British Columbia Insurance Blog : Canada Insurance Lawyer & Attorney : Michael Thomas of Harper Grey Law Firm : British Columbia, Vancouver

The insureds had brought an action with respect to injuries they suffered in an motor vehicle accident.  Prior to beginning the lawsuit, the plaintiffs requested accident benefits through their own insurer and were denied.  The plaintiffs commenced the civil action claiming damages against the tortfeasor and entitlement and payment of various accident benefits against their insurer.  As the civil action progressed, the plaintiffs continued to request benefits and attend mediations with their insurer as required by the Insurance Act.  The insurer paid some benefits but continued to deny most of the plaintiffs’ claims.  On the first day of trial the plaintiffs brought a motion to amend their Statement of Claim to claim aggravated damages.

The insurer resisted the motion on the basis that the proposed amendment was a new cause of action and the two year limitation period set out in the Insurance Act had expired.  It argued that, as the limitation period had expired, there was a presumption of prejudice that would result from the amendment that could not be compensated for with costs or an adjournment.  The judge rejected the insurer’s argument and allowed the amendment.  He found that a claim for any type of damages, including aggravated damages, is not a cause of action but rather is a remedy and “does not stand alone”.

To determine if a pleading raises a new cause of action one must look at whether substantially all of the material facts giving rise to the cause of action have previously been pleaded or whether new facts are sought to be added that are relied upon to support a new cause of action.  A new cause of action is not asserted if the amendments simply plead an alternative claim for relief arising out of the same facts previously pleaded.  In this case, the factual situation that entitled the plaintiffs to assert their claim against the insurer was the existence of a policy of insurance issued by the insurer, the plaintiffs' entitlement to claim accident benefits under this policy, the insurer’s handling of the claims, and its decision to deny the benefits.  The proposed amendment to claim aggravated damages was founded upon the same factual situation.  The fact that the claim for aggravated damages would focus more on the insurer’s handling of the claims and the basis for the denial did not mean that the claim for aggravated damages should be treated as a new cause of action.

The insurer also relied on an earlier decision in which a plaintiff brought a claim for damages for “the insurer’s bad faith conduct in prematurely terminating her weekly benefits”.  However, the wording of the applicable limitation provision had changed since that time.  The earlier limitation provision read:

A proceeding in a court or an arbitration proceeding in respect of no-fault benefits must be commenced within two years after the insurer’s refusal to pay the benefit claimed or within such longer period as may be provided in the No-Fault Benefits Schedule.

In that case, the Court of Appeal upheld the motion judge’s finding that the plaintiff’s characterisation of the insurer’s refusal as bad faith conduct was merely an attempt to circumvent the mandatory requirements of the dispute resolution scheme in the Insurance Act through the guise of linguistic reformulation.  It found that her allegations, distilled, were that the refusal was inappropriate in the circumstances, which was the very issue contemplated for resolution under the No-Fault Benefits Scheme and that her claim was clearly subject to the two year limitation period.

In the instant case, the applicable limitation provision was:

A mediation proceeding or evaluation under section 280 or 280.1 or a court proceeding or arbitration under section 281 shall be commenced within two years after the insurer’s refusal to pay the benefit claimed.

The judge specifically noted that the phrase “in respect of”, present in the earlier limitation provision and also in the current provision regarding dispute resolution, was notably absent from the current limitation provision and provided good reason not to follow the earlier case.  In addition, he noted that no action had been started within the limitation period as it had been in this case.

Finally, the judge noted the practical implications of accepting the insurer’s argument that all claims must be commenced within two years of the denial of benefits.  Given that an insured is statutorily required to mediate before bringing an action, there could well be delay in moving a civil action forward.  An insured might not obtain sufficient disclosure about the insurer’s conduct until well after the expiration of the two year period.  Particulars necessary to justify a claim for punitive or aggravated damages might not be revealed until documentary or oral discovery in the civil action.  Alternatively, the conduct that might cause an insured to consider such an amendment might arise later in the relationship and again well after the limitation period had expired.

In the result, the judge allowed the amendment and granted the insurer a right of further examination for discovery dealing solely with the amendment.

This case was originally summarized by Emily M. Williamson and edited by David W. Pilley of Harper Grey LLP.

The insured was the owner of a truck-mounted concrete boom truck that collapsed on a construction site. The accident was reported to the insurer, but the insured advised it was seeking recovery from the truck manufacturer and distributor. It started an action against those parties on June 29, 2005. However, it advised the insurer that, should it be unsuccessful in the claim, it would be seeking recovery under the policy.

On September 9, 2005 the insurer wrote to the insured confirming that the loss was covered by the policy and that the insurer was prepared to pay the cost of repairing the truck minus the deductible. The letter confirmed that the insurer was aware that the insured was seeking to recover the loss without recourse to the insurer. The letter also confirmed that the claim could be "re-opened for processing" anytime before the one year limitation period expired on January 5, 2006.

The insured never filed a proof of loss form, but it did start an action against the insurer on December 25, 2005. The main action against the manufacturer and distributor is scheduled for February 2010. Should the insured be unsuccessful in that action then it sought, in the action at bar, to recover from the insurer under the policy.

The insurer argued that the insured could not succeed in the action against it because it did not submit a proof of loss to initiate the claim and specifically elected to pursue remedies against the other parties in the main action. As there was never a claim advanced under the policy, there was never a denial of the claim and therefore no breach of contract on which to sue.

The insured argued that it issued a formal claim within the limitation period, by serving the Statement of Claim. Further, it argued that the insurer had, in fact, denied the claim when it issued its Statement of Defence.  The Insured argued that it would be open to the court to conclude that a breach of contract occurred when the claim was defended. Lastly, it argued that the insurer's position concerning a failure to complete a formal proof of loss is merely a question of form over substance and that the court has liberal powers under s. 129 of the Insurance Act to relieve from forfeiture.

The court held that, although the insured was not in technical compliance with the proof of loss procedures under the policy, it was difficult to see how the insurer had been prejudiced by the insured's actions. While the formal proof of loss might not have been filed, the insurer was immediately on notice of the loss, had all the information that would be contained in a proof of loss, and had been kept fully aware of the status of the main action. The court was not persuaded that the insured could not succeed in its arguments and, therefore, there were triable issued raised by the facts and the law. Accordingly, the summary judgment motion was dismissed.

This case was originally summarized by Natasha D. Morley and originally edited by David W. Pilley.

The plaintiff, a dentist, was diagnosed with cataracts in both eyes, a condition which substantially undermined his ability to carry on with his practice.  In July of 1998, the plaintiff’s claim for disability benefits from the defendant, Sun Life, was approved. The defendant subsequently informed the plaintiff that his policy required him to undergo corrective eye surgery.  The plaintiff petitioned the Supreme Court for a declaration to the contrary.  On June 29, 2001, while the Supreme Court judgment was under reserve, the defendant wrote to the plaintiff reaffirming that he was required to have corrective surgery, indicating that it intended to cease benefits if he did not, and setting out a date for final payment. The Supreme Court and the Court of Appeal held for the defendant.  The Court of Appeal issued its ruling on January 29, 2003, and the plaintiff commenced corrective surgery shortly thereafter. Despite the surgeries, the plaintiff was unable to practice dentistry, and commenced an action against the defendant for disability benefits.  The defendant brought an application under Rule 18A claiming the action was statute barred as it was commenced outside the limitation period set out in s. 22 of the Insurance Act, R.S.B.C. 1996, c. 266.  The plaintiff argued that correspondence and discussions passing between the parties during the litigation meant that “clear and unequivocal notice” of the defendant’s intention to deny benefits was never given.  This submission was premised mainly on the fact that the defendant had indicated that it would not consider the plaintiff in fundamental breach of his policy if he postponed surgery during the litigation.  No formal standstill agreement was reached.

The plaintiff’s action was dismissed.  The Supreme Court ruled that the June 29, 2001 letter constituted “clear and unequivocal notice”.  In determining what constitutes “clear and unequivocal notice”, the Supreme Court referred to the Court of Appeal’s decision in Balzer v. Sun Life Assurance Company of Canada, 2003 BCCA 306, and the line of cases emerging from that judgment.  The Court interpreted Balzer to mean that when an insurer expresses its intention to cut off benefits and close its file, the s. 22 limitation period is triggered.  The correspondence and discussions passing between the parties did not undermine the notice contained in the June 29, 2001 letter as the communication was related to the appeal, and to the consideration of additional information concerning the plaintiff’s medical status.

This case was originally summarized by Kim Yee and edited by David W. Pilley of Harper Grey.

In April 2003, the Mawjis were involved in a 68 car pile-up on Highway 401 in Toronto.  Their lawyer received a Motor Vehicle Accident Report stating the Mawjis were involved in a single car collision with a vehicle driven by Mr. Christiaans. The Mawjis commenced an action against Mr. Christiaans in April 2005, and served it in May 2005.

A Statement of Defence and Counterclaim were delivered in December 2005, that stated Mr. Christiaans had been struck by a driver and or operator of vehicles unknown or unnamed in this lawsuit. Enclosed with the pleading was a Statement of Claim by the estate of Mr. Amayo naming Mr. Christiaans, Mawji, a number of orther defendants including John and Jane Doe from the same multi car pile-up.

Mr. Christiaans' lawyer suggested to Mawji's lawyer that he should consider adding other defendants. Mawji's lawyer responded by saying no other vehicle was involved, and that he would consider adding other defendants when he was given some evidence suggesting Mr. Christiaans was not at least 1% liable.

In January 2006, Mr. Christiaans' lawyer sent Mawji an Ontario Provincial Police Technical Report showing other vehicles were involved in the collision, including Mr. Amayo in his maroon Mazda. In March 2006, Mawji commenced an action against Mr. Amayo.

In January 2007, Mr. Chriastiaans stated in his examination for discovery that he had been struck by an unidentified beige car. Mawji's lawyer then wrote to Axa in May 2007 giving notice there was a potiential claim under the unidentified vehicle coverage of the policy.

In April 2008, the Mawjis commenced an action against Axa under the unidentified vehicle coverage of their policy, five years after the collision.

The issues for the court were; a) when was the claim against Axa discoverable, b) if the claim was outside the limitation period, were there special circumstances to allow it, c) would Axa suffer prejudice, and, d) was there a genuine issue for trial as to whether the action was statute barred.

The court held that the Mawjis must possess sufficient knowledge before bringing the action or it could be dismissed as having no reasonable prospect of success. There was a genuine issue for trial with respect to when the Mawjis knew or ought to have known the necessary facts to add Axa to the proceedings. Axa did not suffer actual prejudice as it had been aware of the claim as of at least May 2007.

The judge dismissed the motion as the question as to when the Mawjis would have had sufficient information to maintain a successful action against Axa was a question of fact and beyond the role of a motions judge.

This case was originally summarized by Neil J. MacDonald and originally edited by David W. Pilley.

The plaintiff, MacGregor, was involved in an accident with Ms. Vos, an underinsured motorist, in 1998. The owner of the vehicle as well as the insurer for the owner and Ms. Vos, were not identified. MacGregor obtained a default judgment against Ms. Vos for over $260,000 in May 2006.

In September 2006, MacGregor commenced a second action against Royal and Sun Alliance Insurance Co. of Canada in order to collect on the default judgment against Ms. Vos, claiming on the uninsured endorsenment, but not on the underinsured endorsement.

In April 2009, MacGregor successfully brought a motion to amend his statement of claim to include the underinsured endorsement. The motions judge found that although the statement of claim did not expressly spell out the relief claimed and was defective, it would not cause prejudice to the defendant, and could be amended.

The judge, in granting the leave to appeal,  decided the proper test was for the moving party to show there was a good reason to doubt the correctness of the decision. He found that on the facts of this case, there was. The issues raised were of great importance to the development of the law and the administration of justice that would affect Ontarians generally, and should be debated for resolution by a higher level of judicial authority.

This case was originally summarized by Neil J. MacDonald and originally edited by David W. Pilley.

The Defendant Insurer applied for a dismissal of the Plaintiff Insured's claim.  The Insured was employed by the Royal Bank of Canada as a customer service representative.  The Insurer provided insurance coverage, including long term disability coverage for the bank's employees, including the Insured.

The Insured developed laryngitis and, as a result, was told to rest her voice.  She attempted to return to work but was unable to do so.  On the advice of her employer, she accepted short-term disability benefits for eight weeks.  After the Insured's short-term disability benefits were exhausted, she applied to the Insurer for long-term benefits based on her doctor's then diagnosis of "muscular tension dysphonia".  The Insurer approved her application for long-term disability benefits.  The Insured was advised that if her medical condition prevented her from performing the duties of her own occupation, she would, in approximately 18 months, be eligible for disability payments only if she was unable to work at any occupation for which she was qualified, or might reasonably become qualified by training, education or experience.

The Insured was eventually advised that her claim would be closed at the expiration of the 18 month period as she was no longer entitled to disability benefits.  Approximately six months after the Insured's benefits were cut off, she received a new diagnosis of conversion disorder and advised the Insurer. The Insurer rejected the Insured's claim for benefits based on the new diagnosis and the Insurer issued a Writ of Summons.

The Insurer brought this application to have the Insured's claim dismissed on the basis that section 22(1) of the Insurance Act of British Columbia requires that "every action on a contract must be commenced within one year after the furnishing of reasonably sufficient proof of a loss or claim under the contract and not after".

In this case, the policy provisions that applied to the Insured's claim, on a literal rating, permitted the Insured to commence legal action two years after the last day on which a proof of claim would be accepted under the terms of the policy.  Thus, the issue before the Court was which limitation period applied.  If section 22(1) of the Insurance Act applied, the Insured had not brought her claim within time whereas, if the limitation period in the policy applied, the Insured had brought her claim within time.

The Court found that while section 3 of the Insurance Act prevents an Insurer from contracting for a limitation period shorter than that provided for in the Insurance Act, there is nothing in section 3 that prevents an insurer from contracting for a period greater than that in the Act.  The Court also granted the Insured relief from forfeiture as she had failed to formally file a proof of loss, which the Court viewed as imperfect compliance given the circumstances of the case.  In the result, the Insurer's application was dismissed.

This case was digested by Cameron B. Elder and edited by David W. Pilley.

In 1977 the Plaintiff, Minox, constructed a complex of condominiums which were rented out to tenants. Within two years of completing construction the building experienced humidity problems and mould began to occur in some of the units. In 2001 it was determined that some of the mould was toxigenic.

In 1993 Sovereign General Insurance Company issued a policy of insurance which was maintained by Minox up to and including 2003. In 2002 Minox filed two proofs of loss relating to damage caused by toxigenic and other mould in the complex. Sovereign denied the policy on the basis that mould was not a risk covered by the policy, as it was not fortuitous. It also claimed that the loss was excluded under the policy and that the loss did not occur during the policy period.

The court found that the damage caused by mould is a risk covered under the policy. It rejected Sovereign's argument that mould is a condition resulting from the normal use and occupation of the property, and therefore not a risk or peril. It found that although it is highly likely that mould will develop due to moisture problems, it is not certain or inevitable. The court pointed to the fact that less than half of the units in the complex had occurrences of mould. Therefore, it found that the growth of mould, either toxigenic or non-toxigenic, was a fortuitous event and therefore a risk covered under the policy.

The court then went on to consider whether mould was excluded under the policy. It found that the exclusions relating to "seepage, leaking or influx of water etc.", "entrance of rain, sleet snow through windows, skylights or other similar wall or roof openings etc.", "dampness, dryness or atmosphere, changes of temperature etc." and "wear and tear, gradual deterioration, latent defect, inherent vice, faulty or improper workmanship etc." all did not apply to exclude coverage. It pointed out that the policy contained no exclusion specifically relating to loss or damage caused directly or indirectly by mould and that such exclusion clauses are not uncommon in the industry. Therefore, coverage for mould damage was found not to be excluded under the policy.

The court also looked at whether the loss or damage occurred within the policy period. Sovereign argued that the date of occurrence of the alleged loss was the date on which moisture first resulted in mould. Therefore, damage was present long before Sovereign became the insurer on risk. Minox argued that damage arose with the discovery and identification of the toxigenic mould which, they state, was in 2001. The court agreed that there was no evidence of serious health complaints relating to mould prior to 2001. Therefore, a reasonable inference to be drawn was that, absent any serious health complaints which are generally associated with the presence of toxigenic mould, mould did not exist prior to 2001. The court therefore found that the damage occurred during the policy period.

The court also dealt with the issue of whether Sovereign had waived its right to rely on the exclusions by its failure to make inquiries as to the condition of the building. It stated that the principle enunciated in Canadian Indemnity Co. v. Johns-Manville Co., [1990] 2 S.C.R. 549, does not go so far as to create a duty on the insurer to require an application or do conduct an inspection. Therefore, the most that could be said is that Sovereign deprived itself of the opportunity to deny coverage initially or to include a mould exclusion by its failure to conduct a visual inspection either prior to extending insurance to Minox or during any of the renewal years.

The court therefore held that the damages suffered by Minox were recoverable under the policy.

This case was originally summarized by Natasha D. Morley and edited by David W. Pilley.

The insured was a self-employed businessman injured in a car-accident and was thus entitled, under the SABS, to a weekly income replacement benefit (“IRB”) as well as to loss of income earning capacity benefits (“LECB”)after 104 weeks. The insurer paid the IRBs but would not pay the LECB. The insured commenced an action in 2001 for a declaration that he was entitled to a LECB amount. The insurer counterclaimed for a refund in respect of an overpayment of the IRB. The insured hired an accountant who discovered that the insurer had made an error in the calculation and payment of the IRBs. He therefore sought to amend his claim in 2006. The trial judge found that the IRB claim was statute barred. She found that the delivery of the Statement of Defence and Counterclaim constituted a refusal to pay any further benefits to the insured and thus triggered the two year limitation period under s. 72(1) of the SABS and s. 281 of the Insurance Act. Lastly, she awarded pre-judgment interest in accordance with s. 68 of the SABS but post-judgment interest in accordance with s. 129 of the Courts of Justice Act, at a lower rate.

The Court of Appeal found that the trial judge erred in her finding the insured’s claim was statute barred. It found that, until the accountant became involved, the insurer was not aware of the error in calculation. Therefore, the insurer did not intend its Statement of Defence to constitute a refusal to pay the minimum IRB component of the IRB claim because it was not aware of the error. In those circumstances, the Statement of Defence could not constitute a refusal to pay an amount claimed or benefit claimed within the meaning of s. 72(1) of the SABS.

The Court of Appeal also found that the trial judge erred by failing to award post-judgment interest in accordance with s. 68 of the SABS. It stated that the section is worded in a non-discretionary manner and there is no basis not to apply it to post-judgment interest as well as pre-judgment interest.

This case was originally summarized by Natasha D. Morley and edited by David W. Pilley.

The plaintiff incurred potential liability to the victims of a helicopter crash in 1995. The families of the victims filed actions in Saskatchewan and British Columbia. One of the plaintiff’s insurers, Associated Aviation Underwriters Inc., now Global aerospace Inc. (“Global”) assumed the plaintiff’s defence in those actions. The plaintiff then filed an action against its other insurers in 1999, claiming that they “had neglected or refused to pay legal, defence, investigation, negotiation and settlement costs as required by their respective policies of insurance” (the “Underlying Action”). Global was a third party to the Underlying Action. in 2005, Global settled all the claims against the plaintiff arising from the helicopter crash and in 2007, Global filed a notice of motion in the Underlying Action to vary the plaintiff’s pleadings. The variations sought would effectively substitute Global as a plaintiff by substituting its claim for contribution in place of the plaintiff’s claim for indemnification. The application asked for “radical changes to [the plaintiff’s] statement of claim”.

The chambers judge held that although Global’s proposed amendments were outside the limitation period, they should nonetheless be allowed pursuant to section 20 of Saskatchewan’s Limitation Act, which provides an exception to the normal limitation periods, holding:

Notwithstanding the expiry of a limitation period after the commencement of a proceeding, a judge may allow an amendment to the pleadings that asserts a new claim or adds or substitutes parties if:

(a) the claim asserted by the amendment, or by or against the new party, arises out of the same transaction or occurrence as the original claim; and

(b) the judge is satisfied that no party will suffer actual prejudice as a result of the amendment.

The defendants appealed the decision of the chambers judge. The Court of Appeal held that the chambers judge erred in allowing the proposed amendments. The Court held that provisions like s. 20 “provide for exceptions to limitation periods but should not be allowed to become a means for their wholesale avoidance”, and that the sought amendments were too dramatic to fall within the scope of s. 20.

This case was originally summarized by W. Jay Havelaar and originally edited by David D. Pilley.

The Plaintiff Insured suffered an insurable loss when his house was broken into on June 19, 2006. At the time of the loss, the Insured had a policy with the Defendant Insurer which was in good standing. The Insured issued a Statement of Claim on June 4, 2007. The Insurer alleged that the claim was vitiated by the Insured's willfully false statements. In the alternative, the Insurer relied on Statutory Condition 11 of the The Saskatchewan Insurance Act which provides for an appraisal in the event of disagreement as to value of insured property. When the Insurer filed a Dispute Note, the Insured was still within the limitation period and was in the legal position to cure any irregularities. At the time of the Application, he was outside the limitation period. The Insurer asked the Court to dismiss his Statement of Claim which would have meant that the Insured would not be able to start another Action.

The issues before the Court were as follows:

1.   Had the Insurer waived the requirement of Statutory Condition 11 until after the trial?

2. If "yes", could the parties waive the requirements of s. 3(3) of The Small Claims Act?

3. If the answer to Issue No. 1 or 2 was "no", could this Court apply the remedial provisions of s. 109 of The Saskatchewan Insurance Act to the requirements of s. 3(3) of The Small Claims Act?

The Court answered No. 1 in the affirmative, found that submissions on No. 2 were insufficient for it to reach a conclusion, and since the Court found that it could apply the remedial provisions of s. 109 of the Saskatchewan Insurance Act, it did not decide the issue. Therefore, the Court found that it had jurisdiction to proceed with the trial.

This case was originally summarizxed by Cameron B. Elder and originally edited by David W. Pilley.