Fall 2021 – 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.
Winter is Coming: The Supreme Court of Canada on Government Immunity for Policy Decisions and its Application to Snow Removal
In the recent Supreme Court of Canada decision in Nelson (City) v. Marchi, 2021 SCC 41, the Court develops a four-factor test for determining whether a decision of a government entity is a “core policy decision” that is immune from liability in tort. This decision is of particular importance to municipalities and their insurers in the application and evaluation of the “core policy decision” immunity defence when faced with a new claim.
After a heavy snowfall, the City of Nelson began plowing and sanding streets pursuant to written and unwritten snow clearing and removal policies. City employees cleared snow in angled parking stalls on streets located in the downtown core. The City employees plowed the snow to the top of the parking spaces, which created a continuous snowbank along the curb that separated the parking stalls from the sidewalk. No access route to the sidewalk was cleared for drivers that were parking in the stalls.
The Respondent, Ms. Marchi, parked in one of these stalls. She was attempting to access the sidewalk, but the snowbank the City created blocked any point of access to it. Ms. Marchi attempted to cross the snowbank to reach the sidewalk, which resulted in a serious leg injury. She sued the City for negligence.
At the trial level, the judge dismissed Ms. Marchi’s claim concluding that the City did not owe Ms. Marchi a duty of care because its snow removal decisions were core policy decisions. The Court held that the City was following its written and unwritten policies on snow removal, and its decisions were dictated by the availability of resources.
In the alternative, the trial judge found that the City did not breach its standard of care because objectively, the snowbank did not pose an unreasonable risk of harm. In the further alternative, the Court held that the City’s alleged negligence did not cause the accident, but that Ms. Marchi was “the author of her own misfortune”.
Court of Appeal
The Court of Appeal ordered a new trial. On the issue of duty of care, The Court of Appeal found that the trial judge did not properly engage with the distinction between government policy and operation, and erred by accepting the City’s submission that all snow removal decisions were core policy decisions.
With respect to the standard of care, the Court of Appeal held that the trial judge’s analysis was improperly influenced by his view that the snow removal decisions were core policy decisions. The trial judge simply accepted the City’s submission that this was “the way it has always been done”, without engaging with evidence about other municipalities’ snow removal efforts.
With respect to causation, the Court of Appeal held that the trial judge had misunderstood how to factor Ms. Marchi’s own negligence into the liability assessment. On appeal, the Court held that the trial judge had improperly reasoned that, if Ms. Marchi could have avoided the accident, she was the sole proximate cause of her injuries, and failed to apply the “but for” test.
Supreme Court of Canada
The Supreme Court of Canada (“SCC”) upheld the Court of Appeal’s decision and dismissed the appeal.
The SCC identified three issues on appeal:
- whether the trial judge erred in concluding that the City did not owe Ms. Marchi a duty of care because its snow removal decisions were core policy decisions that are immune from liability in negligence;
- whether the trial judge erred in his application of the standard of care; and
- whether the trial judge erred in his causation analysis.
This article will focus on the first issue, regarding whether snow removal decision was a core policy decision that is immune from negligence liability.
Analysis on Core Policy Decisions
Prior to determining whether core policy immunity was applicable in this case, the SCC examined the law on how to distinguish core policy decisions from government activities that attract liability in negligence.
First, the SCC traced the development of government immunity for negligence, explaining why core policy decisions are immune from liability
Second, the SCC described the principles and factors that the Court has already developed to identify core policy decisions.
Third, the Court provided additional guidance on these issues by clarifying the framework for the analysis of whether a decision is a core policy decision that is immune from liability. Finally, the Court applied the law on core policy immunity to the facts of the case.
(a) Government Liability for Negligence and the Rationale for Core Policy Immunity
Prior to the enactment of Crown proceedings legislation in Canada in the mid-twentieth century, governments in Canada could not be held directly or vicariously liable for negligence of Crown servants.
As government functions expanded, government entities were increasingly involved in activities “that would have led to tortious liability had they occurred between private citizens”. As a result, Parliament and the provincial legislature enacted legislation allowing the Crown to be held liable for the torts of officials in a manner that is akin to provide citizens.
In Ontario, the relevant statue is the Crown Liability and Proceedings Act, which states: “the Crown is subject to all liabilities in tort to which it would be liable if it were a person…”
However, applying private law negligence to public authorities created “special problems”. Legislation makes the Crown susceptible to liability as though it were a person, but the issue is that “the Crown is not a person and must be free to govern and make true policy decisions without becoming subject to tort liability as a result of those decisions”.
The Supreme Court of Canada noted that government decision-making occurs across a wide spectrum. At one end of the spectrum are policy decisions that only governments make, such as to adopt a course of action based on society-wide health policy or social and economical considerations. For these policy decisions, Courts are reluctant to impose a common law duty of care.
On the other end of the spectrum are government employees that drive vehicles, or public authorities who occupy buildings, who owe private law duties of care and must therefore act without negligence in the discharge of those duties. The SCC noted that “[t]ort law must ensure that liability is imposed in this latter category of cases without extending too far into the sphere of public policy decisions”.
To relieve the tension of applying private law negligence principles to public authorities, the Court has adopted the principle from Anns v. Merton London Borough Council,  A.C. 728 (H.L.), “that certain policy decisions should be shielded from liability for negligence, as long as they are not irrational or made in bad faith”.
The rationale for shielding core policy decisions from liability for negligence is to maintain the separation of powers of the government. Subjecting policy decisions to private law duties of care would intertwine the courts in evaluating decisions that are best left to the legislature or executive.
Importantly, the SCC notes that core policy decisions of the legislative and executive branch involve consideration of competing economic, social and political factors and a contextualized analysis of information. These decisions should not be based only on objective considerations, but require value judgments.
If courts were to weigh in on these decisions, “they would be second-guessing the decision of democratically elected government officials and simply substituting their own opinions”. Ultimately, the rationale for core policy immunity is to protect the legislative and executive branch’s core institutional roles and competencies, which is necessary for the separation of powers.
(b) Defining the Scope of Core Policy Decisions
The question of what constitutes a “true” or core policy decision is not straightforward, but jurisprudence has provided helpful guidance. Core policy decisions that may be shielded from liability in negligence are “decisions as to a course or principle of action that are based on public policy considerations, such as economic, social and political factors, provided they are neither irrational nor taken in bad faith”. They are a “narrow subset of discretionary decisions” because discretion “can imbue even routine tasks,” and protecting all discretionary government decisions would cast “the net of immunity too broadly”.
Following an in-depth review of the jurisprudence, the Supreme Court of Canada outlined four factors to be used to identify core policy decisions:
- The level and responsibilities of the decision-maker: what is relevant is how closely related the decision maker is to a democratically-accountable official who bears responsibility for public policy decisions. The higher the level of the decision maker within the executive hierarchy, the higher the possibility that judicial review of their decisions will raise a separation of powers concern.
- The process by which the decision was made: the more the process for reaching the decision was deliberative, required debate, involved input from different levels of authority, and was intended to have broad application, the more likely it is a core policy decision.
- The nature and extent of budgetary considerations: government decisions “concerning budgetary allotments for departments or government agencies will likely be classified as policy decisions”. Day-to-day budgetary decisions of individual employees will likely raise separation of power concerns.
- The extent to which the decision was based on objective criteria: the more a government decision weighs competing interests and requires value judgments, the more likely separation of powers will be engaged because the court would be substituting its own value judgment. Alternatively, the more a decision is based on “technical standards or general standards of reasonableness”, the more likely it can be reviewed by the court for negligence.
The SCC also provided two points of clarification with respect to the application of the test. The first is that financial implications alone will not automatically classify a decision as a core policy decision. The second is that the nature of the decision must be carefully considered on a case-by-case basis to determine whether a decision is a true core policy.
The fact that the word “policy” is found in a written document or that the plan is labelled as a “policy” is not determinative of the question. The focus “must remain on the nature of the decision itself, rather than the format or the government’s label for the decision”.
(c) Application of Core Policy Immunity
The Supreme Court of Canada reiterated the legal principle from 1688782 Ontario Inc. v. Maple Leaf Foods Inc., 2020 SCC 35, that whether the defendant owed the plaintiff a duty of care is a question of law, not of mixed fact and law as proposed by the City. The Court noted that while the underlying facts found by the trial judge deserves deference, whether those facts meet the legal test of core policy immunity is a question of law that must be correct.
The SCC held that the trial judge erred in his legal analysis of whether core policy immunity applied. Applying the four principles outlined above, the SCC found that the City’s clearing of snow from the parking stalls by creating snowbanks along the sidewalks, and thereby inviting members of the public to park in those stalls without ensuring a clear pathway to the sidewalks was not the result of a core policy decision that is immune from liability in negligence.
The City reacted to the snowfall in the usual course: it followed priority routes for plowing in the written policy; it waited to remove snowbanks from the downtown core until after all city streets were plowed; it followed several unwritten practices, including with respect to removal of snow from stairs around the City.
Clearing parking stalls was not part of the written policy, but the City cleared the angled parking stalls, and created a continuous snowbank blocking the stalls from the sidewalk. Throughout this process, the public works supervisor made decisions about how many employees to deploy. She also completed road patrol throughout the day to ensure that the streets were safe, and that the crew was working in a timely manner.
The trial judge determined that “it did not occur” to the supervisor that this process could be done differently. When the supervisor was asked whether she had ever considered the potential dangers caused by clearing the parking stalls, she responded that her job was to follow “[the] normal protocol” and “follow direction from above”.
The City’s decision in this regard did not bear the hallmarks of a core policy decision. The extent to which the supervisor was closely related to a democratically elected official was unclear from the record. The supervisor did disclose that she did not have the authority to make a different decision with respect to clearing snow from the parking stalls (first factor). There was no evidence that suggested an assessment was ever made as to the feasibility of clearing pathways in the snowbanks. The City’s evidence was that it was a matter of custom (second factor).
It was clear that budgetary considerations were involved in this decision, but these were not high-level considerations but rather were day-to-day considerations of individual employees (third factor). Finally, the City’s chosen method of plowing parking stalls could be assessed based on objective criteria (fourth factor).
Cases such as this will not generally raise institutional competency concerns, because courts routinely consider road and sidewalk maintenance in occupier’s liability cases. The Court is well equipped to determine whether the snowbanks posed an objectively unreasonable risk of harm. The safety of a road or sidewalk can be measured on objective criteria or standards, as it is in the private sector.
After consideration and analysis of the application of the four-factor test, the SCC found that the City had not demonstrated that the manner in which it plowed the parking stalls was the result of a proactive, deliberative decision, based on value judgements related to economic, social or political considerations. Accordingly, the City did not meet its burden of proof to establish that Ms. Marchi sought to challenge a core policy decision that was immune from liability in negligence.
The Marchi decision articulates the factors that a court will consider when assessing whether a core policy decision is immune from liability in negligence.
It is not enough for a government entity to merely identify a decision as a “core policy” decision. The nature of the decision must be carefully considered on a case-by-case basis to determine if the decision will qualify as a true core policy decision, and therefore attract immunity in tort.
This case is particularly important for municipal and other government defendants and their lawyers when assessing the availability of tort immunity in a given case, and the evidence required to address the four-factor test for the application of that immunity set out by the Supreme Court of Canada.
 Nelson (City) v. Marchi, 2021 SCC 41 at para 38.
 Crown Liability and Proceedings Act, 2019, S.O. 2019, c. 7, Sched. 17, Section 8(1).
 Nelson (City) v. Marchi, 2021 SCC 41 at para 39
 Just v. British Columbia,  2 S.C.R. 1228.
 Supra note 1 at para 39.
 Ibid at para 41.
 Ibid at para 42.
 Ibid at para 44.
 Ibid at para 51 citing Imperial Tobacco at para 90.
 Supra note 1 at para 62.
 Ibid at para 63.
 Ibid at para 64.
 Ibid at para 65.
 Ibid at para 59.
 Ibid at para 71.
 Ibid at para 80.
 Ibid at para 81.
 Ibid at para 82.
 Ibid at para 83.
 Ibid at para 84.
Section 44 of the Statutory Accident Benefits Schedule (“the Schedule”) gives the insurer the right to request insurer examinations to determine if an applicant is entitled to certain benefits. In Acamovic v Cayuga Mutual Insurance Company, 2021 CanLII 71060 (ON LAT), the Licence Appeal Tribunal provided details as to when an insurer examination is considered to be unreasonable and/or unnecessary.
The applicant was involved in a motor vehicle accident on November 19, 2017 and sought benefits from Cayuga Mutual Insurance Company (“Cayuga Mutual”). Cayuga Mutual denied certain benefits claimed by the applicant. The applicant applied to the LAT for resolution of the dispute.
Cayuga Mutual requested a determination on a preliminary issue, specifically on whether the applicant was barred from proceeding to a hearing for an income replacement benefit because he failed to attend an insurer’s examination.
The insurer submitted that the applicant failed to attend three insurer’s examinations to determine the claimant’s ongoing entitlement to IRBs. The insurer further submitted that the notice of examinations complied with s.44 of the Schedule; that the applicant failed to attend the examinations; and that the applicant failed to provide a reasonable explanation for his non-attendance.
The applicant submitted that the insurer’s requests failed to satisfy the requirement under s.44(1) of the Schedule – specifically, that insurer’s examinations should not be requested more often than is reasonably necessary.
The applicant attended the insurer’s examination on February 12, 2018 (with an orthopedic surgeon), March 9, 2018 (with a physiatrist), and March 22, 2018 (with a neurologist).
The applicant took the position that the insurer could easily have asked its assessors to address the income replacement benefit issue during the first round of examinations. Furthermore, the applicant submitted that the reasons for the request failed to satisfy the requirement under s. 44(5) to provide “medical and any other reasons”, because the notices merely stated that the respondent wished to determine the applicant’s ongoing entitlement to the income replacement benefit.
Section 44(1) of the Schedule states as follows:
44. (1) For the purposes of assisting an insurer to determine if an insured person is or continues to be entitled to a benefit under this Regulation for which an application is made, but not more often than is reasonably necessary, an insurer may require an insured person to be examined under this section by one or more persons chosen by the insurer who are regulated health professionals or who have expertise in vocational rehabilitation. O. Reg. 34/10, s. 44 (1).
At issue in this case was the fact that the applicant attended insurer’s examinations at the respondent’s request, with same assessors, three months prior to the requests at issue.
The adjudicator held that the insurer requested insurer’s examinations more often than was reasonably necessary and that it was unreasonable to request that the applicant attend a second set of in-person examinations on May 25, May 31, and June 1, 2018 with the same assessors.
The insurer did not suggest that a material change in the applicant’s physical or mental condition occurred in the intervening time such that an assessment was warranted. Instead, the insurer submitted that, on April 16, 2018, it received information that the applicant had returned to work, and that this necessitated a second round of in-person examinations.
The adjudicator was not persuaded by the insurer’s submissions. The adjudicator noted that a change in the applicant’s employment status might reasonably have prompted the insurer to request more information from the applicant, as it did on April 16, 2018 when it requested that the applicant submit an OCF-13 declaring any post-accident income.
However, the adjudicator found that “there is no rational connection between a suspected change in employment status and an entirely new round of physical examinations”. Accordingly, the adjudicator found that the requested examinations were “duplicative, redundant, unnecessary and unreasonable” and failed to satisfy the requirements of s. 44(1).
Therefore, the adjudicator held that the applicant is permitted to proceed to a hearing on the income replacement benefit issue.
The insurer sought reconsideration of the adjudicator’s decision. The grounds for a request for reconsideration are contained in Rule 18.2 of the Common Rules. A request for reconsideration will not be granted unless one of the following criteria are met:
- The Tribunal acted outside its jurisdiction or violated the rules of procedural fairness;
- The Tribunal made an error of law or fact such that the Tribunal would likely have reached a different result had the error not been made;
- The Tribunal heard false evidence from a party or witness, which was discovered only after the hearing and likely affected the result; or
- There is evidence that was not before the Tribunal when rendering its decision, could not have been obtained previously by the party now seeking to introduce it, and would likely have affected the result.
The Tribunal found that the preliminary issue decision falls outside the scope of the rule and cannot be reconsidered. The Vice Chair noted that the preliminary issue decision disposes of no part of the applicant’s appeal and “simply determines as meritless one possible defence to the applicant’s income replacement benefit claim”. The Vice Chair indicated that the claim for the income replacement benefit is “very much live; the Tribunal has ordered a hearing on its merits.”
In any event, the Vice Chair held that the insurer“failed to establish any of the criteria for reconsideration found in Rule 18.2” as the insurer had not “identified a violation of the rules of procedural fairness or an error of law or fact that would have led the Tribunal to a different outcome had that error not been made. In fact, it has identified no factual or legal error in the preliminary issue decision at all.”
The decision of Acamovic v Cayuga Mutual Insurance Company confirms that an insurer cannot simply request a further set of examinations due to a suspicion that the claimant has returned to work. Instead, the insurer must comply with s.44 of the Schedule and provide reasoning as to why the examination is not “duplicative, redundant, unnecessary and unreasonable.”
Furthermore, insurers must be cautions in seeking reconsideration of preliminary decisions that dispose of no part of the applicant’s appeal as that is not grounds for a reconsideration.
By Alon Barda
One of the most litigated issues at the Licence Appeal Tribunal is the issue of what constitutes an “accident.” The cases are very specific and often include unusual facts. This occurred in the most recent case of Madore v. Intact, 2021 CanLII 53164 (ON LAT).
The claimant was involved in an accident on June 25, 2019. The accident occurred when the claimant was on the roof of his trailer and fell to the ground and sustained significant injuries. Intact denied the claim for benefits on the grounds that the incident did not meet the definition of “accident” as set out in the SABS. The sole issue to be determined by the Tribunal was whether the incident met the Schedule’s definition of an “accident.”
The claimant submitted that he brought his trailer home to get it ready to go on vacation. He was on the roof of his trailer checking the caulking on the roof and slide-outs when he fell from the roof and struck the ground. There was no evidence that the claimant struck the pickup truck to which the trailer was attached or the trailer itself when he fell. The claimant also did not adduce any evidence that he tripped on any part of the roof or that the trailer itself caused the fall.
The claimant submitted that he did not take his trailer on the road without first completing an inspection and this is why he was on the trailer when he fell. The parties agreed that the trailer was attached to his parked pick-up truck before, during, and after the incident.
Section 3(1) of the SABS defines an “accident” as “an incident in which the use or operation of an automobile directly causes an impairment […].” The two-part test for determining whether an incident constitutes an accident was set out in the seminal case of Chisholm v. Liberty Mutual Group. The insured must satisfy both the purpose and causation test.
The purpose test asks whether the incident arose out of the ordinary and well-known activities for which automobiles are used.
The causation test includes a determination as to whether the use and operation of the automobile directly caused the impairment and consideration as to whether there was an intervening act or acts that resulted in the injuries that cannot be said to be part of the “ordinary course of things”. The second branch of the causation test concerns whether it can be said that the use or operation of the vehicle was a “direct cause” of the applicant’s injuries.
In terms of the purpose test, the Tribunal noted that the intention of the test “is to determine the purpose for which the automobile was being used at the time of the incident and whether the incident arose out of the ordinary activities to which automobiles are put.” On this point, the Tribunal found that, at the time of the accident, the claimant was in the process of inspecting, cleaning and maintaining his trailer. As such, the Tribunal held that this was part of his ordinary pre-travel activities.
In terms of the causation test, the Tribunal found that neither of the causation branches were met. The Tribunal found no evidence that the claimant’s fall was caused by tripping on any part of the trailer, nor was there evidence of any impact with the trailer or truck in the course of falling. Accordingly, the incident did not involve the claimant “using or operating an automobile” that directly caused his injuries.
The Tribunal further clarified that the mere location on or near a vehicle at the time of an incident does not automatically meet the requirements of the causation test. In this regard, “direct cause requires evidence that the claimant’s fall was as a result of tripping on some part of the trailer and that the injuries were directly caused by the trailer.” The Tribunal found that there was no evidence of either circumstance being the case.
The Tribunal then addressed whether there was an intervening act or acts that resulted in the injuries that cannot be said to be part of the “ordinary course of things”. The Tribunal found that the loss of footing, which occurred due to misfortune, represented an intervening act and not at all directly caused by the trailer. Accordingly, the claimant losing his footing on top of the trailer was not part of the “ordinary course of things”.
Therefore, the Tribunal found that the incident was not an accident as it failed to meet the branches of the Chisholm causation test.
The cases interpreting whether there was an “accident” are very fact-specific. In this case, the Tribunal specifically referenced the affidavit evidence of the claimant that he did not trip on any part of the trailer causing him to fall. Had he done so rather than simply lose his footing, then the decision may have been different.
Overall, this is a sensible decision based on the facts. As noted by the Tribunal, the mere location on or near a vehicle at the time of an incident does not automatically meet the requirements of the causation test.
In Grand River Conservation Authority v. Ramadas, 2021 ONCA 815, injunctions were granted to prohibit improvements made to a property without permits. In this Court of Appeal decision, Justice Lauwers provided guidance on handling matters involving self-represented litigants.
Ms. Ramadas owns a property in the Township of Amaranth, located in Dufferin County that lies on the edge of a wetland, which is regulated by the Grand River Conservation Authority. Ms. Ramadas started work on the property without a permit from the Township or from the Conservation Authority.
The work came to the attention of the Conservation Authority and the Township. The Conservation Authority requested that the work stop, but it did not.
On July 13, 2018, Ms. Ramadas was charged with violating s. 28(16) of the Conservation Authorities Act and an associated regulation, which together prohibit developing a wetland without a permit from the Conservation Authority. On July 19, 2018, Ms. Ramadas was served with a summons to appear in court. The work at the property continued despite the charges.
A by-law enforcement officer attended the property on July 11, 2018, because of a complaint and delivered a stop work order. On August 11, 2018, an officer once again attended the property because of complaints regarding ongoing fill activities.
The Conservation Authority and Township brought applications for injunctions to stop the ongoing work at Ms. Ramadas’ property. On August 27, 2018, the injunctions were granted. Thereafter, the proceedings were adjourned several times. By order dated June 3, 2019, Justice Coroza ordered that no further adjournments would be granted without leave, and required Ms. Ramadas to file responding materials by September 30, 2019.
On November 12, 2019, the permanent injunctions came before an application judge. Ms. Ramadas did not file any responding materials prior to the hearing of the application. The application judge did not grant a further adjournment and the hearing proceeded without evidence from Ms. Ramadas.
The application judge granted the permanent injunctions. The order in favour of the Conservation Authority required Ms. Ramadas to comply with the law. The order in favour of the Township was more extensive and required Ms. Ramadas to remediate the property and to reimburse the Township for its enforcement expenses.
Court of Appeal
There were two issues before the Court of Appeal: (1) whether the application judge improperly denied the appellant’s request for an adjournment; and (2) whether it was inappropriate for the Conservation Authority and the Township to proceed by way of application because of contested facts.
Appellant’s Request for an Adjournment
The Court of Appeal dismissed the appeal, and held that the application judge did not improperly deny the appellant’s request for an adjournment. A judge has broad discretion as to whether to grant an adjournment. Justice Lauwers found that there was no basis for intervention with the application judge’s adjournment refusal.
The application judge had acted on the basis that Ms. Ramadas had requested an adjournment, which was not clear on the record. Additionally, Ms. Ramadas did not tell the application judge what she would do if the adjournment were granted.
Justice Lauwers found no basis for intervention on the merits. The evidence the Conservation Authority and Township relied on was overwhelming. While there may have bene conflicts on points of credibility, there was no doubt that Ms. Ramadas proceeded with excavations on her property without the requisite permits.
Ms. Ramadas was self-represented on the application. Justice Lauwers noted that self-represented litigants are “expected to familiarize themselves with the relevant legal practices and procedures pertaining to their case and respect the court process”.
However, Justice Lauwers wanted to emphasize three points on obligations owed to self-represented litigants.
First, Justice Lauwers noted that judges are often rely on counsel to advise of where things stand in the litigation. He called upon judges to permit self-represented parties to explain how they understand the status quo, as this will avoid any impression of favouritism or bias.
Second, Justice Lauwers drew attention to the confusion that self-represented litigants may experience when trying to understand the difference between evidence and submissions. A self-represented litigant may inadvertently give evidence in the course of making submissions. This is not admissible as evidence unless the information is given under oath.
One option is for a judge to swear in the party and allow submissions to be made from the witness box, and to permit cross-examination on the evidentiary parts. Justice Lauwers noted that this would permit a judge to make findings on the evidence where appropriate.
Along the same lines, a judge can engage in “active adjudication” to obtain relevant evidence from a self-represented party. However, a judge cannot cross the line between assisting self-represented litigants in the presentation of their evidence and becoming their advocate.
Lastly, Justice Lauwers reminded opposing counsel of the obligation for counsel to assist both self-represented litigants and the court in order to ensure that “justice is not only done but is seen to be done”.
When people take their vehicles in repairs, they are sometimes given a loaner vehicle. The issue in a recent court decision was whether the customer could be held responsible for damage to the loaner.
In Owasco Canadian Car & Camper Rental Ltd. v Fitzgerald et al., 2021 ONSC 7235,the Divisional Court considered the interaction of temporary substitute automobile coverage and certain aspects of the Direct Compensation – Property Damage provisions found in section 263 of the Insurance Act.
This ruling overturned a decision of the Small Claims Court which held that a lessee was liable to reimburse the lessor for property damage resulting from an accident for which he was not at fault, based on a contract.
Overview of Decision
The defendant, Fitzgerald, took his car to the plaintiff dealership for service. The dealer gave Fitzgerald a free loaner, which was considered a temporary substitute automobile under Fitzgerald’s own insurance policy.
While driving the loaner, Fitzgerald was involved in an accident. The parties agreed that Fitzgerald was not at fault for the accident. The property damage amounted to $5,628.41.
The plaintiff had coverage for property damage through its own insurer, but the deductible was $25,000, and the coverage was therefore ineffectual in this instance.
Fortunately (or so the plaintiff thought), the defendant, Fitzgerald, had signed a rental agreement with the plaintiff which contained a clause stating that he agreed to pay the plaintiff for damage to the vehicle “whether or not due to [his] fault”. Accordingly, the primary issue is whether the plaintiff is entitled to recover per this contractual term.
The issue with the plaintiff’s argument, as identified by the Divisional Court, is that section 263 of the Insurance Act takes away an insured’s right of action against anyone but the insured’s insurer. Section 263(5) of the Insurance Act provides as follows:
If this section applies,
(a) an insured has no right of action against any person involved in the incident other than the insured’s insurer for damages to the insured’s automobile or its contents or for loss of use;
(a.1) an insured has no right of action against a person under an agreement, other than a contract of automobile insurance, in respect of damages to the insured’s automobile or its contents or loss of use, except to the extent that the person is at fault or negligent in respect of those damages or that loss;
(b) an insurer, except as permitted by the regulations, has no right of indemnification from or subrogation against any person for payments made to its insured under this section.
Despite the above provision, the Small Claims Court ruled that “section 263 was not designed to deprive contracting party of its right to recover under the terms of the contract”. However, it relied on case law that predated the addition of section 263(5)(a.1) to the Insurance Act. The Divisional Court found this to be an error of law.
Under section 263(5)(a.1), the plaintiff could not rely on the rental contract to recover damages from Fitzgerald, except to the extent that Fitzgerald was at fault for the accident. As indicated, it was agreed that Fitzgerald was not at fault.
The plaintiff raised an additional argument on appeal. Fitzgerald had a policy of insurance with Coachman Insurance Company. Coverage for property damage to temporary substitute automobiles was specifically included. Section 7.4.3 of the OAP 1 provides:
If you [the insured person] or anyone else drives a temporary substitute automobile (described in Section 2), you may be responsible for any damage to it as a result of liability imposed by law or agreed to by you or the driver. In that case, we will pay for direct damage for which you or the driver are legally responsible, minus the deductible for that peril under this policy.
However, if the owner of the substitute automobile has it insured for such losses, and the deductible on that policy is larger than the one on your policy for such loss, the most we will pay will be the difference between the two deductibles. [emphasis added]
The plaintiff argued that this section revealed that the legislature intended to allow insureds who lease temporary substitute automobiles to agree to reimburse the lessor.
Justice Dawe engaged in a statutory interpretation exercise and ultimately found that the legislature had revealed no such intention. Justice Dawe held that there was no inconsistency between section 263(5)(a.1) of the Insurance Act and section 7.4.3 of OAP 1.
Since section 263(5)(a.1) eliminates the owner’s right of action against the insured, the insured is no longer “legally responsible” to pay for the damage. Section 7.4.3 only promises payment where the insured is “legally responsible”.
Another point of particular interest is Justice Dawe’s discussion of the plaintiff’s policy argument. The plaintiff argued that the upshot of overturning the Small Claims Court’s decision would be to disincentive rental car companies from offering free “loaner” car services because of the increased burden of the higher premiums, which would be needed to lower the deductible.
According to Justice Dawe, it is not self-evident that the legislature would agree that downloading the burden of increased insurance costs to individuals rather than rental companies would be an advisable policy decision.
Comments and Takeaways
Justice Dawe’s decision upholds the principle of freedom to contract, but perhaps not in the way one might expect on these facts at first blush.
In contracting with its own insurance company, it was the plaintiff’s choice to elect a lower premium in exchange for the higher deductible. The plaintiff could not escape this choice by attempting to contract out of the legislation, or rather, attempt to carve an exception out of the legislation to give effect to its contract with the defendant, Fitzgerald.
Ultimately, this case demonstrates that even where a lessee has coverage that contemplates property damage coverage for temporary substitute automobiles, the lessor must recover under their own policy. The lessor can only contract out of this provision to the extent the lessee is at fault for the accident.
- Congratulations to the following lawyers from Rogers Partners for being recognized in the 2022 edition of The Best Lawyers in Canada: Stephen Ross, Kevin Adams, Anita Varjacic, Brian Sunohara, and David Rogers.
- We’re delighted to welcome our newest associates, Jennifer Singh and Kathryn Orydzuk, to the firm!
- The Lawyer’s Daily published an article by Natalia Sheikh in October 2021 on “The Interpretation of Standard Form Insurance Policies: $56 Million Award Overturned”. Double congratulations to Natalia as her article has also been selected for inclusion in the Canadian Journal of Insurance Law.
- In October 2021, Emily Vereshchak’s talented writing skills led to her appearing in The Lawyer’s Daily in an article called “Address Issues of Venue and Procedure Early in Litigation”. This is one of many occasions where Emily’s writings have been published.
- An article by Jennifer Singh, “Reconsideration at the LAT is Not For Re-litigating Issues”, was selected for publication in an upcoming edition of the Canadian Defence Lawyers Hearsay newsletter. Well done, Jennifer!
- One of our articling students, Annie Levanaj, wrote an article that has also been selected for publication in the Canadian Defence Lawyers Hearsay newsletter. Annie discusses the issue of when public authorities can be held liable in negligence. Very impressive, Annie!
- Brian Sunohara and Erin Crochetière were recently successful in a motion to exclude additional expert opinions served by the plaintiff for an upcoming continued trial.
- In December 2021, Stephen Ross will be a skills instructor for a program by the Law Society of Newfoundland & Labrador on “Evidence for Litigators”.
- Stephen Ross is co-chairing the popular Tricks of the Trade conference by The Advocates’ Society, taking place online on January 28, 2022.
- Tom Macmillan will be sharing his wisdom at the Tricks of the Trade conference in a presentation called “The Fallout: Personal Injury Law and the Pandemic”.
- In March 2022, Stephen Ross will be speaking on “Municipal and Government Liability” at a Law Society of Ontario conference, Substantive Law for Litigators: Torts.
- Visit the RP Blog for regular updates on our firm and the law.
The Problem With Virtual Medical Assessments
While recent months have seen the increasing return to the office setting, there remains many aspect of remote work that are likely to remain long after the pandemic.
For example, I can recall travelling to North Bay a few years ago for a mediation. The start time was 10:00 a.m. I left that morning at 6:00 a.m. and drove from Toronto to North Bay. The mediation was done in an hour. I then drove home, which took another 4 hours. In total, I spent 8 hours in the car and one hour at the mediation. I desperately wanted that 8 hours of my life back.
Now, if that mediation was taking place next week, I would almost certainly be attending remotely. So there are certainly aspects of remote work that will remain long after the pandemic. However, this is not the case for everything.
For example, during the height of the pandemic, I questioned how to deal with the attendance of claimants at insurer examinations. Should they be done virtually? Would that be an issue down the road? A recent case from the Licence Appeal Tribunal addresses the issue of virtual assessments and provides some interesting comments as to how such an assessment will be handled by the Tribunal.
In Rasaratnam v. Allstate Insurance,the applicant was involved in an accident and sought benefits from Allstate Insurance. The insurer determined that the claimant’s injuries fall within the Minor Injury Guideline and denied the claimant treatment outside the $3,500 limit. The main issue at the hearing was whether the claimant’s injuries were predominantly minor as defined in s. 3 of the Schedule and, therefore, subject to treatment within the $3,500 limit.
The applicant submitted that he had a pre-existing condition that justified removal from the MIG. He also submitted that he suffered from chronic pain such that his injury should fall outside of the MIG.
The adjudicator found that the medical evidence tendered by the applicant established that he suffered only minor injuries since the records documented soft tissue sprains and strains, whiplash and headaches as a result of the accident. The Tribunal found that all of these injuries fall within the definition of a minor injury as set out in the MIG.
The Tribunal also found that the claimant did not prove that he has chronic pain. In this regard, the claimant relied on a chronic pain assessment from November 4, 2020. The Tribunal noted that the assessment was conducted virtually and, therefore, in the absence of a physical examination.
The Tribunal further noted that while the Tribunal could “only infer from the timing of the assessment that the COVID-19 pandemic may have placed constraints on the assessment format, the quality of the assessment is compromised when an assessor is unable to conduct a clinical assessment in person.”
The Tribunal also criticized the report, stating that the assessment relied heavily on the applicant’s self-reported symptoms and that these were presumed to be truthful “rather than assessed for validity or consistency with objective medical evidence.”
Accordingly, the Tribunal held that, on a balance of probabilities, the pain experienced by the applicant after the accident was the clinically associated sequelae of his minor, soft tissue injuries and that the MIG applies.
While the virtual aspect of the assessment was not the only issue with the report, it certainly factored into the Tribunal’s decision.
This report was completed prior to the vaccine roll-out. For matters heading to a hearing that perhaps had remote assessments completed at some time during the early days of the pandemic, the party would be wise to consider whether an in-person assessment is appropriate. Furthermore, for any such requests that may come in the future, the responding party should consider this decision and the criticisms noted of virtual assessments.
In the end, while certain aspects of remote life will remain long after the pandemic, remote assessments will seemingly not be one of them.
 2021 CanLII 108370 (ON LAT).