Judge Says Plaintiff Not Required to Pursue Claim Against Tortfeasor As Condition of Accessing Uninsured Motorist Coverage

Posted on July 30, 2008 by Stephen Cavanagh

[Addendum: This decision was upheld by the Court of Appeal on August 21, 2009.]

Ontario auto insurers might be surprised to learn that the Insurance Act and the standard auto policy do not require persons claiming against the uninsured motorist coverage to pursue anyone whose negligence might have contributed to the plaintiff’s injuries or “to pursue anybody at all; they require that the insured person simply submit the claim to the insurer and the insurer will pay”.

So said Justice Barry MacDougall in Loftus v. Robertson et al. in a decision released last Friday.

The plaintiff had been injured while driving her car, which was insured by Security National. That car was involved in a collision with a car driven by one Robertson, who was uninsured. At the time of the accident, Robertson was being chased by a member of the Peterborough Lakefield Community Police Services, who was driving a police cruiser.

The plaintiff sued only her insurer, Security National, under its uninsured motorist coverage. Security National brought third party proceedings against the City of Peterborough, alleging that the negligence of the police officer caused or contributed to the collision and to the plaintiff’s injuries.

In this Rule 22 “special case” motion, Security National asked the court to determine the following question:

Assuming negligence on the part of the Third Parties [the police], or any of them, caused or contributed to the injuries and damages sustained by the Plaintiff, is Security National liable to make any payment to the Plaintiff pursuant to the coverage required under s. 265 of the Insurance Act, R.S.O. 1990, c. I.8 ?

The genesis of the dispute was s. 2 of Regulation 676 under the Insurance Act (the “Uninsured Motorist Coverage Schedule”). Paragraphs 2(1)(a) and (c) [the judgment mistakenly refers to subparagraph 2(1)(b), but that paragraph has been repealed] of the regulation read as follows:

2. (1) The insurer shall not be liable to make any payment,

…

(a) where a person insured under the contract is entitled to recover money under any valid policy of insurance, other than money payable on death, except for the difference between such entitlement  and the relevant minimum limits determined under clause (a);
(c) where the person insured under the contract is entitled to recover money under the third party liability section of a motor vehicle liability policy.

As noted above, it was assumed, for purposes of the motion, that negligence on the part of the police had caused or contributed, to some degree, to the plaintiff’s injuries.

Security National relied upon a decision of the Court of Appeal in Barton v. Aitchison (1982), 39 O.R. (2d) 282 (C.A.), for the proposition that “where there is more than one tortfeasor at fault with respect to an accident giving rise to injuries and damages and at least one of those tortfeasors is insured under any valid policy of insurance which will respond to the claims arising out of the accident, the insured person is prevented from suing his own insurer under the s. 265 coverage [uninsured motorist coverage] even if another of the tortfeasors is uninsured. The insured person must recover his or her damages from the insurer of the insured tortfeasor.”

However, Justice MacDougall concluded that “under s. 265 of the Insurance Act [which deals with uninsured motorist coverage], there would be no obligation on the plaintiff to sue the alleged tortfeasor, i.e., the third parties in this case.” To hold otherwise, he said, would “render the mandatory uninsured coverage as ‘illusory and worthless’.”

Accordingly, His Honour answered “yes” to the question posed on the motion and quoted above.

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C.A. Adopts Broad Interpretation of “Subcontractor” in CGL “Your Work” Exclusion

Posted on July 18, 2008 by Stephen Cavanagh

This afternoon, the Court of Appeal released its decision in AXA Insurance v. Ani-Wall Concrete Forming. (We previously commented here on the decision of Perell J. from which the appeal was taken.)

The issue in the case was whether Ani-Wall was entitled to indemnity from AXA, its liability insurer, in relation to a claim against Ani-Wall for defective concrete footings supplied to some building projects. At first instance, Mr. Justice Paul Perell had ruled that the claim was covered. Today, the Court of Appeal dismissed  AXA’s appeal.

Because Ani-Wall does not manufacture concrete, it had entered into a contract with Dominion Concrete Group to supply the concrete that Ani-Wall had contracted to provide to its customers. This fact turned out to be key to the coverage issue.

AXA had sought to rely on three exclusions in the CGL policy: (1) “Your work”; (2) “Rip and tear”; and (3) “Your product”. On the appeal, it pursued only the first two of these.

The “Your work” exclusion in AXA’s policy, which excluded coverage for the cost of making good faulty work, contained an exception which, if applicable, restored coverage. The “your work” exclusion was stated not to apply “if the damaged work or the work out of which the damage arises was performed on your behalf by a subcontractor”. Justice Perell had held that the exception applied because the defective concrete had been supplied by Dominion, which he held to have been a subcontractor of Ani-Wall.

The Court of Appeal agreed. The main bone of contention on this aspect of the case was whether Dominion could be said to have been a “subcontractor” of Ani-Wall. Counsel for AXA urged the Court to adopt a three-pronged test that has been used by some American courts:

(1)        The product supplied should be custom made according to specifications identified in the prime contract;

(2)        The supplier should provide on-site installation or supervision services; and

(3)        The product supplied should form an integral or substantial part of the prime contract.

AXA argued that according to this test, Dominion was not a “subcontractor” of Ani-Wall and so, the exception did not apply. The Court of Appeal rejected that argument. Justice Michael Moldaver, writing for the Court, said:

I prefer to retain a degree of flexibility in the realm of insurance coverage, especially in cases like this, where coverage is acknowledged but the insurer seeks to rely on exclusionary provisions to limit its scope. As Ani-Wall points out, if insurers want to lay down hard and fast criteria, they can do so by defining the word “subcontractor” to their choosing. Insured persons who pay substantial premiums would then know where they stand and would not be left guessing about the extent of the coverage available to them. To date, for reasons unknown, AXA has chosen not to define the word “subcontractor” in the policy. Unless and until it does so, I believe the word should be construed broadly, lest it become a trap for the unwary.

(He went on to find that even if the three-part test were applied, he would still find that the exception applied.)

The Court then considered the “rip and tear” exclusion. Justice Perell had found that this exclusion was “unclear and therefore unenforceable”. The Court of Appeal agreed. In argument, counsel for Ani-Wall made use of a technique which we have found useful in coverage litigation: “exploding” policy provisions by replacing defined terms with the definition that appears in the policy. Justie Moldaver quoted the “exploded” version of the rip and tear exclusion, which read as follows:

This insurance does not apply to any liability for physical injury to tangible property, including all resulting loss of use of that property, or loss of use of tangible property that is not physically injured for the actual expenses incident to the intentional destruction and removal of concrete products which are found to be defective.

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Judge Says Offer Made “Without Prejudice” Not An Offer Under Rule 49

Posted on July 18, 2008 by Stephen Cavanagh

Roma Construction (Niagara) Ltd. v. Dykstra Bros. Roofing (1992) Limited was a dispute about roofing deficiencies. The plaintiff had served an offer to settle in a letter that was marked, “Without Prejudice”. The defendant had orally rejected the offer but, as the trial approached, more problems with roofs built by the defendant were discovered, potentially increasing the amount of damages recoverable by the plaintiff. Accordingly, the defendant then accepted the “Without Prejudice” offer that it had previously rejected.

The plaintiff took the position that its offer was no longer open for acceptance by the defendant. The defendant moved for an order compelling the plaintiff to settle according to the terms of its offer. The motion was heard by Madam Justice Linda M. Walters. She ruled in favour of the plaintiff, that the offer had lapsed before the purported acceptance by the defendant. It seems to us that the decision is wrong.

Her Honour began by distinguishing between offers to settle at common law and offers under Rule 49 of the Rules of Civil Procedure. She noted that, at common law, once an offer to settle had been rejected, “it was at an end” and was no longer open for acceptance. The plaintiff in the present case claimed that it had intended to make such an offer.

Under Rule 49 however, offers to settle are not affected by rejection. They remain outstanding unless and until they are withdrawn in writing.

Her Honour referred to Clark Agri Services Inc. v. 705680 Ontario Ltd. for the characteristics of a Rule 49 offer:

4.  An offer to settle made pursuant to Rule 49 (“Rule 49 offer”) has the following features:

(a)   It must be in writing.

(b)   It must be effectively delivered to the opposing party.

(c)   it must be a proposal that can be construed as an offer to settle, open for acceptance and binding if accepted.

(d)   It must be in Form 49A, but the use of that form is permissive.

(e)     It may be communicated in correspondence between counsel.

5.   If these features are present, an offer will be presumed to be a Rule 49 offer unless expressly stated otherwise or unless the offeror can demonstrate that he or she did not intend the offer to be a Rule 49 offer.

This offer met all of these requirements (although it had been made in a letter). Justice Walters said that “unless the plaintiff can demonstrate that it did not intend the offer to be a Rule 49 offer, it will be presumed to be one”.

In our view, the application of a subjective test to this issue is very problematical. Admittedly, the Clark Agri decision, referred to by Justice Walters, supports such an interpretation. But in the passage from that decision quoted above, it is difficult to reconcile para. 4 (which details five objective criteria) with para. 5 (which appears to suggest that even if all of those indicia are present, evidence of a contrary subjective intent will override).

Justice Walters’ finding that the plaintiff’s offer was not one made under Rule 49 was based primarily on the fact that the letter in which the offer was made had been marked, “Without Prejudice”. She said, “in such a case an offer to settle is not admissible on the issue of costs”.

However that appears to us to be a mischaracterization of the meaning of the phrase, “Without Prejudice”. Subrule 49.05 (not referred to in the decision) provides that “an offer to settle shall be deemed to be an offer of compromise made without prejudice.” So, in other words, all Rule 49 offers are deemed to be “without prejudice”, whether that phrase is used or not. The underlying idea, it seems to us, is that a party’s offer to compromise its position cannot be used against it as some sort of admission.

Thus, we have some difficulty with the analysis of Justice Walters. The use of the phrase, “without prejudice” does not alter the character of an offer that otherwise meets the criteria outlined in Clark Agri, as this one did. In our view, the offer should have been held to be a Rule 49 offer, capable of acceptance by the defendant.

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Divisional Court Reverses Order Striking Jury Notice Where Plaintiff A Muslim

Posted on July 18, 2008 by Stephen Cavanagh

In Kayhan v. Greve, the Divisional Court (Cunningham A.C.J., Stayshyn and Kiteley JJ.) considered whether the fact that the plaintiff in a personal injury action was a Muslim woman of Afghani descent was a sufficient basis to warrant striking the defendant’s jury notice. It concluded that the trial judge (Mr. Justice Nick Borkovich) had erred in making such an order. In the course of its reasons, the Court also commented on the notion of introducing jury challenges for cause in civil cases.

The plaintiff’s motion to strike the jury notice had been brought at the opening of trial. It was supported by the affidavit of an associate lawyer at the firm that was representing the plaintiff. Justice Borkovich had ruled that the affidavit was inadmissible (it evidently contained a good deal of legal argument and opinions of various people about interaction between Muslims and the Western world). Accordingly, as the Divisional Court observed, Justice Borkovich’s order had been made without any evidence.

Nevertheless, Justice Borkovich had held he would “have to be a pretty dumb citizen to not think that there is a considerable amount of animosity against Muslims and Arabs that’s alive because of the circumstances that are happening in the world” and on that basis, took judicial notice “that there is a strong risk, a reasonable apprehension that there could be bias on the part of the jury based on a system where there are no checks”.

The Divisional Court ruled that the trial judge was not entitled to take judicial notice of the possibility of jurors’ prejudice against this particular plaintiff, in the absence of any evidence: “It is not possible to recognize the ‘facts’ that he did, as being so notorious as to be beyond the scope of reasonable debate.  Furthermore, the behavioural link between the existence of a lack of impartiality and the inability to set those biases aside was not established.  Accordingly, the appeal must be allowed and the matter remitted to a different trial judge.”

Although the improper exercise of judicial notice was sufficient to decide the appeal, the Court also discussed whether the time had come (as the trial judge believed) to allow challenges of jurors for cause in civil cases. Two of the three members of the panel (Cunningham A.C.J. and Stayshyn J.) were of the view that no such reform should be introduced in Ontario and that allowing parties to challenge jurors for cause would only add to the cost and delays that already exist in the system.

Justice Kiteley, on the other hand, disagreed. She pointed to the fact that other provinces do have such a procedure and said that ” it is clear that this is a matter which needs a legislative response”.

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Defendants Negligent in Fatal Diving Accident, But Plaintiffs’ Recovery Barred by Release

Posted on July 3, 2008 by Stephen Cavanagh

We have been aware since June 9 of the release of the decision in Isildar v. Kanata Dive Supply, however the reasons have only now become available on CanLII.  They’re 250 pages long though, so perhaps it’s taken CanLII’s editors until now to digest them.

The trial judge was Madam Justice Giovanna Toscano Roccamo. The action arose out of an incident in which the deceased, a novice diver, drowned in the St. Lawrence River while receiving instruction as part of a scuba certification program. The suit was brought by the wife and child of the deceased, against the individual instructor who was leading the dive when the accident occurred and against the organization that had offered the certification course.

Much of Justice Toscano Roccamo’s lengthy reasons consist of a detailed review of the evidence. Ultimately, she found that both defendants had fallen below the applicable standard of care and that their actions “were a necessary and proximate cause temporally and substantially connected to the tragic outcome”.

However, the action was dismissed on the strength of a release or waiver that had been signed by the deceased prior to diving. Justice Toscano Roccamo’s reasons provide a very useful discussion of the law relative to releases.

Her Honour approached the analysis as one having three stages:

  1. Is the release valid in the sense that the plaintff knew what he was signing? Alternatively, if the circumstances are such that a reasonable person would know that a party signing a document did not intend to agree to the liability release it contains, did the party presenting the document take reasonable steps to bring it to the attention of the signator?
  2. What is the scope of the release and is it worded broadly enough to cover the conduct of the defendant?
  3. Whether the waiver should not be enforced because it is unconscionable?

Her Honour concluded that in this case, all of these questions should be answered in the defendants’ favour.

The actual text of the release document does not appear in the reasons, but it provided in part, that the deceased agreed to waive his legal rights and to exempt the released parties from “all liability or responsibility whatsoever for personal injury, property damage or wrongful death however caused, including, but not limited to, the negligence of the released parties, whether passive or active.”

The evidence satisfied Toscano Roccamo J., that one of the instructors had reviewed the wording of the release in the presence of the deceased at the initiation meeting at which he had signed the document. The evidence also indicated that the deceased had signed three other releases in the past, which apparently had had similar wording. Her Honour said of this release, that it was “contained on one page, easy to read and there was no fine print”.

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C.A.: “Don’t Let Sleeping Judges Lie”

Posted on June 12, 2008 by Stephen Cavanagh

In Leader Media Productions v. Sentinel Hill Alliance Atlantis Equicap Limited Partnership, the Court of Appeal confronted an issue that a number of lawyers of our acquaintance (including some in our office) have encountered: what to do when the trial judge falls asleep?

This case involved an appeal from a decision of Mr. Justice William P. Somers. Counsel for the defendants had never tried a case before. In argument before the Court of Appeal, five affidavits were filed that said that the trial judge had frequently fallen asleep during the trial, albeit only for brief periods.

Counsel for the defence consulted with more senior lawyers at her firm while the trial was progressing and a tactical decision was made not to confront the trial judge about his slumbers. Instead, the defendants elected to “wait and see how things played out”. In the result, the defendants lost and it was only on the appeal that the issue surfaced.

(There did not seem to be any dispute on the argument of the appeal, as to whether the trial judge had really been asleep.)

The Court of Appeal rejected this ground of the defendants’ appeal. It noted that there was little authority on this issue, but reviewed some Australian jurisprudence and an Alberta decision in coming to the following conclusion:

While appellants’ trial counsel was not experienced (this was her first trial), the record discloses that she did consult with senior litigation counsel in her firm about the judge’s inattention. Together they made the decision to do nothing about it at the time but to, as respondent’s counsel put it, “roll the dice”.

Counsel was obliged to bring the trial judge’s inattention home to him at the time. Not having done so, and having decided to wait and see what happened, they cannot now raise that inattention for the first time as a ground of appeal on either a substantive or contextual basis.

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C.A. Says s. 21(1) of Limitations Act, 2002 No Longer Permits Addition of Parties After Expiry of Limitation Period, Regardless of Whether “Special Circumstances” Exist

Posted on June 12, 2008 by Stephen Cavanagh

Today, the Court of Appeal released two decisions which address the problem of whether a limitation period can be extended on the basis of “special circumstances” when commencing proceedings or adding defendants to existing proceedings. The answer is a qualified “no”.

The two cases are Joseph v. Paramount Canada’s Wonderland and Meady v. Greyhound Canada Transportation Corp.

Joseph v. Paramount

In Joseph, the cause of action arose on September 5, 2004, after the coming into force of the Limitations Act, 2002 (January 1, 2004). The plaintiff had been injured at an amusement park. Through inadvertence of the plaintiff’s solicitor, no action was commenced within the two year limitation period prescribed by s. 4 of the Act. When he learned of the error, the solicitor caused a statement of claim to be issued on October 31, 2006, almost two months after the limitation period had expired.

The defendant moved under Rule 21.01(1) of the Rules of Civil Procedure, for a determination of whether the action was prescribed. The motions judge, Justice Gerald F. Day, concluded that he still had a discretion, under the common law doctrine of “special circumstances”, to extend the time for commencement of an action. He found that such circumstances existed here, since there had been inadvertence on the part of the plaintiff’s solicitor and no prejudice to the defendant.

Interestingly, the Court of Appeal not only said that the common law “special circumstances” power has been taken away by the new Act, it noted that even when courts had had that power, it only allowed defendants to be added to an existing action after the expiry of a limitation period. The discretion did not permit the commencement of a new action beyond the limitation period. In making the latter ruling, the Court seems to have overruled a series of cases in the last several years, in which judges have done exactly that: St. Denis v. TD Insurance Home and Auto Liberty Insurance Co of Canada (2005), 80 O.R. (3d) 76 (S.C.J.); Doyley v. York Condominium Corp. No. 487 (2006), 82 O.R. (3d) 629 (S.C.J.); and Munshaw v. Economical Mutual Insurance Co. (2007), 84 O.R. (3d) 785 (S.C.J.).

With respect to “special circumstances”, the Court of Appeal noted that neither Justice Day nor counsel arguing the motion before him had addressed the effect of the new Act; everyone seems to have assumed that the “special circumstances” power still existed. (There have been many cases decided since January 1, 2004 in which the same assumption has been made.) The Court noted that s. 4 of the Act “mandates a two-year limitation period ‘[u]nless this Act provides otherwise'”. As a result, relief from a limitation period imposed by that statute must derive from the legislation itself, not from common law.

The principal argument made on behalf of the plaintiff seems to have been based on s. 20 of the Act. It permits the extension, suspension or other variation of a limitation period “by or under another Act.” Counsel for the plaintiff argued that the “special circumstances” power has historically been applied by the courts in conjunction with Rules 5.04(2) (“adding, deleting or substituting parties”) and 26.01 (“amendment of pleadings”) of the Rules of Civil Procedure. Because the Rules are enacted under the authority of the Courts of Justice Act, so the argument went, the “special circumstances” power was still available by virtue of being an extension “by or under another Act”.

However, the Court rejected this submission. It said that it is not the Rules themselves that have incorporated the doctrine of “special circumstances”; it has been the overlay of a common law principle on the Rules. The Court pointed out that if the plaintiff’s argument were accepted, s. 20 of the Act would conflict with s. 21, which specifically prohibits the addition of parties to an existing action after the expiry of a limitation period.

In the result, the appeal was allowed and the Court declared that the plaintiff’s action was statute-barred.

Meady v. Greyhound

The second case considered by the Court involved a more typical fact situation. As a result of a motor vehicle accident that occurred on December 23, 2000, an action had been commenced within the two-year limitation period then provided for by s. 206 of the Highway Traffic Act. Four years after the expiry of that limitation period, the plaintiffs sought to add another defendant and relied on the principle of “special circumstances”. The proposed new defendant opposed the motion on the basis that s. 21(1) of the Limitations Act, 2002 had eliminated that discretion and, in the alternative, that no special circumstances existed in this case.

Mr. Justice George P. Smith accepted both of these arguments. He held that s. 21(1) precluded the addition of the new defendant and that, even if that were not the case, no special circumstances existed in this case.

The Court of Appeal said that Smith J. had been wrong in his first conclusion but correct about the second, and dismissed the appeal.

With respect to s. 21(1), the key point about which the Court of Appeal disagreed with Justice Smith was as to whether that section applied to acts or omissions where the transition provisions of s. 24 of the Act apply. Here, the act or omission occurred years prior to the Act coming into force on January 1, 2004 but the motion to add a defendant was brought after that date. Smith J. held that s. 21(1) nevertheless applied, but the Court of Appeal disagreed.

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S.C.C. Upholds Dismissal of “Fly in Bottle” Case, Saying Law of Negligence Is Not Insurance

Posted on May 22, 2008 by Stephen Cavanagh

In a unanimous decision, the Supreme Court of Canada today dismissed the plaintiff’s appeal in Mustapha v. Culligan of Canada Limited and upheld the Ontario Court of Appeal’s dismissal of the action.

The plaintiff Mustapha had experienced a severe and very unusual psychological reaction to the sight of the remains of two flies in a bottle of water sold to him by Culligan of Canada. He was so revolted that he developed severe depression, phobia and anixiety. He sued Culligan for damages in negligence and in breach of contract. The trial and Court of Appeal decisions in this case were the subjects of previous posts on our website.

At trial, Mr. Justice John Brockenshire found for the plaintiff and awarded damages of $341,774. The Court of Appeal reversed that decision and dismissed the plaintiff’s claim, on the basis that the profound effect that the sight of the flies in the water bottle had had on this plaintiff was not reasonably foreseeable by Culligan. The Supreme Court came to the same conclusion.

The Court’s relatively brief reasons were written by Chief Justice Beverley McLachlin. She said that, to recover damages for negligence, a plaintiff must prove four elements:

  1. a duty of care;
  2. breach of that duty;
  3. damage; and
  4. that the damage was caused, in fact and in law, by the breach of duty.

The plaintiff in this case satisfied all parts of the test, except the requirement that the damage be caused in law by the defendant’s breach. Here, while the plaintiff’s psychological symptoms were found to have been caused in fact by Culligan’s breach of its duty, they had not been caused in law by that breach because it was not reasonably foreseeable by Culligan that anyone would have such an extreme reaction to the sight of dead flies in one of its bottles of water. The Court said that while it was obviously possible for someone to suffer such serious psychological damage in these circumstances (since it had actually occurred here), more is required before legal liability can be imposed.

McLachlin CJC said that the trial judge had erred in applying a subjective test instead of an objective one. She remarked that “unusual or extreme reactions to events caused by negligence are imaginable but not reasonably foreseeable”.

Chief Justice McLachlin went on to emphasize that the law of negligence is not the same as insurance, that compensates for every injury:

[16]  To say this is not to marginalize or penalize those particularly vulnerable to mental injury. It is merely to confirm that the law of tort imposes an obligation to compensate for any harm done on the basis of reasonable foresight, not as insurance.  The law of negligence seeks to impose a result that is fair to both plaintiffs and defendants, and that is socially useful. In this quest, it draws the line for compensability of damages, not at perfection, but at reasonable foreseeability. Once a plaintiff establishes the foreseeability that a mental injury would occur in a person of ordinary fortitude, by contrast, the defendant must take the plaintiff as it finds him for purposes of damages. As stated in White, at p. 1512, focusing on the person of ordinary fortitude for the purposes of determining foreseeability “is not to be confused with the ‘eggshell skull’ situation, where as a result of a breach of duty the damage inflicted proves to be more serious than expected”. Rather, it is a threshold test for establishing compensability of damages at law.

The Court noted that if Culligan had been aware of Mr. Mustapha’s special vulnerability, the outcome of the case might have been different. But there was no evidence of that here.

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Divisional Court Says Standard of Review on Appeal of Master’s Order is Housen v. Nikolaisen’s “Palpable and Overriding Error”

Posted on May 11, 2008 by Stephen Cavanagh

In an important, just-released decision, the Divisional Court has clarified the standard of review on appeals from orders made by masters. The court, composed of Justices Sidney N. Lederman, Katherine E. Swinton and Wailan Low, unanimously held that on an appeal from a master’s order, “the decision will be interfered with only if the master made an error of law or exercised his or her discretion on the wrong principles or misapprehended the evidence such that there is a palpable and overriding error”.

The ruling was made in Zeitoun v. The Economical Mutual Insurance Group. The order in question required plaintiffs in a personal injury action to post security for costs. The order, made by Case Management Master Linda S. Abrams, had been overturned on appeal to Justice Romain Pitt.

Justice Pitt had treated the appeal as a de novo hearing, applying the standard of review propounded by an earlier decision of the Divisional Court in Hudon v. Colliers Macaulay Nicolls Inc. (c.o.b. Colliers International). As the Divisional Court said in Zeitoun, “Hudon is relied upon for the proposition that where a master makes an order which, while interlocutory, is nevertheless most vital to the final issue in the case, the appeal may proceed as a de novo hearing.”

Leave to appeal the decision of Pitt J. was granted by Justice John Jennings. The basis on which leave was granted was the conflicting caselaw regarding the appropriate standard of review of masters’ interlocutory orders going to a matter vital to the final issue in the case. The line of authority competing with Hudon was represented by the Court of Appeal’s decision in Carter v. Brooks, which had held that an appeal should proceed as a true appeal, with deference being shown to the findings of fact made at first instance.

The panel of the Divisional Court analyzed the two streams of caselaw. (Interestingly, Carter did not involve a master’s order at all. Rather, it concerned an appeal from an order made by a judge on an application. The issue was whether the fact that the order had been made on the basis of a paper record, rather than viva voce evidence, meant that the appellate court was equally well-positioned to decide the issue and therefore, need not defer to findings made by the application judge.)

The court looked at its own earlier ruling in Hudon. It noted that the decision in that case had actually been based on the case management master having made an error in law (which, of course, would be a basis for intervention by an appellate court, no matter what standard were applied), but that the case had subsequently been interpreted to mean that “where a master makes a discretionary order that is final or is vital to the final issue of the case, the appellate court may hear the matter de novo“.

The court then looked at a later Divisional Court decision, Bank of Nova Scotia v. Liberty Mutual Insurance Co., which had laid down principles in relation to appeals from orders of masters where the orders did not dispose of an issue vital to the final determination of the suit. Depending on whether the order was discretionary or not, that standard could either be one of “clearly wrong” or “correctness”.

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Master Haberman Reminds Us That Pleadings Must Be of Material Facts

Posted on May 8, 2008 by Stephen Cavanagh

In Witten v. Bhardwaj, Master Joan Haberman of the Ontario Superior Court has usefully reviewed the law governing pleadings, particularly in motor vehicle negligence cases.

Counsel for the defendant had moved to strike the following paragraphs from the statement of claim:

14.      The Plaintiff states that the Defendant, Paawan Bhardwaj was charged and convicted of driving while his driver’s licence was suspended.

15.      The Plaintiff pleads that [sic] Defendant Paawan Bhardwaj had a pattern of reckless conduct, similar in nature of [sic] his conduct alleged in this proceeding and the Plaintiff pleads similar fact evidence, including, but not limited to, speeding on June 24, 2004, March 24, 2004, and March 7, 2006 and other such conduct as may become known during the course of this litigation. [The “sics” were in the Master’s reasons.]

Master Haberman astutely summed up the typical “shotgun” approach of the pleader in MVA cases like this:

This form of pleading is what the personal injury bar commonly refers to as “boiler-plate”. All possible causal links between a driver’s conduct and the ensuing accident are thrown into the mix, generally where there is little evidence at the time of pleading to support most or, at times, any of them. The purpose of pleading in this manner is to ensure a sufficiently broad base to permit discovery questions designed to elicit what, in fact, the defendant driver may have done or failed to do that could have caused or contributed to the accident. The pleading sets the stage for a detailed inquiry into all possible causal factors that could connect a driver’s conduct to the event. 

After rejecting the plaintiff’s submission, that the motion should be dismissed because the defendant had delayed too long in bringing it, the Master turned to the principles of pleading, including the fundamental rule (contained in Rule 25.06(1)), that “a pleading should contain ‘a concise statement of the material facts on which the parties relies’, but not the evidence that will be marshalled to prove those facts”.

What is a “material fact”? The Master gleaned the following from the caselaw:

Generally, a fact is considered “material” when it constitutes a necessary element of the cause of action grounding the suit and supports the theory of the case as advanced by the party pleading it in a legally relevant manner.   For example, in a tort action such as this one, the material facts are those that:

  • explain who the parties are;
  • identify the event or events giving rise to the claim;
  • explain why each party has been sued, by listing what each has done or failed to do to cause or contribute to their damages; and
  • details the damages suffered and the ensuing losses.

Master Haberman referred to the decision of R. MacKinnon J. in Williams v. Wai-Ping with respect to the general inadmissibility of similar fact evidence (and concomitant inappropriateness of pleading similar facts). Such evidence, noted Justice MacKinnon, can be confusing to the trier of fact and can also create the impression that the party against whom the allegations are made is a “bad person”. But similar fact evidence can sometimes be admissible if it can be shown to be probative of a proposition that the party pleading is entitled to advance.

Turning to the pleading in this action, the Master considered first the allegation that the defendant had been driving while under suspension. She was not satisfied the connection between driving while under suspension and negligence in the operation of the vehicle:

I am unable to see any obvious nexus between operating a vehicle while under suspension and driving it in a negligent manner on the occasion of this accident. That background fact tells me nothing about the way this defendant was actually driving or how his manner of driving could have caused or contributed to this accident.  Absent that nexus, the assertion cannot be relevant and, if not relevant, it cannot be probative.

She concluded that the plaintiff was asking the court to sanction a “fishing trip” (we had always understood that the correct terminology was, “fishing expedition”…) and struck the paragraph.

With respect to the similar fact evidence of speeding, this too was struck. The Master said, “assertions regarding prior incidents of speeding could never be anything more than evidence, rather than material fact.”

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