No Reduction of Maximum Non-pecuniary Damages In Face of Large Pecuniary Damages Award

Posted on June 14, 2006 by Stephen Cavanagh

In the well-known case of Sandhu v. Wellington Place Apartments, the jury awarded to the plaintiff non-pecuniary general damages of $311,000. This is the current value of the $100,000 maximum award established by the Supreme Court of Canada in the 1970’s. The jury also awarded damages for income loss in the amount of $1,166,283 and $10,942,908.00 for the cost of future care.

The defendants asked the trial judge, Madam Justice Carolyn Horkins, to strike several parts of the jury’s decision. In relation to the non-pecuniary damages, they argued that “[the plaintiff’s] future care award will improve the quality of his life and for this reason the defendants say that he no longer qualifies as one of the worst cases entitled to receive the maximum amount for non-pecuniary damages”. Justice Horkins rejected the argument as “unsupportable”, saying that “[t]he defendants’ position suggests that only a plaintiff who is in a vegetative state and unaware of the care provided would qualify for the upper limit. Everyone else would be able to appreciate and enjoy the benefit of the future care award and according to the defendants should receive something less.”

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1991 Installation of Fireplace Held to be ‘Accident’ Triggering Coverage for 2003 Fire Claim

Posted on June 14, 2006 by Stephen Cavanagh

  FireplaceWithFire.jpg 

[This post contains a correction at the end, dealing with the apportionment of contributions between the two policies. We had previously said that contribution by equal shares had been ordered; in fact, Power J. ordered proportionate contribution by policy limits. We are grateful to Jim Wilson, one of the counsel who argued the motion, for drawing this error to our attention. Jim’s comment appears below. However, we have retained, in the post, the reference to the Supreme Court of Canada’s decision in Family Insurance Corp. v. Lombard Canada Ltd., which seems to favour an “equal shares” approach. Jim?]

In Lanark Mutual Insurance Company v. Economical Mutual Insurance Company, Superior Court Justice Denis Power held that two insurers owed a duty to defend a contractor which had been sued for having installed a fireplace that malfunctioned and caused a fire. Both insurers (Lanark Mutual and Economical Mutual) had insured the contractor at different times. Both carriers had comprehensive general insurance policies for different policy periods, although neither could locate a complete copy of its policy. The insured had been sued as a result of a 2003 fire at a home at which it had installed a wood-burning stove in 1991.

Lanark undertook the defence of the claim and settled it for a global amount of $15,000, of which it contributed $5,000. (A co-defendant was responsible for the other $10,000.) Lanark then brought this application, seeking a declaration that Economical was obliged to contribute to the defence costs.

Lanark’s coverage was in force at the time of the fire in 2003. Although Economical could not find its policy, it appeared that it had been on the risk for a year in 1991-1992. Economical did, however, find and produce the declaration page, which referred to “Form No. 2089”. It also located a specimen copy of that form, which was entitled “Comprehensive General Liability Coverage Rider Attached To and Forming Part of This Policy–Additional Declarations”.  This rider obliged the insurer “to pay on behalf of the Insured all sums which the Insured shall become legally obligated to pay as compensatory damages because of “property damage caused by accident.” 

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C.A. Upholds $500,000 Non-pecuniary Damages Award in Oil Spill Claim

Posted on June 13, 2006 by Stephen Cavanagh

crude.gif  In Westlake v. Granby Steel Tanks, the Court of Appeal reviewed the damages award made by a jury in an action arising out of an oil spill at the plaintiffs’ home. The plaintiffs were an elderly couple. Liability had been admitted shortly before trial.

Despite the absence of any medical evidence, showing that either of the plaintiffs had actually been injured by the contamination of their home, the jury awarded each of them $250,000 for general non-pecuniary damages for emotional distress and loss of enjoyment.

On appeal, counsel for the defendant argued that the Supreme Court of Canada’s cap on general damages also applied here and that although the awards were below the cap, they were sufficiently close to it as to demonstrate their unreasonableness.

The Court of Appeal declined to rule on whether the cap applies in non-personal injury cases. It went on to hold that, in any event, these awards were below the cap and that the jury could have concluded that the defendant’s negligence “virtually destroyed the respondents’ [the plaintiffs’] enjoyment of their life for many years and left the respondents at an advanced age in a position where they could never regain the enjoyment they had before the oil spill”, such that a large award of damages was warranted.

It is unfortunate that the Court chose not to express an opinion as to whether non-pecuniary general damages in cases not involving personal injury are subject to the Supreme Court of Canada’s cap (now approximately $307,000). In support of its decision on this issue, the Court of Appeal pointed to the fact that the “cap” argument had not been raised at trial.

The Supreme Court of Canada has already held, in Hill v. Church of Scientology of Toronto, that no cap should be imposed on general damages in defamation suits. However, the sort of claims made here (loss of enjoyment and emotional distress) are more akin to those in a personal injury action in that they are normally accompanied by claims for pecuniary damage, in which the plaintiffs can recover all proven monetary losses. It would be helpful to have some guidance from the Court of Appeal as to whether there is any limit on non-pecuniary general damages awards of the sort made in Westlake. But such guidance will have to await a future decision.

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S.C.C. Weighs In on Claims-Made Policies

Posted on June 5, 2006 by Stephen Cavanagh

The Supreme Court of Canada released its decision in Jesuit Fathers of Upper Canada v. Guardian Insurance last Thursday. This is an important decision for anyone working or practising in the field of insurance law. In addition to its adjudication of the particular case before it and its comments on “claims made” policies, the Court also had a number of observations about insurance law generally. In what we feel may turn out to be one of the most important parts of the judgment, the Court discussed the “reasonable expectations” doctrine and the extent to which the context of a particular insurance contract can properly be considered in evaluating coverage. These tea leaves will be studied closely by practitioners looking for clues to the Court’s outlook on insurance issues.

The decision is also of importance for its analysis of what is meant by the word, “claim”.

We have summarized the more general aspects of the decision at the end of this post. First, we’ll look at this particular dispute.

The Spanish School

This case arose out of abuse that was alleged to have taken place at a residential school near Spanish, Ontario in the 1940’s and 1950’s. The students at the school were Aboriginal. The school had been operated by an order of Catholic priests, the Jesuit Fathers of Upper Canada.

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Court Refuses to Bifurcate MVA Trial

Posted on May 31, 2006 by Stephen Cavanagh

linen_divided_dish.jpg  Although he expressed concern about “the somewhat rigid state of the existing jurisprudence”, Justice Denis Power refused to bifurcate the trial of a motor vehicle accident case.

In Aghsani v. Briglio, the plaintiff was a pedestrian who had been struck and seriously injured by a car that was in the process of passing a stopped bus. The defence had served a jury notice. The plaintiff’s lawyers moved for an order that the trial be “bifurcated”, meaning that liability would be tried first. If liability were found, then the damages issue would be tried later. It was estimated here, that the first phase of the trial would take about two weeks but the second was estimated to require six to eight weeks of court time.

As Justice Power noted, “if bifurcation was/is ordered and if the plaintiff subsequently fails to establish some liability on the part of the defendants, weeks of evidence concerning damages might be avoided”. But he went on to say that this was not an unusual occurrence and did not warrant bifurcation. In reaching this conclusion, His Honour reviewed the relevant caselaw in some detail. The jurisprudence was generally to the effect that, as a general rule, multiplicity of proceedings are to be discouraged and all claims tried in one trial.

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C.A. Upholds Punitive Damages Award in Fire Insurance Case, but Reduces Aggravated Damages

Posted on May 31, 2006 by Stephen Cavanagh

house-on-fire.jpg The Court of Appeal today released its decision in Plester v. Wawanesa Mutual Insurance Company, a lawsuit that involved a disputed claim on a policy of fire insurance. Two of the insureds (a married couple) owned a furniture store and a third insured (father of one of the first two) owned an antique furniture business operating from the same premises. The second business was separately insured, but both polcies were with Wawanesa.

A fire in March, 1997, damaged the store and much of its contents. The two groups of insureds submitted separate claims to Wawanesa. Norman Plester, who operated the antique furniture business, died prior to trial. Wawanesa denied both claims on the basis of arson.

At the January, 2005 trial before Mr. Justice Williams Jenkins and a jury, damages were awarded in favour of Terry and Cecile Plester, in the amount of $1,000,673.83 and in favour of the estate of Norman Plester, in the amount of $131,900. Both awards included punitive damages and the award to Terry and Cecile also included aggravated damages.

Wawanesa appealed on both liability and damages. The Court of Appeal varied the award of aggravated damages but otherwise dismissed the appeal. In doing so, it made several points of interest to practitioners.

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Partial Indemnity Costs Can Equal 100% of Actual Fees

Posted on May 31, 2006 by Stephen Cavanagh

Last week’s decision of Mr. Justice David Corbett in a family law case is actually an important one for counsel acting for insurance companies.

In Mantella v. Mantella, a husband and wife were involved in bitter matrimonial litigation. As seems to happen so often nowadays, the husband sued the wife’s lawyer. Justice Corbett dismissed that action as an abuse of process.

But what is interesting is what he did with respect to costs. In our view, he correctly interpreted the amendments to Rule 57.

Counsel for the lawyer had been retained by LawPRO. Like most other insurance companies, LawPRO’s lawyers agree to work for specified hourly rates. In any given case, those rates might be lower than the rates the same lawyers charge to other clients or lower than the “going rate” in a particular area.

Justice Corbett said though, that “the actual rates charged by counsel are not the starting point of a costs analysis”. Instead, the correct approach, he said, is to consider the factors in Rule 57.01. (There is a costs grid that appears in a notice to the profession accompanying Rule 57. It contains maximum hourly rates for counsel of various levels of experience: $350 per hour, for instance, for counsel of more than 20 years’ experience. While Justice Corbett did not specifically refer to this grid, it appears likely that he took it into consideration.)

His Honour’s description of the correct process, with which we respectully agree, appears in paragraph 7 of his reasons, as follows:

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One Defendant Not Liable to Pay Defaulting Defendant’s Settlement Contribution

Posted on May 31, 2006 by Stephen Cavanagh

pie&slice.gifIn Budning v. Vinokurov et al., the plaintiff settled with three defendants. Minutes of settlement were entered into, specifying the amounts to be paid by each defendant. Two of the defendants (a law firm and a municipality) paid their contributions to the defendant. The third defaulted. The plaintiffs moved to enforce the minutes of settlement and for an order that the law firm and municipality were jointly and severally liable for the global amount of the settlement (and thus, obliged to pay to the plaintiffs the share of the defaulting defendant).

Justice Edward Belobaba dismissed the plaintiffs’ motion. He noted that “a settlement agreement is a contract” and this one specified who was to pay what. His Honour said that if the minutes of settlement had not provided for the amounts to be contributed by the individual defendants, he would have accepted the plaintiffs’ argument.

Something to bear in mind for both plaintiffs and defendants who are settling claims in which several defendants are involved.

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“Insured v. Insured” Exclusion Doesn’t Apply to Claim by Insured’s Liquidator

Posted on May 24, 2006 by Stephen Cavanagh

Markham General Insurance Company was ordered wound up in July, 2002. The liquidator of Markham is now suing its former directors and officers, alleging that they negligently managed the company.

Those defendants, in turn, had D & O coverage with American Home Assurance Company (“AIG”). In a decision released on May 18, 2006, in Deloitte & Touche Inc. v. Bennett et al., Justice Peter Cumming of the Ontario Superior Court dismissed AIG’s application for an order, that coverage for the claim against the officers and directors was excluded by the “insured v. insured” exclusion. That exclusion applied to any claim brought against an Insured by any Insured or by the Company [Markham]. The idea behind the exclusion is to prevent collusive claims among insureds.

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C.A. Rules $3.1 Million AB Settlement Enforceable Despite Claimant’s Death

Posted on May 17, 2006 by Stephen Cavanagh

The Court of Appeal ruled today, in Wu v. Zurich Insurance Company, that a $3.1 million settlement of an accident benefits claim was enforceable by the estate of the injured claimant, who died before the settlement had been approved by the court and before the money had been paid.

At first instance, the insurer had been successful. Superior Court Justice John B. McMahon had held that court approval was a “true condition precedent” to the agreement being enforceable. He felt that the court could not approve the settlement after the plaintiff’s death and as a result, the estate was not entitled to have the settlement funds paid to it.

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