Revenge of the HTA Trial

February 3, 2012
Daniel Strigberger

Insurers (and plaintiffs) should take note of a recent Superior Court decision arising from an unusual tort trial.

The defendant Randi Rumney rear-ended the plaintiff (Sabrina Reece) while she was riding her motorcycle. Prior to the collision, the plaintiff was stopped at a t-intersection. She turned west onto Myrtle Road and was riding ahead of Rumney. The plaintiff was subsequently convicted of failing to yield contrary to section 136(b) of the Highway Traffic Act.

Reece sued Rumney in tort, claiming damages arising from the accident. The trial of this matter commenced on November 14, 2011 before a jury in the City of Oshawa. The parties had drafted an Agreed Statement of Facts which identified the essential findings of facts underlying the decision of the Justice of the Peace in the HTA trial. After hearing submissions on how the evidence could be led using an Agreed Statement of Facts in order to avoid conflict with any factual findings made by the J.P., the trial judge ordered that the evidence on liability would be characterized by distance and not speed. They anticipated potential problems with a conflict with the J.P.'s findings if speed and time were used.

As a result, the parties were not permitted to call any evidence that would undermine the factual findings of the J.P. The jury were told this at the outset and were reminded of this several times during the trial. As part of the trial judge's charge, she told the jury that these facts were binding on them.

The jury returned with a liability split of 90-10, favouring the defendant. The plaintiff then moved unsuccessfully to set aside the jury's verdict.

The interesting part of this case is that the plaintiff retained a qualified expert, whose evidence at trial (even using the Agreed Statement of Facts) demonstrated that the defendant could have stopped in time to avoid the collision. It isn't clear how the jury was able to come back with a 90-10 liability split.

But more importantly, I wonder whether the HTA trial would have yielded a conviction had the plaintiff retained the engineer to give his evidence at that proceeding. It seems that insurers (and plaintiffs) might need to consider getting involved in HTA matters to preserve their tort claims/defences. Otherwise, they could be bound later by detrimental fact findings.

For more, see Reece v. Rumney et al, 2012 ONSC 780 (CanLII). 

FSCO: CPP Child Benefit Can't Shrink IRB

February 2, 2012
Daniel Strigberger

FSCO Arbitrator Judith Killoran has ruled that child’s benefit payments under the Canada Pension Plan are not deductible from income replacement benefits.

In Blakely v. State Farm, the parties agreed that a CPP disability pension benefit ws deducted from the amount of the income replacement benefit under the SABS. However, they disagreed on what constitutes a "disability pension benefit." The claimant submitted that only $852.30 monthly for 2011 should be attributed to her as a CPP disability pension benefit and therefore, that is the amount that meets the definition of a payment "for loss of income under an income continuation benefit plan" under subsection 2(9) of the SABS. The insurer submitted that the entire amount of the monthly disability benefit for 2011, which includes the child's benefit, that is, $1,070.80, should be deducted from any income replacement benefits, if the claimant was found to be entitled.

The arbitrator found that the claimant’s CPP disability benefits were comprised of two distinct components: the disability pension benefit of $852.30 monthly in 2011 and the child's benefit of $218.50 monthly in 2011. Consequently, she found that the correct interpretation of the SABS required that "payments of disability pension benefits under the Canada Pension Plan", which in the case before her totalled $852.30 monthly, met the definition of "payments for loss of income under an income continuation benefit plan" and the child's benefit of $218.50 monthly did not meet the definition.

Of note, the arbitrator distinguished the Ontario Court of Appeal’s decision in Ruffolo v. Sun Life, 2009 ONCA 274 (CanLII). The Court of Appeal agreed with the trial judge rgar the language of the group insurance policies permitted Sun Life to deduct the CPP child's benefit from the monthly LTD benefit. The arbitrator held:

In the case before me, the integration section in question under the Schedule specifies that "payments for loss of income under an income continuation benefit plan shall be deemed to include the following payments: 1. Payments of disability pension benefits under the Canada Pension Plan." The language is quite different in that the reference is to "payments of disability pension benefits" not to "disability benefits" or "disability income". Relying on rules of statutory interpretation, I find that the word "pension" has been included for a reason. One reason is to distinguish the CPP disability pension benefit from the CPP child's benefit.

When is an Application for Benefits Complete?

January 19, 2012
Daniel Strigberger

The Ontario Court of Appeal has released a new decision discussing the meaning of “completed application” for the purpose of triggering the 90-day notice period in section 3 of O. Reg. 283/95.

In Ontario (Finance) v. Pilot Insurance, the Fund received an application for benefits from a cyclist who was hit by an unidentified driver. He did not attach a police report to the OCF-1 as he was unable to obtain one. Seeking to dispute its obligation to pay benefits to the cyclist, the Fund took steps to determine the insurer of the striking vehicle, which required it to identify the driver. However, it took the Fund some 18 months after it received the cyclist’s application before it gave Pilot its priority dispute notice (but within 30 days after the Fund had identified the driver).

At arbitration, Pilot argued successfully that the Fund failed to comply with section 3 of O. Reg. 283/95. The arbitrator found that the Fund had not been diligent in investigating the missing information and so failed to meet the 90-day deadline when it put Pilot on notice. On appeal, the application judge disagreed with the arbitrator and held that the Fund had met the notice requirements of section 3. The application judge concluded that the Fund did not have a functionally adequate application – so as to be treated as a completed application under s. 3 – until the Fund obtained the 911 call records, which identified the driver of the vehicle.

The Court of Appeal restored the arbitrator’s decision, finding that the Fund failed to comply with section 3 of the Regulation. The Court wrote:

I would adopt the approach that has developed through the jurisprudence – particularly as set out by Perell J. in Lombard – to determine when an insurer has received a “completed application” for the purposes of s. 3 of O. Reg. 283/95.  That is to say, and as I will discuss below, a completed application is one that is:

(1)  genuinely complete;

(2)  functionally adequate for its legislated purpose; or

(3)  treated as complete based on the conduct of the first insurer.

. . .

Consistently, a functionally adequate application constitutes a “completed application” under s. 3.  An insurer is not permitted to rely on shortcomings in written documentation as grounds for claiming that the 90-day notice period has not commenced.  As soon as the insurer has sufficient information to notify another insurer that it is disputing liability to pay the benefits, the 90-day notice period starts running.

The Court of Appeal held that the cyclist’s application to the Fund was not genuinely complete because it was missing the police report. It became “functionally adequate” when the Fund obtained the 911 records. However, the Fund’s delay in pursuing the 911 call information forms the basis for treating the Fund as if it had received a completed application in February 2008. Accordingly, the Court of Appeal held that the Fund’s notice to Pilot was late.

It isn’t clear whether this decision would apply to any accidents on or after September 1, 2010, as the Regulation now defines “application” to mean an OCF-1 and “completed application” to mean a completed and signed application. Nevertheless, insurers would be wise to be diligent when investigating priority so they could give written priority dispute notices as soon as possible.

Ontario (Finance) v. Pilot Insurance Company, 2012 ONCA 33

ONCA Recognizes Invasion of Privacy Tort

January 18, 2012
Daniel Strigberger

The Ontario Court of Appeal has released its decision in Jones v. Tsige, finding that Ontario law does recognize a right to bring a civil action for damages for the invasion of personal privacy.

In July 2009, the appellant, Sandra Jones, discovered that the respondent, Winnie Tsige, had been surreptitiously looking at Jones’ banking records. Tsige and Jones did not know each other despite the fact that they both worked for the same bank and Tsige had formed a common-law relationship with Jones’ former husband. As a bank employee, Tsige had full access to Jones’ banking information and, contrary to the bank’s policy, looked into Jones’ banking records at least 174 times over a period of four years.

Jones sued Tsige, claiming damages of $70,000 for invasion of privacy and breach of fiduciary duty, and punitive and exemplary damages of $20,000. A Superior Court judge dismissed the claims, finding among other things that Ontario law does not recognize a cause of action for invasion of privacy.

After reviewing an abundance of privacy law from Canada, the US, and other jurisdictions, the Court of Appeal found that it was appropriate to confirm the existence of a right of action for “intrusion upon seclusion”. The court found that privacy has long been recognized as an important underlying and animating value of various traditional causes of action to protect personal and territorial privacy. The court held that recognizing such a cause of action “would amount to an incremental step that is consistent with the role of this court to develop the common law in a manner consistent with the changing needs of society.”

The court adopted as the elements of the action for “intrusion upon seclusion” the formulation found in Restatement (Second) of Torts (2010):

One who intentionally intrudes, physically or otherwise, upon the seclusion of another or his private affairs or concerns, is subject to liability to the other for invasion of his privacy, if the invasion would be highly offensive to a reasonable person.

The court held that the following were key features of the cause of action:

1. The defendant’s conduct must be intentional, which would include reckless;
2. The defendant must have invaded, without lawful justification, the plaintiff’s private affairs or concerns;
3. Third, a reasonable person would regard the invasion as highly offensive causing distress, humiliation or anguish.

With respect to damages, the court held that damages for intrusion upon seclusion in cases where the plaintiff has suffered no pecuniary loss should be modest but sufficient to mark the wrong that has been done. The court fixed the range at up to $20,000 and awarded Jones $10,000.

Jones v. Tsige 2012 ONCA 32

ONSC finds Broker failed to Offer Optional SABS Benefits Properly

January 11, 2012
Daniel Strigberger

The Ontario Superior Court has dismissed a plaintiff’s action against a broker, claiming the broker did not ‘properly’ offer him the chance to purchase optional income replacement benefits.

In Zefferino v. Meloche Monnex Insurance, the plaintiff suffered personal injuries in a May 27, 2005 motor vehicle accident, such that he could no longer be gainfully employed. She was the named insured under an automobile insurance policy sold by the defendant. Under the standard policy terms, the plaintiff was entitled to receive and did receive the statutory minimum income replacement benefit of $400 per week as a result of his income loss following the accident.

The plaintiff alleged that the defendant failed to offer optional income replacement benefits which, if they had been offered, the plaintiff would have purchased. As a result of that failure on the part of the defendant, the plaintiff alleges he was under-insured. His income at the time of the accident would have qualified him for income replacement benefits of $1,000 per week.

The defendant moved for summary judgment. The judge found that the defendant broker’s conduct fell below the required standard of care required of a seller of insurance. More specifically, the judge found that the broker’s offer of optional benefits was more in the nature of a mention accompanied by a solicitation of interest. The judge found that the broker did not comply with the statutory mandate contained in the SABS:

[T]he failure to properly offer the optional benefit coverage, effectively negating any requirement to ensure that customers can make an informed decision on the subject, is a breach of the standard of care applicable to the defendant in the circumstances. I am not persuaded that the evidence of common practice in the industry offered by the defendant through its own representatives is sufficiently persuasive to establish a standard of care under which the offer of optional benefits could be made in a less meaningful way.

However, the judge also found on the evidence that the plaintiff would not have purchased the optional benefits had they been properly offered. The plaintiff and his spouse purchased insurance from four other insurance companies during the ten years before relationship with the defendant began.  There was no evidence that anything other than basic coverage was secured on any of those prior occasions. The choice of securing insurance through the defendant was based on price.

Accordingly, the judge dismissed the action against the broker.

Although this case dealt with a 2005 accident, it highlights the issues insurers (especially direct writers) will continue to face if their clients aren’t offered ‘properly’ optional benefits – especially under the post September 1, 2010 regime.

Zefferino v. Meloche Monnex Insurance, 2012 ONSC 154 (CanLII)