Insurance Defence: 2016 Case Law ROUND UP. January 24, 2017

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1 Insurance Defence: 2016 Case Law ROUND UP January 24, 2017

2 Our quarterly RISK Report provides updates on Ontario Insurance Law rulings. Subscribe at

3 Today s Panel Shawn O Connor Samantha Iturregui Crystal Schulz

4 Format for Today Panel s selection of the top three cases for: Bodily Injury Procedural Property Debate and vote!

5 BI

6 Daggitt v Campbell, 2016 ONSC 2742 Defendant sought IME of the plaintiff by a psychiatrist. Plaintiff had not previously been treated by a psychiatrist and opposed such an assessment. Plaintiff also claimed that defence expert was biased. The court denied the defendant s motion finding that the assessment was neither warranted nor legitimate.

7 Daggitt v Campbell, 2016 ONSC 2742 Takeaway for insurers 1. Choose your experts carefully. 2. The Court will be more likely to refuse an opposed IME where allowing it to take place would cause a delay in the litigation.

8 Watts v. Bowman, 2016 ONSC 3994 Facts: A daughter borrowed her mother s car without express permission and was involved in an accident. The Court confirmed that the test for implied consent is not subjective. Justice Corkery concluded that the daughter did not have implied consent to drive on the day of the accident.

9 Watts v. Bowman, 2016 ONSC 3994 Takeaway for insurers Where implied consent is an issue, details surrounding the prior use of the vehicle by the driver should be obtained including: i. relationship between the owner/driver ii. prior permission/denial of use given by the owner iii. any restrictions put on the use of the vehicle

10 Gardiner v. MacDonald, 2016 ONCA 968 Facts OC Transpo bus with green light collides with car entering intersection on red light driven by drunk driver. Issue - liability of bus driver Trial Judge in January 2016 finds bus driver 20% at fault Ontario Court of Appeal holds that trial judge entitled to consider evidence that bus driver was professionally trained and his conduct judged with regard to the standard expected of an experienced bus driver. The appeal court held that the evidence of travelling at 65.6 km/ hr in a 60 zone and the momentary inattention from looking in the mirrors as he approached the intersection satisfied the elements of proof of causation.

11 Gardiner v. MacDonald, 2016 ONCA 968 Takeaway for insurers 1. Professional drivers duty of care may be different than passenger car drivers duties. 2. Having the right of way is important but is not conclusive evidence on liability issues, evidence of ability to avoid a collision is essential.

12 Procedural

13 State Farm v. Aslan, 2016 ONSC 2725 Facts: State Farm brought an application to compel its insureds to attend and Examinations Under Oath (EUO). The notice letter stated the examination was for the purpose of determining whether State Farm is liable to pay benefits Justice Hackland found that a generic statement is not sufficient.

14 State Farm v. Aslan, 2016 ONSC 2725 Takeaway for insurers 1. The insured is not required to attend the EUO until the proper notice is served 2. The reason for the EUO must be sufficient enough that would allow the insured, and his or her representative, to come prepared to discuss the specific issue being raised

15 Cadieux V. Saywell 2016 ONSC 7604 Facts MVA resulting in brain injury. Jury apportioned liability evenly between plaintiff and each of two defendants. One defendant had settled with plaintiff before trial at a global mediation with SABs insurer. Jury awarded past and future income losses, and future care costs. The largest future care item was $ 701, for a brain injury support worker. Court was required to decide on the reductions for statutory deductions and collateral benefits. Sabs settlement of $900, included $250,000 for med/ rehab and $350,000 for attendant care.

16 Cadieux V. Saywell 2016 ONSC 7604 Issues Is the support worker Med/rehab or attendant care or both? Is the correct approach to use apples to apples or silos? Did the settling defendant use up a share the SABS deduction so that the remaining defendant gets only a partial deduction? Effect of changes to the amount of the general damages deductible and the interest rate after the MVA but before trial?

17 Cadieux V. Saywell 2016 ONSC 7604 Justice Hackland held that the settling defendant had negotiated using the SABS deduction and that plaintiff should not face the deduction twice, and so found that the remaining defendant received only a 50% SABs deduction. Justice Hackland found that the support worker was a med/ rehab benefit and not an attendant care benefit. However the 2016 ONCA decision in Basandra v. Sforza held that the definition of health care benefit in of the Insurance Act included attendant care and endorsed the silo approach over the strict apples to apples approach to matching benefits for deduction. Deduction was combined med/rehab and attendant care, reduced by 50%.

18 Cadieux V. Saywell 2016 ONSC 7604 Takeaway for insurers 1. Get the particulars of the SABs settlement at discovery or an undertaking to disclose a future settlement. 2. The ONCA says in Basandra that counsel must ensure that any settlement of a statutory accident benefit claim allocates the settlement funds among the heads of collateral benefits applicable in the instant case. 3. Hiding the settlement amounts in a lump sum won t work anymore. S creates a healthcare apple. 4. Prejudgment interest is a substantive right, tort deductible is procedural matter.

19 Skunk v Ketash et al, 2016 ONSC 2019 Motion for summary judgement brought by Insurer to dismiss the claim made by insured s husband further to MVA. Vehicle owned by wife. Husband s friend was driving the vehicle at the time of the accident and did not have consent. Insurer denied coverage and claimed vehicle didn t meet definition of uninsured automobile as belonged to spouse.

20 Skunk v Ketash et al, 2016 ONSC 2019 Takeaway for insurers 1. Court found that the legislature wanted to prevent claims made by insureds from the use of their spouse s uninsured automobile where the lack of insurance was caused by the spouse. 2. However, in situations where the vehicle is considered uninsured due to no fault of the spouse, the Court will allow a claim under the OPCF 44 R. 3. The Court in this case spent time reviewing the principles dealing with the interpretation of an act and a contract.

21 Property Property

22 Ledcor v Northbridge Indemnity Insurance Co SCC 37 Facts: During construction of Epcor Tower the windows were scratched by window cleaners using improper tools and methods. Windows had to be replaced at cost of $ 2.5 million. Builders risk policy contained exclusion for the cost of making good faulty workmanship. Insurer denied coverage. Trial court found the exclusion clause ambiguous, construed clause against the interests of insurer and found coverage. The Alberta CA disagreed saying the damage was physically connected to the contractors own work. SCC held, with an interesting dissent, that standard form contracts with wide application, such as insurance policies, are an exception to the appellate review test set out in Savatta, and can be reviewed on correctness basis meaning no deference is owed to trial judges interpretation.

23 Ledcor v Northbridge Indemnity Insurance Co SCC 37 Takeaway for insurers 1. Appeal courts will get second kick at the can to interpret the policy. 2. The decision discusses the previous leading cases on builders risk policies. 3. The faulty design cases that are discussed also figure in the dissent. 4. The next battleground will be faulty design cases- whether the exclusion means only the redesign cost is excluded and the building replacement is resultant damage, or whether the design and the thing designed are the work and is all excluded.

24 Carter v Intact Insurance Company, 2016 ONCA 917 Insured owned condominiums which were destroyed by fire. Insurance policy with Intact provided for replacement cost. Insured rebuilt condominiums but expanded significantly and wanted Intact to pay replacement cost of the pre-existing building instead of ACV. Intact maintained that because the new building was not of like and kind the insured was not entitled to replacement cost.

25 Carter v Intact Insurance Company, 2016 ONCA 917 Takeaway for insurers Ontario Court of Appeal has confirmed that an insured is only entitled to replacement cost if they replace their insured property with a new property of like and kind quality. Otherwise, they are entitled to Actual Cash Value only.

26 Monk v. Farmers and Muskoka Ins., 2015 ONCA 911, Supplementary Judgment 2016 ONSC 3488 Facts: contractor damaged insured s home while performing restoration work. Motion Judge ruled that the faulty workmanship exclusion covered both direct and indirect/resulting damage, and dismissed the plaintiff s claim. The plaintiff successfully appealed the decision. The Court of Appeal held absent clear wording to the contrary, resulting damage from faulty workmanship is covered under a homeowners policy.

27 Monk v. Farmers and Muskoka Ins., 2015 ONCA 911, Supplementary Judgment 2016 ONSC 3488 Takeaway for insurers 1. The Court of Appeal s decision places a heavy onus on insurers to clearly exclude coverage, with specificity. 2. It can t simply rely on the absence of an exception for resulting damage in its exclusion wording.

28 Time to Vote Ledcor V Northbridge Daggitt V Campbell State Farm V Aslan

29 Risk Management Counsel of Canada (RMC) We are insurance defence counsel located in every province. Looking for some advice on an issues in another jurisdiction? Looking for general information on insurance issues? Subscribe to our monthly insurance law update at

30 Questions Shawn O Connor Samantha Iturregui Crystal Schulz