Litigation Privilege Protects Adjuster's File

When does litigation privilege arise in tort claims?

Panetta v. Retrocom, 2013 ONSC 2386 (S.C.J.)

In this slip and fall action, there was a question of whether litigation privilege applied to an investigation done by an adjuster prior to defence counsel being appointed.  The plaintiff fell in a Wal-mart parking lot and an incident report was prepared.  A few weeks later, an adjuster retained by Wal-mart's insurers wrote to the landlord of the premises advising it of the incident.  The plaintiff sought production of the adjuster's notes, file and reports, on the basis that litigation privilege had not yet arisen at the time they were created/obtained.

Justice Quinn held that the notes were privileged:

[61]   I think that, in third-party or tort claims (as opposed to claims by an insured against his or her own insurer), there is no preliminary investigative phase where privilege does not attach to notes, reports and files of adjusters. In third-party insurance claims, the sole reason for any investigation by or on behalf of an insurer is because of the prospect of litigation. It is naive to think otherwise; and the fact that the investigation may be used to arrive at a pre-lawsuit settlement does not detract from the point that I make. The prospect of litigation inherently includes the prospect of settlement.

When the adjusters were retained to conduct their investigation on behalf of Wal-mart's insurer, the sole purpose of any documents they created was in anticipation of litigation.  The decision provides a helpful summary of the case law regarding litigation privilege (and as an added bonus, a nice example of Justice Quinn's sense of humour). 

Limitation Periods in Duty to Defend or Indemnify Cases

When does the limitation period begin to run in duty to defend or duty to indemnify cases?

In Georgian Downs Ltd. v. State Farm Fire and Casualty Co., 2013 ONSC 2110 (S.C.J.), the applicant sought an Order compelling State Farm to pay its defence costs.  Georgian was a defendant in a slip and fall action, and State Farm insured Georgian's winter maintenance contractor.  Georgian was added as an additional insured to the contractor's policy.  The underlying claim was ultimately settled on the basis of the contractor's admission of liability.

One of the issues was when the limitation period began to run.  Although counsel exchanged correspondence back and forth about defence costs, there was no clear and unequivocal denial of Georgian's request for defence costs.

Justice Mulligan held that "when there is an absence of a clear and unequivocal denial of a duty to defend or a duty to indemnify, a limitation period commences on the day of judgment or settlement."  Using such an interpretation promotes certainly, since it fixes a readily ascertainable date, rather than being dependent on subjective questions of discoverability.

Presumably, if the facts were different and State Farm had clearly denied the request to pay defence costs, the limitation period would have commenced at that time.

Insurer Obligated to Continue Paying Defence Costs

Jevco v. Malaviya,2013 ONSC 675 (S.C.J.).

Malaviya was insured under a Standard Automobile Policy (SAP) with Jevco for the minimum liability limit of $200,000.  He was sued following an accident in 2005. The insurer paid the limits of its policy, then sought a declaration that it had no continuing duty to indemnify or defend Malaviya.  The contentious issue on the application was whether Jevco was obliged to continue paying the insured’s defence costs.

Justice Morgan described the wording of the SAP as “muddled and contradictory”.  It failed to clearly answer whether the insured would pay the insured’s legal costs above and beyond the coverage limit.  On the other hand, s. 245(b) of the Insurance Act provides that the insurer shall bear the defence costs of a claim.  There is no limiting language in s. 245.  As a result, the insurer is obligated to continue paying defence costs of the insured, even when there is no further duty to indemnify. 

The  SAP may have to be modified in order to avoid this situation from arising in the future.

Action Against Municipality Dismissed for Failing to Give Notice

In August of last year, we reported on Argue v. Tay (Township), in which the action was dismissed for the failure to give notice required by s. 44(10) of the Municipal Act.  The plaintiff argued that the municipality had actual or constructive knowledge of the accident because the municipal fire department attended the scene.  The matter was appealed to the Court of Appeal, which has now dismissed the appeal at 2013 ONCA 247 (CanLii).

The Court of Appeal confirmed that the plaintiff had the onus of establishing that she had a reasonable excuse for not providing notice and that the municipality was not prejudiced.  The motions judge held that she failed to meet her onus.  The Court of Appeal found no error in the motion judge's analysis or his application of the relevant principles.

This is an extremely helpful decision in cases where the plaintiff has failed to provide notice to the Municipality.

City Not Liable for Icy Boulevard

The City of London has successfully defended a slip and fall action that occurred following a winter storm.  In Bondy v. London (City), [2013] O.J. No. 1281 (S.C.J.), the plaintiff slipped and fell on the paved portion of the boulevard abutting the city sidewalk, which was used to access her driveway. The night before the plaintiff fell there was a heavy freezing rain storm, which continued throughout the night and into the morning.  Schools were closed and radio announcements recommended citizens stay off roads and sidewalks. The adjacent property owned salted the sidewalk but not the boulevard. The City decided to call in its sidewalk equipment operators at midnight and they were deployed at 4:30 a.m.  In the area of the plaintiff's fall, operators were deployed from 7:30 a.m. to 5:30 p.m., with the route taking 12-14 hours to complete.

The case involved a number of issues, including whether the boulevard qualified as an untravelled portion of the highway, whether adjacent property owner was liable for failing to salt the boulevard, whether the Municipal Act or Occupier's Liability Act applied, and the standard of care for the municipality.  Justice Gorman held that the boulevard was not part of the untravelled portion of the highway.  In addition, the City could not deflect liability onto the adjacent property owner in the circumstances, as they did not exercise control over the area.

Ultimately, Justice Gorman held that the City had met its standard of care.  It had complied with the Minimum Maintenance Standards for icy roadways. The plaintiff was entitled to expect a highway to be in a good condition, but "when the weather is so treacherous as to require the broadcast of public warnings, one travels at one's peril". Although the action was dismissed, the decision that the boulevard was not part of the untravelled portion of the highway poses a problem: are municipalities now expected to salt these areas?

The Agony of the Collision

A recent motion decision dealt with the standard of care in emergency situations.

In Dubois v. Ford Credit Canada Leasing, 2012 ONSC 7311 (S.C.J.), the plaintiff was a passenger in a vehicle being driven by Gunn.  An oncoming vehicle crossed into Gunn's lane and he swerved left to avoid the accident.  Unfortunately, the other driver also swerved and they collided.

Gunn brought a motion for summary judgment on the basis that his actions occurred in an emergency situation and he was not negligent on the basis of the "agony of the collision" principle.  Justice Spence reviewed three formulations of the test for negligence in an emergency:

1.  Which focuses on whether the driver was driving with the skill and care expected of a reasonable driver at the time and place in issue;
2.  Which provides that the driver has a duty to extricate himself and his passengers from the situation with safety if possible, but his conduct is not to be judged by the standards involving deliberation and the opportunity for careful and conscious decision.  He is not negligent for failing to adopt the best course of action in the light of hindsight;
3.  Which provides that if driver A loses control and seeks to apportion blame on B, A must show that B became aware or should have become aware and had an opportunity to avoid the accident.

Justice Spence concluded:

[39]  The conclusion to be drawn from the above analysis is that the test to be applied is properly set out in the first formulation on the understanding that, as emphasized in the second formulation, a driver in the “agony of a collision” generated by an emergency, may properly be considered to have acted reasonably even though his conduct might not be considered reasonable if it had occurred in circumstances that offered a reasonable time for decision.

Justice Spence dismissed the motion for summary judgment, as there were competing expert opinions and the potential for unfairness to the plaintiff, who was an innocent passenger. Although the decision is an interesting summary of the "agony of the collision" principles, it also imports a fairness component, which introduces a new factor in the analysis.

Causation and Insurance Broker Negligence

The Ontario Court of Appeal recently commented on one of the leading cases pertaining to insurance broker negligence, Fletcher v. Manitoba Public Insurance Company, [1990] 3 S.C.R. 191.  

In Zefferino v. Meloche Monnex Insurance Company, 2013 ONCA 127 (C.A.), the plaintiff sued his insurance company alleging that the insurer should have offered him optional income replacement benefits, and claiming a loss of IRBs which should have been available to him. The plaintiff argued that the ratio in Fletcher did not require a plaintiff to prove that the acts or omissions of the insurer caused the loss, but rather only that the insurer had a duty to inform the insured, that it breached its duty of care and that there was a gap in coverage. 

The Court of Appeal held that a plaintiff is not relieved of the normal burden of proof in an insurance broker context and must show causation.  There was no evidence to prove that Zefferino would have purchased optional insurance coverage other than a bald and self-serving assertion, and therefore his action failed.