Canada: Regional Insurance Litigation Group: Atlantic Canada Case Law Updates

Last Updated: April 27 2015
Article by Steven A. Forbes, Amy MacGregor, Jorge Segovia and Deirdre L. Wade, QC

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.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

To print this article, all you need is to be registered on

Click to Login as an existing user or Register so you can print this article.

Steven A. Forbes
Jorge Segovia
In association with
Related Topics
Related Articles
Up-coming Events Search
Font Size:
Mondaq on Twitter
Register for Access and our Free Biweekly Alert for
This service is completely free. Access 250,000 archived articles from 100+ countries and get a personalised email twice a week covering developments (and yes, our lawyers like to think you’ve read our Disclaimer).
Email Address
Company Name
Confirm Password
Mondaq Topics -- Select your Interests
 Law Performance
 Law Practice
 Media & IT
 Real Estate
 Wealth Mgt
Asia Pacific
European Union
Latin America
Middle East
United States
Worldwide Updates
Registration (you must scroll down to set your data preferences)

Mondaq Ltd requires you to register and provide information that personally identifies you, including your content preferences, for three primary purposes (full details of Mondaq’s use of your personal data can be found in our Privacy and Cookies Notice):

  • To allow you to personalize the Mondaq websites you are visiting to show content ("Content") relevant to your interests.
  • To enable features such as password reminder, news alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our content providers ("Contributors") who contribute Content for free for your use.

Mondaq hopes that our registered users will support us in maintaining our free to view business model by consenting to our use of your personal data as described below.

Mondaq has a "free to view" business model. Our services are paid for by Contributors in exchange for Mondaq providing them with access to information about who accesses their content. Once personal data is transferred to our Contributors they become a data controller of this personal data. They use it to measure the response that their articles are receiving, as a form of market research. They may also use it to provide Mondaq users with information about their products and services.

Details of each Contributor to which your personal data will be transferred is clearly stated within the Content that you access. For full details of how this Contributor will use your personal data, you should review the Contributor’s own Privacy Notice.

Please indicate your preference below:

Yes, I am happy to support Mondaq in maintaining its free to view business model by agreeing to allow Mondaq to share my personal data with Contributors whose Content I access
No, I do not want Mondaq to share my personal data with Contributors

Also please let us know whether you are happy to receive communications promoting products and services offered by Mondaq:

Yes, I am happy to received promotional communications from Mondaq
No, please do not send me promotional communications from Mondaq
Terms & Conditions (the Website) is owned and managed by Mondaq Ltd (Mondaq). Mondaq grants you a non-exclusive, revocable licence to access the Website and associated services, such as the Mondaq News Alerts (Services), subject to and in consideration of your compliance with the following terms and conditions of use (Terms). Your use of the Website and/or Services constitutes your agreement to the Terms. Mondaq may terminate your use of the Website and Services if you are in breach of these Terms or if Mondaq decides to terminate the licence granted hereunder for any reason whatsoever.

Use of

To Use you must be: eighteen (18) years old or over; legally capable of entering into binding contracts; and not in any way prohibited by the applicable law to enter into these Terms in the jurisdiction which you are currently located.

You may use the Website as an unregistered user, however, you are required to register as a user if you wish to read the full text of the Content or to receive the Services.

You may not modify, publish, transmit, transfer or sell, reproduce, create derivative works from, distribute, perform, link, display, or in any way exploit any of the Content, in whole or in part, except as expressly permitted in these Terms or with the prior written consent of Mondaq. You may not use electronic or other means to extract details or information from the Content. Nor shall you extract information about users or Contributors in order to offer them any services or products.

In your use of the Website and/or Services you shall: comply with all applicable laws, regulations, directives and legislations which apply to your Use of the Website and/or Services in whatever country you are physically located including without limitation any and all consumer law, export control laws and regulations; provide to us true, correct and accurate information and promptly inform us in the event that any information that you have provided to us changes or becomes inaccurate; notify Mondaq immediately of any circumstances where you have reason to believe that any Intellectual Property Rights or any other rights of any third party may have been infringed; co-operate with reasonable security or other checks or requests for information made by Mondaq from time to time; and at all times be fully liable for the breach of any of these Terms by a third party using your login details to access the Website and/or Services

however, you shall not: do anything likely to impair, interfere with or damage or cause harm or distress to any persons, or the network; do anything that will infringe any Intellectual Property Rights or other rights of Mondaq or any third party; or use the Website, Services and/or Content otherwise than in accordance with these Terms; use any trade marks or service marks of Mondaq or the Contributors, or do anything which may be seen to take unfair advantage of the reputation and goodwill of Mondaq or the Contributors, or the Website, Services and/or Content.

Mondaq reserves the right, in its sole discretion, to take any action that it deems necessary and appropriate in the event it considers that there is a breach or threatened breach of the Terms.

Mondaq’s Rights and Obligations

Unless otherwise expressly set out to the contrary, nothing in these Terms shall serve to transfer from Mondaq to you, any Intellectual Property Rights owned by and/or licensed to Mondaq and all rights, title and interest in and to such Intellectual Property Rights will remain exclusively with Mondaq and/or its licensors.

Mondaq shall use its reasonable endeavours to make the Website and Services available to you at all times, but we cannot guarantee an uninterrupted and fault free service.

Mondaq reserves the right to make changes to the services and/or the Website or part thereof, from time to time, and we may add, remove, modify and/or vary any elements of features and functionalities of the Website or the services.

Mondaq also reserves the right from time to time to monitor your Use of the Website and/or services.


The Content is general information only. It is not intended to constitute legal advice or seek to be the complete and comprehensive statement of the law, nor is it intended to address your specific requirements or provide advice on which reliance should be placed. Mondaq and/or its Contributors and other suppliers make no representations about the suitability of the information contained in the Content for any purpose. All Content provided "as is" without warranty of any kind. Mondaq and/or its Contributors and other suppliers hereby exclude and disclaim all representations, warranties or guarantees with regard to the Content, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. To the maximum extent permitted by law, Mondaq expressly excludes all representations, warranties, obligations, and liabilities arising out of or in connection with all Content. In no event shall Mondaq and/or its respective suppliers be liable for any special, indirect or consequential damages or any damages whatsoever resulting from loss of use, data or profits, whether in an action of contract, negligence or other tortious action, arising out of or in connection with the use of the Content or performance of Mondaq’s Services.


Mondaq may alter or amend these Terms by amending them on the Website. By continuing to Use the Services and/or the Website after such amendment, you will be deemed to have accepted any amendment to these Terms.

These Terms shall be governed by and construed in accordance with the laws of England and Wales and you irrevocably submit to the exclusive jurisdiction of the courts of England and Wales to settle any dispute which may arise out of or in connection with these Terms. If you live outside the United Kingdom, English law shall apply only to the extent that English law shall not deprive you of any legal protection accorded in accordance with the law of the place where you are habitually resident ("Local Law"). In the event English law deprives you of any legal protection which is accorded to you under Local Law, then these terms shall be governed by Local Law and any dispute or claim arising out of or in connection with these Terms shall be subject to the non-exclusive jurisdiction of the courts where you are habitually resident.

You may print and keep a copy of these Terms, which form the entire agreement between you and Mondaq and supersede any other communications or advertising in respect of the Service and/or the Website.

No delay in exercising or non-exercise by you and/or Mondaq of any of its rights under or in connection with these Terms shall operate as a waiver or release of each of your or Mondaq’s right. Rather, any such waiver or release must be specifically granted in writing signed by the party granting it.

If any part of these Terms is held unenforceable, that part shall be enforced to the maximum extent permissible so as to give effect to the intent of the parties, and the Terms shall continue in full force and effect.

Mondaq shall not incur any liability to you on account of any loss or damage resulting from any delay or failure to perform all or any part of these Terms if such delay or failure is caused, in whole or in part, by events, occurrences, or causes beyond the control of Mondaq. Such events, occurrences or causes will include, without limitation, acts of God, strikes, lockouts, server and network failure, riots, acts of war, earthquakes, fire and explosions.

By clicking Register you state you have read and agree to our Terms and Conditions