Insurance coverage refused on the basis of an unintentional misrepresentation on insurance policy
Grafton Connor Property Inc. v Murphy, 2015 NSSC 195
In 2007, the North-End Pub in Halifax was destroyed by fire. It was owned by Grafton Connor and insured by Lloyd’s of London Underwriters under an insurance policy that had been placed through Marsh Canada Limited.
After the fire, Underwriters discovered that, contrary to the information on the insurance application, the Pub was neither sprinklered nor entirely of masonry construction. Underwriters denied the claim due to material misrepresentation in the application. Grafton Connor brought an action against Underwriters and Marsh for coverage under the policy and for damages as a result of delay in rebuilding the Pub and an apartment complex it planned for the site.
Although Grafton Connor argued that the misrepresentation was unintentional, Justice LeBlanc found that Underwriters had no liability under the policy, which was not intended to excuse unintentional material misrepresentations by the insured. Underwriters had no duty to investigate the accuracy of the information provided in order to determine whether its insured had made any misrepresentations. Justice LeBlanc further found that Marsh had breached the standard of care of a reasonable insurance broker by failing to make inquiries to determine whether the insured's representatives had the necessary training or expertise to accurately complete the insurance application. Marsh was ordered to pay Grafton Connor approximately half of the insurance proceeds and half of the increased costs and lost profit from the Pub which it would have rebuilt had it received the insurance money.
Grafton Connor was also negligent and held 50% responsible for its misfortune in failing to ensure that its representatives who handled the placement of insurance had sufficient knowledge of the properties to place coverage.
Court finds that CPP disability benefits are deductible from loss of income claim Tibbetts v Murphy
, 2015 NSSC 280
Tibbetts was injured following a motorcycle/motor vehicle accident with Murphy. The court concluded that although Tibbetts was primarily responsible for the collision, Murphy was one-third liable for the accident.
On the issue of damages, Tibbetts argued that her CPP disability benefits, which she began receiving after the accident, were not deductible from her loss of income claim. Tibbetts relied on the court’s decision in Hollett v. Yeager, 2014 NSSC 207, where it found that CPP disability benefits are not deductible from a claim for past loss of income. Murphy, however, argued that the decision in Hollett was wrongly decided based on section 113A of the Insurance Act, which provides that in claims for damages arising from the use or operation of a motor vehicle, a plaintiff’s claim for loss of income or diminished earning capacity shall be reduced by “
all payments in respect of the incident that the plaintiff has received or that were available before the trial of the action for income loss or loss of earning capacity under the laws of any jurisdiction or under an income-continuation benefit plan if, under the law or the plan, the provider of the benefit retains no right of subrogation."
Murphy argued that Tibbetts’ CPP disability benefits were received “in respect of the incident” as contemplated by the Act and, therefore, that they were deductible from damages for loss of income.
The court found that the reasoning in Hollett
was based on Ontario law which was distinguishable from the legislative framework in Nova Scotia and accepted Murphy’s argument that Tibbetts’ CPP disability benefits must be deducted from her loss of income claim.
Prince Edward Island
Preserving the availability of a motion for non-suit
Doyle v Roberts & PEI Mutual, 2015 PESC 2
Doyle was injured while working on a fishing vessel owned and operated by Roberts. The matter proceeded to trial, where Doyle testified as a witness. Before beginning his cross-examination of Doyle, counsel for Roberts moved to enter the entire transcript of Doyle’s discovery. After four days of trial, Doyle closed his case. Counsel for Roberts then notified the court of his intention to move for a non-suit.
Counsel for Doyle argued that Roberts was precluded from bringing a non-suit motion because he had opened his case by tendering evidence on the cross-examination of Doyle. In response, counsel for Roberts argued that the rule in Browne v Dunn required him to put the evidence of inconsistent statements to the witness.
The court agreed that Roberts had opened his case by tendering evidence and that a non-suit was no longer available. The proper procedure on the cross-examination would have been to have the evidence marked for identification but not have it tendered as evidence. The court reasoned that the current rules still permit a defendant to open his case if a motion for a non-suit proves unsuccessful. There was no reason to broaden the scope of the availability of a non-suit by permitting some evidence to be lead prior to making the motion.
Only a Quality Improvement Committee can conduct a quality improvement activity
Est. Faye Carter v. Flemming et al.
, 2015 PECA 9
Carter was admitted to the defendant Hospital and passed away while a patient there. The Estate of Carter and her dependants brought an action against several doctors and the Hospital in relation to her death. Hospital administration contacted an Ontario physician to review the circumstances of Carter’s death. This review resulted in the Hill Report. The Hospital resisted disclosure of the Hill Report on the basis that it was produced in the course of a quality improvement activity and protected from disclosure by section 29 of the Health Services Act. The decision of the motions judge in favour of the Hospital was appealed.
The Court of Appeal found that section 29 of the Health Services Act created an absolute prohibition on admissibility rather than a form of statutory privilege. The protection of quality improvement information from admissibility cannot be waived provided the requirements of the Act are satisfied.
The court determined that it was not sufficient to meet the requirements of the Act that the review was in the nature of a “quality improvement activity” and produced “quality improvement information”. The Act requires that such an activity can only be carried out by a “quality improvement committee” established or designated by the Board or its authorized delegate. In this case, the Hospital administration had not been delegated the authority by the Board to establish or designate a quality improvement committee. As a result, Dr. Hill was not a “quality improvement committee” within the meaning of the Act and the Hill Report was subject to production.
Court denies double party and party costs where the offer to settle contained no compromise
Hawkins v Village Mall Shopping Centre (2006) Inc., 2015 NLTD(G) 136
At trial (2015 NLTD(G) 59), Hawkins failed to prove any negligence with regards to her slip and fall in the Mall's parking lot. The trial judge weighed an unusual freeze event against the reasonableness of the Mall’s de-icing practices. While ineffective, the trial judge found the cleaning system to be as reasonable a response as could be expected.
Prior to trial, the Mall made an offer to settle pursuant to the rules of court. The Mall offered to accept a discontinuance of the action, without cost consequences to Hawkins, if settlement was concluded by a certain date. Thereafter, the Mall offered to accept a discontinuance of the action with costs in favour of the Mall based on the usual party and party costs.
The court relied on Coady v Dicks, 2004 NLSCTD 193, where it was held that the presumption of solicitor-client, now double party and party, costs does not apply where the offer to settle is merely nominal, contains no element of compromise, or requires capitulation by the other party.
According to the court, the Mall's offer to settle appeared to lack any compromise. Furthermore, given the unusual facts regarding liability, it was not inappropriate or unreasonable for Hawkins to have litigated the issue of liability for the slip and fall. The merits of the case were not clear cut and did not justify capitulation by Hawkins. The Court denied the Mall’s application for double party and party costs.
Court finds no liability for motor vehicle accident and dismisses the claim
Burry v. Murphy, 2015 NLTD(G) 135
Burry's motor vehicle struck Canning's vehicle from behind, and pushed Canning's vehicle into the vehicle ahead. According to Burry, Canning had suddenly changed lanes in an unsafe manner and then stopped abruptly in front of him, leaving Burry with no opportunity to avoid striking Canning's vehicle. Canning denied having made a lane change. From his point of view, the accident was simply a typical rear-end collision.
As the driver of the rear vehicle, there was an inference that Burry was negligent. None of the witnesses could offer direct evidence as to how the accident occurred. The determination of liability depended on the credibility of the two drivers, with the onus on Burry to establish that his evidence should be preferred over that of Canning.
The Court found that inconsistencies in Burry’s testimony at trial versus his discovery evidence, including his evidence as to the specific lane in which the accident occurred (“a very significant inconsistency”, given that a sudden lane change was alleged), raised doubts about his reliability. By contrast, Canning’s evidence was clear and cogent, and he logically explained any alleged discrepancies between his trial testimony and his earlier evidence. Having accepted Canning’s recollection as the more probable version of the accident, the Court dismissed Burry’s claim.
Production of documents at discovery in the context of a bad faith claim
The Wawanesa Mutual Insurance Company v Shirley Wade, 2015 NBCA 43
Wade, who was involved in a car accident, was insured with the defendant Wawanesa. Wade’s insurance policy provided coverage for loss of income. The benefits were initially paid, then denied, and then reinstated on a retroactive basis at a lower amount. Wade sued Wawanessa on the grounds that her benefits had been improperly reduced and that Wawanessa had acted in bad faith.
The motion on appeal related to the trial judge’s decision to order Wawanesa to provide documents at discovery pertaining to its financial status, its pool of similar policy holders, the average duration of paid benefits, its past practices regarding the hiring of a consulting group to conduct Transferable Skills Analyses, and its past practices in terms of referrals of Section B claimants to the Atlantic Pain Clinic.
On appeal Wawanesa argued that the documents sought were not related to “matters at issue”, that the financial information prior to liability arising did not need to be disclosed and that the requests were disproportionate.
The Court of Appeal affirmed the trial judge’s decision. The documents requested related to “matters at issue” as they were related to issues and facts material to the bad faith claim. Any concerns regarding the impact of financial information on the trier of fact are not at issue where the judge is sitting alone. The trial judge considered the costs of producing the documents and the probability of the documents yielding evidence supporting Wade’s bad faith claim.
Advance payments for past lost of income
Trenholm v Palmer, 2015 NBQB 141
Trenholm was involved in a car accident and sued the owners of the vehicle alleging that they had lent their vehicle to an incompetent driver and that they permitted a vehicle to be operated that they knew or ought to have known was not fit to be on the road. Trenholm brought a motion seeking an advance payment of his past loss of income claim.
Justice McNally reviewed the section 265.6 Insurance Act process authorizing the court to make orders for the advance payment of special damages, including past loss of income. Justice McNally concluded as follows:
- The provision is remedial in nature and is intended to consider the plaintiff’s financial interests and as such should be given a fair, large and liberal construction and interpretation;
- The action has to arise out of a motor vehicle accident on or after January 1, 1997;
- The plaintiff bears the burden of proving that it will, more likely than not, prove at trial that the defendant is liable for the type of special damages in question; and
- In determining the amount of advanced payment, the court will take into account all relevant circumstances including those listed in s. 265.6(4).
While the court concluded that Trenholm would more likely than not succeed at trial, the court held there should be no advanced payment given that, more likely than not, the damages would not include past loss of income.
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