Fall 2019 – Newsletter
Welcome to In|Sight, Rogers Partners’ quarterly newsletter that offers our unique perspective on relevant legal issues and the internal happenings of the firm.
The Nature of a Right to Sue Application
When the evidence in a personal injury action suggests that one or more of the parties may have been working when the accident occurred, insurers and defence counsel should ask themselves, is the action ripe for a Right to Sue Application (“Application”)?
A successful Application results in the plaintiff’s civil action being statute-barred. If unsuccessful, there are no cost consequences at the conclusion of the Application.
Under the Workplace Safety and Insurance Act, 1997, S.O. 1997, Chapter 16, Sched. A (“WSIA”), an Application can be commenced when the accident involves a worker who is injured in the course of employment, is employed by a Schedule 1 employer, and sues another Schedule 1 employer or a worker of a Schedule 1 employer.
The purpose behind this legislative provision is to ensure that workers who are injured in the course of employment will receive benefits through a no-fault insurance plan, while at the same time employers are protected against civil actions by those same workers.
Employers in certain industries in Ontario are statutorily obligated to participate in the workplace compensation scheme and pay premiums to the Board. The business activities of those employers listed as Schedule 1 employers are divided into nine industry classes.
However, what is required by statute does not always happen in practice. It is not unusual for the Board to have no record of registration by the parties alleged to be employers. The WSIB status is determined by the type of business carried on and whether it is listed in the Schedules, not by the contributions to the insurance fund.
On a Right to Sue Application, the Tribunal considers the nature of the employment relationship, as well as the place, time and activity surrounding the accident.
If the plaintiff in the civil action is found to be an independent operator as opposed to a worker, the plaintiff will be allowed to continue his or her civil action. Correspondingly, where the place, time and activity giving rise to the accident are not sufficiently connected with the employment itself, the plaintiff will be allowed to continue his or her civil action.
Vice Chair Crystal recently considered an Application in Decision No. 550/19 [2019 ONWSIAT 1844, (Ont. W.S.I.A.T.)], which resulted in a favorable outcome for the insurer of TC Inc., a trucking company, against Mr. C, a long-haul truck driver. She determined that Mr. C’s right to sue TC Inc. was taken away by the WSIA.
The Civil Action
The civil action between Mr. C and TC Inc., arose out of a slip and fall accident on January 11, 2014 (the “accident”).
On the accident date, Mr. C had completed a long haul delivery and had returned the truck he was driving to a yard owned by TC Inc. After parking the truck, Mr. C called his daughter to come pick him up at the yard. Once he was in her vehicle, he thought that he left behind a personal belonging near the truck.
Mr. C then got out of his daughter’s vehicle, and looked for the personal belonging that he thought that he left behind. He realized that he was mistaken about having left anything behind.
On his return trip to his daughter’s vehicle within the trucking yard, he slipped and fell on ice, and broke his leg.
Issues on the Application
The two main issues for the Application were whether Mr. C was an independent operator or a “worker” for TC Inc., and whether the accident occurred while he was in the course of his employment.
Independent Operator versus Worker
Vice Chair Crystal considered Operational Policy Manual Document No. 12-02-1, titled “Workers and Independent Operators” to determine whether Mr. C was a “worker” for TC Inc., or an independent operator.
Some features of the policy document include providing definitions of a “contract of service,” or employer-employee relationship, and a “contract for service,” or a business relationship. The policy also provides information about the “organizational test,” which is a basis for determining whether a party is an independent operator or a worker.
The organizational test recognizes features of control, ownership of tools/equipment, chance of profit/risk of loss, and whether the person is part of the employer’s organization, or operating their own separate business.
Vice Chair Crystal stated that there were mixed factors of Mr. C having both “worker” and independent operator status; however, overall the evidence supported that Mr. C was a “worker” for TC Inc. She highlighted the following factors in support of her determination:
- C worked on a full-time basis for TC Inc., typically working 70 hours or more, exclusively for TC Inc. Despite Mr. C being at liberty to work for others, he never did so;
- The truck driven by Mr. C while performing his work was owned by TC Inc. Since he was not the owner of the truck, he did not bear significant financial risk, and did not have a significant opportunity to obtain profit or bear a loss;
- TC Inc. paid for fuel, insurance and vehicle maintenance;
- C drove the assignments provided to him by TC Inc., and his earnings were essentially determined by the amount of driving he was assigned, thereby limiting his opportunity for profit or loss;
- C rarely refused to a haul a load for TC. Inc.; and
- Despite Mr. C being responsible for damage which he caused to the truck or freight, this occurred infrequently. Therefore, this fact did not significantly change Mr. C’s opportunity for profit or loss.
There was evidence that Mr. C established a corporation and that TC Inc. did not make source deductions from his earnings. Vice Chair Crystal acknowledged that this may reflect an intention of the parties to establish a relationship in which Mr. C was an independent operator.
However, she stated that those factors were superseded by the organizational test, which attributes weight to the level of control exercised by the respective parties and to the question of whether the subject party has an opportunity for profit or loss.
Course of Employment
Mr. C argued that he was not in the course of his employment at the time of the accident because: 1) 15 to 20 minutes had passed between him parking the truck and completing his workday; and 2) the accident occurred when he was undertaking a personal activity (i.e., leaving his daughter’s vehicle to retrieve what he believed to be a personal item), which was not related to work.
Vice Chair Crystal applied the “premises test” to conclude that Mr. C was in the course of his employment at the time of the accident.
The premises test establishes that “…a personal injury by accident sustained on the employer’s premises occurs in the course of employment — unless the worker’s activity is sufficiently remote from normal employment functions that the activity and resulting injury cannot be characterized as reasonably incidental to employment…”
Vice Chair Crystal acknowledged that this test typically reflects circumstances where a worker has left a workplace which is a building and has fallen in an adjacent parking lot. However, she stated that Mr. C leaving his truck and falling in the employer’s truck yard is comparable to the “premises test” and the same principles should be applied.
Vice Chair Crystal found that the only reason that Mr. C was present in TC Inc.’s truck yard was that he was leaving his employment at the end of his work assignment. She concluded that the number of minutes that passed before his daughter arrived to pick him up for work does not change the fact that he was in the yard for reasons that were related to his work.
Further, she stated that retrieving a personal item in these circumstances was reasonably incidental to leaving work, and leaving work was reasonably incidental to his employment.
When considering whether to pursue a Right to Sue Application, insurers and defence counsel are reminded to look beyond the intentions of the parties, contracts, and tax returns, and evaluate the true nature of the employment relationship.
This case demonstrates that an Application may still be successful, even when faced with a party having characteristics of both “worker” and independent operator status, and also when there is doubt that the “place, time, and activity” giving rise to the accident are sufficiently connected with the employment itself.
The benefit of a positive outcome on an Application should not be underestimated. After all, a successful Application results in the exposure in a civil action being avoided altogether.
By David Rogers
The Government of Canada recently announced that it is moving forward with its mandate on the use of Electronic Logging Devices (ELDs) for all federally regulated commercial truck and bus operators by June 12, 2021.
Although this means a two-year phase-in period for full compliance, Canadian commercial carriers will need to begin to fully transition to these devices as soon as possible.
An ELD is a tamper-resistant piece of hardware that is integrated into a commercial vehicle’s engine by attaching to the Engine Control Module (ECM). The device can automatically collect the driver’s hours of service by using both driver inputs and information collected from the ECM.
The purpose is to ensure commercial drivers are driving within their daily limits and are accurately logging their working hours behind the wheel.
The ELD stores the information in a standardized format that no one can alter. The stored information can then easily be transferred to an officer during an inspection, or can be used by police when investigating an accident.
It is hoped that mandatory use of ELDs will help ensure compliance consistency throughout North America, and should result in considerable savings to commercial carriers by reducing administrative burdens.
Eliminating the need for paper daily logs will in turn prevent errors and logbook tampering, and will reduce the time enforcement officers need to verify regulatory compliance.
Currently, commercial carriers who cross into the United States are already required to have ELDs installed pursuant to U.S. regulations. Commercial carriers in Canada that do not cross into the United States on the other hand are likely using a form of computerized logging device or perhaps old fashioned, paper logs to self-report their on-duty, off-duty and daily driving time.
Well, the days of the paper log book are quickly coming to an end. Carriers need to move now to adopt ELDs and should consider updating their company policies and procedures and be ready to provide training to employees on new considerations in order to ensure full compliance.
By Dana Eichler
Taylor v. Canada (Health) Revisited
The Ontario Court of Appeal in Taylor v. Canada (Health) dealt with the apportionment of fault to non-parties, and also the ability of a defendant alleged tortfeasor to claim contribution and indemnity against another alleged tortfeasor pursuant to Section 5 of the Negligence Act. 
In Taylor, the statement of claim specifically plead that the defendant was liable only for “those damages that are attributable to its proportionate degree of fault”. The Court of Appeal held that no contribution rights arose because the defendant would not be required to pay more than its proportionate share of the plaintiff’s potential damages.
As a result, the Court of Appeal upheld the motion Judge’s striking of a third party claim as disclosing no reasonable cause of action when considering Section 5 of the Negligence Act.
The Purpose of Partial Settlement Agreements
Since Taylor the Supreme Court of Canada has reviewed the purpose of Partial Settlement Agreements (eg. pierringer agreements) and their essential provisions in the case of Sable Off-Shore Energy Inc. v. Ameron International Corp.
One of these noted essential provisions is that the plaintiffs continue their action, but limit their claim to the non-settling defendants several liability.
In review of the essential provisions of a partial settlement agreement, the Ontario Court of Appeal in the recent case of Endean v. St. Joseph’s General Hospital, 2019 ONCA 181 discusses the resulting bar order as fulfilling the purpose of putting the non-settling defendant in the same economic position as it had been, if it had to pay the plaintiff in full, and recover indemnity from the settling defendant (ie simply removing the settling defendant from the payment equation).
The Question in Endean
In Endean, the Court was asked to consider whether following a pierringer agreement (between the defendant oral surgeons and the plaintiffs) and resulting amendment of the statement of claim by the plaintiffs, the only remaining defendant in the action (the hospital) would also remain liable for damages caused by non-party tortfeasors.
At trial in 2017, the hospital was found 5% at fault. 20% was apportioned to the oral surgeons and 50% to the manufacturer, with 25% to the distributor. Neither the manufacturer nor the distributor were ever parties to the actions and both were in fact bankrupt.
The plaintiffs had entered into a partial settlement agreement in 2013 with the oral surgeons. They maintained their action against St. Joseph’s Hospital. The partial settlement agreement provided for dismissal of the action against the oral surgeons, and resulted in the dismissal of the crossclaims between the hospital and oral surgeons.
The statement of claim was amended to limit the claim against the hospital to its several or proportionate share of joint liability to the plaintiffs, and the plaintiffs claims were restricted “such that the plaintiffs would only claim those damages, if any, arising from actions or omissions of the defendant hospital”.
On appeal, the hospital relied on the terms of the partial settlement agreement, the consequential amendment of the statement of claim, and the decision in Taylor to argue that the plaintiff’s recovery was restricted to the 5% apportionment of fault against the hospital.
Justice Zarnett, in writing for the Court of Appeal, found that the trial judge erred in apportioning fault to the manufacturer and distributor and then reducing the recovery of the plaintiffs as result of that apportionment.
Justice Zarnett writes that the right of indemnity is not something which affects the plaintiffs. The Court, in return to Taylor, notes that if the second wrong-doer is not pursued by crossclaim, third party action or separate action or, if the second wrong-doer pursued is not credit-worthy or insured, the first wrong-doer will still have to pay 100% of the plaintiff’s damages and recover no indemnity.
Athey v. Leonati Revisited
The Court of Appeal states that in practical terms the full-compensation principle set out in Athey v. Leonati, provides that the plaintiff may recover 100% of their losses from any defendant who caused or contributed to a particular injury, regardless of the degree of fault of that defendant, and regardless of whether others, parties or non-parties, were also at fault.
The Court in Endean reviews the resulting interplay with Section 1 of the Negligence Act, which provides that although the defendants remain jointly and severally liable to the plaintiff, each can exercise their statutory right to have fault apportioned among the wrong-doers such that indemnity will flow between them to their proportionate degrees of fault.
Endean Contribution and Indemnity Context
In Endean the Court notes that prior to the partial settlement agreement, the hospital and oral surgeons had crossclaimed against each other, and were therefore both at risk of having to pay 100% of the plaintiff damages. At the time of the partial settlement agreement, neither of them had proceedings for indemnity against the manufacturer or distributor and further, there would be no practical means of collecting any indemnity even if they had.
Furthermore, while the partial settlement agreement in Endean provided for the plaintiffs’ claim to be amended to claim only from the defendants those damages, if any, arising from the acts or omissions of the defendant hospital, the court found those terms must be read in light of the context of the other provisions of the settlement agreement which demonstrated that it was only intended as a term of settlement that the plaintiffs not recover from the hospital anything attributable to the fault of the oral surgeons.
These terms included a provision of the partial settlement agreement, and resulting “bar order”, which read that the apportionment of fault would be “among all defendants named in the statement of claim”.
Further terms considered that the plaintiffs might be members of a class action against the distributor, and provided that the plaintiffs would reduce their claims against the hospital to take into account “the amounts they recovered from the distributor under the class action settlement”.
The Court found that, taken as a whole against the evidentiary background, the partial settlement agreement and amended statement of claim did not require that the plaintiffs reduce their claims against the hospital by the proportionate fault of the manufacturer and distributor and thus, improve the position of the hospital.
In other words, the agreement and amendment did not authorize reduction of recovery to the plaintiffs due to the fault of persons other than the settling defendants (the oral surgeons).
Proportional Payment of Plaintiff’s Damages
However, because prior to the partial settlement agreement, the hospital and the oral surgeons had each crossclaimed against the other and were both in the same positions, vis à vis the manufacturer and distributor, the Court accepted the hospital’s argument on their proportional payment of the plaintiffs’ damages.
The Court held that because the partial settlement agreement was designed to protect the hospital from paying more than its proportionate share, to the same degree as its prior crossclaim against the oral surgeons would have, were the hospital be required to pay 80% of the plaintiffs’ damages (100% less the 20% apportioned to the oral surgeons), the hospital would be paying more than its proportionate share relative to the fault of the oral surgeons.
As a result, the Court of Appeal replaced the 5% payment of the plaintiff’s damages by the hospital to 20% (based on the trial Judge’s findings as between the hospital and oral surgeons – the surgeons being four time more at fault).
Ultimately the Court of Appeal found that the trial judge erred in relying on Taylor in these circumstances. While Taylor is authority for the apportionment of fault to non-parties, Justice Zarnett writes that the issue is not whether or not a court may do so, but under what circumstances the Court should do so.
The Court tells us in Endean that the proposition in Taylor is not so broad that it should entitle the apportionment of fault to non-parties and reduce the plaintiff recovery by that apportioned share of fault in all cases. The Court does not tell us however that this can never happen. Taylor remains good law in this contextual approach to partial settlement agreements.
Last month, CBC News published an article about an Ontario man, Robert Pugh, whose application for life insurance was denied on the basis that he suffered from generalized anxiety disorder.
The 32 year old advised Sun Life Financial that he took medication and CBD oil for the condition, under the supervision of his doctor, and had received treatment since his late 20s.
What made the story interesting, in part, was the fact that it was published at all. It is accepted practice that life and disability insurance policies differentiate between individuals on the basis of past medical history. If an applicant has a history of diabetes, for example, she can expect to pay more in life insurance premiums.
It comes as no surprise to the public that individuals with certain terminal conditions are denied life insurance altogether.
For some reason, however, the fact that Mr. Pugh’s application was denied caught people’s attention. It may well be that the uncomfortable feeling aroused by Mr. Pugh’s situation has to do with the fact that the increasing public acceptance of mental health issues has come hand-in-hand with the expansion of the concept of human rights into the minutiae of our civil society.
A generation ago, public discussion of ‘human rights’ was more likely than not to relate to religious persecution, intrusions on liberty, or suffrage.
Fast-forward to 2019, and the ‘human rights’ cases we hear about in the news often relate to the dismantling of systemic barriers to inclusion within civil society, and very often to the provision of services to individuals.
Seen in this way, the transparent discrimination based on mental health in the context of an application for insurance may strike some as jarring. The story raises interesting questions about how it is that we conceptualize disease, insurance itself, and the extent to which the insurance industry is premised on a fragile tolerance of risk and payment.
It may initially come as a surprise to some that the Ontario Human Rights Code explicitly permits insurers to differentiate on the basis of age, sex, marital status, family status, or disability, when entering into a contract of automobile, life, accident or sickness, or disability insurance. Section 22 of the Code specifically sets out this exception for insurers, so long as such differentiation is reasonable and based on bona fide grounds.
The Supreme Court of Canada in 1992 addressed the issue of differentiation amongst insureds in the case of Zurich Insurance Co. v. Ontario (Human Rights Commission). That case was a challenge to the insurer’s policy of charging higher premiums for automobile policies insuring men under the age of 25.
The Supreme Court agreed with the Ontario Court of Appeal that an insurer is permitted to discriminate based on age in this context. The Court noted that the Code permits such prima facie discrimination, so long as it meets the standard of being reasonable and based on bona fide grounds.
In support of the reasonableness of Zurich’s policy, the Court pointed to actuarial evidence which showed that single male drivers aged 25 or younger represented the highest claim frequency, highest loss per car insured, and highest average claim cost of any category of driver.
Interestingly, the Court rejected the suggestion that there exists a reasonable alternative to the insurer’s policy of charging increased premiums. It was argued that it would be simple for the insurer to have the category of young male drivers subsumed by the wider pool of insureds, so that the risk and premium burdens would be shared more equitably throughout the pool.
In rejecting this suggestion, the Court indicated the following:
If the premiums of Mr. Bates’ class are arbitrarily spread out amongst other classes, the net effect of this change is that drivers in other classes will be forced to subsidize further a group of drivers who already fail to pay premiums sufficient to cover their insurance losses…
What is noteworthy about this passage is that it appears to challenge one of the foundations of the concept of insurance itself. It questions how far it is that we are prepared to share risk.
This question is of paramount importance when considering whether, for example, we wish to set up a system of insurance that prevents differentiation on the basis of a pre-existing diagnosis for generalized anxiety, and whether we are ready and willing to share more widely the risk and premium burden of that group.
While the Supreme Court refused to entertain the suggestion that the insurance risk posed by young male drivers should be shared more broadly than was the industry standard at the time, the idea of shared risk is the necessary underpinning of the concept of all insurance.
Insurance is shared risk, and our current system of insurance relies on some amount of subsidy from low-risk to high-risk insureds. In the automobile context, this means that low-risk drivers in general subsidize high-risk drivers. In the life and disability insurance context, this means that young and healthy individuals in general subsidize others.
Looking at the hypothetical extremes of a group risk model, on the one hand we have a system with no insurance. In such a world, each individual bears her own risk for disaster, be it in the form of having to pay for damages caused by her negligence, or having to pay the entire cost of some misfortune that befalls her.
At the other end of the spectrum is blanket insurance coverage, borne equally by all and available to all. In this system, there would be no differentiation of premiums; a low-risk individual pays as much as a high-risk individual.
Our current life insurance model lies between poles. Insurers are permitted to differentiate between individuals on the basis of perceived risk. The issue, of course, is to come to terms with how much differentiation we wish to tolerate as a society, as the more widely and aggressively such differentiation is employed, the closer we get on the spectrum to the model where risk is no longer being shared by the group, but is instead borne by each individual.
A purist may ask why it is that any differentiation should be tolerated. If insurance is the spreading of risk across society, is it not more true to the form of insurance that everyone (or almost everyone) be covered, with the risks and premiums being shared evenly? Would the costs of such a model not be outweighed by the benefit of ensuring that there is appropriate coverage for all potential personal disasters?
The answer to ‘why not’ may lie in the extent to which self-interested individuals are prepared to buy into a system of equally-shared risk. Most people do not give much thought to the extent to which they may be subsidizing other individuals who may be higher risk, but when they do it may be accompanied by a sense of unfairness on the part of low-risk individuals who feel that they disproportionately contribute.
The true value of allowing for differentiation may then be to placate those who feel that they are unfairly over-contributing to the pool of insurance funds. In other words, the answer to, ‘why am I paying so much for insurance which is mostly being used by others?’ can be answered by, ‘you are paying much less than you would were you a higher-risk individual.’
Without some amount of differentiation to quell such grumblings on the part of low-risk contributors, then when premiums are too high there could be a risk of widespread opting out. If a sense of excessive unfairness starts creeping into the system, there is a risk of it crumbling.
This underscores the fragility of a system of insurance that relies on optional participation. While contributors to the insurance pool are prepared to abide by some level of disproportionate payment on the risk that some misfortune may befall them, there is a point at which individuals want some reassurance that they are paying less than higher-risk individuals.
There may be an element of cynicism in this view of our loose loyalty to collectivism, but it is this author’s opinion that self-interest is clearly a part of the policies surrounding insurance funds, and that a degree of differentiation is a tool to ensure acceptance by individuals in a system of shared risk – and shared cost.
More Precise Differentiation, Not Less
So where does that leave individuals like Mr. Pugh, and why was his application rejected outright?
A 2016 study from Cambridge University on mortality rates among people with anxiety disorders revealed that such disorders significantly increased mortality risk. Such scientific support would likely be enough for Sun Life to justify differentiation under the Code, and may well have formed the basis for the insurer’s refusal of the application.
Why wasn’t Mr. Pugh told that he could purchase coverage at an increased premium? An optimistic view is that our understanding of mental health issues is still in its infancy, and that with further time and study, science will gain a more complex and nuanced understanding of the magnitude of risks involved. Insurers assessing risks and setting premiums may then follow suit.
As there are varying levels of risk with different cancer diagnoses, it appears unlikely that in the future all sufferers of generalized anxiety will continue to be completely denied life insurance.
It is unlikely that there will be an overhaul of the system of differentiation to a more egalitarian model. The more likely outcome is more precise differentiation by insurers on the wings of more understanding of mental health concerns.
*The author thanks Matthew Umbrio, student-at-law, for his valuable research for this article.
Discovery can sometimes make or break a case.
There has been discussion of increasing the monetary limit of the Ontario Small Claims Court from $25,000 to $50,000. With this potential change, heightened consideration needs to be given to discovery rights at the Small Claims Court.
While the Small Claims Court and Ontario Superior Court of Justice share procedural similarities, a notable difference is the discovery process, or lack thereof, at the Small Claims Court.
The efficiency of the Smalls Claims Court process that results from the lack of oral and documentary discovery does not come without disadvantage. The lack of discovery is an especially pertinent issue when a plaintiff or defendant desires evidence from a non-party to an action.
In the Superior Court, a party to an action can seek production of documents from a non-party by bringing a Rule 30.10 motion.
In the Small Claims Court, this avenue is unavailable, although it is not uncommon to see counsel attempt to argue otherwise.
Jurisdiction to Order Production from Non-Party
Elguindy v. St. Joseph’s Health Care (2016 ONSC 2847)
In Elguindy v. St. Joseph’s Health Care, the Divisional Court addressed whether the Small Claims Court has jurisdiction to issue an order for production of documents from a non-party.
The plaintiff commenced an action in the Small Claims Court against a hospital, a nurse and two physicians as a result of a cancellation of a medical procedure. At the mandatory settlement conference, the Deputy Judge ordered among other things, production of the plaintiff’s medical records and the plaintiff’s expert reports that were intended to be relied upon at trial.
The Superior Court asserted that, while there is no provision in the Rules of the Small Claims Court for discovery generally, Rule 13.05(2)(a)(vi) provides that a judge conducting a settlement conference may make an order relating to the conduct of an action that the court could make, including directing production of materials.
As such, the Superior Court held that the Deputy Judge had jurisdiction to order the plaintiff to produce the expert reports that were intended to be relied upon at trial.
The Superior Court was careful to say, however, that Rule 13.05(2)(a)(vi) only applies in the context of a settlement conference and only permits an order for production by a party to the action as part of the settlement conference.
In regard to the issue of whether the Small Claims Court has jurisdiction to order documentary production from a non-party, the Superior Court held that the Small Claims Court has no such jurisdiction.
Riddell v. Apple Canada Inc. (2016 ONSC 6014)
In Riddell v. Apple Canada Inc., the Divisional Court addressed the issue of jurisdiction of the Small Claims Court to order discovery post Elguindy.
In Riddell, the plaintiff commenced an action against the defendant as a result of an iPhone overheating, causing severe burns to the plaintiff’s arm. The defendant was successful in obtaining an order of the Deputy Judge to have the plaintiff produce the iPhone in question for the purpose of the defendant having the iPhone examined by an expert.
The Superior Court upheld the Deputy Judge’s order in light of the fact that the examination of the iPhone was critical to a proper determination regarding causation of damages. In doing so, however, the Superior Court cautioned that such orders should be made sparingly and only when justice cannot possibly be done between the parties without such discovery.
The Superior Court distinguished the issues in Riddell from that of Elguindy, noting that favour is to be given to not making pre-trial orders for discovery type relief, especially when those orders seek information from non-parties to an action, as was the case in Elguindy.
This decision was upheld by the Ontario Court of Appeal (2017 ONCA 590).
Schafer v. Wagner (2016 CanLII 90738)
Post Riddell and Elguindy, the Ontario Small Claims Court in Schafer v. Wagner, dismissed a motion seeking an order to compel discovery of the plaintiff’s former property, damage to which gave rise to the action.
The Court commented that the case law has established that the Small Claims Court has no jurisdiction to entertain motions under Rules 30.10 and 32 of the Rules of Civil Procedure, although Riddell may have opened the door to some degree for Rule 32 motions (i.e., inspection of property).
Nevertheless, the Court held that because the property in question was no longer owned by the plaintiff, to grant the order sought by the defendants the Court would, in effect, have to order inspection of property of a non-party to the action.
The Court confirmed that the Small Claims Court has no jurisdiction to make such an order. The Court further held that even if the court had jurisdiction, the relief sought was unwarranted in this instance.
In conclusion, the case law indicates that the Small Claims Court has limited jurisdiction to order discovery of documents and discovery of property.
Jurisdiction to order discovery is available in very limited circumstances only as between the named parties to the action in the context of a settlement conference when justice cannot possibly be done between the parties without such discovery.
In situations where a party to an action seeks production of property or documents from a non-party to the action, dealt with under Rule 30.10 in Superior Court, the jurisprudence has established that the Small Claims Court does not have jurisdiction to make such an order.
Accordingly, the type of evidence that will be needed and from whom are important considerations in determining the appropriate forum to commence an action.
When commencing an action in Small Claims Court, strategy must be developed accordingly on the part of both the plaintiff and defendant to ensure the necessary evidence is accessible to establish a case and/or defense without requiring judicial intervention to obtain of evidence from a non-party.
The Ontario Superior Court of Justice recently dealt with the issue of what can be disclosed as evidence to the jury with respect to a plaintiff’s accident benefits settlement for the same accident.
What follows is a brief summary of the decision in Farrugia v. Ahmadi, 2019 ONSC 4261, and the issues addressed.
The plaintiff had been involved in an accident in December 2013, and in March 2016, settled her accident benefits claim for a total of $1.8 million. The breakdown was as follows:
- $100,000 for all past and future caregiver benefits;
- $700,000 for all past and future medical benefits;
- $750,000 for all past and future attendant care benefits;
- $75,000 for all past and future housekeeping and home maintenance benefits; and
- $175,000 for legal expenses, past incurred expenses and disbursements
The plaintiff brought a tort action seeking damages from the driver and owner of another motor vehicle involved in the accident.
During the trial, counsel for the defendants made known their intention to cross-examine the guardian of the plaintiff’s property, as well as the plaintiff herself, about the total amount received for various accident benefits under the accident benefits settlement. Plaintiff’s counsel objected.
The defendants’ position was that questions in respect of accident benefits were based on the defence that the plaintiff failed to take reasonable steps to mitigate her damages.
The defendants argued that the plaintiff could have taken reasonable steps by using funds received from her accident benefits settlement to reduce her loss and the damages sought in the tort action.
The plaintiff’s position was that the jury had all of the evidence from the plaintiff’s guardian of property that they needed to assess the mitigation issue, namely, that the jury had heard that $750,000 had been paid for attendant care benefits and had been invested in a structured settlement.
The plaintiff also submitted that the plaintiff could not obtain double recovery of amounts the jury may award for particular damages in the tort action to the extent that she had already received accident benefits for the same purposes. Counsel for the plaintiff noted that those accident benefits would be deducted as collateral benefits from any damages awarded as a matter of law.
Reasoning: Prejudicial Effect vs. Probative Value
Justice Emery noted that all questions to a witness in cross-examination must be relevant, unless the prejudicial effect of those questions outweighs their prohibitive value, or the answer to the question is protected by privilege.
Reasoning: Proper Purpose
Justice Emery also noted that, in his view, the law permits counsel to ask a question or refer to the receipt of payment or settlement for accident benefits during the cross-examination of a witness when the question or reference is posed for a proper purpose.
That evidence should be accompanied with the appropriate instruction to the jury that collateral benefits will be deducted by the trial judge as a matter of law after the verdict is delivered.
Justice Emery added that the fact that the plaintiff had received or settled her accident benefits claim “should not be used as a basis to defeat the purpose behind receiving the collateral benefits, or the assessment of damages in a tort action.”
However, he also noted that that fact should not be shielded from relevant questions “that are asked in good faith, or at the expense of the defendant to properly cross-examine a witness to answer the case it must meet.”
Justice Emery denied permission to the defendants to ask about the totality of the plaintiff’s accident benefits settlement, given the prejudicial effect it would create in the minds of the jury compared to its probative value, and the lack of materiality for asking those questions.
He noted that the issue of mitigation was not pled with enough specificity and that there was no prior evidence in the trial that the use to which the plaintiff had put the settlement funds could lessen, reduce or mitigate her loss or claim for damages. He reasoned that permitting a question about the totality of the accident benefits settlement received and related questions would expose the plaintiff to double jeopardy.
Justice Emery ruled that the defendants could ask questions on the caregiver expenses, attendant care expenses, and housekeeping and home maintenance expenses received, as they had been expressly pleaded by the plaintiff and denied by the defendants.
He noted that “this exchange of pleadings but those benefits in dispute, making questions on each of them relevant for the jury to hear.” He also noted that these questions were relevant to prior evidence.
Justice Emery also reiterated that it is appropriate to instruct the jury during a charge that they are to make awards on a gross basis with no deduction for any collateral benefits.
The Farrugia decision is helpful in clarifying how evidence pertaining to collateral benefits can be used in tort jury trials.
Catalyst Capital Group Inc. v. VimpelCom Ltd.: A Consideration of “Obiter” and Obiter Commentary on Appellate Review
By Stephen G. Ross and Ankita Abraham, Student-at-Law
The Ontario Court of Appeal recently dismissed an appeal brought by the plaintiff, Catalyst Capital Group Inc., which stemmed from a series of lawsuits arising from the plaintiff’s attempted purchase of Wind Mobile Group from VimpelCom Ltd. in 2014.
This is an interesting case as the Court considered a number of legal concepts such as issue estoppel, cause of action estoppel and abuse of process. The Court also commented on two other propositions – what is considered “obiter” and what is the scope of appellate review – which were somewhat surprising in nature.
What follows is a brief summary of the decision and commentary on the two legal principles of what is “obiter” and the scope of appellate review.
This case arises out of the failed attempt by the plaintiff, Catalyst Capital Group Inc., (“Catalyst”) to purchase Wind Mobile Group from VimpelCom Ltd. (“VimpelCom”), which was later sold to a group of purchasers (the “Consortium”).
As such, the plaintiff commenced a number of lawsuits, the first of which was (the “Moyse Action”) against Brandon Moyse (“Moyse”), a junior analyst at Catalyst. He left the company during their negotiations with VimpelCom Ltd. to work at one of the members of the Consortium, West Face Capital Inc. (“West Face”).
In short, an employee (Moyse) of the plaintiff went to work for the company that ultimately bought Wind Mobile Group during the time the plaintiff was still trying to purchase Wind Mobile Group.
This matter went to trial in June 2016 before Justice Newbould. The trial judge dismissed the Moyse action in its entirety as Catalyst failed to make out the three elements of the breach of confidence claim. In February 2018, the Ontario Court of Appeal also dismissed Catalyst’s appeal of Justice Newbould’s decision on its merits.
The second and current action (“current action”) was commenced five days before the trial of the Moyse Action. Catalyst in the current action, having failed in their suit against their former employee, tried to sue the successful purchaser on causes of action arising from essentially the same factual matrix.
In the current action, Catalyst alleged breach of contract, breach of confidence, conspiracy and inducing breach of contract against West Face (the successor employer of Moyse) and a number of other defendants. The defendants were successful in dismissing the action on the basis of issue estoppel, cause of action estoppel and abuse of process.
The Court of Appeal dismissed the appeal and found that the trial judge did not err in striking the claims on the basis of issue estoppel and abuse of process, as these issues had essentially already been determined in the Moyse Action.
What is “Obiter”?
In the Court of Appeal’s analysis as to whether the trial judge erred in dismissing the current action, the Court of Appeal analyzed the issue of which findings are considered as “obiter”.
On appeal, the plaintiff argued that the findings in the Moyse action that affect the current action were in obiter and collateral (and hence not binding) because they were not necessary to the judge’s decision.
The plaintiff argued that the central issue with respect to the Moyse Action was whether Moyse passed confidential information to West Face and that any other analysis and findings by the trial judge should be treated as obiter (and hence not caught by the doctrine of estoppel).
The plaintiff’s arguments appeared consistent with the traditional understanding of “obiter”. For example, when a case deals with a situation where there are two separate points and the first point is dispositive, the analysis with respect to the second point may well be treated as obiter as it was strictly speaking, not necessary for the disposition of the case.
The Court of Appeal rejected this submission stating that if both points are before the Court and are dispositive, then neither is to be considered “obiter”.
The Court notes that the plaintiff’s interpretation (the traditional understanding) of “obiter” would lead to absurd consequences as it would make the applicability of the doctrine of issue estoppel dependent upon the order in which the Court chooses to address issues in its reasons.
The Court’s clarification with respect to the concept of “obiter” is of significance as it not only alters the traditional understanding of what is considered “obiter”, but also broadens the scope of what is considered as a binding judicial precedent.
Scope of Appellate Review
The Court of Appeal in this decision also makes an interesting observation while noting that there is a limited scope of appeal by the Court of Appeal when it comes to reviewing a lower court’s exercise in discretion. The Court somewhat surprisingly suggests that the scope of review is greater when the lower Court is an administrative tribunal.
This comment by the Court seems rather counterintuitive as it relates to the level of deference afforded by a reviewing Court to an administrative tribunal. Courts traditionally have afforded greater deference to administrative tribunals, particularly when they are interpreting their home statue.
Here the Court of Appeal suggests that at least with respect to the interpretation of issue estoppel, the level of deference would be less for an administrative body rather than greater.
This suggestion by the Court, although stated boldly as a stand alone proposition, may well have been advanced by the Court in that instance, as it was the Court’s view that the interpretation of issue estoppel did not fall within the particular expertise of many, if not most, administrative bodies. As such, Courts are to be given a greater scope of review.
However, even that interpretation of the Court’s comments does not seem to be well supported in the case law.
In our review of the case law, we were unable to find a case which clearly supports the proposition and instead found that, in many instances, administrative tribunals were awarded judicial deference even when analyzing technical legal or equitable issues.
For example, in Nor-Man Regional Health Authority Inc. v Manitoba Association of Health Care Professionals,  3 SCR 616, the Supreme Court of Canada, found that labour arbitrators are awarded judicial deference to adopt and apply common law and equitable principles within their distinctive sphere.
Nevertheless, perhaps there is some force to the position advanced in certain circumstances. For example, it may be that certain administrative tribunals (such as those presided over by non-lawyers) may well not have sufficient expertise in equitable remedies to be afforded deference in that context.
In the decision of United Brotherhood of Carpenters and Joiners of America, Local 579 v. Bradco Construction Ltd.,  2 SCR 316, Sopinka J. notes specifically that in matters that do not fall within the expertise of the arbitrator, those findings would be reviewable on a standard of correctness. Therefore, the scope of review to be greater in those circumstances.
It should be noted that this remark by the Court is “obiter”as the case did not deal with an administrative tribunal. Nevertheless, the suggestion by the Court regarding deference could dramatically alter what the scope of appellate review of administrative tribunals.
The resolution of this apparent conflict may need to await a case which turns on the discretion between the level of deference owed on an appeal to a Court versus an administrative tribunal.
In conclusion, this decision brings up a number of interesting legal points and concepts, such as the two discussed in this article, both of which seemed counterintuitive.
We hope this article proves helpful with respect to what the Court considered as “obiter” and the scope of appellate review of an administrative body.
 Catalyst Capital Group Inc. VimpelCom Ltd., 2019 ONCA 354 [VimpelCom ONCA].
 Catalyst Capital Group Inc. v. Moyse, 2016 ONSC 5271.
 The Catalyst Capital Group v. Moyse, 2018 ONCA 283.
 The Catalyst Capital Group Inc. v. VimpelCom Ltd., 2018 ONSC 2471.
 See Canada Inc. V. Apotex Inc 2011 FCA 300, as an example of the traditional understanding of “obiter” in these circumstances.
 Membery v. The Great Western Railway co. (1889), 14 App. Cas. 176 (H.L.) at p. 187.
 VimpelCom ONCA at para 47.
 See Belairdirect Insurance v. Dominion of Canada General Insurance Co. (Travelers) 2012 ONCA 101 at para 58, where the Court of Appeal specifically states that there is “no reason to displace the deference owed to the arbitrator, who was applying his home status and his specialized expertise”.
 At para 53.
 At p. 336.
- In June 2019, Stephen Ross was elected to the Board of Directors of The Advocates’ Society.
- An article written by David Rogers called “Liability admissions in sexual abuse claims” was recently published in Canadian Employment Law Today.
- Our new articling students started with the firm in July 2019. We are delighted to welcome Ankita Abraham, Micah Pirk O’Connell, and Matthew Umbrio.
- Rogers Partners was a proud sponsor of the Women in Insurance Cancer Crusade Golf Tournament in July 2019. Tom Macmillan, Rebecca Moore, Andrew Yolles, and Meryl Rodrigues participated in the tournament.
- In July 2019, The Lawyer’s Daily published an article by Tom Macmillan called “Upcoming Changes to insurance industry in Ontario”.
- An updated paper by Stephen Ross and Meryl Rodrigues on the interaction between collateral benefits and tort claims has been selected for publication in the Oatley McLeish Guide to Motor Vehicle Litigation.
- Brian Sunohara successfully defended a Supreme Court of Canada leave to appeal application in Zeppa v. Woodbridge Heating. The decision was released in July 2019.
- In July 2019, an article written by Brian Sunohara on “Closing Addresses In Jury Trials” was published in the Lexpert Litigation Wire.
- Meryl Rodrigues was successful in a motion to dismiss an action in July 2019. Meryl brought the motion on behalf of our client because the plaintiff was taking no steps to advance the lawsuit.
- In July 2019, the Court of Appeal released an important decision on using surveillance and social media evidence at trial. Stephen Ross, Brian Sunohara, and Meryl Rodrigues were counsel for the appellant in Nemchin v. Green, 2019 ONCA 634.
- The Lawyer’s Daily published an article in August 2019 by Stephen Ross, Brian Sunohara, and Meryl Rodrigues on “The Use of Surveillance at Trial”.
- In September 2019, Kevin Adams was quoted in a Law Times article in relation to a Court of Appeal decision which indicated that court actions for bad faith damages in SABS claims are not permitted.
- Congratulations to Stephen Ross, Kevin Adams, and Anita Varjacic for once again being named in the Best Lawyers in Canada.
- Visit the RP Blog for regular updates on the law and our firm.
Promoting Efficiency in Litigation
In my personal life, I am probably best known for having four kids under the age of eight years old. In my legal life, I am certainly best known for being involved as counsel for one of the defendants in a trial (or as it has more commonly become known, the “Zuber trial”) involving a claim of $60 million for injuries arising from a train accident in 1999.
All told, the trial took 106-days and generated in excess of 26 weeks of trial time. The result was a 100 (!) page decision of The Honourable Justice M.L. Edwards awarding a net recovery to the plaintiff of $50,000 in general damages.
There is also the more recent 28-page cost decision awarding total costs to the defendants before setoff of approximately $2.5 million.
Considering the length of the trial, people are often surprised when I explain that there were measures in place to reduce costs and streamline the trial. In particular, through the use of video conferencing and providing evidence in chief by way of affidavit.
The extended use of these methods in this case provides an interesting case study for potential future use in other litigation matters.
In one of the earlier motions in the Zuber trial, the issue was whether certain witnesses would be required to provide viva voce evidence in Canada (there were many witnesses situated in Europe).
The defendants argued that these witnesses needed to be examined in person in the courtroom as the court would otherwise lose the ability to properly assess credibility as the evidence was being taken in a foreign language in another country.
In his decision on the motion, Justice Edwards stated that the SCC in Hyrniak recognized that “to create an environment that promotes efficient, affordable and participatory access to justice requires modern methods of adjudication.” Justice Edwards clarified that “modern methods of adjudication include video technology in the courtroom.”
Justice Edwards also referenced a case dating back to January 2001 wherein 20 witnesses in a personal injury action were allowed to testify by video conferencing and where the Court endorsed video conferencing as interactive technology and noted that it allows the trier of fact to assess the demeanour of the witness and hear visual and verbal cues that are part of oral testimony.
Justice Edwards ultimately allowed certain witnesses to give evidence via video conferencing and clarified that “in assessing the credibility of a witness the demeanour of the witness may be, whether it is in court or by video conference, only one of many factors in the overall assessment of a witness’ credibility.”
Near the end of the trial decision, Justice Edwards commented on the video conferencing throughout the trial. He noted that, for the most part, calling the plaintiff’s case via video worked “very well” and that the digitizing of the exhibits allowed for relatively easy access by everyone regardless of where the witness was testifying from.
Justice Edwards did, however, note a major concern that would need to be addressed in future cases regarding the enforcement of witness exclusion orders for witnesses outside of the jurisdiction.
Evidence in Chief by Way of Affidavit
In an effort to streamline the case, many witnesses testified in chief by way of affidavit. Following some brief “warm-up questions”, the affidavit was entered and the witness was tendered for cross-examination.
In the decision, Justice Edwards noted that consideration might be given in future cases to adopting this method for witnesses other than the parties’ experts, and other critical witnesses to a party’s case.
Time to Embrace Technology and New Initiatives
I use FaceTime very often to video call my family. I have also used Skype for many years and I am generally very comfortable with this mode of communication.
However, I have always been skeptical of using it for an examination for discovery, let alone a trial. I just always felt there was a need to have a witness present (in the case of a discovery, just a few feet away) to get a real sense of the person’s credibility. I have also had concerns about connectivity and picture quality.
It is surprising to think that almost 20 years ago (when people were using dial-up internet) courts were already endorsing the use of video conferencing.
Now, 20 years on, and in the digital age and with high speed internet (although sometimes only in name) there is still a hesitancy in using video conferencing.
However, since my experience in the Zuber trial, I am confident in utilizing video conferencing and specifically look to schedule a discovery in such a manner if it is more practical and in consideration of costs.
For example, in a recent case, I attempted to schedule the discovery of the plaintiff by video-conferencing in a remote area in India. I was able to locate a court reporter online that would provide all the necessary tools to do so and only required the plaintiff to attend a hotel close-by.
I anticipate it being widely used at trials moving forward as well, subject to the considerations noted by Justice Edwards.
As Justice Edwards pointedly stated, everyone associated with civil litigation has an “obligation to streamline cases – if we do not, the civil trial may go the same way as the dinosaurs did so many years ago.”
Considering its effectiveness in the Zuber trial, it would not be surprising to see evidence in chief by affidavit in more cases, including notably for more critical witnesses, in an effort to effectively streamline a trial.
While we will likely never see a case of this duration, it acted as a case study of sorts regarding the methods that may be used to lessen costs and to streamline a trial in a digital age of scarce judicial resources – methods, as well as others, that will likely be seen more increasingly in years to come.
 Davies v. The Corporation of the Municipality of Clarington, 2018 ONSC 4370.
 Davies v. The Corporation of the Municipality of Clarington, 2019 ONSC 2292.
 Davies v. The Corporation of the Municipality of Clarington, 2015 ONSC 7353.