Judge Finds “Staggering” Discrepancy Between Legal Fees of Successful Defendant and Losing Plaintiff

Posted on January 26, 2007 by Stephen Cavanagh

Justice Joan L. Lax’s decision in Antorisa Investments Ltd. v. 172965 Canada Limited et al. illustrates why legal fees are becoming such an important part of commercial litigation. Her ruling makes it clear that winners cannot expect to be indemnified by losers for unreasonably high legal expenses.

Here, Imperial Oil had successfully defended an action in which damages had been agreed, before trial, at $500,000. But its legal fees were so high (almost $1.1 million for a 10 1/2 day trial) that the costs award of $650,000 fell far short of full reimbursement. The shortfall of $443,331.69 was only $56,668.31 less than the full amount of the damages in dispute.

Justice Lax had dismissed the plaintiff’s action for damages arising out of its acquisition of a service station that it discovered, five years after the purchase, to be contaminated. Settlements were reached with some defendants but the trial proceeded against Imperial Oil. As mentioned above, the parties had settled the damages at $500,000 prior to trial. For a 10 1/2 day trial that Her Honour said “was not factually complex”, “was not unduly lengthy”, had only one expert witness and involved legal issues that were “imaginative but not novel”, the legal fees claimed on behalf of the successful defendant, Imperial Oil, totalled $1,093,331.69.

Her Honour noted that the fees charged by the plaintiffs’ solicitors were only $332,800 (less than a third of the fees billed to Imperial Oil by its lawyers) and called the difference “staggering”.

As mentioned above, Justice Lax ruled that $650,000 was an appropriate amount for Imperial Oil to recover for legal fees.

There were a couple of unusual circumstances here that were relevant to costs. First, there had been a contract between the plaintiff and Imperial Oil which Justice Lax interpreted to give Imperial Oil “a contractual right to be fully indemnified for legal fees if they are reasonable”. Secondly, Her Honour had found that the plaintiff had made unsubstantiated allegations of fraud against Imperial Oil which warranted a “punitive and deterrent” award of costs.

Despite these two unusual factors, both of which would have tended to increase the costs award, the amount that Lax J. determined to be reasonable ($650,000) was less than 60% of the actual fees billed to Imperial.

Her Honour was clearly troubled by the amount of time that had been spent on this case by Imperial Oil’s lawyers. She mentioned a multi-volume document brief that Imperial had filed at the opening of trial, saying she had “no doubt that countless hours were devoted” to its preparation but observed that “at the end of the day, there was only one document that really counted–the purchase agreement between the parties”.

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Dangerous Driving Conviction Precludes Driver from Contesting Liability in Civil Action

Posted on January 24, 2007 by Stephen Cavanagh

The decision of Mr. Justice David M. Brown in Caci v. MacArthur raises some interesting questions relating to apportionment of fault. It also applied to this MVA action a line of decisions in sexual abuse cases, where defendants had not been permitted to “relitigate” their criminal convictions.

This was a civil trial arising out of a 2001 motor vehicle accident. The plaintiff was a passenger in one of two cars that collided. He sued his own driver (MacArthur) and the other driver (Dorkin). The only remaining issue at trial was the respective liability of the two drivers, who had crossclaimed against each other.

(The defendant MacArthur was uninsured and accordingly, the plaintiff’s insurer, Economical Mutual, was also sued, under its uninsured motorist coverage. At trial (before Justice Brown and a jury), MacArthur was unrepresented but his case was, in effect, being presented by counsel for Economical.)

Today’s decision is a sequel to a ruling made by Justice Brown two days earlier (January 16, 2007), one which has unfortunately not been posted online.

Brown J.’s January 16, 2007 ruling

MacArthur had been convicted of dangerous driving, contrary to s. 249(3) of the Criminal Code. In the January 16 ruling, counsel for the defendant Dorkin had asked Justice Brown for leave to place before the jury the reasons of the judge who had convicted MacArthur of dangerous driving. He also asked that the defendant Economical Mutual not be permitted to adduce evidence about the collision that would have the effect of re-litigating the criminal case.

Justice Brown reviewed caselaw in which it was held that it would be an abuse of process to permit persons who had been convicted of sexual assault, in later civil proceedings, to adduce evidence inconsistent with the conviction: Toronto (City) v. C.U.P.E., Local 79, [2003] 3 S.C.R. 77 and Hanna v. Abbott (2006), 150 A.C.W.S. (3d) 606 (Ont. C.A.). He also considered a 1985 Divisional Court case, Taylor v. Baribeau, (1985), 51 O.R. (2d) 541 which had held that evidence of a criminal conviction was admissible as prima facie evidence of the elements of the evidence but that that evidence was subject to rebuttal at the civil trial.

His Honour concluded that Taylor v. Baribeau is no longer good law and that the Supreme Court of Canada’s decision in CUPE now “governs the analysis”, even in this different set of circumstances:

The effect of the decision in CUPE is that if a convicted person cannot demonstrate that the admission of evidence rebutting the conviction is necessary to enhance the credibility and effectiveness of the adjudicative process as a whole, then proof of the criminal conviction, for all practical purposes, will be conclusive of the issue, a result recognized by the Court of Appeal in K.F. Jordan F. v. White (2001), 53 O.R. (3d) 391 (C.A.). 

Having concluded that it was not open to either MacArthur or Economical Mutual, to relitigate “the facts essential to the conviction”, Justice Brown then set about identifying what those facts were. He reviewed the reasons for judgment of the judge who had tried the criminal case and distilled from those reasons four “facts essential to the conviction”. These related to such things as MacArthur having been speeding and following too closely.

Justice Brown refused the request of counsel for Dorkin, that he provide to the jury a copy of the reasons for judgment in the criminal trial.

The January 16 ruling concluded with Justice Brown’s finding that his decision not to allow re-litigation of the facts essential to MacArthur’s conviction still left outstanding the issue of whether the other driver, Dorkin, had also been negligent.

Brown J.’s January 18, 2007 ruling

As a result of the January 16 decision, counsel provided Justice Brown with draft questions for the jury. The first question asked whether there had been any negligence on the part of MacArthur which caused or contributed to the collision. If the answer were “Yes”, the second question would have asked the jury to provide full particulars of MacArthur’s negligence. (Questions 3 and 4 were similar, but related to the other driver, Dorkin. A fifth question asked the jury to apportion liability between the two drivers.)

Justice Brown held that, in light of his January 16 decision, “there is nothing left for [the jury] to do in respect of the finding of negligence against [MacArthur]. They cannot be asked to provide particulars of his negligence because they are not being asked to consider whether he was negligent; they are being directed to find him negligent.” As a result, His Honour refused to put to the jury the questions, asking whether MacArthur had been negligent and if so, in what particulars.

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Judge Criticizes Loose Practices Afflicting Court Approval of Settlements

Posted on January 18, 2007 by Stephen Cavanagh

In Marcoccia v. Gill, Mr. Justice John C. Wilkins has criticized, in rather strong language, various practices that have grown up around court approval under Rule 7.08, of settlements of claims by persons under legal disabilities. (These are what were often colloquially referred to as “infant settlements”, although the claimant need not be underage to have a legal disability, such that court approval of a settlement is required.)

In this case, His Honour was asked to approve partial settlement of a catastrophic case. The legal fees and disbursements that the plaintiff’s solicitors were seeking to retain from the overall funds paid by the insurer of the two settling defendants was approximately 41% of the total. Justice Wilkins refused to approve the legal expenses, in the amount requested.

The decision contains little information about the circumstances leading up to the settlement. However, we learn from an earlier ruling in this litigation, made by Madam Justice Julie Alexandra Thorburn in 2006, that the case arose out of a motor vehicle accident on June 8, 2000. The plaintiff Robert Marcoccia was struck by a vehicle driven by the defendant Gill and leased by the defendant Purba Furniture from the defendant Ford Credit Canada Ltd. Gill and Purba had insurance limits of $1 million. The plaintiff suffered severe brain injuries.

The partial settlement saw Gill and Purba’s insurer paying its $1 million limits plus an additional $395,000 for costs and disbursements. The action is to continue against the defendant Ford Credit, with the latter having agreed to forego any subrogated claim against Gill or Purba.

According to Justice Wilkins’ reasons, the plaintiff’s solicitors estimated that the overall value of the case was in excess of $16.5 million, leading His Honour to observe that the partial settlement that he was being asked to approve was for only 7% to 9% of the total potential value of the claim.

In the course of his 11 pages of reasons, Justice Wilkins discussed how court approval is supposed to be done under Rule 7 and contrasted that process with the one that, in practice, does take place. We predict that his reasons in this case will be influential.

The following were the main targets of His Honour’s criticisms:

  1. What he described as the “very strange” practice in Toronto , “where solicitors forward files for approval to judges of their own choice”;
  2. Counsel separating, on an ad hoc basis, the three elements of a settlement requiring court approval and bringing some of these three elements before different judges. The three “essential ingredients” identified by Wilkins J. are: (a) the amount of the monetary sum being paid; (b) the disposition of those funds in the best interests of the person under a disability; and (c) a scheme of management and accounting for the ultimate disposition of the funds. In Justice Wilkins’ view, all three aspects of a settlement ought to be dealt with by one judge.
  3. Failure to follow Rule 7.08 [which sets out the procedure for obtaining court approval of a settlement entered into on behalf of a person under a disability] in its entirety in all settlements;
  4. Where settlement funds are to be paid into a structure or otherwise dealt with prior to court approval having been obtained (as happened in this case), failure to provide satisfactory information “to explain what was done and why, as well as how it is in the plaintiff’s best interests”. His Honour went on to say that, “included in this information, in my view, should be the amount of the commission being charged by the structured settlement broker if that commission reduces the amount of money available to make payments on behalf of the plaintiff under a disability….[T]he Court should know how much that commission reduces the stream of payments in the annuity”; and
  5. solicitors’ fees.

Escrow Payment of Structure Funds

As anyone invovled in personal injury litigation knows, where a structured settlement is being entered into, it is commonplace for the liability insurer to “pre-fund” the structure, pending court approval. The rationale for this practice is that it allows the broker to “lock in” the funds at advantageous rates of return. Justice Wilkins was troubled by this practice but was not prepared to go so far as to condemn it, saying he could see some benefit accruing to the injured party. However, he was clearly unhappy with the way the matter had been handled in this case. He referred to correspondence that he had received from the structured settlement broker, explaining why $735,000 had been deposited with a life insurer, pending court approval. He complained that “they [the brokers] have proceeded to ‘lock-in rates’ and they have proceeded with establishing the schedule of payments, indexing and any other circumstances that might be relevant ahead of time and simply forwarded ‘our final print-out suitable for attachment to your draft minutes of settlement and judgment’ as if I was a rubber stamp.”

Wilkins J. said that where this sort of escrow funding is done, material should be placed before the judge to satisfy him or her on all other aspects of the annuity and the company with which the annuity has been placed. He observed that in a particular case, a judge might wish to consider a selection of several life insurance companies and for that purpose, might need to have some information about the company in order to evaluate the security of the investment.

In this case, His Honour approved the amount of the settlement and the disposition of the funds into the proposed structure. He then turned to his principal concern: the fees being sought by the plaintiffs’ solicitors.

Solicitors’ Fees and Disbursements

This case did not involve a contingency fee arrangement. Rather, there was a retainer agreement between the law firm and the litigation guardian. It specified an hourly rate of $350 for the lead counsel, with other members of “the legal team” to charge different rates, not specified in the agreement.

The retainer agreement went on to say that fees in similar cases do not normally exceed 15% plus party-and-party costs [the former term for what are now known as “partial indemnity costs”].

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Court Strikes Claim for Intentional Infliction of Mental Distress

Posted on January 18, 2007 by Stephen Cavanagh

In High Parklane Consulting Inc. v. Royal Group Technologies Limited, Mr. Justice Paul Perell struck out a claim for intentional infliction of mental distress, brought by the principal of a company that was itself a plaintiff, suing for breach of contract. In his reasons, Justice Perell provides some guidance as to what is legally sufficient to sustain a pleading in which damages are sought for the tort of intentional infliction of mental distress.

In this case, the plaintiff High Parklane Consulting had a contract with the defendant, Royal Group. Under the contract, High Parklane was to act as a sales agent for Royal Group (the company was in the business of selling extruded plastic products).

As part of a restructuring of Royal Group in 2006, its independent contractors were offered contracts of employment with the company, on a “take it or leave it” basis. The employment relationship would have been much less lucrative than the former contractual relationship.

High Parklane sued for breach of contract, contending that it was an implied term of its contract with Royal Group, that the contract between the two would not be terminated without reasonable notice.

The plaintiff Sajid Lewis was the sole shareholder of High Parklane. He also sued Royal Group, claiming that the defendant knew that Lewis had “health issues” and was aware of the harm that its conduct to do to his physical and mental health.

Royal Group attacked Lewis’ claim as an abuse of process and on the basis that the pleading did not disclose a reasonable cause of action. Justice Perell rejected the first argument but accepted the second one.

Abuse of Process

Mr. Justice Perell noted that while the Supreme Court of Canada’s decision in Fidler v. Sun Life Assurance Company of Canada limits the cases in which a claim can be brought for damages for mental distress occasioned by breach of contract, “it does not follow that it is abusive for Mr. Lewis to sue for his own emotional distress based on the tort of intentional infliction of emotional distress, which tort claim is mutually exclusive from his corporation’s breach of contract claim”. He then turned to a consideration of the pleading.

Reasonable Cause of Action

His Honour concluded that the plaintiff Lewis had failed to allege facts that disclosed a cause of action for intentional infliction of mental distress. He pointed out that this tort has three elements: (1) an act or statement by the defendant that is extreme, flagrant, or outrageous; (2) the act or statement is calculated to produce harm; and (3) the act or statement causes harm. This pleading did not meet those standards.

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Third Party Action Against Plaintiff’s Expert Dismissed on Basis of No Duty of Care and “Witness Immunity”

Posted on January 16, 2007 by Stephen Cavanagh

In an interesting decision, just released, Mr. Justice De Lotbinière Panet dismissed a third party claim brought by a defendant against an engineering firm which had provided a report to the plaintiff.

Vie Holdings Inc. v. Imperial Oil Limited was an action for damages consequent upon the contamination by gasoline of the plaintiff’s property. The plaintif alleged that a hydrocarbon spill at an Esso station, owned by Imperial Oil, had migrated to the plaintiff’s adjacent premises. The plaintiff had commissioned an environmental assessment from an engineering firm, Paterson & Associates. Paterson had concluded that the plaintiff’s property had been contaminated by gasoline from the defendant’s service station.

Imperial Oil defended the action and commenced third party proceedings against Paterson and some of its individual members, alleging negligent misrepresentation, breach of contract and abuse of process.

The third parties and the plaintiff moved under Rule 21 for dismissal of the third party claim, on five separate grounds. Justice Panet allowed the motion, accepting all of the plaintiff’s five arguments. (We got the impression, reading the decision, that His Honour had taken a dim view of Imperial’s tactics.)

In this commentary though, we are going to focus on only two of the five grounds: (1) absence of duty of care and (2) “witness immunity”.

Duty of Care

In his analysis of both duty of care and “witness immunity”, Panet J. referred extensively to a decision of the Nova Scotia Court of Appeal in Elliott v. Insurance Crime Prevention Bureau. (We have linked to a PDF version of that case, which is well worth reading.) In Elliott, the plaintiffs’ home was destroyed by fire. Their insurer denied their claim, alleging arson. The plaintiffs succeeded against the insurer at trial and recovered damages, interest and costs for their loss of property. However, the trial court found that the insurer had not acted in bad faith in denying the claim and accordingly, claims for aggravated and punitive damages were dismissed.

The plaintiffs in Elliott then brought another suit against various adjusters and investigators who had been retained by the insurer (as well as a deputy fire marshall, who had investigated at the request of the local fire department). It is the decision in this second action to which Panet J. referred in Vie Holdings. The Nova Scotia Court of Appeal held that, for policy reasons, no duty of care was owed to the plaintiff homeowners by the insurer’s investigators. (The fire marshall was found to owe no duty even apart from the policy argument.) The court said that “imposing the proposed duty would distort the legal relationships among the insurer, the insured and the investigators and could potentially undermine the ability of the insured and the insurer to properly deal with insurance claims”.

The Nova Scotia Court of Appeal went on to consider, at some length, the concept of “witness immunity”. It found that the principle protected the defendant investigators against some, but not all of the plaintiffs’ allegations.

On the duty of care issue, Justice Panet applied what was referred to in Elliott as the Anns/Kamloops test (a reference to two leading cases, one from the House of Lords and the other from the Supreme Court of Canada). The test is a two-part one: first, determining whether the requirements of foreseeability and proximity have been met. The second part involves a consideration of whether a duty that might otherwise exist, should be negated for policy reasons.

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C.A. Criticizes Trial Judges Incorporation of Excerpts from Factums into Reasons

Posted on January 14, 2007 by Stephen Cavanagh

In a decision released last Friday, the Court of Appeal sent a strong message to the trial bench: be very careful about incorporating into judgments excerpts from the arguments of counsel.

The case is 2878852 Canada Inc. v. Jones Heward Investment Counsel Inc. The plaintiff’s claim arose out of alleged mismanagement by the defendant of an investment portfolio. Pursuant to section 126(5) of the Courts of Justice Act, judgments are supposed to be delivered within six months of the hearing. In this case, the six-month deadline was looming. To save time, the trial judge elected to incorporate, by reference, some 105 paragraphs of the factums of both counsel, into his reasons for judgment. He explained his rationale as follows:

[5] It is now nearly six months since the conclusion of the trial of this action. The pressure of presiding over other cases and preparing judgments in more urgent, but not necessarily more important, cases has made it impossible for me to give my judgment earlier. As well, in addition to the oral evidence of witnesses, the record in this case includes a vast number of documents and it has required a great deal of time to review all of the evidence and arrive at a just disposition. It is now desirable that judgment be rendered prior to the expiry, in just a few days, of what is now considered to be the acceptable time limit for judgments to be reserved in the absence of unusual circumstances.

[26]     As I began to write these reasons, I was fortunate to have the closing submissions of both sides before me. Both contained extensive references to the evidence and the inferences that should be drawn. Accordingly, I found myself using those submissions extensively and borrowing freely from them.

[27]     In these circumstances, I have therefore decided to shorten these reasons by adopting portions of both submissions as submitted by counsel rather than by setting out in my own words essentially what counsel have already done. There is nothing to be gained in delaying the release of this judgment merely to enable me to rewrite the submissions. Both of them were carefully prepared and, so far as I could ascertain, fairly and accurately reflected the evidence that was tendered.

[28]     I adopt and incorporate into these reasons the following paragraphs of the submissions made on behalf of the plaintiff; 134, 135, 136, 137, 138, 139, 145, 146, 147, 148, 149, 150, 151, 152, 153, 154, 155, 156, 157, 158, 159, 160, 161, 162, 163, 164, 165, 166, 167, 168, 169, 170, 171, 172, 173, 174, 175, 176, 177, 178, 179, 180 (the reference in [para.] (c) at page 75 should be to Nicholishen and not Monahan), 181, 182, 183, 184, 185, 186, 187, 188, 189, 190, 191, 192, 193, 194, 195, 196, 197, 197A.

[29]     I adopt and incorporate into these reasons the following paragraphs of the submissions made on behalf of the defendants; 3, 4, 5, 6, 7, 13, 14, 15, 16, 17, 18, 34, 35, 36, 37, 38, 39, 40, 41, 42, 43, 44, 45, 46, 47, 48, 65, 66, 67, 68, 69, 70, 71, 74, 75, 76, 77, 78, 79, 80, 81, 82, 83, 84, 85.

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Driver of Go-kart Entitled to Liability Coverage Under Auto Policy

Posted on January 11, 2007 by Stephen Cavanagh

FURTHER UPDATE–We understand that the appeal from this decision was heard by the Court of Appeal on October 31, 2007. We’ll report on the appeal decision as soon as it becomes available.

UPDATED–Since the original post, some additional discussion of the implications of this decision has been added at the end. 

In the hectic days leading up to Christmas, we overlooked Mr. Justice Roydon Kealey’s decision in Adams v. Pineland Amusements Ltd. Fortunately, Master Robert Beaudoin is always ready to point out our oversights and he drew this decision to our attention. Justice Kealey ruled that an auto insurer was obliged to defend one of its insureds who had been sued as a result of driving a go-kart on a private track. The case has some interesting implications. We understand that it is under appeal.

A father and son were go-karting at the Pineland track in Ottawa. The son was injured in an accident and, in ensuing litigation, the father was named as a defendant. The father had an auto policy with Kingsway General Insurance and he brought a third party action against Kingsway, seeking indemnity and a defence to his son’s claim.

Kingsway moved under Rule 21 before Kealey J., seeking an order dismissing the action. Justice Kealey dismissed the motion and found that Kingsway was required to defend and indemnify its insured.

Central to the decision was whether a go-kart could be considered an “automobile”, as the Kingsway policy provided coverage for automobiles other than the described vehicle, while driven by the named insured.

His Honour undertook a comprehensive review of the caselaw that has interpreted the meaning of the word, “automobile”, in various contexts. He distilled from the cases the following three-step methodology in determining whether a particular vehicle is an “automobile”:

1)      Is the vehicle an “automobile” in “ordinary parlance”?

2)      If not, is the vehicle defined as an “automobile” in the wording of the insurance policy?

3)      If not, is the vehicle an “automobile” within the enlarged definition of automobile in any relevant statute?

Justice Kealey concluded that the first two criteria did not apply here, so he turned to several statutes, including the Insurance Act, the Highway Traffic Act and the Compulsory Automobile Insurance Act (“CAIA”) in order to apply the third criterion.

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Power J. Says Costs Premiums Are Back!

Posted on January 10, 2007 by Stephen Cavanagh

Ward v. Manulife (Costs).pdf

In a major development in the law of costs, Mr. Justice Denis J. Power has distinguished the Supreme Court of Canada’s decision in Ritchie v. Walker and has held that, because of two changes to Rule 57.01 made in 2005, the reasoning in that case is no longer applicable and courts can again award costs premiums, payable by opposing parties, that reflect the risk assumed by plaintiffs’ counsel in taking on a case. A PDF of the as-yet unreported decision appears above. This post is a brief one so that the decision can be made available as quickly as possible.

The two changes to Rule 57.01 cited by Justice Power relied were:

  1. the addition of “the principle of indemnity” and “the amount of costs that an unsuccessful party could reasonably expect to pay” as factors under Rule 57.01, to be considered in the exercise of the judge’s discretion; and
  2. the amendment to Rule 57.01(4), allowing a court “to award costs in an amount that represents full indemnity”.

Readers of our blawg will recall that Justice Brockenshire, who was the trial judge in Walker v. Ritchie, held in Authorson Estate v. A-G, that the Supreme Court’s decision in Ritchie v. Walker is applicable, despite the changes to Rule 57. On that basis, Brockenshire J. deleted a $1 million premium that he had granted prior to Ritchie v. Walker being handed down.

It seems that we have not heard the last of this issue!

There were other interesting aspects to Justice Power’s decision in Ward. That was a case that went very badly indeed for the defendant Manulife at trial. Manulife had terminated a contract with one of its brokers (Ward), who sued for his unpaid commissions. Justice Power found that Manulife’s conduct had been “self-serving, malicious, arbitrary and high-handed”. Ward received very substantial damages, including an award of punitive damages. The plaintiffs sought costs of over $1 million. Manulife argued that costs should be fixed in the amount of $536,269.39.

In the result, Power J. awarded costs totalling $792,283.81. In the course of his decision, he found:

  1. that Manulife should reasonably have expected a higher award of costs, including premium, if the plaintiffs succeeded;
  2. an award of costs on a substantial indemnity scale does not amount to “double indemnity” where punitive damages have also been granted;
  3. although the plaintiffs’ offer to settle included a “non-publication” term that Power J. felt could probably not have been ordered by the court, the offer could still be treated as an offer to settle for purposes of Rule 57.01;
  4. following his usual practice, Justice Power ruled that substantial indemnity costs are 1.5 times the partial indemnity rate, but cannot exceed counsel’s actual hourly rate. In this case, he found that the rates claimed by counsel for the plaintiff were excessive and concluded that those rates should be “aged”, to reflect the fact that they had increased over the life of the litigation.
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Limitation Period Extended on Basis of Discoverability and Special Circumstances–Should It Have Been?

Posted on January 8, 2007 by Stephen Cavanagh

The recent decision of Parker v. Chapman raises some interesting issues about the law of limitation periods in the post-Limitations Act, 2002 era. The ruling was made by Mr. Justice Barry MacDougall of the Ontario Superior Court.

This was a medical malpractice case. Mr. Parker died on April 16, 2003. On January 9, 2004, his widow retained counsel “to conduct an investigation and determine if a claim for medical negligence would be warranted against the doctors or hospitals who had treated the deceased, Frank Parker”.

An action was started on April 16, 2004 (the one year anniversary of Mr. Parker’s death), naming a hospital and various doctors as defendants. Also named as defendants were “John Doe” and “Jane Doe”, described in the judgment as “staff or agents employed by either of the two named hospitals who attended to and provided treatment to the deceased, whose identities were unknown to the Plaintiffs”.

In 2004, the plaintiffs’ solicitor received hospital records that referred to the deceased having been treated by Dr. Alan Selby in 1990 and 2000. The solicitors tried unsuccessfully to get records documenting the care that had been provided by Dr. Selby.

In September, 2004, counsel for the plaintiffs consulted an expert cardiologist. In 2005, that expert provided a verbal report, that the deceased had not received proper care, dating back to 2000, when he had been a patient of Dr. Selby. In 2006, the expert delivered a one-sentence report, saying “After reviewing the file again, I feel that Dr. Allen [sic] Selby should be added as a defendant in this case.”

On April 26, 2006, the solicitor for the plaintiffs advised opposing counsel of his intention to move to add Dr. Selby as a defendant. Justice MacDougall heard that motion, which was opposed by counsel for the proposed defendant.

His Honour perceived there to be two issues:

  1. Had the limitation period expired or was its commencement period postponed by the discoverability principle?
  2. If the limitation period had expired, should the court nevertheless exercise its discretion to add Dr. Selby as a defendant, notwithstanding the expiry of the limitation period, on the basis of “special circumstances” and “absence of prejudice to the defendants”?

It seems to us though, that there were other issues in this case that were not raised in argument and thus, not addressed in the decision of MacDougall J. We will look at these issues in the discussion that follows.

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Loss Transfer for Vermont Accident Still Governed by Ontario Law

Posted on January 7, 2007 by Stephen Cavanagh

In Royal & SunAlliance Insurance v. Wawanesa Mutual Insurance Company, Superior Court Justice Frank Newbould has ruled that a loss transfer claim by one Ontario insurer against another, arising out of a car accident that took place in Vermont, is governed by Ontario law. In so finding, Justice Newbould rejected the submission of Royal & SunAlliance Insurance, that the claim should be governed by the lex loci delicti– the law of the place where the tort occurred.

Justice Newbould was hearing an appeal from the decision of an arbitrator. The arbitrator had also found for Wawanesa, upholding its right to pursue loss transfer against Royal for accident benefits paid to the driver of a heavy commercial vehicle who had been injured while driving through Vermont.

Royal had argued for the applicability of Vermont law because there is no right of loss transfer in that state. So, had that argument succeeded, Wawanesa would have had no right to be reimbursed by Royal for the accident benefits that it had paid out.

However, Newbould J. declined to apply the lex loci delicti of Vermont because he found that Wawanesa’s claim was not one in tort. Thus, the “law of the place where the tort occurred” was irrelevant:

Rather, the claim by Wawanesa is a statutory claim under section 275 of the [Ontario Insurance] Act that is a separate and distinct claim from any underlying tort claim that might be brought between the parties involved in the accident. There would be no purpose served in this case by looking to the law of Vermont to settle a dispute between two Ontario insurers arising from a claim made under the Act, an Ontario statute. 

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