Canada: Ontario Court Of Appeal: Insured's Failure To Provide Up To Date Address Not A "Breach Of Duty To Cooperate" As Not "Substantial"

Last Updated: May 15 2019
Article by Shaun Hashim

The insured has a duty to cooperate with defence counsel appointed by his insurer. The Ontario Court of Appeal recently reconfirmed that this duty to cooperate is not subject to a standard of perfection. Instead, to establish a breach of duty, an insurer must show that the insured's breach was "substantial" and not merely "inconsequential or trifling". The Court will always consider the facts and consequences of the alleged conduct to determine whether a breach can be established.

In Ruddell v. Gore Mutual Insurance Company,1 an insurer argued that its insured's failure to keep them updated on her current address was a substantial breach of the duty to cooperate. On a summary judgment motion, a judge of the Ontario Superior Court disagreed and ruled that – in these circumstances – the insured's conduct was not a "substantial" failure to cooperate. This was upheld on appeal.

Facts

The circumstances of Ruddell are peculiar. As cases involving the duty to cooperate are adjudicated on a case by case basis, a full appreciation of the facts is important to understand the decisions of both the lower court and the Court of Appeal.

Gore Mutual Insurance Company ("Gore") was defending its insured, Gayle Bass. Gayle was the owner of a vehicle involved in a single car accident. At the time of the accident, the vehicle was driven by her son, Alan Stewart. Alan had allegedly been driving too fast, down a road he was unfamiliar with. When the road ended abruptly, he took a sharp turn, slid on gravel and rolled the vehicle. Because of the accident, Alan's passenger, Michael Ruddell, sued both Gayle and Alan for personal injuries.

As most Ontarians with auto insurance, Gayle's relationship with Gore was subject to the Statutory Conditions – Automobile Insurance, O. Reg 777/93, a regulation made under the Ontarian Insurance Act. Statutory Condition 5(3) codifies a general principle of insurance: an insured's duty to cooperate with his or her insurer in the defence of an action. That condition reads:

The insured shall, whenever requested by the insurer, aid in securing information and evidence and the attendance of any witness and shall co-operate with the insurer, except in a pecuniary way, in the defence of any action or proceeding or in the prosecution of any appeal.

When first contacted by Gore, Gayle cooperated fully in compliance with her obligations under statute. In Gore's first letter to Gayle, they asked that she "keep [Gore] advised of any change of address". Gayle provided a statement and particulars for their file including her current address and information about past addresses. She also provided all the information she had about the accident.

The Court of Appeal and the court below were careful to note that the information provided at this stage was effectively exhaustive. Gayle was not involved in the accident and was merely the owner of the vehicle. She had little else to provide than particulars of her ownership, herself and her son. Gayle's son Alan, on the other hand, was in the best position to provide information about the case and would likely have been a witness at trial.

After cooperating fully at this early stage, Gore and Gayle fell out of contact for a period of time.

The action proceeded and pleadings were closed. About one year into the litigation, as discovery was approaching, counsel for Gore tried to reconnect with Gayle. Gore's counsel tried the various phone numbers and addresses provided by Gayle without success. Efforts to contact Gayle continued without success for several years. During this period, Gore was also unable to locate Gayle's son Alan. Alan had what the court described as a "peripatetic" lifestyle. He worked as a rigger in the entertainment industry – colloquially, he was a "roadie" who traveled with stage productions and set up equipment rigs.

Three years into the litigation, in 2013, Gore's counsel removed themselves from the record and Gayle and Alan were noted in default. Gore was then added as a statutory third party. The litigation continued and in 2016, it came to light that Mr. Ruddell's insurer, Allstate Insurance Company of Canada ("Allstate"), had located Gayle two years earlier, through a private investigator. With new contact information, Gore connected with Gayle in 2016. At this time, Gayle once again cooperated fully with all of Gore's requests. The case was later settled and a judgment of over $300,000 was ordered.

Following judgment, Gore refused to indemnify its insured claiming that Gayle had breached her policy and statutory condition 5(3) by failing to cooperate. Gore alleged that she had a positive obligation to keep counsel up to date on her current address. On this basis, Gore argued that Allstate was therefore responsible for the judgment, as Gayle was without insurance.

Decision

The motion judge found that Gayle did not breach her policy and cooperated at all times when involved. In both 2010, when she was first contacted, and 2016 when she was later found, she provided all that was requested. The motion judge held that during her period of absence there was no evidence that she "was somehow evading process or trying to hide from those responsible in litigating the lawsuit",2 nor was there evidence that she had been "working in concert with her son, encouraged him not to cooperate, or failed to assist Gore in locating [Alan]".3 To the contrary, the motion judge believed Gayle had acted reasonably. Ultimately, he found that she had "little information to give that could assist in their defence of the action beyond assisting Gore in finding [Alan]. When asked to do so, she did provide that information".4 In light of these findings, the motion judge concluded there was no breach of duty.

On appeal, the Court agreed with the motion judge. In doing so, the Court recognized the long-established principles set out in its 1996 decision of Canadian Newspapers Co. v. Kansa General Insurance Co. In that decision, Justice Weiler quoted this foundational passage from the New Brunswick Court of Appeal:

The duty of the insured to co-operate with the insurer, being a condition precedent to his right to recover, requires him to assist willingly and to the best of his judgment and ability. If in this connection a breach occurs in some material respect the insurer is entitled even to refuse to defend an action. Lack of co-operation, however, must be substantial. No inconsequential or trifling breach of such obligation should serve to exonerate the insurer from his contractual liabilities under the policy. The breach of the duty of co-operation in this case was substantial because it affected the insurer's assessment of the risks of the litigation.5

In other words, to find a breach of the duty to cooperate the court will look for "substantial" conduct. The Court noted that a breach of this duty differs from, for example, a breach of a more straightforward obligation like the 90-day deadline to provide a declaration about a loss set out in Statutory Condition 6(1)(c). There, compliance with the condition is straightforward, either the declaration is provided in-time or not. If it is not, it is a breach (subject to relief from forfeiture).

With the "duty to cooperate", there is no bright line. In this case, the Court of Appeal confirms that whether a "substantial breach" is established will depend on the particular facts and circumstances of each case. While Gayle did not strictly "cooperate" with the requested obligation to keep her address up to date, the result of that "breach" was inconsequential. She had little information to assist the defence. All she could have done was help Gore locate her son. Given her son's nomadic lifestyle, she was not in any better position than Gore to do so. Further, it is noteworthy that Gore's efforts to locate Gayle were subject to some criticism by the court below.

Comment

This case serves as a strong reminder from the Court of Appeal that a breach of the duty to cooperate must be "substantial". Ruddell shows us that – in practice – without real consequences arising from the insured's conduct, there can be no "substantial" breach of the duty to cooperate.

Despite missing 6 years out of a 7-year litigation, Gayle's absence had no substantial impact on Gore's ability to defend the action. While such an extended absence sounds significant, in the circumstances, the effect was minimal. Gayle had only a minor role in the litigation. The Court acknowledged that the only assistance Gayle might have provided during the 6-year absence would have been to assist Gore in locating her son, Alan. However, given Alan's transience as a "roadie", Gayle was in no better position that Gore to assist. Thus, while Gayle's conduct might strictly have been a "failure" to meet her insurer's initial request regarding her address, her conduct had no consequential effect on the defence.

While this decision breaks no new ground in the law, insurers and insureds alike can look to Ruddell as a yardstick to measure whether an insured's conduct is a "substantial breach" of the duty to cooperate.

Footnotes

1. Ruddell v. Gore Mutual Insurance Company, 2019 ONCA 328.

2. 2018 ONSC 3932 at para. 8.

3. 2018 ONSC 3932 at para. 7.

4. 2018 ONSC 3932 at para. 7.

5. Canadian Newspapers Co. v. Kansa General Insurance Co. (1996), 30 O.R. (3d) 257 (C.A.).

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 Mondaq.com.

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

Authors
Shaun Hashim
 
In association with
Related Topics
 
Related Articles
 
Up-coming Events Search
Tools
Print
Font Size:
Translation
Channels
Mondaq on Twitter
 
Mondaq Free Registration
Gain access to Mondaq global archive of over 375,000 articles covering 200 countries with a personalised News Alert and automatic login on this device.
Mondaq News Alert (some suggested topics and region)
Select Topics
Registration (please 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

Mondaq.com (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 www.mondaq.com

To Use Mondaq.com 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.

Disclaimer

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.

General

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