C.A.’s First post-Resurfice Discussion of “But For” Causation Test

Posted on April 22, 2007 by Stephen Cavanagh

In Barker v. Montfort Hospital, released last week, the Court of Appeal had its first opportunity of considering the Supreme Court of Canada’s recent decision in Resurfice Corp. v. Hanke. (Readers will recall that in the latter case, the Supreme Court made it clear that the “but for” test is the appropriate one for courts to apply in evaluating causation and that the “material contribution” test can only be resorted to in exceptional cases where factors beyond the plaintiff’s control make it impossible for him or her to prove that the defendant’s negligence caused the injury on the “but for” test, and where the plaintiff’s injury falls within the ambit of the risk created by the defendant’s breach of his duty of care owed to the plaintiff.)

In Barker, Justices Robert Blair and Paul Rouleau were in the majority; Justice Karen Weiler dissented. The case was one involving allegations of medical malpractice. The trial judge had found liability against the defendant physician, on the basis that his delay in performing surgery on the plaintiff had caused her to lose a portion of her bowel (which had become gangrenous) and to suffer from “small bowel syndrome”.

There were several grounds of appeal, but the three members of the panel differed only on the issue of causation. The majority applied a rather more onerous test than did dissenting Justice Weiler, leading it to allow the appeal and dismiss the plaintiff’s claim.

The majority agreed with the appellant physician, that the plaintiffs had not shown that it had been impossible for them to prove, on a balance of probabilities, that the defendant’s delay in operating had made it necessary to remove a section of the plaintiff’s bowel. For that reason, said the majority, the Supreme Court’s “impossibility” requirement for the use of the material contribution test, could not be met. Applying the “but for” test, the plaintiffs would have had to show, according to the majority, “a substantial connection between the injury and the defendant’s conduct”. Blair and Rouleau JJ.A. held that “no such foundation was laid in the present case. There is a complete absence of medical or other evidence from which to infer that, but for the delay in operating, the section of bowel would likely have been saved.”

Justice Weiler agreed with the majority on all issues save one: causation. She would have dismissed the appeal, on the basis that the trial judge’s findings on this issue were entitled to deference. She also felt that this would be an appropriate case for the use of the “material contribution” test, which, she felt, also supported a finding of liability.

Weiler J.A. did not agree with the majority, that the absence of a “positive medical opinion as to causation” was fatal to the plaintiffs’ case. She cited an earlier decision of the Supreme Court of Canada, Snell v. Farrell, to that effect. She evaluated the evidence in some detail and concluded that the trial judge had been entitled to draw the inferences he did. A “positive medical opinion” was not required for the plaintiffs to succeed on a “but for” analysis.

The defendant had submitted, on the appeal, that it was scientifically impossible to know when the plaintiff’s bowel had become strangled (by a loop developing in it). Justice Weiler turned this submission around and pointed out that if this were true, it meant that the “impossibility” requirement of the “material contribution” test was met. She then determined that short bowel syndrome was within the ambit of the risk created by the defendant physician, with the result the causation was established.

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Offer to Contribute Should Attract Substantial Indemnity Costs

Posted on April 22, 2007 by Stephen Cavanagh

In Caci v. MacArthur, Mr. Justice David Brown held that a defendant who achieved a better result at trial than an offer to contribute that it had made to a co-defendant, was entitled to costs on a substantial indemnity basis from the co-defendant, despite any express authorization in Rule 49. In doing so, he appears to have “read into” Rule 49.12 (which deals with offers to contribute) a “costs consequences” provision similar to that found in Rule 49.10, which applies to offers to settle.

This action arose out of a motor vehicle accident. The plaintiff was a passenger in a car driven by a defendant named MacArthur. That car had collided with another, operated by the defendant Dorkin. Initially, Dorkin’s insurer, Lloyd’s of London, had denied coverage to Mrs. Dorkin and had itself added as a statutory third party under s. 258(14) of the Insurance Act. Later, it changed its position and undertook Dorkin’s defence. Meanwhile, the plaintiff had sued his own insurer, Economical Mutual, under the latter’s uninsured and underinsured coverage.

MacArthur was uninsured and was not represented by counsel.

Prior to the trial, the plaintiff’s claim was settled, with Lloyd’s funding the settlement. The liability of the defendants was left to be tried. After a five-day trial, the jury found MacArthur 100% responsible for the accident.

(Had Dorkin been found even one percent at fault, Lloyd’s would have had to pay the entire amount of the settlement and Economical would not have had to pay anything.)

Before the trial began, Lloyd’s had offered to settle with Economical Mutual on a basis which would have seen Economical reimbursing Lloyd’s for 75% of the settlement. of course, the jury’s decision was more favourable to Lloyd’s than the terms of its offer had been.

Lloyd’s sought partial indemnity costs from Economical to the date of its offer and substantial indemnity costs thereafter. Justice Brown reviewed the caselaw. He concluded that Rule 57.01(4) would give him discretion to make such an order. But rather than rely on the broad and general discretion conferred by that Rule, he preferred to “read into” Rule 49.12(2) (offers to contritue) a provision similar to the “costs consequences” which are expressly set out, in relation to offers to settle, in Rule 49.10. He cited with approval the following passage from a 1994 Ontario trial level decision, Denzler v. Aull:

It does not make sense to equate an offer to contribute to an offer to settle without allowing the court to impose the same cost sanctions. The purpose of R. 49 as confirmed by Robins J.A. in Mortimer is to encourage settlement. Inability of the court to increase the level of costs from the party-and-party scale that would be awarded without any offer to contribute to the solicitor-and-client levels defeats this purpose.

I am satisfied that the omission of r. 49.10 in subrule 49.12(3) was not intended to deprive the court of the discretion under subrule 49.12(2) to impose the same cost consequences for a successful offer to contribute as is available when there has been a successful offer to settle.

It will be interesting to see whether other courts follow this reasoning.

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Court Rules Evidence of Marine Accident Reconstruction Expert Inadmissible

Posted on April 22, 2007 by Stephen Cavanagh

j0405842.jpg In Laudon v. Roberts, Mr. Justice Guy D. DiTomaso ruled that an expert witness retained by the plaintiff could not testify at trial.

The action was one for personal injuries arising out of a boating accident. The plaintiff had been a passenger in a boat that collided with another boat. The operators of both boats were sued. The plaintiff retained Ronald M. Blanchet of Marine Accident Services to provide an expert opinion regarding the collision. The expert prepared two reports (which were supposed to have been attached to Justice DiTomaso’s reasons for judgment but did not find their way into the CanLii version of the reasons). The defence objected to the admissibility of Mr. Blanchet’s testimony at trial.

There were several bases to the objection:

  1. the evidence did not meet the “necessity” criterion laid down by the Supreme Court of Canada in R. v. Mohan;
  2. the witness was not properly qualified to give expert opinion evidence; and
  3. the witness had improperly assumed the role of “advocate” for the plaintiff.

Justice DiTomaso ruled that the expert was qualified, so no exception could be taken to his evidence on the second of these three grounds. His Honour also did not rule that the expert had become an advocate. However, he held that the first objection (that the evidence be “necessary” to assist the trier of fact) was well-founded and he disqualified Mr. Blanchet from testifying on that basis. The reasons are interesting because they potentially apply to a broad spectrum of cases.

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Master Orders Insurer to Produce Its Schedule B Documents

Posted on April 4, 2007 by Stephen Cavanagh

pep47dis.jpg  Back in January, we posted a commentary about the Divisional Court’s decision in Smith v. London Life. The case dealt with production of an insurer’s file in a first party claim that was based on allegations of bad faith on the part of the insurer. The Divisional Court in Smith reversed the ruling of the motions judge, who had found that because the insurer had pleaded in its statement of defence, that it had acted in good faith, it had placed its state of mind in issue, thereby waiving privilege. The motions judge had ordered the insurer to produce its entire file but the Divisional Court disagreed. However, the appeal decision did hold that, on a prima facie showing of misconduct, a plaintiff could be given access to documents over which an insurer had asserted a claim of privilege. We wondered then just how such an inquiry would be conducted; would the prima facie showing of misconduct sufficient to overcome privilege come from the court’s review of the documents themselves? If so, how would the parties make submissions about the significance of those documents without losing the very confidentiality sought to be protected?

We now know a bit more. And the news isn’t good for insurers. In Mamaca v. Coseco Insurance Company, Master Dash applied the Smith case in ordering an insurer to produce many documents for which it had claimed litigation privilege. But the Master’s decision was much further-reaching. It dealt with such issues as when litigation privilege arises, what evidence must be proffered to substantiate a claim for privilege and when litigation will be considered to be the dominant purpose for which a document was prepared. All in all, a decision that will have insurance companies reaching for a big bottle of Pepto-Bismol…

In this accident benefits case, the insurer (Coseco Insurance Company) had originally believed that the car accident leading to the claim for benefits had been staged. Coseco had obtained an engineering opinion on this issue, leading it to deny benefits to its insured on the ground of material misrepresentation. It later relented and accepted that the accident had been entirely caused by an unidentified driver. However, Coseco continued to deny income benefits to the insured, for a variety of reasons. For example, it relied on an independent medical opinion, that the plaintiff could return to work. It also took the position that the plaintiff had failed to produce satisfactory evidence of his income from employment. Ultimately, the plaintiff’s solicitor applied for mediation with FSCO and simultaneously, commenced a lawsuit for unpaid benefits and damages for bad faith.

Examinations for discovery were held. Counsel for Coseco claimed privilege on a number of documents and refused to permit the insurer’s witness at the examination to answer various questions. On the ensuing motion before Master Dash, counsel for the plaintiff sought production of the insurer’s entire claims file and an order requiring that the discovery questions be answered. Coseco claimed that the disputed documents were protected by litigation privilege.

Master Dash dealt with the following issues:

(a) At what date was there a reasonable anticipation of litigation?

(b) Were documents prepared after that date for the dominant purpose of claims assessment or of defending the litigation?

(c) Notwithstanding the answers to (a) and (b) is there prima facie evidence of bad faith such that the insurer is prohibited from hiding behind the cloak of litigation privilege?

(d) Notwithstanding the existence of litigation privilege, has that privilege been waived with respect to documents submitted to and from FSCO? [Sic. This is a typo in the reasons. “FSCO” should read, “ICPB” (“Insurance Crime Prevention Bureau”).]

With respect to the first question, FSCO arbitrators have generally held that there is a reasonable prospect of litigation at the time that mediation is requested. However, Master Dash did not agree. He said, “a request for mediation at FSCO is an attempt to resolve a dispute, even if mediation is also a statutory pre-condition to commencing litigation, and not necessarily a procedure taken in contemplation of litigation”.

Throughout his reasons, the Master laid considerable emphasis on the insurer’s evidentiary burden, to establish a claim for privilege by adducing evidence that the dominant purpose for which each document had been prepared, was anticipated or pending litigation: “The onus is on the insurer to provide proper evidence as [to] the dominant purpose [for which] each such document was created.” [Emphasis added]

In this case, the Master held that Coseco had fallen far short of meeting its onus of proof. It had filed no affidavit from any claims handler at the company as to the date on which the company had anticipated litigation, nor the purpose for which the disputed documents had been prepared. The affidavit evidence had come, instead, from a law clerk employed by Coseco’s solicitors. The insurer’s evidence left the Master very unimpressed. The law clerk’s affidavit had suggested a number of possible dates by which litigation had reasonably been anticipated by Coseco; the Master rejected one after the other until he got to the date on which counsel for the plaintiff had expressly threatened litigation. This, the Master agreed, was sufficient to create a reasonable apprehension on the part of the insurer, that it would face litigation.

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Medical Malpractice Action by Mental Incompetent Has Two Year Limitation Period Where Litigation Guardian Appointed

Posted on April 2, 2007 by Stephen Cavanagh

In St. Jean v. Cheung, Mr. Justice John C. Murray undertook a detailed analysis of how the Limitations Act, 2002 has changed the law of limitations as it applies to claims on behalf of persons under a legal disability. While such a disability (e.g., mental incompetence or being an underage minor) formerly meant that a limitation period would not commence until the disability ceased, Justice Murray concluded that that is no longer the law if the claimant has a litigation guardian. Here, an action for medical malpractice was held to be prescribed because the plaintiff’s litigation guardian knew the relevant facts more than two years prior to commencement of the proceeding. The decision is an important one, particularly for the plaintiffs’ bar.

The plaintiff in this case was born in November, 1982. Shortly afterwards, he became severely hypoglycaemic and later suffered a severe brain injury. An action was brought on his behalf in November, 2002, naming as defendants his mother’s obstetrician and a hospital. The mother acted as litigation guardian for her son, who was mentally incompetent to sue on his own behalf.

In 2005, the plaintiffs retained a new solicitor. That lawyer obtained expert opinions about the postnatal care that the plaintiff had received. Based on those opinions, the solicitor commenced a second action on behalf of the plaintiff, again naming the mother as litigation guardian. Various physicians who had participated in the plaintiff’s postnatal care were named as defendants in the second action. The motion before Justice Murray was to consolidate the two actions or, in the alternative, to have the defendants in the second action (referred to throughout the reasons as “the New Defendants”) added as defendants in the first action.

Counsel for the New Defendants argued that the claim against the New Defendants was commenced after the expiry of the limitation period. Justice Murray agreed.

His Honour reviewed the law for the period prior to the coming into force of the Limitations Act, 2002 (the “effective date” of that legislation was January 1, 2004). He concluded that the old law did not differentiate between cases where a litigation guardian was involved on behalf of a person under a disability and those in which no litigation guardian had yet been named. In either case, s. 47 of the former Limitations Act provided that, in actions by mental incompetents or minors, “the period within which the action may be brought shall be reckoned from the date when such person became of full age or of sound mind”.

The new Act, however, made an important change to this law, in section 8:

8. If a person is represented by a litigation guardian in relation to the claim, section 5 applies as if the litigation guardian were the person with the claim.

Section 5 lays down the criteria for when a claim is “discovered”. Thus, once a person is represented by a litigation guardian, the discoverability principle established by s. 5 (and the two-year limitation period in s. 4) apply just as if the claimant was not under a disability. This is a significant departure from the former law, but St. Jean is the first case (so far as we’re aware) to focus on it.

The evidence disclosed that the litigation guardian knew or should have known the material facts giving rise to the second action by February, 2003 (some 11 months before the effective date of the Limitations Act, 2002). Justice Murray reasoned that because the previous limitation period had been extended by s. 47 of the old Act (see above), that limitation period had not expired by January 1, 2004. He also held that the claim could not be “discovered” by the litigation guardian prior to that date, since the old law was that discoverability was irrelevant so long as the disability continued. It was not until January 1, 2004 (the “effective date” of the new Act), that the plaintiff’s litigation guardian could “discover” the material facts for purposes of the legislation (even though in this case, those facts had actually been known to the litigation guardian for almost a year).

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Privacy Commissioner Says Adjuster’s Request for 5 Years of Medical Records Might Have Exceeded Scope of Authorization

Posted on March 27, 2007 by Stephen Cavanagh

In PIPEDA case #362, an insurance adjuster had obtained from an accidents benefits claimant a release for medical records. The document read as follows:

I hereby authorize any doctor, hospital, clinic, institution or person, possessing information or medical records on my person, to furnish any such information, reports or records as may be requested by (the insurance adjuster) or their representative concerning my state of health, nature and extent of injuries arising out of an accident which occurred on or about (the date of the 2004 accident).

Using this release, the adjuster requested the claimant’s health records for the past five years. When the claimant learned this, she revoked her consent. The adjuster had not, by that time, collected any records.

In response to a complaint to the Privacy Commissioner, the Assistant Commissioner ruled that “had the adjuster in fact collected the information he requested, the company could have been found to have collected more personal information than necessary for the purposes identified. It would likely have been found to have collected this information without the complainant’s knowledge or consent, as the authorization form she signed did not in any way authorize the adjuster to collect such information.”

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Judge Finds No Solicitor-Client Privilege Where Communication in Furtherance of a Tort

Posted on March 27, 2007 by Stephen Cavanagh

It is well-established that solicitor-client privilege will be lost where the communication between lawyer and client is in furtherance of a crime.  In Dublin v. Montessori Jewish Day School of Toronto, Mr. Justice Paul Perell ruled that the same result follows where the communication is in furtherance of at least certain types of tort.

In this case, an email communication from one of the defendants to their lawyer was inadvertently disclosed to counsel for the plaintiffs. Before the Master, the defendants sought the return of the email, on the basis that it was privileged and had been produced by mistake. The Master granted the motion. The plaintiffs appealed to Justice Perell, who allowed the appeal. He held that the document was not privileged and ordered its production.

His Honour read the email. He concluded that it could be interpreted as evidence that the defendants intended to inflict emotional harm on the plaintiff and his family. Accordingly, it was not privileged.

Perell J. reviewed, in detail, the jurisprudence that has established that a communication is not privileged if it is in furtherance of unlawful conduct. Most previous Ontario cases had confined this rule to criminal conduct. However, His Honour cited some decisions that had applied it to certain types of torts as well. Justice Perell held that there was no reason not to extend it to “communications perpetrating tortuous [sic, should read “tortious”] conduct that may become the subject of civil proceedings”. However, he stopped short of applying the principle to all torts. It appears though, that he would apply it to cases involving the torts of fraud, breach of trust and intentional torts.

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Thorburn J. Discusses What’s Required for Court Approval of Settlements

Posted on March 27, 2007 by Stephen Cavanagh

In Rivera v. Leblond, Madam Justice Julie Ann Thorburn was asked to approve the settlement of the claim of a cyclist who had suffered a serious head injury when struck from behind by an automobile. In the course of her reasons, Her Honour provided a very useful and detailed discussion of the evidentiary requirements of motions, under Rule 7.08, for court approval of settlements of claims by persons under a legal disability. (In this case, the injured plaintiff had been in a coma since the accident. The Rule also applies to other legal disabilities, such as claims by minors.)

Following an examination of the defendant for discovery and a private mediation, the parties arrived at a settlement of tort and accident benefit claims, in the amount of $1,850,000 all-inclusive. It was proposed that a portion of the settlement funds be placed into a structure. Partial indemnity costs, in the amount of $175,000 plus GST and disbursements, were to be paid by the defendants. In addition, a further $250,000 was to be payable to the plaintiffs’ solicitors for fees and disbursements. Her Honour noted that the total fees to be paid to the plaintiffs’ solicitors as part of the proposed settlement, was $417,500 plus GST.

Justice Thorburn reviewed the law dealing with court approval of settlements and ruled that the material that had been provided to her was not adequate. She referred to the recent decision (discussed in one of our earlier posts) in Marcoccia v. Gill, in which Wilkins J. had expressed his dissatisfaction with the evidence typically provided to the court on motions for approval of settlements. Acknowledging that what is “sufficient” will vary with the facts of the case, Justice Thorburn said that generally, applicants for court approval of settlements will have to provide evidence that an appropriate investigation and assessment of liability and damages has been made and that the fees and disbursements sought to be charged by the plaintiffs’ solicitors are reasonable. Her Honour went on to say that:

In a case such as this involving a severely disabled party, there must be:

a) medical evidence adduced to show not only the present medical condition of the disabled person but the future prospects for that person, the anticipated future care needs and costs, and the life expectancy of the disabled person;

b) any additional evidence material to the assessment of general damages;

c) evidence to enable the court to assess any other economic damages such as loss of income;

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Not Necessarily Negligence to Allow Unlicensed Driver to Operate Car

Posted on March 27, 2007 by Stephen Cavanagh

In George v. Thach, Superior Court Justice Harvey Spiegel ruled that “The failure to possess a lawfully issued operator’s permit does not of itself constitute incompetence or inexperience.” Accordingly, the employer of an unlicensed driver was not vicariously liable for injuries suffered by the driver’s passenger when the driver lost control of the car and crashed it.

The plaintiff George had sued the driver Thach and had originally alleged that the vehicle being driven by Thach at the time of the accident was owned by the defendant HMS Automotive. The plaintiff had also sued Liberty Mutual, his own auto insurer, on the basis that Thach might have been an uninsured motorist. In the event of such a finding, he claimed to be entitled to recover from Liberty. Liberty defended the action and crossclaimed against Thach and HMS for contribution or indemnity. The sole allegation against HMS was that it was liable, as owner of the car, for the negligence of the diver, Thach.

Just before trial, Liberty’s pleadings were amended. Instead of crossclaiming against HMS based on the latter having been the owner of the car driven by Thach (since the evidence had made it clear that HMS was not the vehicle’s owner), Liberty’s new claim was for contribution or indemnity based on HMS being vicariously liable as Thach’s employer. Liberty settled the plaintiff’s claim against Thach and proceeded to trial on the crossclaim.

The evidence showed that Thach had purchased the car in question from a used car dealership. Thach was himself employed by a car dealership, HMS. He had obtained a set of dealer plates from HMS to allow him to take delivery of the cars that he had bought from the other dealership. The owner of HMS admitted that he knew that Thach did not have a valid driver’s licence. (The owner denied having given Thach permission to use the dealer plates though and the evidence was somewhat in conflict on this point.)

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Court Refuses Amendment to Plead that Owner of Vehicle Was Also Employer of Driver

Posted on March 27, 2007 by Stephen Cavanagh

In Shuker v. Gagne, Mr. Justice Barry Matheson of the Ontario Superior Court refused to permit the plaintiffs to amend their statement of claim, to plead that a defendant who had already been sued in the capacity of owner of a motor vehicle, was also the driver’s employer. The reason for the refusal was that Justice Matheson felt that the proposed amendment would have raised a new cause of action against that defendant and that the limitation period for suing on that cause of action had expired.

The claim was one for personal injuries arising out of a motor vehicle accident. The plaintiffs had sued the owner and driver of the subject automobile within the two-year limitation period. (Although Matheson J. referred in his reasons to the limitation period being under “the Limitations Act“, it was presumably the former limitation period under the Highway Traffic Act that applied, since the accident was in 2001 and the current limitation period under the Limitations Act, 2002 did not come into force until January 1, 2004.)

The owner of the vehicle, a party named “Laberge”, who was sued in time, would have been a protected defendant under s. 267 of the Insurance Act (i.e., there would be a deductible from non-pecuniary damages, the injured plaintiff would have to meet a verbal threshold, etc.) However, because of the Court of Appeal’s decision in Vollick v. Sheard, Laberge, who also happened to be the employer of the driver of the car, would not be a protected defendant if liable in the capacity of employer. Thus, there could potentially be significant benefits to having Laberge in the action as employer.

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