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Loss Transfer / Priority Disputes

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



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