In Persampieri v. Hobbs, the Plaintiff was rear-ended by the Defendant and brought a tort claim for damages. Following a two week trial, the jury awarded net damages of $20,414.83. However, this case is significant for the costs award – roughly 12 times the amount awarded in damages!
Several months before trial, on March 21, 2017, the Plaintiff served a rule 49 Offer to Settle the action for $20,000.00, plus partial indemnity fees and disbursements. On May 15, 2017, about two weeks before trial, the Plaintiff served a further Rule 49 offer for $10,000.00, plus partial indemnity costs. Comparing the Offers to the jury award, the Plaintiff clearly “beat” the award. At the costs hearing, the Plaintiff sought the usual cost consequences under Rule 49.01(1). The Defence adamantly argued that to order costs as sought by the Plaintiff would be unreasonable and not proportional to the net award.
Justice Sanderson thought otherwise. According to Justice Sanderson, “to let proportionality be the overriding, or even the predominant factor, would be grossly unfair to the Plaintiff and would be to reward the uncompromising, and, (in the light of the jury verdict) unreasonable behaviour of the insurer.” She noted the Insurer took a hard line, despite admitting liability. From day one, the Insurer took the position that it had assessed the case on its merits and was not willing to offer even $1.00 towards settlement. The Insurer never budged from this aggressive stance.
Justice Sanderson noted that, in this case, the party trying to rely on the proportionality principle was a sophisticated insurer that had made a tactical decision to reject a Plaintiff’s Rule 49 Offer understanding the risk in costs that it was taking by doing so. Furthermore, because the Insurer had framed its defence in the manner that it had, it knew that the resolution of the issues at trial would involve the hearing of lengthy and costly evidence.
Ultimately, Justice Sanderson found no reason to depart from the usual cost consequences of Rule 49.01(1) and found the Plaintiff entitled to her costs on the partial indemnity scale to May 15, 2017, and to her costs on the substantial indemnity scale thereafter. The Court ordered costs of $237,017.50 – almost 12 times the net of the jury award!
This case is a serious warning to Insurers that “playing hardball” could well expose them to significant adverse cost consequences at trial, even where they are successful in limiting the plaintiff’s recovery to a very modest amount.
The decision is also notable for its thorough review of the case law on costs.[/et_pb_text][/et_pb_column][/et_pb_row][/et_pb_section]
A fire at commercial premises is at the center of a dispute between the insurers of a landlord and tenant
in the recently reported decision of Imperio Banquet v. Alternative Access and Mobility. The lease
required the tenant to contribute its proportionate share of the landlord’s premiums for ‘public liability,
fire and other coverages’ insurance. Other parts of the lease made it clear that the Additional Rent paid
by the tenant was for ‘Building Insurance’. The tenant was also required to obtain insurance but only to
insure the property and operations of the tenant. Moreover the tenant’s repair obligations expressly
excluded the portions of the building which were expressly the responsibility of the landlord, ‘namely
the roof, foundation, structure, outside walls and unit heaters.’ The tenant paid the additional rent. The
landlord obtained the building insurance. When a fire resulted in damage to the building as a result of
the negligence of the tenant’s employee, the landlord’s insurer attempted to subrogate. The court
granted summary judgment to the tenant, referring to Ross Southward v. Pyrotech in finding that where
the tenant contributed to the insurance obtained by the landlord, the tenant should obtain the benefit
of that insurance as it was evident that the underlying lease shifted the risk of this type of loss to the
landlord. Contractual risk shifting cases are often tricky and a close read of the underlying agreement, in
this case the lease is critical to understanding which party was to bear the risk of loss.[/et_pb_text][/et_pb_column][/et_pb_row][/et_pb_section]
In Security National Insurance Co. v. Allen, Justice Fragomeni of the Divisional Court upheld the decision of Director Delegate Blackman’s , finding that when an organic brain injury and a psychological disorder separately result in emotional or behavioural impairments, they are both to be rated and then combined for the purpose of determining a WPI rating.
At arbitration, the issue was whether the claimant had sustained a 55% Whole Person Impairment (WPI) pursuant to the SABS. The Arbitrator concluded the claimant had a 52% WPI rating and therefore was not catastrophically impaired. In reaching this conclusion the Arbitrator did not provide a a Chapter 4 rating, finding that the Chapter 14 rating captured any mental and behavioral impairment. On appeal by the insured, Director’s Delegate Blackman rejected the insurers argument that rating under both Chapter 4 and Chapter 14 was double counting and remitted the questions of the insured’s rating for brain injury under Chapter 4 and the medication rating back to arbitrator for determination. He confirmed the Arbitrator’s other WPI ratings. With respect to brain injury and double counting, Director’s Delegate Blackman relied upon clause 2(1.2)(f) of the Schedule, which speaks of “an impairment or combination of impairments” – not “symptoms” as was used by the Arbitrator. Director’s Delegate Blackman decided that it was incumbent upon the Arbitrator to provide separate ratings under both Table 2 and Table 3 of Chapter 4 when one rating related to a Chapter 14 impairment. The more severe of the two would represent the appropriate level of cerebral impairment. This number would then be combined with the other impairment ratings using the Combined Values Chart.
On Judicial Review, the Divisional Court applied the standard of review of reasonableness to Director’s Delegate Blackman’s decision given it was made in the context of a specialized regime and one in which the Director’s Delegate has expertise.
The Court concluded that his decision was reasonable with regard to all three issues.
The Court also held that Director’s Delegate Blackman reasonably applied the two general principles that the Guides should be given a broad and liberal interpretation andhat whether a person has sustained a catastrophic impairment is an adjudicative and not a medical determination.
This case provides some further clarification on the issue of “double counting” in the context of WPI ratings. .
See Security National Insurance Co. v. Allen, 2017 ONSC 6779[/et_pb_text][/et_pb_column][/et_pb_row][/et_pb_section]
The Ontario Superior Court recently released a decision finding an injured Plaintiff did not meet threshold on the basis that a “disabling” impairment to the left shoulder was not causally related to the accident.
In Grieves v. Parsons, the Plaintiff was injured in a motorcycle accident on July 24, 2012. The Plaintiff sought past and future income loss and general damages for pain and suffering and loss of employment of life. The Defendants had previously admitted liability.
The primary issue was whether the Plaintiff’s impairments were caused by the accident or by other medical conditions that would have developed even if the Plaintiff had not been injured in the accident.
While the jury was deliberating, the Defendants brought a “threshold motion” for a declaration that the Plaintiff’s claim for general damages was barred on the basis that the Plaintiff had failed to establish that, as a result of the accident, he had sustained a permanent, serious impairment of an important physical, mental or psychological function.
After hearing the evidence, the jury awarded $61,000.00 for past income, $90,000.00 for future loss earnings (substantially less than the $738,000.00 to $866,000.00 that was claimed by the Plaintiff) and $50,000.00 for general damages. With respect to the threshold motion, Justice Charney considered the fact that the jury verdict reflected a result much closer to the position advanced by the Defence than to the position of the Plaintiff
Both parties presented expert evidence with respect to causation and threshold. The Plaintiff’s expert testified the Plaintiff’s ongoing symptoms were attributable to the accident and that the Plaintiff had sustained a permanent, serious impairment. However, Justice Charney preferred the evidence of the Defence’s expert that the Plaintiff ongoing symptoms were not related to the index accident.
Ultimately, Justice Charney concluded the Plaintiff did not meet threshold, stating that the evidence supported the Defence’s position that the Plaintiff stopped working in May 2017 because of pain in his left shoulder and that that pain was the result of left shoulder osteoarthritis that first presented itself prior to the index accident.
In Mabe Canada Inc. v. United Floor Ltd., the Ontario Court of Appeal weighed in on the standard of care in the context of contractual duties and industry practices.
Mabe sustained damages when a drainage pipe that ran underneath a floor installed by United Floor caused a flood in Mabe’s warehouse. United Floor was hired by First Gulf to build the warehouse in 2004. First Gulf is not a party to the action. The flood was caused by two holes in the drainage pipe that ran below the concrete floor.
At trial, Mabe’s alleged that the holes were caused by United Floor when installing the floor. None of the building drawings showed a drainage pipe in the location where the damaged pipe was found. In addition, the pipe was installed much shallower than it ought to have been under industry standards.
The trial judge dismissed Mabe’s claim in negligence. The trial judge found that United Floor damaged the drainage pipe by puncturing it with a stake it used to brace its concrete floor. However, United Floor should not have anticipated that it was as shallow as it was. There was no reason for United Floor to be concerned that there would be a shallow pipe in the location where the damaged pipe was found. United Floor did not breach the standard of care.
Mabe submitted to the Court of Appeal that the trial judge failed to take into account the United Floor’s contractual duties in determining the standard of care; erred in his foreseeability analysis; and erred in failing to determine whether relevant industry practice was itself negligent and should not have been followed.
The Court of Appeal held that, although contractual duties may, in some circumstances, modify the standard of care that would otherwise apply, the trial judge’s findings precluded such a finding in this case. The contract required United Floor to notify First Gulf in writing if the subsurface conditions differed significantly from those specified in the contract. The trial judge found that United Floor should have been aware that a pipe ran underneath the floor, but he accepted expert evidence that the United Floor had no reason to foresee that the pipe would be at a shallow depth. As a result, the respondent’s duty to notify First Gulf under the contract did not arise.
The trial judge was held not to have erred in his foreseeability analysis. He accepted expert evidence offered by United Floor that there was no reason not to put a stake in the ground at the subject location. It was the plumber’s responsibility to alert First Gulf to the shallow depth of the pipe and First Gulf’s responsibility to notify United Floor. First Gulf failed to do so.
It was accepted by the Trial Judge that a flooring contractor would not have expected to have a pipe running through the subfloor at the position it was in. United Floor’s expert testified that drainage pipes would normally be set two to three feet into the subfloor, well below the reach of the 18 inch stakes used by United Floor. The trial judge rejected the Mabe’s expert evidence and found that there were no other factors that should have alerted United Floor to the possibility of puncturing a pipe.
The Court of Appeal held that, although it is clear that conformity with standard practice in an industry does not necessarily insulate a defendant from a finding of negligence, as the Supreme Court explained in Neuzen v. Korn, , a practice will be judged negligent “only where the practice does not conform with basic care which is easily understood by the ordinary person who has no particular expertise in the practices of the profession” – only where it is “fraught with danger”. Mabe’s expert provided the only evidence supporting the submission that industry practice was negligent in this case. But it was rejected by the trial judge, who preferred the evidence of United Floor’s experts in concluding that the United Floor had no obligation to do more than it did to determine the location of the drainage pipe. There was no basis for the Court of Appeal to interfere with the trial judge’s decision concerning the expert evidence and the weight to be attached to it.
See Mabe Canada Inc. v. United Floor Ltd. , 2017 ONCA 879 (CanLII)[/et_pb_text][/et_pb_column][/et_pb_row][/et_pb_section]
In Sacks v. Ross, the Ontario Court of Appeal dealt with how to apply the causation test in medical negligence cases involving multiple tortfeasors.
Sacks suffered serious injuries arising from complications after a routine bowel surgery. An anastomotic leak occurred after surgery, which spilled into his abdominal cavity, but the discovery of the leak was delayed, and by the time treatment started, he was in septic shock. Ultimately, he was in a coma for several weeks and his legs were both amputated.
At trial, Sacks put forth that the delay and treatment caused his injuries, which were the result of cumulative errors made by the respondents, a team of doctors, nurses and Sunnybrook Hospital, who treated him after his bowel surgery. The respondents argued that the delay in diagnosis did not cause Sacks’ injuries – his injuries were actually caused by flesh eating disease, which could not have been diagnosed or treated when it first arose.
At trial, the jury found five of the defendants breached their respective standards of care, but none of the breaches caused the injuries. Sacks appealed, arguing that the trial proceeded on a mistaken understanding of the appropriate causation test, evidenced by improper jury questions and instructions. Sacks argued that in cases involving multiple tortfeasors, a “global but for” test for causation should apply.
Ultimately, the Ontario Court of Appeal dismissed the appeal. The Court followed the prior Clements decision, where the Supreme Court found that the “but for” test also applies in complex, multiple tortfeasor, negligence cases.
The Sacks decision is significant for the Court’s discussion of the causation test and how it should be applied in complex negligence cases. The Court reminded that the normal causal reasoning process follows three steps:
Step one: what likely happened in actuality – whether the delay in treatment led to the plaintiff’s injury?
Step two: what would have happened if the defendant had not breached their standard of care?
Step three: allocate fault amount the negligent defendants
The analysis requires the jury to analyze each event in the sequence of events, while ignoring any decision it might have made with respect to an earlier event.
To reflect the causal reasoning process, the court recommended framing the jury questions as follows:
- Have the Plaintiffs proven, on a balance of probabilities, that a delay in treatment caused Sack’s injuries?
- If yes to #1, have the Plaintiffs proven, on a balance of probabilities, that the delay resulting from [this defendant’s] breach of the standard of care caused or contributed to the injuries of Sacks?
- If yes to #2, how did [this defendant] breach the standard of care?
Importantly, question #1 only asks the trier of fact to consider what the plaintiff needed by way of timely diagnosis and treatment in order to avoid injury, without considering the presence or absence of any breaches of the standard of care. In contract, question #2 determines fault.
See Sacks v. Ross , 2017 ONCA 773 (CanLII)[/et_pb_text][/et_pb_column][/et_pb_row][/et_pb_section]
In the FSCO Appeal Decision of State Farm and Sabadash (P16-00029), Director’s Delegate Evans conducts a thorough analysis of the key jurisprudence on causation in Canada of the key causation decisions: Athey v. Leonati (1996 S.C.C.), Resurfice Corp v. Hanke (2007 S.C.C.)., Clements v. Clements (2012 S.C.C.) and Monks v. ING Insurance Co. (2008 Ont. C.A.) and confirms that the “but for” test is the primary causation test for SABS litigation.
Delegate Evans set out that the “material contribution to risk” test could still be applied but only once the claimant passed the “but for” test, such that there can be no fallback to use the “material contribution” test if the claimant fails the “but for” test. As a result, the “material contribution” test only becomes relevant in the rare circumstances where an accident alone and a pre-existing condition alone could have directly caused an impairment. Similarly, the de minimis test may only play a role after the “but for” test has been answered in the affirmative.
While this decision provides some much needed clarity for decisions where causation is in dispute, it may not be the final word on the subject since the claimant in Agyapong v. Jevco has filed for Judicial Review.[/et_pb_text][/et_pb_column][/et_pb_row][/et_pb_section]
The Ontario Divisional Court has weighed in on an application under the JRPA for a stay of LAT proceedings pending a review of 2 rulings refusing the insurers requests for an adjournment.
In Taylor v. Aviva there was a threshold legal issue as to whether the claimant was involved in an ‘accident’. After the case Conference, and facing an unexpected affidavit in a written hearing proceeding, the insurer sought an adjournment of the case in order to cross examine the affiant and was denied. Twice. With no substantive reason provided. The insurer turned to the Divisional Court for relief and in particular a stay of the proceeding pending judicial review of the refusal to grant the adjournment. It was argued that there was a serious issue to be tried (relating to procedural fairness) and that irreparable harm would result if the stay was not granted.
The Divisional Court didn’t buy it. Not only did they not accept the arguments regarding the serious nature of the issue to the insurer they found that the insurer’s application was premature because they had not exhausted all of the remedies available in the LAT such as a Request for Reconsideration. Importantly the court noted the importance of allowing a relatively new tribunal such as the LAT the opportunity to ‘iron out wrinkles in procedural issues’ and to let it do ‘what the legislature directed it to do’ – to provide a dispute resolution mechanism that is fair, efficient and proportional.
See Aviva Canada Inc. v Taylor , 2017 ONSC 2661 (CanLII)[/et_pb_text][/et_pb_column][/et_pb_row][/et_pb_section]
In MK v Dumfries Mutual, LAT adjudicator Jeanie Theoharis stated that “in arbitration hearings an Applicant’s credibility is vital, particularly where there are competing medical opinions”.
The adjudicator looked closely at the Applicant’s self-reports, surveillance, the clinical notes and records of the Applicant’s treating doctors and the content and quality of assessor’s reports for internal consistency and consistency with known facts. The adjudicator found there was a contradiction between surveillance and the statement given by the Applicant; that the Applicant’s psychological assessment was unreliable; and, that the Applicant’s self-reports were not supported by the records of her treating doctors.
Ultimately the adjudicator held that the Applicant’s injuries fall within the Minor Injury Guideline and that she is not entitled to income replacement benefits.[/et_pb_text][/et_pb_column][/et_pb_row][/et_pb_section]
The year 2016 was not all that bad: The Superior Court finally provided some much needed guidance on whether an insurer can recover an overpayment made to an insured under the SABS. Justice Perell in Intact Insurance Company v. Marianayam shed some light on this ambiguous area of law.
Overpayments commonly occur when an insured person is paid an income replacement benefit and subsequently receives Long Term Disability benefits (LTD) or Canada Pension Plan benefits (CPP), which are deductible under the SABS.
The recovery of overpayments is governed by section 52 of the SABS-2010 (see section 47 of the SABS-1996). It provides that an insurer may recover benefits that were paid to an insured in error or if the insured was disqualified from receiving benefits. This is, of course, only if the overpayment is not a result of willful misrepresentation or fraud. One of the most controversial aspects of this law is subsection 52(3) of the SABS-2010 (section 47(3) of the SABS-1996), which requires the insurer to give notice of the amount that is required to be repaid.
The notice requirement was introduced in the 1996 amendments to the SABS. Subsequently, a body of case law has developed around the timing and content of this notice.
With respect to timing of notice, the Superior Court in Marianayam has helped clarify this area of law by upholding the Director’s Delegate decision in Pries v. Economical Mutual Insurance Company 2, and confirming that an insurer can only recover an overpayment made within 12 months of giving notice. In Pries, Economical took issue with the term “payment” in s.47 (3) of the SABS, and with the phrase, “within the 12-months after the payment was made”. Economical argued that they should be able to recover the full amount of the overpayment. However, Directors Delegate Evans was not persuaded and ultimately held that an insurer can only recover an overpayment made within 12-months of giving notice and awarded Economical 12 of the 16 months of overpayments. To put it another way, the amount of the repayment is capped at one year before the demand and there is no recovery for any payment made more than 12 months before the repayment notice was made.
The Superior Court in Marianayam also weighed in on what constitutes proper notice under the SABS. In doing so, Justice Perell upheld the controversial decision of Knechtel v. Royal SunAlliance, where Arbitrator Sampliner held a valid notice letter must contain:
- The name of the specific benefit(s) the insurer claims has overpaid;
- A statement of the appropriate weekly/monthly or lump sum amount sought;
- The payment date of applicable time span of the specific benefit(s) it has paid and seeks repaid; and
- Calculation of the total repayment claim;
Justice Perell stated that the amount claimed in the insurer’s notice letter “need not be perfectly correct but should be substantially correct.” While this may sound simple enough, Justice Perell determined that Intact’s first two notice letters failed comply with the Knechtel requirements.
In Marianayam, Intact claimed reimbursement for overpayments made to the Claimant between 2007 to 2015 as a result of the Claimant’s receipt of retroactive LTD benefits and CPP benefits.
Intact’s first letter sought $69,000 or 170 weeks of IRBs although the applicable statute provided for repayment of only 12 months (52 weeks). Justice Perell stated that Intact should have only indicated in their letter a demand for 12 months of payments. As a result, Justice Perell found the amount requested was not substantially correct; it was grossly incorrect. Therefore, the first notice was not considered proper notice and could not be relied upon.
Intact’s second letter indicated its legal position and advised that an accountant had been retained to calculate the quantum of the repayment. Justice Perell found that this letter also failed to satisfy the notice requirement, as the amount of the repayment was left undetermined.
Finally, Justice Perell accepted a subsequent letter that enclosed Intact’s accounting report as a proper notice. Justice Perell accepted the letter and report as notice, since it came close to calculating the correct amount of the overpayment and only erred by making a claim for 14-months of overpayments rather the limit of 12-months.
Interestingly, Justice Perell did not order repayment of CPP amounts. Intact’s accounting report included the CPP benefits in its overpayment calculation; however, Intact’s letter did not specifically request repayment of CPP benefits. Therefore, Justice Perell found Intact was not entitled to the CPP payments.
Given that Justice Perell did not define “perfectly correct” and “substantially correct”, we are left guessing when a particular notice falls on the spectrum between perfect and substantially correct. Nevertheless, it is fair to say that the evolving jurisprudence regarding overpayments has made it more difficult for insurers to recover overpayments. However, the Marianayam decision has provided much needed guidance on how to recover overpayments successfully. When faced with an overpayment situation, insurers must act quickly to identify and provide notice of any overpayment within 12 months or they may lose the right of recovery. Insurers must also ensure their notice contains the Knechtel requirements and the amount sought must comply with the statute.
See Intact Insurance Company v. Marianayam , 2016 ONSC 1479 Pries v. Economical Mutual Insurance Company, FSCO A11-002004, September 21, 2012; Economical Mutual Insurance Company v. Pries, FSCO Appeal P12-00036, July 8, 2013 [/et_pb_text][/et_pb_column][/et_pb_row][/et_pb_section]