Unique Labeling Inc. v. Gerling Canada, [2008] O.J. No. 4090, deals with the unique issue of attempting to enforce a jury award pursuant to s. 132(1) of the Insurance Act. The Plaintiff obtained a judgment against the Defendants in Oregon for damages arising  from the negligent supply of bottled water. The Plaintiff was ultimately awarded $1.5 million in damages by a jury. It then sought to recover the judgment in Ontario, under s. 132(1), against the Defendants’ commerical liability insurers. The insurers denied liability on the basis that the Oregon judgment did not impose liability for damage to property, as required by s. 132(1). Instead, they argued that the jury simply awarded damages for pure economic loss. The Plaintiff argued that the requirement in s. 132(1) of “injury or damage to property” creates a much lower threshold than “physical injury to tangible property”, the latter being a term relevant to the CGL policies. It further argued that injury or damage to property includes both tangible and intangible property. The Plaintiff submitted that there could be no dispute that its property was damaged. Its bottled water, supplied by the Defendants, was contaminated and had to be destroyed. 

The parties were unable to find any caselaw in which an Ontario court had determined a judgment creditor’s right to successfully invoke the provisions of s. 132(1) where the underlying judgment follows upon a jury verdict on liability and damages issues. The Court observed that the Oregon jury had issued no reasons; it simply answered the questions put to it following the completion of the trial. The Court stated that any review of evidence, of arguments by counsel and/or of directions given the jury by the trial judge would pre-suppose that such matters influenced the jury. One might thereby come to a firm but entirely inaccurate understanding of the outcome of the trial below. Thus, the Court held that a better approach would be to consider the judgment and the jury questions and answers within it in the context of the claims, as framed by the pleadings in the Oregon action. The Court ultimately found that the Oregon jury had indeed only awarded damages for economic losses, and thus not for damage to property. Without more in the way of clarity in the jury questions, the Court was not satisified that liability had been imposed for property damage. Thus, inter alia, the Court dismissed the action.

The Court in Unique Labeling Inc. was clearly troubled by the exact nature of the damages awarded by the Oregon jury. The decision is instructive as clearer jury questions and pleadings in the underlying action would have given the Court much more assistance in its analysis under s. 132(1). In trying an action before a jury, and in contemplation of a potential s. 132(1) proceeding, Unique Labeling Inc. illustrates that it is vital that an eye is kept on creating a record, specifically by way of clear jury questions, that will satisfy the requirements of s. 132(1).   

Jim Davidson