At our weekly meeting, Emmanuel Couture-Tremblay discussed the recent decision of the Court of Appeal for Ontario in Truscott v. Co-Operators General Insurance Company, 2023 ONCA 267.
This appeal arose from an application for insurance coverage for claims related to a fire that destroyed a building, and the accounting papers and records within it.
The appellant, Joseph Truscott, is a chartered professional accountant running his practice out of a Victorian home in Hamilton. On January 20, 2017, the building and its contents were damaged by a fire.
The appellants were covered by Co-Operators General Insurance Company (“Co-Operators”) for building loss, contents loss, business interruption loss, valuable papers loss, professional fees, and personal property engineering fee vacancy permit. The Policy limits were $1,081,600 for building loss, $106,090 for contents loss, and $250,000 for valuable papers loss.
The contents loss clearly exceeded the policy limit, leading Co-Operators to pay up to the limit of $106,090. The matters of building loss and valuable papers loss were at issue in this litigation.
The parties nominated an umpire for an appraisal under s. 128 of the Insurance Act. The umpire accepted that the building was a total gut and issued an award appraising the building loss at $507,130.09 for replacement cost value and $431,060.58 for actual cash value. Before the appraisal, the respondents had set a period of indemnity that ended on September 30, 2017. As a result, the respondents ceased to cover rent expenses for the appellants’ temporary office after this date, and refused to cover two proofs of loss relating to building by-law compliance from 2018.
Regarding the valuable papers loss claims, the respondents consented to the appraisal of one of three proofs of loss submitted, for $157,639. Co-Operators then sought judicial review of this award, arguing that it breached the indemnity principle, which the Divisional Court did not accept. The Court stated that the umpire had jurisdiction, Co-Operators had a chance to contest the appellants’ appraisal methodology, and the award was limited to the quantification of loss. Co-Operators declined to consider the other two loss claims.
The respondents brought a partial summary judgment motion based on the umpire’s appraisal decisions causing the end of the period for the appellants to submit further loss claims. The respondents also sought an order dismissing the claim against Thomas Carroll in his personal capacity, pursuant to r. 21.01(1)(b) of the Rules of Civil Procedure, for acting within the course of his employment with Co-Operators. The motion judge accepted that the appellants had passed the period to submit further loss claims and struck the claim against Thomas Carroll.
- Whether this was an appropriate case for partial summary judgment;
- Whether the Awards finally settled the full amount of the appellants’ entitlements under the Policy; and
- Whether the trial motion judge erred in striking the claims against Mr. Carroll personally.
1. This Was Not an Appropriate Case for Partial Summary Judgment
Partial summary judgment is reserved for an issue that may be readily split from those in the main action, and that may be dealt with expeditiously and in a cost-effective manner, as stated in Butera v. Chown, Cairns LLP, 2017 ONCA 783. Partial summary judgment should be granted only in the clearest of cases and only if doing so does not give rise to delay, further expense, inefficiency, and inconsistent findings.
The Court of Appeal found that the motion judge made an error in granting partial summary judgment because he did not consider if it was appropriate in the context of the litigation as a whole. The issues cannot be readily separated from the other issues at trial. Because the issues are necessarily intertwined, deciding them on the motion leads to the possibility of inconsistent findings and substantive injustice.
The summary judgment process did not serve the objectives of proportionality, efficiency, and cost effectiveness. The motion was eventually argued over two years after it was brought. There was extensive delay and expense caused by the use of the partial summary judgment procedure. Ultimately, this was not one of those “clearest” of cases in which partial summary judgment was appropriate.
2. The Awards Did Not Finally Settle the Appellants’ Entitlements Under the Policy
The interpretation of the relevant provisions in the Insurance Act is a question of law and the standard of appellate review is correctness.
The relevant legislation includes Section 128 of the Insurance Act, which establishes an appraisal process that is intended to “determine specified matters” over which the insured and the insurer disagree. Section 148 also gives no indication that an award is intended to finally settle an insured’s entitlement under a head of coverage.
In two cases, interim proofs of loss were permitted: Campbell v. Desjardins, 2020 ONSC 6630, 2022 ONCA 128, and Senator Real Estate v. Intact Insurance, 2021 ONSC 200. Although the motion judge differentiated these cases to the one at bar for being interim decisions, the Court of Appeal disagreed with this assessment and stated that there was no distinction between this case and Campbell or Senator Real Estate.
The motion judge erred when he interpreted the relevant provisions of the Insurance Act. The appellants were not seeking to challenge the awards, and the courts are the appropriate venue for the adjudication of the claims. Additionally, the Insurance Act is not a “one-shot” valuation. The Act permits the insured to submit further proofs of loss after an appraisal.
In this case, the umpire adjudicated on awards that were correctly constrained to the specified claims of the appellants. Accordingly, the appellants were not precluded from submitting other claims for building loss or valuable papers loss. It is up to the trial judge to make the factual findings to determine whether the parties agreed that the appraisals finally determined the appellants’ rights to make other related claims.
3. The Claim as Against Mr. Carroll Was Erroneously Struck
A claim may be struck under r. 21.01(1)(b) of the Rules only where it is “plain and obvious” that it has no reasonable prospect of success. The relevant standard of appellate review is correctness.
The Court found that the motion judge erred in striking the claim as against Mr. Carroll by applying an incorrect legal principle and by failing to accept, as true, the material facts as pleaded against Mr. Carroll.
The motion judge stated, “If an employer is vicariously liable for the conduct of its employees (who are acting in the course of their duties) there is no independent action against the employees”, which was incorrect. An employee acting in the context or course of employment can be sued and held personally responsible in law for their tortious conduct.
As in Sataur v. Starbucks, 2017 ONCA 1017, the motion judge in this case blended two separate legal concepts: the employer’s vicarious liability for its employees acting within the scope of their employment and the employee’s personal liability for their own tortious conduct while acting within the scope of their employment.
The Court of Appeal has confirmed that an employee acting in the course of employment can be personally responsible in law for committing torts. In Correia v. Canac Kitchens, 2008 ONCA 506, the motion judge dismissed the plaintiff’s claim for intentional infliction of mental distress against an employee in her personal capacity. The claim was dismissed on the basis that the employee committed the alleged tort while acting for her employer. On appeal, the Court of Appeal reaffirmed that the employee could be held personally liable for her conduct and allowed the claim to proceed.
Mr. Carroll’s presence was also deemed necessary, pursuant to r. 5.03(1), so that the trial court could effectively and completely adjudicate the issues raised in the claim. In Blackwater v. Plint, 2005 SCC 58, the Supreme Court held that “punitive damages cannot be awarded in the absence of reprehensible conduct specifically referable to the employer”. The trial judge may yet determine that Mr. Carroll’s personal conduct is worthy of punitive damages that are not attributable to Co-Operators.
The motion judge also erred by failing to accept, as true, the material facts as pleaded against Mr. Carroll. When assessing whether to strike out a pleading on the basis that it discloses no reasonable cause of action under r. 21.01, the court has to accept as true the material facts as pleaded. Accepting as true the material facts as pleaded, it was not plain and obvious that the claim against Mr. Carroll had no reasonable prospect of success. Therefore, it should not have been struck.
Appeal allowed and judgment set aside. The entire claim is set to proceed to trial.
This decision provides insight on appropriate use of partial summary judgments, umpire appraisals and admissibility of subsequent related claims, as well as liability of an employee while in the course of employment. Notably, an employee acting in the course of employment can be held to be personally liable for tortious conduct.