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
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
Mondaq Ltd requires you to register and provide information that personally identifies you, including what sort of information you are interested in, for three primary purposes:
  • To allow you to personalize the Mondaq websites you are visiting.
  • To enable features such as password reminder, newsletter alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our information providers who provide information free for your use.
  • Mondaq (and its affiliate sites) do not sell or provide your details to third parties other than information providers. The reason we provide our information providers with this information is so that they can measure the response their articles are receiving and provide you with information about their products and services.
    If you do not want us to provide your name and email address you may opt out by clicking here
    If you do not wish to receive any future announcements of products and services offered by Mondaq you may opt out by clicking here

    Terms & Conditions and Privacy Statement (the Website) is owned and managed by Mondaq Ltd and as a user you are granted a non-exclusive, revocable license to access the Website under its terms and conditions of use. Your use of the Website constitutes your agreement to the following terms and conditions of use. Mondaq Ltd may terminate your use of the Website if you are in breach of these terms and conditions or if Mondaq Ltd decides to terminate your license of use for whatever reason.

    Use of

    You may use the Website but are required to register as a user if you wish to read the full text of the content and articles available (the Content). 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 & conditions or with the prior written consent of Mondaq Ltd. You may not use electronic or other means to extract details or information about’s content, users or contributors in order to offer them any services or products which compete directly or indirectly with Mondaq Ltd’s services and products.


    Mondaq Ltd and/or its respective suppliers make no representations about the suitability of the information contained in the documents and related graphics published on this server for any purpose. All such documents and related graphics are provided "as is" without warranty of any kind. Mondaq Ltd and/or its respective suppliers hereby disclaim all warranties and conditions with regard to this information, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. In no event shall Mondaq Ltd 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 or performance of information available from this server.

    The documents and related graphics published on this server could include technical inaccuracies or typographical errors. Changes are periodically added to the information herein. Mondaq Ltd and/or its respective suppliers may make improvements and/or changes in the product(s) and/or the program(s) described herein at any time.


    Mondaq Ltd requires you to register and provide information that personally identifies you, including what sort of information you are interested in, for three primary purposes:

    • To allow you to personalize the Mondaq websites you are visiting.
    • To enable features such as password reminder, newsletter alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
    • To produce demographic feedback for our information providers who provide information free for your use.

    Mondaq (and its affiliate sites) do not sell or provide your details to third parties other than information providers. The reason we provide our information providers with this information is so that they can measure the response their articles are receiving and provide you with information about their products and services.

    Information Collection and Use

    We require site users to register with Mondaq (and its affiliate sites) to view the free information on the site. We also collect information from our users at several different points on the websites: this is so that we can customise the sites according to individual usage, provide 'session-aware' functionality, and ensure that content is acquired and developed appropriately. This gives us an overall picture of our user profiles, which in turn shows to our Editorial Contributors the type of person they are reaching by posting articles on Mondaq (and its affiliate sites) – meaning more free content for registered users.

    We are only able to provide the material on the Mondaq (and its affiliate sites) site free to site visitors because we can pass on information about the pages that users are viewing and the personal information users provide to us (e.g. email addresses) to reputable contributing firms such as law firms who author those pages. We do not sell or rent information to anyone else other than the authors of those pages, who may change from time to time. Should you wish us not to disclose your details to any of these parties, please tick the box above or tick the box marked "Opt out of Registration Information Disclosure" on the Your Profile page. We and our author organisations may only contact you via email or other means if you allow us to do so. Users can opt out of contact when they register on the site, or send an email to with “no disclosure” in the subject heading

    Mondaq News Alerts

    In order to receive Mondaq News Alerts, users have to complete a separate registration form. This is a personalised service where users choose regions and topics of interest and we send it only to those users who have requested it. Users can stop receiving these Alerts by going to the Mondaq News Alerts page and deselecting all interest areas. In the same way users can amend their personal preferences to add or remove subject areas.


    A cookie is a small text file written to a user’s hard drive that contains an identifying user number. The cookies do not contain any personal information about users. We use the cookie so users do not have to log in every time they use the service and the cookie will automatically expire if you do not visit the Mondaq website (or its affiliate sites) for 12 months. We also use the cookie to personalise a user's experience of the site (for example to show information specific to a user's region). As the Mondaq sites are fully personalised and cookies are essential to its core technology the site will function unpredictably with browsers that do not support cookies - or where cookies are disabled (in these circumstances we advise you to attempt to locate the information you require elsewhere on the web). However if you are concerned about the presence of a Mondaq cookie on your machine you can also choose to expire the cookie immediately (remove it) by selecting the 'Log Off' menu option as the last thing you do when you use the site.

    Some of our business partners may use cookies on our site (for example, advertisers). However, we have no access to or control over these cookies and we are not aware of any at present that do so.

    Log Files

    We use IP addresses to analyse trends, administer the site, track movement, and gather broad demographic information for aggregate use. IP addresses are not linked to personally identifiable information.


    This web site contains links to other sites. Please be aware that Mondaq (or its affiliate sites) are not responsible for the privacy practices of such other sites. We encourage our users to be aware when they leave our site and to read the privacy statements of these third party sites. This privacy statement applies solely to information collected by this Web site.

    Surveys & Contests

    From time-to-time our site requests information from users via surveys or contests. Participation in these surveys or contests is completely voluntary and the user therefore has a choice whether or not to disclose any information requested. Information requested may include contact information (such as name and delivery address), and demographic information (such as postcode, age level). Contact information will be used to notify the winners and award prizes. Survey information will be used for purposes of monitoring or improving the functionality of the site.


    If a user elects to use our referral service for informing a friend about our site, we ask them for the friend’s name and email address. Mondaq stores this information and may contact the friend to invite them to register with Mondaq, but they will not be contacted more than once. The friend may contact Mondaq to request the removal of this information from our database.


    From time to time Mondaq may send you emails promoting Mondaq services including new services. You may opt out of receiving such emails by clicking below.

    *** If you do not wish to receive any future announcements of services offered by Mondaq you may opt out by clicking here .


    This website takes every reasonable precaution to protect our users’ information. When users submit sensitive information via the website, your information is protected using firewalls and other security technology. If you have any questions about the security at our website, you can send an email to

    Correcting/Updating Personal Information

    If a user’s personally identifiable information changes (such as postcode), or if a user no longer desires our service, we will endeavour to provide a way to correct, update or remove that user’s personal data provided to us. This can usually be done at the “Your Profile” page or by sending an email to

    Notification of Changes

    If we decide to change our Terms & Conditions or Privacy Policy, we will post those changes on our site so our users are always aware of what information we collect, how we use it, and under what circumstances, if any, we disclose it. If at any point we decide to use personally identifiable information in a manner different from that stated at the time it was collected, we will notify users by way of an email. Users will have a choice as to whether or not we use their information in this different manner. We will use information in accordance with the privacy policy under which the information was collected.

    How to contact Mondaq

    You can contact us with comments or queries at

    If for some reason you believe Mondaq Ltd. has not adhered to these principles, please notify us by e-mail at and we will use commercially reasonable efforts to determine and correct the problem promptly.

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