Legal Cases Flashcards
Whiten v Pilot Insurance
Proportionality/Power of Imbalance
Supreme Court
Whiten Wins
Insured’s house was destroyed in a fire. After some time, the insurer cuts off the rent without notice alleging arson (“that insured deliberately set the house on fire”) but has no evidence
Issue: Did Pilot Ins use the power imbalance to force insured into a smaller settlement?
Ruling 1: jury awards 1M in punitive damages to insured
Ruling 2: ON Court of Appeals reduces punitive damages to 100K
Ruling 3: Supreme Court of Canada restores the 1M in damages. Although award was very high the award was within the rational limit as the act was highly reprehensible as an effort to force an unfair settlement.
Awards of this type should consider proportionality along several dimensions:
1) Degree of vulnerability of the plaintiff. Punitive damages would be higher if defendant abused their position of power.
2) Degree of harm or potential harm directed at plaintiff. The more harm is done the higher the quantum.
3) Other advantage wrongfully gained - so that the defendant don’t see the award simply as a fee
4) Consider the need for deterrence
5) Consider all other civil and criminal punishments to defendant
Somersall v Friedman/Scottish York
Subrogation
Supreme Court
Somersall wins
Victim is severely injured by UNDER-insured driver
Injured party & tortfeasor sign limits agreement
Injured party also claims against OWN insurer for excess beyond limits agreement
Insurer denies claim
Issues:
- Does limits agreement imply plaintiff not legally entitled to further recovery from tortfeasor?
- Insurer then effectively loses subrogation rights
Ruling 1: motions judge rules for insurer
Ruling 2: ON appeals court reversed original ruling (plaintiff recovers under SEF 44)
Ruling 3: Supreme Court dismissed insurer’s appeal (plaintiff recovers under SEF 44)
At time of accident, SEF 44 was in effect, therefore:
Subsequent limits agreement did not preclude coverage under SEF 44.
Limits agreement: Agreement between injured party & tortfeasor where:
- Tortfeasor admits liability
- Injured party won’t sue for more than tortfeasor’s limits
SEF No.44: Endorsement providing coverage to insured when tortfeasor is UNDER-insured
Sansalone v Wawanesa
Duty to Defend
Wawanesa wins
BC Transit bus drivers sexually abused a teenager
Wawanesa DENIED defense & coverage: policy terms exclude bodily injury caused intentionally
Issue: How does (duty to defend) relate to (duty to indemnify)?
- Does insurer have a duty to defend where indemnification is beyond the scope of the policy
RULING 1: Duty to defend
Bus drivers may have (mistakenly, negligently) believed consent had been given (insurer appeals)
RULING 2: appeals court rules there is no duty to defend (2-1 split decision)
Majority:
When the risk of injury is inherent in the insured’s deliberate act so that the injury is the natural and probable consequence of the act, the intention to commit the act is the intention to cause the injury.
In this case, Sansalone had the intention to commit the act and therefore the intention to cause the injury. The insurer has no duty to defend
Minority:
Sansalone committed an intentional tort without intending to cause injury.
Sansalone committed the alleged sexual acts in the negligently‐held belief that the victim consented. The duty to defend is separate from the duty to indemnify against damages, and therefore, the insurer has a duty to defend.
Nichols v American Home Assurance
Duty to defend
Supreme Court
American Home Assurance wins
A lawyer was accused of fraud but found innocent
- Sought defence costs from professional liability insurer
- Insurer denied claim
Issue: How does (duty to defend) related to (duty to indemnify)
- Does insurer have a duty to defend where indemnification is beyond scope of the policy?
Ruling 1: Duty to defend
Ruling 2: ON appeals court dismissed appeal:
- (Duty to indemnify) vs (duty to defend) is different
- Must pay defense since defendant was found innocent
Supreme Court allowed appeal:
- (Duty to defend) is triggered by (duty to indemnify)
- Since fraud was beyond the scope of coverage, there was no duty to indemnify, and therefore no duty to defend
Alie v Bertrand
Indemnity trigger, defense trigger
Alie wins
Defective concrete requires replacement of basement of 140 houses in Ottawa (built between 1986 and 1988)
Issues:
INDEMNITY COST ALLOCATION:
- Different years were covered by different insurers
- Which policies were triggered?
DEFENSE COST ALLOCATION:
- How are defense costs ALLOCATED between primary & excess insurer?
Ruling 1a:
INDEMNITY TRIGGER: injury-in-fact
- consider each 1-yr period from construction to realization of defect in 1992
- assume that damages are evenly spread over all years
Ruling 1b:
DEFENSE TRIGGER:
- excess/umbrella policies have duty to defend provided
they follow the form of the underlying policy AND do not specifically exclude duty to defend
Precision Plating v Axa Pacific Insurance
Duty to Defend
Axa wins
Insured has a fire on premises causing chemicals to overflow and contaminate neighbouring properties
Issue: Does insurer have a duty to defend?
- Pollution/contamination is EXCLUDED from policy
- But insured argued that cause of loss was fire & therefore covered
Ruling 1: Duty to defend
Chambers judge held for insured (insurer must defend)
- policy terms were ambiguous
- should not exclude contamination caused by fire
Ruling 2: Insurer’s appeal allowed (no duty to defend)
- Third party claims were for CONTAMINATION not for fire (thus excluded from coverage)
Precision Plating v Axa Pacific Insurance : compare to other duty-to-defend cases
Compare to: (no duty to defend because no duty to indemnify)
- Sansalone v Wawanesa (sexual abuse)
- Nichols v American Home (fraud)
Precision Plating was different however:
- pollution/contimation was clearly excluded
- Insured argued cause of loss was fire not pollution (unsuccessful on appeal)
Explain the significance of the court case Precision Plating v Axa Pacific Insurance as it applies to exclusions in CGL coverage
What is critical is not the cause of loss, but the cause of liability. The claim arose from pollution damages, but pollution was excluded so the insurer had no obligation to payout. So even though fire was a concurrent cause of loss, the claim was for pollution damages, an excluded item.
Amos v ICBC
Purpose test, Casualty test
Supreme Court
Amos wins = “arising out of”
The insured, Amos, was shot by a gang in California (while driving rental car)
- claims no-fault accident benefits against his BC auto policy
Issues:
PURPOSE TEST: Did the accident result from ordinary and well known activities to which automobiles are put? (essentially, was the car being used in a normal way?)
CAUSALITY TEST: Is there some causal relationship between the injuries and the user or operation of the vehicle? (essentially, was there a link (possibly indirect) between use of car and shooting?)
Ruling 1:
NO - BC Supreme Court dismissed driver’s claim
Ruling 2:
NO - Appeals court upheld the judgment of the BC Supreme Court
Ruling 3:
- Supreme Court of Canada held that appeal SHOULD be allowed (driver is compensated)
- Answer is YES to both purpose & causality tests
- Plaintiff received no-fault benefit (Accident Benefits) because damage was “arising out of” use of car
Applicability in ON: Not strictly applicable in Ontario
- In Ontario, the policy wording is damage “caused by” use of car (vs “arising out of” use of car)
Belanger v Sudbury
Duty of Care
Belanger wins
20-yr old woman catastrophically injured in head-on collision due to icy road in Sudbury Ontario
Issues: Was the city LIABLE for failing to maintain roadway in good repair during winter storm?
- Damages of 12M had already been agreed upon
Ruling 1: City was liable for plaintiff injuries
- Salting & plowing occurred but were not sufficient given the storm conditions
Ruling 2: UPHELD: court of appeals rejected defendant’s “statutory defense” and upheld trial judges decision
- City is expected to ADAPT to conditions, NOT just blindly follow procedures
City’s defense strategy: attempted a “statutory defense”: claimed no liability because:
- could not reasonably be expected to know about the reformed ice
OR
- took reasonable steps to maintain roadway
Standard of Care:
- Appeal judge implied that standard of care was breached
- A qualified city worker should reasonably have foreseen the icy conditions and taken steps to mitigate them
Saadati v Moorhead
Non-pecuniary damages for mental injuries
5 criteria: duty of care, breach, factual and legal causal relationship, establish mental injury)
Supreme Court
Saadati wins
Mr Saadati sustained injuries in an auto accident when his vehicle was hit by Mr Moorhead’s vehicle
- Accident occurred on July 5, 2005
(Mr Saadati is the paintiff, Mr Moorhead is the defendant)
Issues: Is Mr Saadati eligible for non-pecuniary damages for physical and/or mental injury
(see also: Trilogy case involving cap on non-pecuniary damages)
Ruling 1: YES
Physical Injury Claim:
- Rejected by trial judge
Mental injury claim:
- Evidence from plaintiff’s expert psychologist not enough to establish psychological injury
- BUT testimony of Mr Saadati’s family and friends was sufficient proof of psychological injury
- Judge awards 100K in non-pecuniary damages
Ruling 2: NO
Trial judge’s decision overturned by BC court of appeals
Mr Saadati has not demonstrated a medically recognized psychiatric or psychological injury
Ruling 3: YES
Supreme Court of Canada: unanimously reversed the BC Court of Appeal (June 2017)
Reason: recovery for mental illness depends on 5 criteria:
1. Duty of care (defendant had duty to drive safely)
2. Breach of duty of care
3. Legal causal relationship
4. Factual causal relationship
5. Establishment that the mental injury is serious & prolonged, and rises above ordinary anxieties & fears
Comments:
All criteria were met (plaintiff does not have to prove a specific recognized mental illness), would not be fair for mental injuries to have a specific classification whereas for physical injuries there is no need for this.
The law of negligence must afford equal protections to victims of mental and physical injuries
This case will have a significant impact on future cases dealing with compensation for mental injuries
Resurface Corp v Hanke
But for test, material contribution test
Supreme court
Resurface wins
Hanke badly burned, sued manufacturer of ice-surfacing machine for negligence in making the gasoline and water tanks so similar leading to his mistake
Issue:
what was the cause of injury?
STANDARD CAUSATION TEST: “but for” rule
would result have occurred BUT FOR act/omission of defendant?
if YES: defendant NOT liable
if NO: defendant liable
ALTERNATE CAUSATION TEST: “material contribution” (use only when the “but for” rule can’t establish causation and accident is foreseeable)
Requires that the negligent action MATERIALLY CONTRIBUTED to the risk of harm
- less rigorous than the “but for” test
Ruling 1: defendant wins
The trial judge found that Hanke did not prove negligence of manufacturer as was Hanke’s error and not manufacturer design error’s. Notably due to Hanke’s own admission and application of but for rule test.
Reasoning of the “but for test”
- would explosion still have occurred BUT FOR making gas/water tanks similar?
- YES, so defendant not liable
Ruling 2: HANKE WINS
Reasoning: apply “material contribution test”
- Appeals judge stated trial judge failed in FC analysis (Foreseeability & Causation)
- Appeals judge then applies “material contribution test”
Supreme Court: defendant wins
Reasoning: Supreme Court conclude that manufacturer is not liable for Hanke’s injury and assessment of comparative blameworthiness is not necessary since Hanke’s error was not a design error and the but for rule test is the basic test and material contribution test not justified and necessary in this case
Morrow v Zhang (AB 2004)
Minory injury cap constitutionality
Cap upheld
Alberta introduced legislation to address: rising costs, increase in un/under-insured motorists
- Trial challenged constitutionality of $4K cap on non-pecuniary damages for ‘minor injuries’
Issues: Issue 1 (article 7): insured stated that his right to freedom was not respected since he was “forced” to follow certain medical practices in order to be compensated.
Issue 2 (article 15): Injured states that the law is discriminatory for minor injured victims. Indeed, they can’t “fully” be compensated for non-pecuniary damages while major injureds can. Moreover, this stigmatizes the minor injured.
RULING 1: NO CAP
Cap is discriminatory & shut down
- Cap does discriminate vs MI victims
- Cap promotes stereotype as malingeres
- Cap is unconstitutional - makes MI victims bear unfair share of cost cutting that came from need to reduce prems
RULING 2: CAP STAYS
appeal reverses original ruling (cap is upheld)
- Cap is designed to lower premiums to everyone
- Cap does not discriminate against minor injuries (cannot be appealed further)
PIPEDA Report Findings
Credit score
PIPEDA is Personal Information Protection & Electronic Documents Act
- an ON couple complained of increase in property insurance rates because insurer used their credit score
Ruling: PRIVACY COMMISSIONER: use of credit score is acceptable
Note:
Commissioner notes that the standard insurance form is deficient & misleading
Consent must be meaningful (website said credit MAY be used, but it was ALWAYS used)
Insurer should be explicit regarding its intent
Aviva v Pastore
Catastrophic impairment (class 4)
Victim sustained severe complications from ankle injury in 2002 auto accident
Victim broke her leg and sought catastophic impairement designation. After a certain time, the other leg was not working properly
Insured impacted by one of the 4 catastrophic impairement condition (was classified as class 4 in only one of 4 areas)
Aviva rejected cat imparment designation
Class 4 impairment: Marked impairment significantly impeding if at least 1 of: Daily living / social interaction / concentration / work activities
Issues:
1 issue: Director delegate required only one criteria (DSCW) of these to be satisfied to declare a catastrophic impairment
2 issue: this is allowed as it is hard to separate out the individual mental & physical injury. A comprehensive approach is needed to determine if CAT injury criteria are satisfied
Pre-ruling: Designated Assessment Centres (DAC) concluded there was marked impairment in daily living. Class 4 cat impairment was appropriate.
Arbitration: DAC’s conclusion affirmed by arbitration delegate (class 4 impairment upheld)
Divisional Court
* Judicial review requested by Aviva reversed prior decision
* Judge stated that delegate exceeded jurisdiction → NO cat impairment
Ruling 2 - Appellate Court
* Divisional Court erred in ‘standard of review’
* Standard should be ‘reasonableness’ (which delegate applied) → class 4 reinstated
