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Loss Transfer and Tort: Never the Twain Shall Meet

 Jan 30, 2018 9:00 AM
by Samis + Company

Recent work on cases has lead me to resurrect some older loss transfer case law that might still assist practitioners with their current cases.  The first is the case from our Court of Appeal in  Jevco v. Canadian General, dated August 6, 1993.  Jevco sought appeal of the denial of its application to appoint an arbitrator in loss transfer (remember the provisions of automatic appointment in priority disputes do not apply to loss transfer and an Application is necessary where there is no agreement amongst the parties to appoint or whom to appoint).  The use to which I again sought it out was regarding how a finding of fault in a related tort matter might affect a loss transfer matter that was subject to the ordinary rules of law, per Rule 5 of Regulation 668, instead of the Rules themselves.  Recall the Fault Determination Rules were initially promulgated for property damage claims and are often a bit of a square peg in a round hole and have lead to a lot of litigation over their interpretation in the context of loss transfer.  In overturning the original decision that a stay of loss transfer was warranted by reason of the existence of the tort action,  Justice Griffiths, at the second paragraph of the Conclusion, and repeated at paragraph four thereof, focussed upon the intended expediency of the scheme and said quite emphatically that “any determination of fault in litigation between the injured plaintiff and the alleged tortfeasor is irrelevant.”  Jevco was granted its arbitrator appointment with costs of the appeal but not of the Application, due to its novelty.  The citation for the decision is  14 O.R. (3d) 545.  There was no appeal taken beyond Ontario’s top Court.                 


The second case is the February 6, 2008 private arbitration award of Jay Rudolph in Unifund and Axa v. St. Paul.  Reference to it is found at #11 of the list of decisions upon the Rudolph Mediation & Arbitration Services Inc. website (see http://rudolphmediation.com/arbitration-decisions-released-by-j-jay-rudolph/).  Unfortunately, the index of decisions on the website does not appear to be a complete list of all of Jay’s awards and they are not hyperlinked.  Converse to the prior case, this case does permit consideration of a Highway Traffic Act conviction to govern in a loss transfer matter.  The case is 25 pages long and too extensive to deal with comprehensively in a short summary.  Suffice it to say that in this case accident benefits were being requested from St. Paul by the other two insurers due to the fault for the loss attributed to the driver of its described transport truck.  She pleaded guilty to careless driving and both applicants sought to preclude St. Paul, by the flexible doctrine of abuse of process (as distinguished from issue estoppel, collateral attack or res judicata, which focus more on the interests of the parties), from adducing evidence inconsistent with the facts forming the basis for the conviction by way of guilty plea by her lawyer (she was not present at the HTA proceeding).  Arbitrator Rudolph relied heavily upon the Supreme Court of Canada case in Toronto v. C.U.P.E., Local 79, [2003] 3 S.C.R. 77.  In siding with the loss transfer applicants, he found that the three tests (fraud, fresh evidence and fairness) were not met by St. Paul, which would otherwise be reason to relitigate the liability issue and would enhance, not impeach, the principles of economy, consistency, finality and integrity of our judicial system.  The HTA proceeding of St. Paul’s insured was admitted by the parties not to have been fraudulent.  Fresh evidence must be admissible, discussed at page 21 of the arbitrator’s award, but still might be excluded if the explanation why it was not adduced at first instance is inadequate.  Arbitrator Rudolph found St. Paul’s evidence not fresh and, although generally admissible, there was no reasonable explanation why it had not been adduced at the HTA proceeding.  Having found as he did, he did not feel impelled to decide if the evidence would have affected the outcome of the HTA proceeding.  He makes a particularly insightful comment at the bottom of page 23 why St. Paul should be bound by the conviction, which I invite readers of this summary to review and digest.  In the final analysis, St. Paul was bound by the conviction, the facts essential to it and could not lead evidence contrary to those facts.  Therefore, albeit subject to the latter, St. Paul was still permitted to lead evidence of the alleged contributory negligence of Unifund’s insured driver.  Legal costs, although the party responsible was not specified, presumably followed the cause.  St. Paul was responsible for the arbitrator’s account.  The award was not appealed.            


- Kevin Mitchell


Producing Facebook Profile Information

 Jan 25, 2018 10:00 AM
by Dan Inkpen

In the Superior Court of Justice matter of Jones v. I.F. Propco Holdings (Ontario) 31 Ltd., the defendant sought an order for production of the plaintiff’s private profile information including profile posts and comments.


The action arose out of an alleged incident in which the plaintiff claims that she was hit in the head by ice that fell from the defendant’s property. The plaintiff was seeking general and special damages arising from the injuries sustained in the incident.


The defendant’s position was that relevant conduct pertaining to the plaintiff’s social, family, leisure, and volunteer activities revealed on the public portion of her Facebook leads to an inference that there is relevant information on the private portion of her Facebook profile.


Justice Leitch cited the case of Knox v. Applebaum and indicated that “There must be evidence that posted photographs are relevant in order to justify an order for production.” Justice Leitch stated that relevant information on the public portion of a Facebook profile does support the inference that relevant information is contained on the private portion of the profile.


Justice Leitch concluded that there was no evidence that the public posts are relevant because the activities depicted in the photographs are not relevant to the extent of the plaintiff’s physical limitations since the incident. Therefore, because the information on the public portion was not relevant, there is no inference that the information on the private portion would be relevant. Since there was no inference that it was relevant, Justice Leitch did not assess the privacy interests of the plaintiff against any probative value obtained from the disclosure of the private portion of the plaintiff’s profile.



Dan's practice areas of interest include accident benefit and bodily injury litigation, loss transfer and priority dispute arbitrations and subrogation litigation.

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Courts, News  

Bearing the Risk of Loss: Another Landlord Tenant Tale

 Jan 25, 2018 9:00 AM
by Neil Reeves

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.


Biblical proportions: Divining King Solomon (or Geddy Lee?) in the determination of priority disputes.

 Jan 17, 2018 9:00 AM
by Samis + Company

In this January 5, 2018 priority dispute private arbitration award of Ken Bialkowski, the main issue was principle dependency; a construct of the definitions contained in s. 3(7)(b) of the SABS.  The definition of ‘insured person’ in s. 3(1) of the SABS ties in the ‘dependant’ definition to the authorizing section for priority disputes:  s. 268(2) of the Insurance Act.  RBC, in respect of two claimants injured in an auto accident on April 4, 2015, sought to have TD assume handling of the SABS claims and indemnify it for benefits it had to date expended. 


The elder claimants were both passengers in the RBC insured auto at the date of loss and, by s. 268(5.2), RBC would be the highest priority insurer if the two were found dependent upon their younger son.  At a minimum, however, they were insured persons of RBC, based upon occupancy alone, and that is likely the reason their OCF-1s were sent to RBC in the first place.  Notwithstanding, it was argued the claimants were dependent upon either of their two sons, each of which were the named insureds of the parties to the dispute. 


The arbitrator started by defining the duration of the time period pre-loss to be considered that would give the best indication of the situation that existed as of the date of loss.  This inquiry largely surrounded where they primarily resided.  His review of the case law confirmed the preference by our Superior Court for the statistical LICO methodology over the mathematical one.  The arbitrator astutely noted the mathematical approach was rooted in a criterion for dependency, which was rejected by the Ontario Court of Appeal back in 1986 in the seminal Miller v. Safeco case.  RBC argued a third methodology, the plural approach.  This approach is meant to determine upon whom a claimant is dependent when that claimant provides less than half of their own needs and one, of at least two individuals, provides a financial amount in excess of the claimant or anyone else who is also contributing.  It, however, would appear to go against the established, and in my opinion inaccurately named, ‘51% rule’.  To be accurate mathematically, it should be named the ‘50% + 1’ rule.  Its distinct departure from the 51% rule is that the individual upon whom the claimant is said to be dependent contributes less than 50% of the claimant’s needs (not more) but more than the claimant or anyone else involved. 


In this case it was argued by RBC the majority contributor was the eldest son; TD’s named insured.  Even if RBC hadn’t admitted dependency upon its named insured (albeit not the greatest contributor), it still had the onus of proof in the dispute since it, at a minimum, was liable to pay benefits, per s. 268(3), based upon mere occupancy.  The arbitrator found the sons to be equal financial contributors to their parents so, although they were each not independent, they were not considered principally dependent upon any one individual.  RBC was found to be the priority insurer for both claimants and responsible for TD’s partial indemnity costs and the arbitrator’s account.  The arbitrator thereby skirted support for what was said to be the genesis for the plural approach; the January 2013 award of arbitrator Scott Densem in Economical v. Aviva, which was not appealed, while yet paying homage to the 51% rule.  It is too early to tell if this award will be appealed.  However, with the standard of review still reasonableness, although requested to be revisited by the Court of Appeal in a pending decision where our firm was counsel, I doubt RBC will be so inclined.        


- Kevin Mitchell          

Accident Benefits, Arbitrations, Loss Transfer / Priority Disputes  

Double Counting to Capture a Whole Person Impairment

 Jan 16, 2018 9:00 AM
by Vagmi Patel

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


Disabling Impairment Not Causally Related to Accident

 Jan 10, 2018 9:00 AM
by Alexandra Wilkins

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.

See: https://www.canlii.org/en/on/onsc/doc/2018/2018onsc26/2018onsc26.html?resultIndex=3

Alexandra practices insurance related litigation with a focus on accident benefits and bodily injury claims. 

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Standard of Care in the Context of Contractual Duties and Industry Practices

 Jan 8, 2018 9:45 AM
by Lindsay Woods

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, [1995], 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)

Lindsay Woods is a lawyer in our Toronto office.



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