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Laches Applies to Loss Transfer Actions

Insurers dealing with loss transfers should be aware of the decision in Zurich Insurance Company v. TD General Insurance Company, 2014 ONSC 3191 (S.C.J), where the Court dismissed the claim.

The claim arose out of a motor vehicle accident that occurred July 14, 1999.  In 2010, approximately 11 years after the accident, TD sent Zurich a Notice of Loss Transfer alleging Zurich's insured was 100% at fault.  Shortly after, TD made two requests for indemnification.  In 2011, TD brought an application requiring Zurich to participate in an arbitration.  Zurich brought a motion to decide a preliminary issue as to whether the application was barred by the equitable doctrine of laches and the Limitations Act.  The arbitrator dismissed the motion and Zurich appealed.

Justice Lederman held that TD's claim was not barred by the Limitation Act, relying on decision in Markel Insurance v. ING Insurance Company of Canada, 2012 ONCA 218 (CanLII), where the Court of Appeal held that the limitation period runs from the day the first party insurer requests loss transfer from the second party insurer.

However, Justice Lederman held that laches applied in the circumstances.  Applying laches in the circumstances was consistent with the fusion of law and equity to achieve just results.  He held that acquiescence is a stand-alone basis for laches, and there need not be prejudice for the doctrine to apply.  The 11-year delay coupled with a directive that the first party insurer notify the second party insurer promptly and the fact the TD is a sophisticated insurer, gave rise to an inference that it had abandoned or waived its rights to the claim. 

The “Curtain” of Asserted Claims of Privilege Lifted to Permit a Full Examination of all Available Evidence

In Tomasone v. Capo, Sgro LLP, 2014 ONSC 2922 (CanLII) the defendant had provided two legal opinions to the plaintiffs which the plaintiffs claimed failed to meet the requisite standard of care. The plaintiffs sued the defendant in negligence. The defendant brought a motion for summary judgment asserting that the plaintiffs’ claim was statute barred by the Limitations Act, 2002.

In defence to the summary judgment motion, the plaintiffs put forward affidavit evidence suggesting they discovered their claims against the defendant after retaining counsel. Their counsel also swore affidavits but during cross-examinations they refused to answer any questions about when or how they discovered those claims.

In advance of the summary judgment motion, the defendant moved for answers to refusals with respect to discoverability, particularly dealing with information and documentation the plaintiffs claimed privilege over.

Master Short considered whether the plaintiffs could rely on privilege in these circumstances and concluded at paragraph 48 as follows:

The plaintiff ought not to be allowed to rely on discoverability arguments to seek to avoid a limitations defence, without making full disclosure with respect to all relevant facts relating to what knowledge was acquired and when.

Master Short also considered the defendant’s argument that even if privilege applied, the plaintiffs waived privilege. Master Short agreed, taking into account the following factors inter alia:

1) the plaintiffs undertook to prove their action was not statue-barred and they put their state of mind and their lawyer’s mind in issue to argue that the action was not statute-barred;

2) the plaintiffs relied upon the affidavit evidence of their lawyer; and

3) the plaintiffs subpoenaed former counsel to give evidence.

Master Short went on to review the guidance provided by the Supreme Court of Canada in Hryniak v. Mauldin, 2014 SCC 7 regarding the importance of full disclosure in light of the court’s power on the hearing of summary judgment motions to assess the quality and sufficiency of the evidence and the requirement that the parties "put their best foot forward".

The plaintiffs were ordered to answer the questions they refused related to the timing of receipt and review of relevant documents and the timing of investigations into possible claims against the defendant.

Action Dismissed for Failing to Provide Municipal Notice

A recent decision dismissed a plaintiff's claim against a municipality for failing to give notice within 10 days, as required by the Municipal Act.

In Seif v. City of Toronto, 2014 ONSC 2983 (S.C.J.), the plaintiff tripped and fell on a sidewalk.  She did not provide notice to the City for four months.  She stated she was unaware of the Municipal Act notice requirement. She was on painkillers for 3 days, was mobile within a week of the accident and was able to focus on a job search in the weeks after the accident.  The Court found that the delay in giving notice was as a result of her indecision as to whether to bring an action.

Justice Morgan dismissed the action.  Even though the notice requirement is "very unfair", it is a specific statutory requirement that can only be changed by the legislative.  The exception to the notice requirement is to accommodate plaintiffs whose delay is as a result of their injuries.  The plaintiff had no reasonable excuse for the failure to comply with the notice requirement.  Whether or not the City was prejudice was not relevant.

This is a useful decision for those dealing with a notice issue.

Lawyer Swearing Affidavit for Motion does not Waive Solicitor-Client Privilege

Solicitor-client privilege is an important right, as seen in a recent appeal of a Master's decision.

In Elgner v. Freedman Estate, 2014 ONSC 1989 (S.C.J.), the defendant brought a motion for particulars.  A lawyer from the firm representing the defendant swore an affidavit in support of the motion.  Plaintiff's counsel cross-examined on the affidavit and a number of refusals were given.  On a motion for the refusals, the issue was whether the tendering of litigation counsel's affidavit in support of a motion amounts to "a total waiver of privilege over a lawyer's file."  The Master held it did not and Justice Morgan upheld the decision on appeal.

The refusals were extremely broad, including things such as accounts, letter of advice, dockets, and the initial retainer.  The plaintiff argued that since defence counsel swore they had no information (and therefore needed particulars), the only way to test their assertion was to ask to see everything.  Plaintiff's counsel also argued they needed to see everything in order to test the assertion the affidavit was made for "no improper purpose".  Justice Morgan disagreed, holding that the onus is on the party asserting the affirmative, not the party stating a negative.  If a statement that an affidavit is sworn "for no improper purpose" requires cross-examination, it would "burden all affiants with limitless cross-examination".  The plaintiff's motion was a fishing expedition aimed at undermining their ability to conduct the litigation.  The appeal was dismissed.

Court of Appeal Rejects Discoverability Argument

A recent example shows that the new summary judgment rule may be used in cases where plaintiffs claim they did not discover they had a claim within the limitation period.

In Yelda v. Vu, [2014] ONSC 2168 (C.A.), the plaintiff was injured in a motor vehicle accident in 2002.  She did not commence an action until 2011.  She alleged that she did not discover her injuries met the threshold for a claim until she had an x-ray of her back in 2009.  A motions judge disagreed, and granted summary judgment dismissing the action.  The plaintiff appealed.

The Court of Appeal dismissed the appeal.  The plaintiff's own evidence was that she had "really bad" back pain "half the time" each month following the accident.  She was never really pain free at any time, and at all times she attributed the pain to the accident.  Apart from occasional visits to hospital emergency departments, the plaintiff took no active steps to investigate the back pain from 2002 to 2009.  The motions judge held that it was implausible that a reasonable person would consistently take over the counter medication, have "really bad" pain, be unable to function a couple of days each month, and would find pain so bad as to need to attend the emergency department, yet fail to do anything to investigate the cause.  The Court of Appeal held there was no error in the motion judge's finding.

Plaintiffs Denied Costs of Jury Trial

A London judge recently denied costs to plaintiffs following a jury trial which saw them recover less than 10% of their claim.

In Mayer v. 1474479 Ontario Ltd., 2014 ONSC 2622 (S.C.J.), the defendant admitted liability for a 2008 motor vehicle accident.  The action proceeded to a jury trial on damages.  The Statement of Claim sought damages of $1.1 million, and mid-trial the prayer for relief was amended to $2 million.  The jury awarded the primary plaintiff $137,000 (reduced to $116,000 after the deductible and collateral benefits), her daughter $3,300 (reduced to $0 after the deductible) and her husband $0, for a total recover of $119,300.  The plaintiffs sought costs of $422,000.

Justice Leach went through the factors in r. 57.01.  Some of the factors considered were:

1.  The plaintiffs fell "drastically short" of the amounts claimed;
2.  The time and resources devoted by the plaintiffs were disproportionate to what the case was worth, as determined by the jury; 
3.  There were disbursements for experts who either did not add much to the proceeding or overlapped with other experts;
4.  The case was scheduled for 2 weeks and ran to 4 weeks, for which the plaintiffs were largely responsible; and
5.  Various disbursements were not permissible in any event, such as a "day in the life" video which was not used, the cost of a trial that was adjourned by the plaintiffs, and the cost of a voluntary mediation.

The defendants made several offers; however, they were not r. 49 offers as they failed to separate interest from damages, did not make it clear whether the offer was global for all plaintiffs or severable, and were not clear as to whether the plaintiffs could retain future collateral benefits.  But for the deficiencies in the offers, the defendants would have been entitled to partial indemnity costs in the amount of $181,000.  Even though they were not r. 49 offers, the defendants' offers were taken into account in exercising the Court's discretion.  Justice Leach held that each party should bear their own costs.

Mayer should be reviewed by counsel as guidance in making offers, as well as in deciding what resources should be put into a particular file.