samworth.
The Uber Coverage Debate appears to be far from resolved.
On May 9, the Ontario Superior Court released a decision which reminds us of three important lessons:
A court will allow juries to use their common sense to make decisions;
Telling your insurer you had a fur coat when you didn’t will probably be considered a wilful misrepresentation; and,
Relief from forfeiture is not an available remedy when you make a wilful misrepresentation.
In 2003, a fire occurred in the Pinders’ home, the Plaintiffs. The Pinders submitted a claim to their insurer, Farmers’ Mutual Insurance Company, for various items that they claimed were lost in the fire. Farmers’ Mutual denied coverage citing, among other things, that the Pinders were using portable electric heaters throughout their home and that they made wilfully false statements on the Proof of Loss form. In December 2017, a jury trial was conducted.
The jury decided that the Pinders were in fact using portable electric heaters to warm their house (presumably voiding coverage) and they did make wilfully false statements in the Proof of Loss form effectively voiding their insurance coverage. The Pinders brought a motion to, among other things, not enter the jury’s verdict on account that there was no evidence to support the jury’s finding and grant them relief from forfeiture.
Was there Evidence to Support the Jury’s Finding?
Yes. Justice Vallee noted that a judge may refuse to accept a jury’s verdict only when the decision is “bad in law or devoid of evidentiary support” – in other words, if there is no evidence to support the conclusion. This was not such a case.
The Pinders argued that throughout the trial, it was never established or even uttered that they used portable electric heaters to warm the majority of their house. Counsel for Farmers’ Mutual urged the jury to consider the totality of the evidence and infer that most of the house was in fact being warmed by portable heaters. Although circumstantial, Justice Vallee decided that there was enough evidence to allow the jury to come to their conclusion.
Is Relief from Forfeiture an Available Remedy?
No. Relief from forfeiture is a principle enumerated in s.129 of the Insurance Act and s.98 of the Courts of Justice Act. It is an equitable remedy that allows a court to “look past” an insured’s improper compliance with certain contractual or statutory requirements and force an insurer to maintain coverage for a loss.
Justice Vallee cited several cases which were appropriate candidates for such a remedy: a late filing of a notice to arbitrate, a Proof of Loss form that did not provide adequate particulars of items lost, or a party’s exaggeration of a claim designed for “puffery” or to establish a better negotiating position.
In this case, Farmers’ Mutual argued that the Pinders’ policy was void because they wilfully misrepresented items on the Proof of Loss. This was differentiated from alleging fraud as that would require the element of intent to deceive. During the trial, Ms. Pinder was cross-examined regarding each item on the Proof of Loss. She admitted that some items were duplications, some were described incorrectly, some values were wrong, and that some items didn’t exist. Among those items was a fur coat which, despite significant investigation, could not be proven to have ever been bought. In fact, considering that the Pinders were receiving social assistance and were using their RRSPs at the time in question, they simply could not have made such a lavish purchase.
The jury had the latitude to believe or not believe what the Pinders were saying and more importantly were not tasked with finding intent to deceive Farmers’ Mutual. The jury concluded that the Pinders did not make wilfully false statements regarding 29 items and did make wilfully false statements regarding 39 items, including the fur coat.
Justice Vallee concluded that this was not a case of improper compliance but one of wilful misrepresentation which did not invite relief from forfeiture as an available remedy.
Judgment was entered in favour of Farmers’ Mutual.
The moral of this story is simple: wilful misrepresentation does not require an insured’s intent to deceive their insurer – fraud, on the other hand, does. An insured has an obligation to investigate and report, to the best of their ability, the items that were lost and their accurate value. The courts will allow some flexibility regarding compliance with such contractual reporting obligations and may find it equitable to relieve an insured if strict compliance isn’t satisfied – wilful misrepresentation is not an instance when such relief will be granted.
It is also important to remember that courts will typically trust juries to use their judgment and life experience to consider the available evidence and come to their appropriate conclusions. We, like the courts, should trust juries to conclude that if it walks like a duck and quacks like a duck, it’s probably a furry duck.
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...
Risk of personal injury after vehicle stolen by two minors from commercial garage found not to be reasonably foreseeable.
The Supreme Court of Canada has weighed in on the duty of care owed by a business that stores vehicles to someone who is injured following the theft of a vehicle. This case arose after two teenagers drank alcohol, smoked marijuana, stole a vehicle from an unsecured car garage in town and subsequently crashed the vehicle. The passenger in the vehicle suffered a catastrophic brain injury and commenced a lawsuit against the driver, the driver’s mother (who supplied some of the alcohol) and the commercial car garage.
The issues the Court weighed in on were as follows:
Was the risk of personal injury reasonably foreseeable in this case?
Did the garage have a positive duty to guard against the risk of theft by minors?
Could illegal conduct sever any proximity or negate a prima facieduty of care?
Was the Risk Reasonably Foreseeable?
The Court commented that the foreseeability question must be framed in a way that links the impugned act (leaving the vehicle unsecured) to the harm suffered by the plaintiff (physical injury). It was not enough simply to determine whether the theft of the vehicle was reasonably foreseeable. The proper question to be asked was whether the personal injury suffered was reasonably foreseeable to someone in the position of the defendant when considering the security of the vehicles stored at the garage.
The Court noted that the evidence did not suggest that a vehicle, if stolen, would be operated in an unsafe manner, failed to address the risk of theft by a minor, and failed to address the risk of theft leading to an accident causing injury. To find a duty, there must be some circumstance or evidence to suggest that a person in the position of the defendant ought to have reasonably foreseen the risk of injury — that the stolen vehicle could be operated unsafely.
While in this case, it was argued that it was the risk of theft by minors that could make the risk of the unsafe operation of the stolen vehicle foreseeable, had there been other evidence or circumstances making the risk of personal injury reasonably foreseeable, a duty of care would exist.
Duty to Guard Against Risk of Theft by Minors
Although there was no need to address this given the conclusion that the injury was not reasonably foreseeable, the Court provided commentary on this issue. It was argued that the commercial garage was analogous to a commercial vendor of alcohol who has a duty to those who may be harmed by the damage caused by an intoxicated patron. The Court remarked that this analogy was misguided. While a garage benefits financially from servicing cars, they do not profit from or encourage the persons who steal cars. Having many vehicles does not necessarily create a risk of personal injury.
Additionally, the mere fact that the plaintiff was a minor was insufficient to establish a positive duty to act. Tort law does not make everyone responsible for the safety of children at all times.
Could Illegal Conduct Sever / Negate Duty of Care?
Although there was no need to address this given the conclusion that the injury was not reasonably foreseeable, the Court provided commentary on this issue. The notion that illegal or immoral conduct by the plaintiff precludes the existence of a duty of care has consistently been rejected by the Court. Whether the personal injury caused by unsafe driving of the stolen car is suffered by the thief or a third party makes no analytical difference to the duty of care analysis.
The Court concluded that, while the risk of theft was reasonably foreseeable, the evidence did not establish that it was foreseeable that someone could be injured by the stolen vehicle. There was no evidence to support the inference that the stolen vehicle might be operated in an unsafe manner causing injury. It concluded that a business will only owe a duty to someone who is injured following the theft of a vehicle when, in addition to theft, the unsafe operation of the stolen vehicle was reasonably foreseeable.
The Court made it clear that its decision was based on the evidentiary record in this case. This is not to say that a duty of care will never exist when a car is stolen from a commercial establishment and involved in an accident. Another set of facts and evidence may establish that the business ought to have foreseen the risk of personal injury. In this case, the plaintiff only established a risk of theft in general. However, there was nothing to connect the risk of theft of the car to the risk of someone being physically injured.
case has liability implications for both personal and commercial auto insurers. The Court did not accept that anyone that leaves a vehicle unlocked with the keys in it should always reasonably anticipate that someone could be injured if the vehicle were stolen, noting this would extend tort liability too far. Physical injury is only foreseeable when there is something in the facts to suggest that there is not only a risk of theft, but that the stolen vehicle might be operated in a dangerous manner. A commercial entity will not be held liable simply because it failed to properly secure vehicles on its premises. The Court has made it clear that plaintiffs must now jump an additional hurdle in order to establish a duty of care against an owner / entity with possession of a vehicle after the vehicle is stolen and personal injury ensues.