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Summer 2020 – 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.

COVID-19: The Ultimate Business Interrupter – Can Businesses Claim Coverage for COVID-19 Related Business Losses Under an All-Risks Property Insurance Policy?

By David Rogers

The COVID-19 pandemic has led to the shutdown of a large portion of the global economy.  In Ontario, this has included the shutdown of most non-essential businesses, and the ongoing requirement for individuals to maintain physical distancing.

In turn, businesses have seen profits reduced to a trickle and in many cases, this has led to forced bankruptcies and closures.

The provincial and federal governments have implemented various measures for the assistance and protection of certain businesses, but for most, this is simply not enough.

Many of the Ontario businesses that have seen significant losses are in turn following the steps of many counterparts in the United States and looking to their insurers for coverage.  More specifically, many companies are making enquiries about potential business interruption coverage under their all-risks insurance policies.

All-Risks Insurance

All-risks insurance policies are generally property policies, and they can provide a broad range of coverage for all risks of property damage, including business interruption losses.

Insurers will in turn usually rely on a number of specific exclusions in order to narrow this broad coverage.  Property policies do not generally define the term “property damage”, as is the case with most commercial liability policies, and therefore the scope of that term is often open to interpretation.

Although policy wording can vary, most property policies contain very similar policy language. Businesses are often unique however, and insurance risks can be underwritten in a way that is specific to that unique business.

Therefore, it is very important that insurers and policyholders review the actual wording of the policy at issue when considering potential coverage issues under an all-risks property policy.

Business Interruption Insurance

Business interruption insurance generally forms part of an all-risks policy, and provides coverage where the policyholder has suffered losses as a result of physical damage to either its property or to a nearby property, or physical damage elsewhere causing the disruption of its supplies or interference with the ability of customers to access the insured’s business.

Requirement for Property Damage

One common condition for these types of coverages is the requirement that there be property damage in order to fit within the initial grant of coverage.

This becomes complicated when considering COVID-19 related business losses, as many policyholders will not have sustained direct physical damage to their property, such as would generally be caused in a water or fire loss. Instead, these businesses have had to close their doors because of provincial government orders.

Therefore, although the purpose of the closures is to prevent the spread of the COVID-19 virus to the property, there is not, on a narrow interpretation of the term, actual physical loss or damage to the property itself or to property within the supply chain.

This is the general position that most insurers are likely to take when considering questions of coverage for these types of business losses: COVID-19 related business interruption losses are not the result of physical loss or damage to property.

The Role of the Courts in Interpreting Coverage

However, where there is no definition of property damage in the policy, courts play an important role in providing guidance and will generally do so through the well-established principles of insurance policy interpretation.

This means a court will consider whether there is a clear literal meaning to the term, or whether it is capable of more than one meaning. If the term is capable of more than one meaning, there is in turn an ambiguity, and such ambiguities should be interpreted contra proferentem, or against the party that drafted the clause, so long as the outcome is within the reasonable expectations of the parties.

Traditionally, courts have interpretated the definition of “property damage” within the grant of coverage to require actual physical damage to the property itself. Some courts however, notably in United States, have taken a more broad view of the term “property damage”, finding that where businesses have been shut down due to a government order, the ensuing loss of use of the property is physical loss or property damage.

A very recent trial level decision from the Ontario Superior Court of Justice follows similar reasoning in finding that a government ordered shutdown of a business did constitute physical loss or damage to property for the purpose of coverage under an all-risk property policy. Many now wonder whether this decision will provide for greater access to insurance coverage in response to COVID-19 related shutdowns.

MDS Inc. v. Factory Mutual Insurance Company

In MDS Inc. v. Factory Mutual Insurance Company, 2010 ONSC 1924 (“MDS Inc.”), the court was asked to consider whether there was physical property damage where a policyholder’s supplier was forced to close operations for a number of months because corrosion caused a radioactive leak of heavy water in its nuclear facilities.

The policyholder was unable to buy radioisotopes from the supplier because of the closure and in turn claimed loss of profits under its business interruption coverage as part of its all-risks insurance policy.

The insurer’s position was that the loss of use of the premises did not equate to physical damage to property, while the policyholder argued a more broad interpretation where the loss of use of that property by government order meant there was physical damage to the property.

As is common, the term “physical damage” was not defined in the policy.  The court considered conflicting lines of case law interpreting the term “physical damage” and in turn determined that there was no clear and literal meaning to the term in the context of an all-risks policy in Canada.

The question for the court was whether resulting physical damage should be defined narrowly to require actual physical damage or whether it should be defined broadly to include loss of use or function.

Ultimately, the court concluded that a broad definition of resulting physical damage was most appropriate under the specific set of facts at issue, and interpreted the policy to include impairment of function or use of tangible property caused by an unexpected event. The leak of heavy water precipitated the shutdown and caused the reactor to be inoperable and this was considered physical damage to property.

Policyholders are likely to see this decision as opening the door to a wider interpretation of business interruption coverage in the context of COVID-19 related claims. However, policyholders and insurers alike should proceed with caution.

The MDS Inc. decision was based on a complicated fact scenario, which will certainly make it distinguishable in most future coverage disputes. However, each determination will also be unique and fact specific, and so the precise wording of each specific policy term must be carefully considered in any analysis.

By Order of Civil Authority

Some businesses will also have additional insurance specifically for the consequences of a pandemic, including losses resulting from an order by a civil authority shutting the business or prohibiting access to the policyholder’s property.

This second type of coverage will often not require physical damage to the insured property, although may or may not require a confirmed outbreak of the pandemic at the property itself.

This appears on its face to be a more straightforward type of coverage. However, here too there are disputes arising between insurers and policyholders over the proper interpretation of the policy terms, including the term “civil authority” and the term “order”.

Further, consider where coverage requires proof that the shutdown occurred due to an actual outbreak at the insured’s premises. Does a wide-ranging shutdown like we have seen in Ontario, done for the purpose of protecting against such an outbreak at the premises, therefore fit within the policy coverage even though the outbreak never occurred?

The answer is a difficult one, as the costs to the policyholder of the shutdown have arguably protected against the imminent peril of an otherwise covered claim.

This is one of many additional questions that will be decided on a case-by-case basis over the coming months and years, as businesses try to rebuild in the aftermath of COVID-19.


Although the COVID-19 impact on businesses in Ontario has been staggering, it is unlikely that private insurers will play a major role in assisting these businesses to rebuild.

Specifically, it is unlikely that COVID-19 related losses would be covered under the business interruption provisions of most all-risks property policies, which require actual property damage.

However, policy wording can be unique, and it is imperative for both policyholders and insurers to carefully review the actual language of the policy at issue and consider the unique facts of each claim for coverage before determining a coverage position.

Special Awards at the LAT – An Upward Trend

By Alon Barda

In preparation for a conference a few years ago, I co-authored a paper that analyzed various trends and changes since the inception of the Licence Appeal Tribunal (“LAT”) in April 2016. At the time, I noted that, while the recovery of costs and expenses was removed with the migration of accident benefits claims from FSCO to the LAT, section 10 of Ontario Regulation 664 maintained an award for unreasonably held or delayed payments, or a special award as it more commonly referred.

The only difference between the new wording compared to the one applied during the FSCO regime is that if the LAT finds that an insurer has unreasonably withheld or delayed payments, the LAT, in addition to awarding the benefits and interest to which an insured person is entitled under the SABS, may award a lump sum of up to 50 per cent of the amount to which the person was entitled at the time of the award together with interest on all amounts at 2 per cent per month, compounded monthly.

This slightly differs from the FSCO regime where the special award was required to be awarded once it was found that the insurer had unreasonably withheld or delayed payment.

Criteria for Application of a Special Award

A special award is an equitable remedy that is intended to punish the insurer for misconduct and to deter others from engaging in such conduct in the future.[1]

Generally, in order to be successful in obtaining a special award, the claimant must demonstrate that the insurer not only withheld or delayed a benefit payment, but did so unreasonably.

The Tribunal has stated that an award should be granted “only where there was unreasonable behaviour by an insurer in withholding or delaying payments, which can be seen as excessive, imprudent, stubborn, inflexible, unyielding or immoderate.”[2]

In determining the quantum of the award, the Tribunal has considered the following factors:[3]

  • the blameworthiness of the insurer’s conduct;
  • the vulnerability of the insured person;
  • the harm or potential harm directed at the insured person;
  • the need for deterrence;
  • the advantage wrongfully gained by the insurer from the misconduct;
  • other penalties or sanctions that have been or likely will be imposed on the insurer due to its misconduct; and
  • overall length of the delay.

Special Awards Initially Ordered Sparingly

The frequency in which the special award was levied during the early days of the LAT seemed to support the claim amongst counsel for claimants that the LAT was more favourable to insurers (a position I disagreed with then and more strongly disagree with now). During the first 17 months of the LAT’s existence, the Tribunal had awarded the special award on only two occasions.[4]

Recent Cases and the Upward Trend

While I have not engaged in an exhaustive analysis and reviewed all cases as I did during the first two years of the LAT, it appears based on some recent cases released this year that the LAT is ordering a special award with greater frequency and even in circumstances where it does not appear warranted.

Malitskiy v. Unica Insurance

In Malitskiy v. Unica Insurance[5] the claimant was deemed catastrophically impaired. He sought attendant care benefits in the amount of $6,000 a month less a partially approved amount of $1,199.10. He also sought entitlement for home renovation expenses in the amount of $344,864, among other benefits.

The adjudicator ultimately found entitlement to $6,000 per month for attendant care from October 13, 2017 and ongoing less amounts paid by the insurer and also entitlement to the home modification expenses.

The adjudicator was critical of the insurer for reliance on its assessors. The adjudicator found that the insurer failed to “ask the relevant questions” regarding the claimant’s functional needs and relied on reports of the insurer assessors that did not correspond with the information in the claimant’s medical file and that was not supported in the evidence.

Accordingly, the adjudicator found that the position taken by the insurer relating to the attendant care benefit and the home modification expense amounted to an unreasonable withholding or denial and that the denial of the benefits was “imprudent, inflexible, and immoderate”.

The adjudicator required the insurer to pay 25% of the portions of attendant care and the home modification expense that was denied. Considering the quantum in dispute, this represented a significant award despite the insurer reasonably relying on its expert assessors.

A.A. v. Aviva General Insurance Company

In  A.A. v. Aviva General Insurance Company[6] the central issue was whether the claimant was entitled to a special award. The Tribunal ordered a special award for each treatment plan in dispute (payment of which resolved at the case conference).

For the first treatment plan, the claimant argued that a special award was warranted as the insurer failed to comply with the appropriate notice requirements as the insurer did not provide medical or other reasons for its denial and failed to consider new evidence. The insurer argued this was simply technical non-compliance.

The Tribunal noted that insurers are not held to a standard of perfection and the insurer is entitled to make an adjusting decision based on the medical evidence available at the time and on an ongoing basis.

However, the Tribunal held that, once the insurer has evidence, particularly from its own assessors, that the applicant’s injuries are not within the Minor Injury Guideline, “it cannot ignore that evidence and choose to rely on the evidence it prefers in order to deny the treatment plan.”

The Tribunal found as an aggravating factor the fact that the insurer continued to maintain that the MIG applied to the claimant’s injuries, “despite an insurer examination report to the contrary”. Furthermore, the insurer “continued to maintain that the denials were in accordance with the Schedule despite the denials being outside the requirements of s. 38(8).”

Accordingly, the Tribunal held that the claimant “should not have to incur the temporal, emotional, and financial costs associated with engaging the Tribunal in order to obtain the treatment they should have received long before”. The Tribunal ultimately awarded 25% of the amounts in dispute.[7]

D.Y. v. Aviva General Insurance Company

In D.Y. v. Aviva General Insurance Company[8] the Tribunal found that the claimant was entitled to non-earner benefits, medical rehabilitation benefits and examinations. In finding that the insurer was responsible for payment of a special award, the Tribunal noted that one is warranted where the insurer’s conduct has been “unreasonable or wrongly motivated.”

In this case, the Tribunal found that the insurer had enough evidence when the application was launched from its own experts regarding the claimant’s chronic pain and psychological impairment and the claimant’s need for chiropractic and physical therapy.

The Tribunal ultimately concluded that, “based on that evidence and the recommendations of its retained specialists, the insurer should have approved payment of everything recommended by their specialists rather than waiting for the results of a hearing.”

Instead, the Tribunal found that “the applicant has had to endure another year of pain” and the Tribunal did “not doubt that her complete recovery has been adversely impacted by this.”  Accordingly, a special award at 33% of the amounts owed was awarded.

M.M. v. Aviva Insurance Company

In the very recent decision of M.M. v. Aviva Insurance Company[9] the Tribunal found that the insurer’s notice for various treatment plans was non-compliant with s.38(8) of the Schedule. The Tribunal highlighted that, while all of the insurer’s notices were deficient, “this finding in and of itself does not amount to unreasonable withholding or delay of payment of a benefit that would entitle [the claimant] to an award”.

However, in this case, among other issues, the insurer failed to cure the deficient notice after follow-up letters from the claimant and the claimant’s counsel. As such, the Tribunal found that the insurer contributed to the delay in failing to respond.

The Tribunal noted that deterrence is warranted in this matter for, among other reasons, the insurer ignoring the claimant’s letters as it is “not an appropriate way to respond to a client of an insurer, even if their counsel’s conduct may be considered challenging”.

Ultimately, the Tribunal found that “the timeliness and process by which Aviva’s denials were communicated to [the claimant] failed to provide the readily available information required to uphold the consumer protection mandate of the Schedule. Accordingly, the Tribunal found that the claimant was entitled to a special award of 20% for the preparation of one treatment plan and payment of another.

The Takeaway

A recent search identified four cases from this year alone where a special award was granted. This is just a snapshot and there are likely more. This represents a renewed concern for insurers.

As set out above, awards are being levied not only for behaviour which can be seen as excessive, imprudent, stubborn, inflexible, unyielding or immoderate. Awards are being granted against insurers that take seemingly justifiable positions on the facts of the case. In other cases, the awards are certainly justified to uphold, as the LAT noted, the consumer protection mandate of the Schedule.

Overall, insurers need to take caution and recognize that, while costs may be gone at the LAT, recent cases demonstrate that the Tribunal will certainly grant a special award in circumstances where the conduct may not appear to warrant such a significant remedy.

Accordingly, while the circumstances where an award may be granted are fact specific, insurers should be sure to prudently handle files and take extra caution to ensure that benefits are denied properly and that files are handled in accordance with the SABS and in accordance with the now abundant LAT caselaw. A failure to do so may lead to some significant consequences.

[1] See: N.P. v. The Economical Insurance Group CanLII 94133 (ON LAT).

[2] Ibid.

[3] See for example: 17-006757 v. Aviva Insurance Canada, 2018 CanLII 81949 (ON LAT) at paras 44-45 and A.A. v. Aviva General Insurance Company 2020 CanLII 19571 (ON LAT).

[4] See: 16-002779 v BelairDirect Insurance 2017 CanLII 70688 (ON LAT) and 16-002861 v Aviva Insurance Company 2017 CanLII 62160 (ON LAT).

[5] 18-010164/AABS.

[6] 2020 CanLII 19571 (ON LAT).

[7] The Tribunal noted that this is 25% of the “maximum award”. However, this amount is actually 25% of the total in dispute and not 25% of 50% of the total, which is actually the maximum that can be awarded.

[8] 2020 CanLII 30363 (ON LAT).

[9] 2020 CanLII 37673 (ON LAT).

The Latest Ruling on Social Host Liability

By Tom Macmillan

The recently-released British Columbia Supreme Court decision of McCormick v. Plambeck, 2020 BCSC 881, adds the latest chapter to Canada’s grappling with the issue of social host liability.  It follows on the heels of the Ontario Court of Appeal decision of Williams v. Richard, 2018 ONCA 889, in which that Court overturned the motion judge’s ruling for summary judgment in favour of the defendants.

Both of these cases, along with a handful of others, represent and effort by lower courts to explore the boundaries of the 2006 Supreme Court of Canada decision of Childs v. Desormeaux, 2006 SCC 18.  In Childs, the Supreme Court found that no duty of care was owed by the hosts of a party to a plaintiff who was later that night injured when a guest of the party, while intoxicated, struck the vehicle in which the plaintiff was a passenger.

Background on the Childs Decision

In Childs, the hosts were aware that the guest was a “heavy drinker,” and observed him consume approximately 12 beers over two and a half hours at the party.  As the guest was leaving, one of the hosts asked him if he was alright to drive.  The guest replied that he was.

The Supreme Court found that there was no duty of care, relying on the distinction between nonfeasance (a negligence failure to act) and misfeasance (a negligent overt act).  The Court found that the behaviour of the hosts in Childs is best characterized as nonfeasance, and outlined that “…where the conduct alleged against the defendant is a failure to act, foreseeability alone may not establish a duty of care”.

In short, the Supreme Court outlined that when the law seeks to impose liability on a party for failing to take certain actions in relation to another person’s behaviour, something more is required than mere foreseeability that the person’s behaviour could cause harm to another.

In Childs, while it may have been foreseeable that the guest’s actions would cause injury to the plaintiff, in order to find a duty of care in that case, more was required, because it was a case of nonfeasance.

The rationale underpinning this legal principle is that the court is hesitant to impose legal liability on individuals for failing to act to restrict the autonomous activities of another.  Chief Justice McLachlin put it as follows in Childs:

…Although there is no doubt that an omission may be negligent, as a general principle, the common law is a jealous guardian of individual autonomy.  Duties to take positive action in the face of risk or danger are not free-standing.  Generally, the mere fact that a person faces danger, or has become a danger to others, does not itself impose any kind of duty on those in a position to become involved.

The Supreme Court enumerated three categories of relationships that do give rise to a duty of care, even in cases of nonfeasance.  Those are:

  1. Where the defendant intentionally attracts and invites third parties to an inherent and obvious risk that he or she has created or controls;
  2. Paternalistic relationships of supervision and control, such as those of parent-child or teacher-student; and
  3. Where the defendant exercises a public function or engages in a commercial enterprise that includes implied responsibilities to the public at large.

Some prematurely concluded, following Childs, that the Supreme Court had effectively closed the door on social host liability. Since that ruling, however, there have been a number of cases which have addressed some of the softer factual points in the case.

Court of Appeal’s Decision in Williams

Recently, the Court of Appeal in Williams, was faced with a situation where the defendant host actually provided to the at-fault driver the alcohol that got him intoxicated.  Furthermore, the host knew of his guest’s intention not only to drive, but to drive others in his vehicle, all while intoxicated.

Contrast this with Childs, where the guest supplied his own alcohol, and where the hosts at least took a small step to ask if the guest was alright to drive.

The Court of Appeal in Williams allowed the plaintiffs’ appeal of the motion judge’s ruling on summary judgment, pointing out that the facts of this case make it such that it is not a foregone conclusion that there is no duty or standard of care by the host to the plaintiff passenger of the guest’s vehicle.

It is worth noting that the recent ruling in Williams was merely that the questions of the duty and standard of care are triable issues.  There was no finding that a duty of care toward the host to the plaintiffs actually did exist, or that if it did, the standard was not met.  Importantly, there remains no case of social host liability involving the intoxication of a guest who then later commits a tort.

The door is still closed, at least for now.

Where the Guests are Minors

Enter McCormick, out of sleepy Salt Spring Island in British Columbia.  In this case, the defendant adult homeowners agreed to host a number of teenagers at their house to celebrate.  Both they and their teenaged daughter were present at the party, with the adults walking through the party to gauge the atmosphere.

At one point in the evening, the plaintiff and his friend left the party, walked to a nearby property, and stole a vehicle using keys that were left in the vehicle itself.  They subsequently drove off the road, resulting serious injuries to the plaintiff, and the death of the driver.

The surviving plaintiff brought an action against the owners of the vehicle.  That action resulted in a settlement prior to trial.  He also brought an action against the hosts of the party, for failing to prevent his injuries.

The trial judge, in a detailed and well-written decision, concluded, on the facts of this case, no duty of care existed by the hosts to the plaintiff.  Although this is a case of nonfeasance, the trial judge found that the injuries to the plaintiff were not foreseeable by the hosts, so there was no need to look at the enumerated grounds set out in Childs.

The judge further ruled that, if he was wrong and a duty of care did exist, that the hosts in this case met the standard of care.

The hosts had kept a loose tally of who was present at the party, and with the assistance of their daughter, collected the car keys of guests who drove there.  The evidence was that the hosts asked the guests to contact their parents for rides home, if needed.

One of the hosts ultimately drove five of the guests to their homes herself.  One guest was permitted to sleep over on the porch.  The plaintiff had walked to the party, and the evidence of the hosts was that at no point did they see the plaintiff intoxicated.

While the party clearly contravened provincial statutory schemes on alcohol consumption by minors, the trial judge finally noted the well-established principle that a breach of statute does not create liability in negligence.  There was no duty of care owed by the hosts to the plaintiff.

In deciding whether the hosts owed the plaintiff a duty of care in the circumstances, the trial judge outlined that he would have to find that it was foreseeable that guests at their party would leave and steal a vehicle, and drive it in an unsafe manner.

The trial judge rejected that it this was a foreseeable outcome of hosting the party.  While evidence was put forward that it was commonplace on Salt Spring Island for residents to leave their cars unlocked with keys in or near them, the judge found that this is precisely evidence that residents there did not expect vehicular theft.

It was not foreseeable to the hosts that, simply by virtue of having under-aged guests consuming alcohol at their premises, the guests would steal a car and drive it in a dangerous manner.

Standard of Care Met in Any Event

The judge found that, in any event, even if a duty of care did exist to the plaintiff, the hosts would have met the standard expected of them.  In stressing that the standard is not perfection and that the hosts were not required to prevent any and all misfortunes that may befall their guests, the judge noted that the following was undertaken by the hosts:

  • they circulated through the party a number of times throughout the evening;
  • they collected car keys from guests who drove;
  • they encouraged people to call their parents to pick them up;
  • they drove people home themselves who were not able to secure rides;
  • they allowed one guest to sleep over.

The trial judge found that it was reasonable for the hosts to not have a specific “plan” in place for those like the plaintiff who walked to the party.  It was reasonable of the hosts to expect that those who walked to the party would walk home at the end of their night.

The trial judge looked at the standard of care of a careful and prudent parent, which requires a consideration of community standards and the age of the child.

In this case, the judge focused on the relatively relaxed community standards on Salt Spring Island, as well as the fact that the plaintiff was 17 years old.  He distinguished this case from those involving small children, where there would be a higher expectation of supervision on the part of parents.

So Where Are We Left?

As noted above, there remains no case in Canada where there has been a finding of “social host liability” for circumstances such as Childs and now McCormick.  The BC case is noteworthy in that it addresses the issue of adult hosts knowingly hosting a party for minors involving alcohol consumption.

Before writing the eulogy for social host liability in Canada, it is worth noting some key factual findings from this case which leave the door open for different fact scenarios in the future.

First, the trial judge found that the plaintiff was not intoxicated at the time that he left the party.  As noted previously, in Williams this issue is very much live, and it will be fascinating to see how it is dealt with, if that matter proceeds to trial.

Second, the plaintiff in this action was involved in the theft of a vehicle from a neighbour’s property.  One can imagine that the analysis would have been more challenging if, for example, the plaintiff had driven to the party, and was either able to get his keys back, or was never forced to give over his keys in the first place.

The judge in McCormick stressed that there was no evidence of any guests who did drive getting into an accident after the party.  If one had, then we would have had a fact situation closer to Childs, except involving minor guests.  Would the court still have found that no duty of care existed?

Third, a lot of emphasis was placed by the judge on the community standards of Salt Spring Island, and its relatively relaxed attitude.  In reading the ruling, the island at times appeared to be almost a party itself to the action.

These community standards influenced the judge’s interpretation of the behaviour of the hosts toward their guests.  It is possible to imagine that a court in the future may rule another way on similar facts, but in a different geographical setting.

Parties for Minors

Leaving aside the legal analysis, this case stands both as a source of relief for social hosts, and as a stark reminder of the tragedy that can unfold following such gatherings.  The hosts in McCormick went to some lengths to ensure the safety of their guests, knowing that they were minors consuming alcohol.  The hosts did not serve their guests alcohol, and provided rides home for those who requested them.

Frankly, however, it would likely be a mistake for prospective hosts of such parties to look at the list of precautionary elements put in place by the hosts here as a checklist by which civil liability can be avoided.  As noted above, there are a lot of facts in this case which contributed to there being no duty of care, which the hosts did not have control over.

In short, hosting such parties for minors remains a risk.  There is no telling whether courts will remain inclined to find there is no duty of care for social hosts, or whether a fact situation will come along that tilts the other way.  One can imagine that if there is, there is a good chance that it involves minor guests.

House Construction: The Duties of Contractors and Municipal Building Inspectors

By Brian Sunohara

After moving into a newly renovated or constructed home, the last thing people want is to have deal with the hassles and headaches of problems with their home. People greatly rely on construction contractors and building inspectors to do a proper job.

In White v. The Corporation of The Town of Bracebridge, 2020 ONSC 3060, the court examined the obligations of contractors who design and construct houses, as well as the duty of care owed by municipal building inspectors.


In March 2012, the plaintiff purchased a house from the defendant, Grand. At the time of the purchase, Grand was in the process of renovating the property and adding a two storey addition.

Some of the construction was being conducted pursuant to a building permit issued by the Town of Bracebridge, while other parts of construction were not. The construction passed inspections by the Town’s building department.

In March 2014, the plaintiff noticed watermarks on the wall and landing area around the stairs of the house. In April 2014, upon further investigation by a contractor, the plaintiff was advised that the water was entering the house through the ceiling in the new addition.

Additional investigations revealed a number of construction deficiencies and infractions of the Ontario Building Code associated with Grand’s construction activities that the Town failed to identify during its building inspections.

The matter proceeded to a six day trial. Grand did not participate in the trial.

Negligent Construction

Justice DiTomaso stated that contractors who design and construct a building owe a duty of care to subsequent purchasers for foreseeable failures that would lead to defects that pose a danger to the health and safety of the occupants.

It is reasonably foreseeable that negligent construction resulting in latent defects may cause injury or damage to other property owners when those defects manifest themselves. Justice DiTomaso held that Grand owed the plaintiff a duty of care.

Regarding the standard of care, Justice DiTomaso noted that the Ontario Building Code provides minimum standards for construction so that owners of houses will be safe from poor construction. His Honour held that the applicable standard of care for construction contractors is, at a minimum, the Ontario Building Code’s requirements.

Grand breached the standard of care. There were a significant number of deficiencies which contravened the Ontario Building Code.

Breach of Contract

Justice DiTomaso indicated that a construction contract includes an implied term that the contract will be performed in a good and workmanlike manner, if the property owner relies on the knowledge and expertise of the contractor.

When the plaintiff entered into the Agreement of Purchase and Sale for the house, it was conditional upon the completion of the construction work. The plaintiff’s expectation was that Grand would not only comply with the Ontario Building Code, but would complete the construction in a good and workmanlike manner.

Justice DiTomaso found Grand liable for breach of contract.

Negligent Building Inspection

A “reasonable” building inspection will vary depending on the facts of each case, including the likelihood of a known or foreseeable harm, the gravity of the harm, and the burden or cost that would be incurred to prevent the injury.

Municipalities are not held to a standard where they are required to act as insurers or guarantors for renovation work. A municipality does not have to discover every latent defect or every deviation from the Ontario Building Code where inspections are carried out according to an inspection scheme based on good faith policy decisions.

A municipality does not have an obligation to ensure that the building is completed exactly in accordance with the development specifications set out by the owner.

In addition, municipal building inspectors do not have to continuously monitor the construction.  They have a duty to detect defects that are apparent on visual inspection during the staged inspections and to order that the defects be remedied. As indicated, perfection is not expected.

The Town conceded that certain aspects of the construction contained Ontario Building Code deficiencies which should have been caught on inspection.

However, for the most part, the Town acted reasonably. Justice DiTomaso held that there was nothing unusual during the Town’s staged inspections that raised red flags and warranted an increased standard of care.

Contributory Negligence

The Town argued that the plaintiff should be held contributorily negligent for failing to conduct due diligence before purchasing the property. Justice DiTomaso disagreed.

His Honour held that the plaintiff was very diligent in his pre-purchase review of the property. He ensured that there would be a final inspection from the municipality confirming Ontario Building Code compliance. He also had two friends who had experience in construction and real estate inspect the property.

Moreover, the Town did not lead evidence on the standard of care or level of due diligence required by the plaintiff, nor did it elicit any objective or other evidence of a failure of the plaintiff to meet that undefined standard.

Private Insurance Exception

The Town argued that it should be allowed to deduct a certain portion of the damages to account for amounts received by the plaintiff from his home insurer. The Town submitted that the plaintiff cannot recover the same damages twice.

Justice DiTomaso held that the private insurance exception should apply, thereby prohibiting a deduction. His Honour stated that it would be unfair and inappropriate to allow the defendants to benefit from the plaintiff’s foresight and sacrifice in obtaining home insurance.


Grand was found solely liable for damages of over $96,000.  The Town and Grand were found jointly and severally liable for damages of just over $71,000. This includes general damages of $5,000, on the basis of the plaintiff suffering inconvenience, distress, and a loss of enjoyment of his house for a prolonged period of time.

The Town’s crossclaim against Grand was granted in the amount of just over $71,000.


Contractors who construct houses owe a duty to purchasers in regards to foreseeable failures that will lead to defects which pose a danger to the health and safety of the occupants of the house.

At a minimum, contractors must comply with the Ontario Building Code. Further, it is an implied term of a construction contract that the work will be performed in a good and workmanlike manner, if the property owner relies on the knowledge and expertise of the contractor. Therefore, in many cases, contractors may have an obligation to exceed Ontario Building Code requirements.

Municipal building inspectors have to conduct “reasonable” inspections. They are not expected to be perfect or ensure exact compliance with construction specifications. The requirements vary and depend on the facts of each case, including the likelihood of a known or foreseeable harm, the gravity of the harm, and the burden or cost which would be incurred to prevent the injury.

Access to Justice & Summary Judgment Post-Pandemic: A “Culture Shift” - At Long Last?

By Stephen G. Ross and Gemma Healy-Murphy

The Covid-19 pandemic looks set to be the impetus for much change in the world as we knew it, not least with respect to the administration of justice. The courts have recognized both the need to bring the Ontario judiciary into the virtual world and the benefits that could be derived from same when society emerges fully from these unprecedented times, including more timely and cost effective access to justice.

This is not the first “crisis” that has rallied a call for change in the courts’ system. In 2014, the Supreme Court of Canada spoke of Ontario’s “broken” civil justice system in the seminal case of Hryniak v. Maudlin[1].

Summary judgment was heralded as the way forward in increasing access to justice and promoting proportionality, expediency and affordability in the context of civil litigation.

The Supreme Court of Canada held that a “culture shift” was required to promote these goals, in particular by “moving the emphasis away from the conventional trial”. In that way, summary judgment was primed as the catalyst for change in the administration of justice in Ontario and beyond.

While there were optimistic beginnings, the “culture shift” that was envisioned by the Supreme Court of Canada in theory has fallen far short in reality, particularly in certain practise areas, including personal injury and insurance law. The caselaw that has followed in the six (6) or more years since Hryniak reveals many reasons for same, including a scarcity of judicial resources and the impact of interpretative/judicial erosion.

Then, enter the Covid-19 pandemic, which served to ground an already “broken” system to a complete halt, albeit briefly, and from which we are now starting to emerge.

Looking Back to Look Forward

Over the past few months, we have seen the judiciary quickly and creatively respond to the challenges imposed by the Covid-19 pandemic. In this way, we have seen the makings of the “culture shift” called for by the Supreme Court in Hryniak, and the courts appear invigorated by the efficiencies that are already emerging.

Let’s look back briefly to see past obstacles, and how the Ontario courts can move forward and renew its efforts to promote the efficiencies of summary judgment that the Supreme Court of Canada extolled in Hryniak, in the post-Covid-19 pandemic era.

Scarcity of Judicial Resources

In Hryniak, the Court noted that “to the extent that current scheduling practices prevent summary judgment motions being used in an efficient and cost effective manner, the courts should be prepared to change their practices”.

There is a distinction between the courts being so prepared and having the necessary additional resources required to truly give full legal effect to the vision of the Supreme Court in Hryniak. This vision has, unfortunately, not come to pass, in part because of the scarcity of judicial resources, including the number of judges, and the lack of available government funding to facilitate such change.

Further, the courts were notoriously slow to embrace the digital age.

While the Covid-19 pandemic will unlikely serve to increase judicial resources and funding (in fact the opposite could be true), what it has done is force the courts to quickly adapt to more remote operations and, presumably, to find ways to reallocate the resources that are available in order to ensure ongoing access to justice.

Justice Edwards expressed this very sentiment in the recent case of Blaese v. Metcalfe[2] where he stated that “with the covid-19 pandemic, it has become increasingly apparent to the court that wherever possible, judicial economies of scale will have to be employed in the future to ensure that parties have access to our court system”.

Equally, the cost benefits of summary judgment in the post-Covid-19 era can and should no longer be ignored as part of the conversation of preserving judicial economies of scale.

To date, however, summary judgment post-Hryniak has often been a cost prohibitive and ineffective process. There have been countless motions for summary judgment since Hryniak where bright and capable judicial officers have reviewed mountains of evidence and heard detailed submissions from counsel, but the motion was dismissed in favour of a full trial of the issues in dispute (a trial that rarely if ever actually happens).[3]

The time, money and energy of all involved is put to effective waste where more often than not, the motion is simply dismissed in favour of the mythical trial and the motion judge rarely remains seized or looks to make use of the evidence gathering process to date.

It is the authors’ view that this was an unfortunate development and one that must change in the post-Covid-19 pandemic era we are entering into.

Jury Trial is Not the Default

Despite Hryniak, it would appear that at least theoretically, the full jury trial remained the default in Ontario in the pre-pandemic era.

In Anjum v. Doe[4], Justice Myers held that if all it takes to resist the progress made in Hryniak is the filing of a jury notice, the advances seeded by the Rules change in 2010, and magnified by the Supreme Court in Hryniak, would be undone.

Despite same, the presence of a jury notice has persisted as a basis for not granting summary judgment.

In Brown v. Dalessandro[5], despite an abundance of evidence available to decide the issue summarily, the Court still required the “jury” to assess credibility at trial. As the parties were presumptively entitled to a trial by jury, the Court refused to even open the “tool box” and/or to conduct a mini-trial or other bifurcated process.

Similarly, in Wettlaufer v. K2D2 Investments Inc.[6], the Court did not wish to usurp the role of the jury and stated that since both parties elected to have their dispute tried by a jury, including the party seeking summary judgment, they should have the issue so decided.

As indicated, more often than not, we know (at least statistically speaking) that that theoretical trial on the merits rarely occurs, as full trials have become prohibitively expensive, time-consuming and risky. This is particularly so where the parties have already been though an expensive and time-consuming summary judgment motion process.

Further, and looking forward once full operations are resumed, the courts face a significant challenge to deal with the already back-logged trial list in all areas of the court’s responsibility, particularly in Toronto.

In MacPherson v. Samuel[7]­­­­, Justice Kimmel cited a host of cases which concluded that the existence of a jury notice is not relevant to the determination of the question of whether there is a genuine issue requiring a trial on a summary judgment motion.

Indeed, now more than ever, a jury trial should no longer be the default in cases otherwise appropriate for disposition by summary judgment.

Interpretive Erosion

The success of summary judgment post-Hryniak has been further hindered by what is commonly known as interpretive erosion.[8]

The onus on motion for summary judgment is that each party put its “best foot forward” and “lead trump or risk losing”. The motions judge is entitled to assume s/he has all the evidence that would be available at trial.[9]

This presumption has also often been honoured in the breach post-Hryniak (and pre-pandemic) since, at least in the area of personal injury law and insurance law, parties are often given a second or even third kick of the can.

Oftentimes, “missing” evidence has been the basis for which the Ontario courts have declined to order summary judgment.

In Cartini v. Square One Ltd.[10], the defendant landlord moved for summary judgment with expert evidence that the parking lot was safe and in compliance with all legal requirements. The plaintiff elicited no expert evidence and despite the urging of the judge, did not amend the claim to particularize her alternative “unsafe shopping cart” theory.

At the second attendance, the plaintiff, who led no evidence on the theory, was given a third kick at the can to present a case that there was a triable issue with respect to her still unparticularized “unsafe shopping cart” theory. The matter was sent back to pleadings stage on that issue and the summary judgment motion was dismissed.

In Efremova v. Spadaccini[11], the plaintiff was found to be in “bare compliance” with her duty to put her best foot forward but when she pointed to “missing” evidence, in the form of a “doggy DNA test” to identify the dog that had bit her, the defendant’s motion for summary judgment was dismissed citing a genuine issue for trial.

In Rego v. Walmart[12], the defendant moved for summary judgment and tendered video evidence of the plaintiff’s fall. Dozens of people were seen walking over the impugned area of the floor both before and after the fall. Three (3) employees swore affidavits to establish that there was nothing on the floor where the plaintiff fell. The plaintiff conducted no cross-examinations of those witnesses.

At the motion, the plaintiff alleged that a trial was nevertheless necessary in part because the so-called “CCTV operator” was a relevant witness (missing evidence) whose evidence was “necessary” for proper adjudication. The motion was dismissed on the basis of this and other similar “missing” evidence. Leave to appeal was denied by the Divisional Court.

It is submitted that moving forward, the courts will need to take a distinct step back from providing parties multiple chances to remedy defects in the evidence. In the coming era of even far greater scarcity of judicial resources, the system may simply not be able to bear it.

It may well be necessary to give real and meaningful effect to the “lead trump or lose” principle and the presumption that the motion judge has all the evidence that will be available at trial, if there is any hope to clear the judicial backlog and provide ongoing access to justice.

Covid-19: Not Business as Usual

In 2015, Justice Myers astutely opined in Anjum[13] that “change of the magnitude of a “culture shift” is not business as usual”.

The wheels of justice move slowly and it is only now, over six (6) years later, and in response to a worldwide pandemic, that the Ontario courts appear ready to embrace the culture shift envisioned by the Supreme Court of Canada to fix Ontario’s “broken” civil justice system.

The court has already seen the advantages of requiring litigants to use virtual means to comply with procedural timelines, produce documents, engage in examinations for discovery and cross-examinations, and attend pre-trials, case conferences, hearings, and even trials.

In fact, the court has encouragingly commented that “virtual hearings are likely to retain a permanent place in the judicial tool box”[14].

Notably, in Arconti v. Smith[15], Justice Myers opined that “in 2020, use of readily available technology is part of the basic skillset required of civil litigators and courts.” Further, His Honour commented that “we now have the technological ability to communicate remotely effectively. Using it is more efficient and far less costly than personal attendance. We should not be going back.”

The court also now seems prepared to take the necessary steps to reduce its backlog and deliver timely access to justice. In Blaese, Justice Edwards indicated that an amendment to the Rules of Civil Procedure, giving the court the discretion to bifurcate issues of liability and damages absent the consent of the parties, is something that the Civil Rules Committee may wish to consider.

Moving forward, we are hopeful that in its evaluation of the tools and processes available to ensure access to justice, the courts will also breathe new life into the summary judgment process in the various ways described above. It is the authors’ view that an actual Hryniak­-like summary judgment process should be added to the “judicial toolbox” to meet the challenges of the post-pandemic era.

The judiciary should now be encouraged, or even required, to embrace summary judgment in the manner they were asked to by the Supreme Court of Canada in 2015. We are optimistic this this will be the case as we this trend already emerging in the caselaw.

In Scaffidi-Argentia v. Tega Homes Developments Inc.[16], Justice MacLeod revisited his pre-pandemic refusal to schedule a motion for summary judgment and granted the scheduling request, given that the trial of the action would be at least a year away post-pandemic.

Justice Pazaratz reviewed the Superior Court Protocols and Notices to the Profession issued during the Covid-19 pandemic in CCAS v. I.B. et al[17], a child protection case. In ordering that a summary judgment motion proceed via video conference over two full days, His Honour dismissed concerns that the motion was too complicated to proceed by Zoom videoconference.[18]

As stated by Justice Myers in Arconti when addressing the use of technology, “we should not be going back”[19].

It is the authors’ hope that when combined with the court’s recent and ongoing technological revolution, a revamped summary judgment process can provide the courts with the “judicial toolbox” necessary to meet the coming challenges. Time will tell.

[1] Hryniak v. Maudlin, 2014 SCC 7

[2]Blaese v. Metcalfe, 2020 ONSC 2432

[3] A Real Culture Shift Post-Hryniak?, Stephen G. Ross and Nathaniel Dillon-Smith, Osgoode Professional Development, October 13, 2014, “11th Annual Update – Personal Injury Law & Practice” at pg. 26

[4] Anjum et al. v. Doe et al, 2015 ONSC 5501

[5] Brown v. Dalessandro, 2016 ONSC 1724

[6] Wettlaufer v. K2D2 Investments Inc., 2018 ONSC 408

[7] MacPherson v. Samuel, 2020 ONSC 2849 at para. 43

[8] Effecting a Culture Shift – An Empirical Review of Ontario’s Summary Judgment Reforms, Brooke MacKenzie, (2017) 54 Osgoode Hall Law Journal

[9] A Real Culture Shift Post-Hryniak?, Stephen G. Ross and Nathaniel Dillon-Smith, Osgoode Professional Development, October 13, 2014, “11th Annual Update – Personal Injury Law & Practice” at pg. 17

[10] Cartini v. Square One Ltd., 2016 ONSC 8151

[11] Efremova v. Spadaccinii, 2016 ONSC 7848

[12] Rego v. Walmart, 2017 ONSC 2599

[13] Supra at para. 28

[14] Scaffidi-Argentia v. Tega Homes Developments Inc2020 ONSC 3232 at para. 1

[15] Arconti v. Smith, 2020 ONSC 2782 at paras. 19 and 33

[16] Scaffidi-Argentia v. Tega Homes Developments Inc2020 ONSC 3232 at para. 8

[17] CCAS v. I.B. et al., 2020 ONSC 3220

[18] Ibid at para. 11

[19] Supra at para. 33

What's Happening at Rogers Partners

  • Stephen Ross contributed in his role as member of the Board of Directors of The Advocates’ Society’s to the Best Practices for Remote Hearings and TAS’ Statement on Judicial Independence.
  • Stephen Ross is part of The Advocates’ Society Task Force on the Ontario government’s proposal to ban civil juries.
  • In March 2020, Tom Macmillan and Meryl Rodrigues were counsel in a hearing at the Workplace Safety and Insurance Appeals Tribunal. Matthew Umbrio provided valuable assistance with the hearing.
  • We’re delighted to announce that Matthew Umbrio was called to the bar in May 2020 and has joined the firm as an associate lawyer. Well done, Matthew!
  • Alon Barda’s excellent writing skills and detailed knowledge of the law have led him to be published on multiple occasions. Most recently, in May 2020, Alon’s article on “The Uncertainty Surrounding the Extension of Limitation Periods at the LAT” appeared in The Lawyer’s Daily.
  • Stephen Ross and Erin Crochetière prepared a comprehensive paper called “Rights and Remedies of Primary and Excess Insurers”, which was published in The Lawyer’s Daily in May 2020.
  • In May 2020, an article by Anita Varjacic and Gemma Healy-Murphy, entitled “Rights of Action of an Unborn Child”, was published in The Lawyer’s Daily.
  • Gemma Healy-Murphy again appeared in The Lawyer’s Daily in May 2020. This time it was an informative piece on the standard of care of parents, entitled “Being a reasonable parent: What does it mean?”.
  • Tom Macmillan recently spoke at the 26th Annual Canadian Institute Provincial/Municipal Government Liability conference on the topic of “Applying Lessons Learned from Recent Government Liability Cases”. Colleen Mackeigan was instrumental in assisting Tom with this presentation.
  • In June 2020, an article by Carol-Anne Wyseman was selected for publication in the Canadian Journal of Insurance Law. The article is called “Tea Time Gone Wrong: Spilled Tea in Car Not an Automobile Accident”.
  • In June 2020, an article by Emily Vereshchak was selected for publication in The Lawyer’s Daily. The article is entitled “Joint Liability And The Nature Of Subrogation Under The OPCF 44R”.
  • Gemma Healy-Murphy recently displayed her incredible singing skills at The Lawyer Show Cabaret in a heartwarming rendition of For the First Time in Forever from the movie Frozen! The event was held on-line by Nightwood Theatre in support of many worthy causes. Prior to becoming a lawyer, Gemma was a choral scholar and singing teacher. Another little known fact about Gemma – she’s an expert in racquet sports. What talent!
  • We’re excited that our new articling students, Angeline Bellehumeur, Athina Ionita, and Christopher MacDonald, will be starting with our firm in July 2020. We can’t wait to welcome them aboard!
  • Stephen Ross is chairing The Advocates’ Society’s Discount Rate Task Force, which is examining proposed changes to the discount rate to be used in determining the amount of an award in respect of future pecuniary damages and the prejudgment interest rate with respect to damages for non-pecuniary loss.
  • The Ontario Bar Association’s Anatomy of a Trial conference is now proceeding in November 2020. Stephen Ross and Anita Varjacic will be speaking at this conference.
  • Stephen Ross has accepted an invitation to again co-chair The Advocates’ Society’s popular Tricks of the Trade conference, which is scheduled for January 2021.
  • Please visit the RP Blog for regular updates on our firm and the law.

From the Desk of Colleen Mackeigan

Practical Tips for Conducting Virtual Discoveries

As society continues to learn to adapt to our “new normal” of social distancing, the legal profession has made every effort to persevere and find innovative ways to ensure, to the extent possible, that access to justice is preserved. One way in which lawyers continue to keep the litigation process moving efficiently is by conducting virtual examinations for discovery.

Lawyers who, during the initial phases of social distancing, were resistant to moving examinations for discovery to virtual platforms, are now left with little choice after the decision of Justice Myers in Arconti v. Smith, 2020 ONSC 2782, wherein he ordered examination for discovery to be conducted by video-conference despite the plaintiffs’ objections.

Justice Myers, in his reasoning, stated:

It’s 2020…We now have the technological ability to communicate remotely effectively. Using it is more efficient and far less costly than personal attendance. We should not be going back.

It may be safe to say that conducting virtual examinations for discovery will continue to be “the norm” for the foreseeable future. Accordingly, Rogers Partners wants to share some of the practical tips and tricks we have learned over the past several months for smoothly conducting an examination for discovery on a virtual platform.

  • Don’t rely on WIFI – depending on the location of counsel and the witness, WIFI connections can be spotty, causing lag and freezing which interrupts the flow of questioning. When this happens, try switching to data on your smartphone or tethering same to your laptop.
  • Discuss your witness’s set up with him/her beforehand – make sure your witness knows they need to be alone, in an area with the least amount of interruption and background noise as possible, and limit distractions to the extent possible. It is near impossible for counsel to know for certain if the witness is referring to a document or notes throughout the discovery. Accordingly, in order to avoid suspicion of same, make sure your witness knows to not look at their phone during the discovery unless asked, and if using their phone’s camera for the discovery to not sit in front of their computer as the natural inclination to look ahead may come across as the witness referring to documents on their computer.
  • Put it on the record – before beginning questioning, it is best to confirm some points on record that one wouldn’t have to do for an in-person discovery, such as:

(a) The witness is alone.

(b) The witness is not going to reference any documents or notes during the discovery unless counsel directs him/her to same or ask the witness to confirm what documents they have in front of them, if any.

(c) Some platforms (such as Zoom) allow for participants to video record a meeting – it is likely best to confirm that no participants, including the witness, will video record the examination. If the court reporter is video recording the discovery, confirm with counsel on the record that if the recording is to be obtained by counsel, prior consent for same will be obtained.

  • Do a test run – if you witness is not familiar with the platform you will be using for the discovery, do a test run with him/her beforehand so they are comfortable and time is not wasted during the discovery trying to sort out technological issues.
  • Be mindful when using the share screen function – some virtual platforms allow participants to share their screen during a meeting, which can be very convenient when putting documents to a witness. However, it is important to be alert to the fact you may be allowing other participants to see your personal notes or privileged documentation if same is open on your computer when you share your screen.
  • Be clear about who you are addressing – it is our natural inclination to use eye contact or body language to communicate to whom it is that we are speaking. This is obviously not as easily discernable using a web camera, so addressing whether you are speaking to counsel, the court reporter, or the witness, will avoid any confusion.
  • Utilize the mute function and turn off video if you are not asking questions to the witness – this cuts out background noise and eliminates and potential for confusion for the witness and court reporter regarding who is speaking.

We hope the foregoing is of some help as we continue to navigate our way through this new way of conducting litigation events and look forward to continuing to share our tips and tricks as we discover them.