In Morrow v. Zhang, 2009 ABCA 215, the Alberta Court of Appeal recently released its decision on the constitutionality of the Province’s monetary cap on non-pecuniary damages. Under the cap, car accident victims could only receive a maximum of $4,000 for pain and suffering. The trial judge ruled that the cap unjustifiably violated s. 15 of the Charter. In an unanimous decision, the Alberta Court of Appeal held that the cap did not violate s. 15 of the Charter, and upheld the trial judge’s decision that the cap did not violate s. 7 of the Charter.

The Appeal Court’s decision raises the recurring debate over the efficacy of threshold tort systems. Alberta took a fairly hard line on “minor injuries” by imposing the cap, and this approach has been vindicated by the Court. The evidence was that premiums had dropped by 18 % since the imposition of the cap. Ontario has its own threshold, but does not like Alberta impose a cap on non-pecuniary damages for minor injuries. It actually goes further and denies any claim for non-pecuniary damages for non-threshold claims and the same applies to any type of injury (i.e. soft tissue, orthopaedic, psychological). It appears that the Alberta Court of Appeal’s decision may be appealed to the Supreme Court of Canada. If upheld, it will be interesting to see if this influences future changes to Ontario’s tort regime, and whether it prompts the goverment to implement further retrictions on damages.

Jim Davidson

Russo v. John Doe is a very recent decision from the Ontario Court of Appeal dealing with the recurring issue of coverage under the OPCF 44R for the negligence of an uninsured or inadequately insured motorist. The appellant was a tragic victim of a drive-by shooting. She brought an action against her insurer, the respondent, seeking compensation for her injuries. The insurer denied coverage, and argued that the accident did not arise as a result of the ownership, use, or operation of a car, but rather as a result of an intervening act, the shooting. The Court of Appeal agreed with the insurer. Following the recent decisions of the Supreme Court of Canada on this issue, the Court of Appeal stated that in order to trigger the OPCF 44R Endorsement, the at-fault defendant’s tort must be committed as a “motorist”. There are two aspects to this inquiry - the purpose test and the causation test. The Court of Appeal found that the purpse test had been met. It did not matter that the motorist intended to commit a criminal act. His subjective reasons for using the car were not relevant to the inquiry. The appellant, however, failed to meet the causation test. The Court of Appeal accepted the argument that the shooting was a distinct and severable act from the operation of the car. In order words, it was incidental that the car was used in the shooting. The Court of Appeal emphasized that it is not reasonably expected that automobile insurance will cover injuries or death arising from the joint act of a group of tortfeasors simply because one tortfeasor’s involvement in the tortious act consists of operating a motor vehicle.

The Court of Appeal’s decision is interesting in that it appears to apply a strict application of the decisions of the Supreme Court in Vytlingam and Herbison. In the latter cases, the tortfeasor had already exited the vehicle when the tort was committed. Arguably this would move the facts in Russo closer to the required threshold for causation. It will be interesting to see whether the courts continue to apply a more strict application of the causation test, or whether at some point in time there is a relaxing of the standard.  

Jim Davidson

Guy v. Toronto (City), [2008] O.J. No. 5126, concerns a slip and fall personal injury claim where the Plaintiff slipped on ice on a City owned laneway. The central question on liability was whether the laneway was simply a roadway for vehicles, or if it was also a footpath for pedestrians. A different standard of care would apply depending on the answer to this question.  A higher standard of care would apply if the laneway was also a footpath. The City admitted at trial that the laneway was a commercial roadway, but no more than that. Since it had become customary for pedestrians to traverse the laneway, the Court found that it was both a roadway and a footpath. However, the Plaintiff argued that the standard of “gross negligence” required under the Municipal Act did not apply since the laneway was not a sidewalk. She argued for negligence simpliciter. Nothwithstanding the dual use of the laneway, the Court decided to apply the higher standard of gross negligence.

Jim Davidson

St. Jean (Litigation guardian of) v. Cheung, [2008] O.J. No. 4862 (ONCA) is a medical malpractice claim where the Plaintiff, after having become severely hypoglycaemic shortly after his birth, suffered severe brain damage allegedly as a result of a failure to properly treat the hypoglycaemia. Twenty years after his birth, a claim was commenced against the doctor and hospital who cared for the Plaintiff’s mother prior to his birth. The primary allegation was that as a result of the failure to diagnose and treat his mother’s gestational diabetes, the Plaintiff was born severely hypoglycaemic. Close to two years after the claim was commenced, Plaintiff’s counsel obtained a medical report indicating that the likely cause of the Plaintiff’s injury was the protracted hypoglycaemia that followed his birth which was inadequately treated. Further, the report stated that had the hypoglycaemia been treated more aggressively, the Plaintiff would not have suffered injury. Thus, a second action was commenced against the medical professionals who cared for the Plaintiff after his birth. The defendants in the second action successfully had the action struck on the basis that the limitation period had expired.

The Ontario Court of Appeal reversed the motion judge’s decision. The decision involved the application of s. 24(2) of the new Limitations Act. It was clear that the second action was based on acts or omissions which took place before the effective date of the new Act (Jan. 1, 2004). The dispute was over whether a proceeding had already been commenced prior to the effective date. If yes, then s. 24(2) applied to the second action. The Plaintiff argued that the first action counted as a proceeding. However, the Appeal Court rejected this since the first action did not concern any acts or omissions of the defendants in the second action. Thus, s. 24(2) was found to apply. The next issue was the correct application of s. 24(5) of the new Act. If the claim was discovered prior to the effective date, then the old limitation period applied. If it was not discovered before the effective date, then the new period applied and it would be assumed that the act or omission occurred on the effective date. The new defendants argued that the claim was not discovered prior to the effective date since the Plaintiff was mentally incompetent and could not have discovered the claim on his own. The Appeal Court disagreed and found that the Plaintiff’s litigation guardian had in fact discovered the claim before the effective date. The Court made a clear distinction between a litigation guardian’s ability to “discover” a claim vs. the triggering of the limitation period. It is settled law that even though the litigation guardian had discovered the claim, this did not trigger the limitation period in cases where the Plaintiff is incapacitated. The discovery of claims and the commencement of limitation periods are different, though related, notions and should not be conflated. Thus, the Court found the limitation period in the old Limitations Act applied. Since the old Act suspended the triggering of the limitation period due to mental incapacity, the second action was brought in time.

Jim Davidson

Day v. Wood, [2008] O.J. No. 3296 is an interesting insurance coverage decision from the Superior Court. The insured was an owner of a property which was rented to a third party. The third party moved out after a month and complained of health problems due to the exposure to mould and yeast, as well as property damage due to a flood in the premises. The third party sued the insured for these damages. The insured sought coverage under a rental dwelling policy from his insurer, but the insurer denied coverage on the basis of a mould exclusion. The insured brought an application against the insurer and argued that since 3 out of the 4 theories of liability against him were covered under the policy, a duty to defend was owed. The mould exclusion specifically excluded claims arising from any losses or claims arising out of fungus “regardless of whether other causes acted concurrently or in any sequence with the fungus”.  Thus, since mould was a concurrent or contributing factor, under the wording of the policy, if another cause acted concurrently with the mould, there was no coverage. However, the motions judge rejected the insurer’s argument, and found that a duty to defend was indeed owed.

Key to the judge’s decision was the fact that it was possible that the damages arose solely from non-mould related circumstances (e.g. excessive moisture levels from flooding). Thus, though it may be that mould was a contributing factor, it was also possible that it was a non-factor. The continuing lesson from this line of cases is that the duty to defend will be interpreted more broadly than the duty to indemnify. Further, claimants would be wise to advance multiple theories of liability in order to negate the application of the mould exclusion. Insurers, in defending these insurance applications, may want to consider the availability of extrinsic evidence in determining the true nature of the allegations in the claim.

Jim Davidson

The Ontario Court of Appeal has released its decision in the case of Garratt v. Orillia Power Distribution Corporation on May 29, 2008 . The decision is significant as it deals with the analytical approach required in determining the issue of reasonable foreseeability in negligence actions.

The action arose out of a bizarre accident which occurred on Highway 11 near Orillia. As the Plaintiff was driving her car underneath the Memorial Avenue overpass, a blue spider rope dropped from above and wrapped around her driver’s side mirror. While travelling 95 km/hr, she alleged that the rope wrapped around her mirror and caused her car to stop ”on a dime” approximately 80-100 feet north of the overpass. Even though her driver’s side mirror sustained only superficial damages, and the expert evidence that it was physically impossible for the rope to slow, let alone stop the car, the trial judge accepted the Plaintiff’s description of the accident and found that her injuries had been caused by the accident. Her damages were assessed at approximately $260,000.00.

The spider rope had been tied to a wooden guardrail post on the overpass by an Orillia Power work crew. The crew was in the process of installing new hydro lines in the area, and was using the spider ropes to string electrical conductors through the new hydro poles. On the day of the accident, the crew took its lunch break and tied four spider ropes to the post using bowline knots and a shackle. The trial judge specifically found that the rope had gotten loose not because it had been tied improperly, but because a vandal had tampered with the ropes and had allowed one to fall upon the highway. However, despite the fact that the accident was directly caused by the actions of an unknown vandal, the trial judge imposed liability on Orillia Power for failing to take better measures to prevent the actions of a vandal.

In an unanimous judgment, the Ontario Court of Appeal set aside the trial judge’s finding of liability, and dismissed the action with costs.  The Court found that the trial judge had erred in finding  that Orillia Power had breached its “own standards” since there was no evidence presented at trial of any industry standard for the securing of spider ropes when a work crew is absent from a job site. Further, the standard referred to by the trial judge was a general statement contained in the EUSA Rule book which simply stated the legal requirements for the standard of care at common law. Finally, even if there was such an industry standard (which was not proven), the trial judge erred by treating an industry standard as dispositive of a breach of the standard of care, thus amounting to a finding of strict liability.

The key to the Appeal Court’s decision was that nothing indicated the possibility, let alone the likelihood, of any acts of vandalism and hence the loss was not reasonably foreseeable. The Court noted that the act of mischief by the unknown vandal occurred in broad daylight, immediately beside a public roadway, and on a highway overpass frequently travelled by vehicles but rarely, if at all, by pedestrians. The project had been ongoing for several months without any previous acts of vandalism. Finally, the three Orillia Power lineman had a combined experience of over 60 years, and had never encountered any previous incidents of vandalism.

The Court of Appeal’s decision in Garratt is significant as it confirms that hydro utilities, and by extension construction companies, telecommunication companies, and other similarly situated entities, are not insurers against the acts of vandals. Further, it is a case of significance for the insurance bar in general, as it raises the bar with respect to the foreseeability of the acts of vandals and makes it clear that such a scenario will need to at least be a probable occurrence before the court will entertain a finding of liability.

At trial, Orillia Power was represented by myself. On appeal, it was represented by Alan Mark of Ogilvy Renault. The Court of Appeal’s decision can be found at: Garratt v Orillia Power OCA

Jim Davidson