New Brunswick
Bifurcation orders and the threshold for severance
- Shanks v. Shay, 2015 NBCA 2
Shanks, who was involved in two car accidents, was denied Section B benefits. TD Home was his insurer at the time of the first accident. It took the position that Shanks failed to disclose that his vehicle was used for commercial purposes, a material change in the risk. CAA, the insurer for the second accident, argued that all of Shanks' injuries were caused by the first accident. Shanks sued TD Home and CAA, as well as their respective adjusters. Apart from his claim for Section B benefits, Shanks also alleged induced breach of contract, bad faith and negligence.
TD applied to sever the claim for Section B benefits from the other claims. It also sought to have the claims for each accident tried separately. CAA brought a similar motion. The court severed the claims for policy benefits from the claims of induced breach of contract and bad faith. It denied the request for separate trials for each accident.
Shanks appealed, arguing that the threshold test for bifurcation, described in Walsh v. Nicholls, 2004 NBCA 59, was biased against plaintiffs. The Court of Appeal clarified the proper test. It rejected any suggestion that "exceptional or special circumstances" were required for severance. The test is whether it is "just and convenient" to sever the issues. According to the Court of Appeal, it was "just and convenient" to sever the more simple issue of insurance coverage from the more complicated issues involving bad faith and induced breach of contract. This was a matter of "common sense", since the determination of the coverage issue might put an end to the entire action.
Driving while under the influence does not necessarily exclude coverage
- Conrad v. Wawanesa Mutual Insurance Company, 2015 NBQB 14
Conrad and her friend, Rideout, were out at a pub. Rideout said she was able to drive Conrad's car. While operating the vehicle, Rideout rear-ended another car. Rideout's breathalyzer samples showed a blood alcohol level of .200. Rideout was charged with impaired driving, but the charges were later dropped. Wawanesa denied coverage for the damages to Conrad's vehicle, arguing that Conrad had allowed Rideout to drive the vehicle while Rideout was under the influence of alcohol. In addition to suing for coverage, Conrad alleged bad faith.
The court held that impairment by intoxicating liquor does not, by itself, satisfy the test under the exclusion. The test is whether the impairment was to such an extent as to render the driver incapable of proper control of the vehicle. Despite the breathalyzer samples and the police officer's testimony that Rideout showed signs of intoxication, the court found that Wawanesa had not established that Rideout was rendered incapable of proper control of the car. Furthermore, Wawanesa would have to prove that it was reasonably foreseeable to Conrad that Rideout would be incapable of proper control of the vehicle due to impairment. This onus was not met. Conrad had considered Rideout's usual behavior when intoxicated but felt that Rideout was not impaired, and Conrad did not observe Rideout driving improperly. Finally, the court dismissed the claim of bad faith. While Wawanesa did not correctly interpret the policy in light of the facts, that did not necessarily amount to bad faith. There was, after all, evidence of intoxication and conflicting evidence.
Nova Scotia
Action renewed where no prejudice to the defendant's insurer
- O'Connell v. Farr, 2015 NSSC 85
O'Connell sued Farr and Lorde with regards to a multi-vehicle accident that occurred in 2005. The action was never served. While notice was given to Farr's insurer, notice was not given to Lorde's insurer. Several years passed without any activity in the action. In 2014, the Prothonotary moved for its dismissal. Up until this point, neither Lorde, nor his insurer, were aware that an action had been filed. O'Connell applied to renew the action.
While there was inordinate delay, the court found that it was not O'Connell's responsibility. With respect to prejudice from the delay, Farr's insurer argued that it was denied the opportunity to properly investigate O'Connell's injuries. The Court found no serious prejudice to Farr. His insurer was aware of the alleged injuries, and it knew the action had been filed. It could have requested medical records and an independent medical examination, and it could have conducted surveillance. In addition, most of O'Connell's medical records were still available. Because the delay was not O'Connell's fault, the interests of justice dictated that her action against Farr should proceed.
As for Lorde, however, the court refused to renew the action. The court noted that 9 ½ years had passed between the accident date and when either Lorde or his insurer became aware of the action. As it was not notified of the claim, Lorde's insurer did not take steps to assess O'Connell's injuries. The failure to have notified Lorde, or his insurer, of the claim for almost a decade caused serious prejudice. As a result, O'Connell's action against Lorde was barred by the applicable limitation period.
Court of Appeal clarifies standard on assessment of damages motions
- MacKean v Royal & Sun Alliance Insurance Company of Canada, 2015 NSCA 33
Royal Insurance settled a Section D claim with its insureds. It obtained default judgment against the tortfeasor, and applied to assess the damages. The wrongdoer did not appear to defend the motion. Royal argued that damages should be based on the reasonableness of the settlement with its insureds. The judge disagreed, holding that the settlement amount was irrelevant. Royal had to prove the insureds' losses on a balance of probabilities, calculated as of the date of the hearing, not the settlement date.
The Court of Appeal agreed with Royal. In the "special circumstances" of this case, the reasonableness of the settlement was relevant when assessing damages against the tortfeasor. This was supported by both "principle and policy". As noted by the Court of Appeal, Section D coverage is limited to what an insured would be "legally entitled to recover" from an uninsured driver. There is a connection between what the insurer has to pay its insured, and the damages caused by the wrongdoer. Initially, the insurer has a common interest with the tortfeasor to limit payment to its insured. The insurer's doubtful prospect of recovery against the wrongdoer would also minimize the likelihood of any overpayment to the insured. In the circumstances, "a simpler, quicker, less expensive and proportional basis for assessing damages" in undefended cases is appropriate. In any event, the insurer retains the onus of establishing, through proper evidence, the reasonableness of the settlement. That would involve evidence of Royal's own witnesses, as well as some evidence from its insureds. Where there is a delay between the settlement and the assessment of damages, more recent evidence on general damages may be warranted.
Newfoundland & Labrador
Payment for a medical report does not extend the limitation period
- Tuck v. Supreme Holdings Ltd., 2014 NLTD(G) 131
Tuck's action, involving a car accident, was issued outside the two year limitation period. Tuck tried to save the suit, arguing that the limitation was extended by confirmation. Under the Limitations Act, confirmation can occur by "acknowledgment" of the cause of action or by "payment in respect of" the cause of action. Tuck argued that the defendant's payment for a medical report confirmed the cause of action.
The court noted that in Ryan v. Moore, 2005 SCC 38, the Supreme Court of Canada stated that confirmation must involve an admission of liability, and that the mere investigation of a claim does not constitute such an admission. The court noted that, where confirmation by payment is alleged, the purpose of the payment is a key factor. A defendant's payment for a medical report about a plaintiff does not amount to an admission by the defendant of any liability. Such reports are obtained for "investigative purposes". Furthermore, costs and damages are not the same. Paying for a medical report does not indemnify the plaintiff for damages. Rather, it is a repayment of the plaintiff's litigation costs. On the other hand, payment for a plaintiff's treatments, such as physiotherapy, could qualify as confirmation because the payment would indemnify the plaintiff for damages arising from the accident.
In this case, there was no admission of liability and, therefore, no confirmation. The defendant had merely paid for a medical report. The action was not confirmed, the limitation period was not extended and the action was, therefore, issued outside the limitation period.
Court denies request to hear damages before liability
- 10565 Newfoundland Inc. v. Canada, 2015 NLTD(G) 40
The company sued Canada because of contamination at its hotel, which allegedly flowed from Canada's air force base. The company's claim was based on negligence, strict liability, nuisance and trespass. Canada applied to sever the trial. In an unusual move, it sought to have the issue of damages heard before the determination of liability.
Canada was unable to site any case where damages were tried first. It argued that the determination of liability would be complex and lengthy. As for damages, while the company's property did contain contamination, it was 16 meters below ground, raising serious doubts as to the existence of any compensable damages. Canada submitted that without compensable damages, there would be no need for a liability trial.
The court denied Canada's application to sever the trial. According to the court, unless "good cause is shown", all issues should be tried together. The claim for damages was vague, and the court was unable to determine its likely merits. It was not "plain and obvious" that the company would be unable to prove damages. As a result, Canada failed to show that severing the trial would make it "probable" that the action would end. Furthermore, issues about the nature and extent of contamination could overlap with liability issues, particularly given the claim for exemplary and punitive damages. The court considered other factors: the estimated eight-week trial was not considered "unduly long"; the action was commenced in 2007; and the company's principal was elderly and had cancer.
Prince Edward Island
Liability can be tried before damages in certain cases
- Rilling v. Stewart, 2014 PESC 29
Rilling, a passenger in a car, sued the operator of the vehicle, as well as the operator of an SUV. The driver of the SUV applied to bifurcate the trial, seeking to have liability determined before damages. He argued that it would be unfair to subject him to a lengthy trial on damages when a liability trial might absolve him of any fault. The motion was granted.
Rule 6.03 allows the court to order a separate hearing on one or more issues in a proceeding, including separate hearings on the issues of liability and damages. According to the court: bifurcation of issues is unusual and should only be ordered in special cases; the onus is on the moving party to establish that bifurcation is appropriate; and a number of factors are to be considered, including: the complexity of the issues, the potential savings of time and costs, and whether or not the issues of liability and damages can be easily separated.
Here, the onus was met. According to the court, this case was exceptional due to the length of time anticipated for trial (6 weeks for the damages issues alone). Also, there was a significant potential benefit, in terms of time and expense, in trying the issues of liability and damages separately, and little if any prejudice to any party. This analysis was consistent with Rule 1.04(1), which mandates a construction of the Rules to secure the just, most expeditious and least expensive determination of every civil proceeding on its merits.
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