Court of Appeal Narrows Scope of Defences Available to Municipalities in Road Authority Cases

By Colin Chant

Feb6

Although it has been late in coming to Southern Ontario this year, winter weather is finally upon us.

As municipalities scramble to keep roads safe for winter driving conditions, they would do well to note the recent Ontario Court of Appeal decision of Giuliani v The Regional Municipality of Halton and the Town of Milton 2011 ONCA 812 [Giuliani].

Giuliani clarifies the circumstances under which municipalities may rely on the defences to liability set out in the Minimum Maintenance Standards for Municipal Highways (MMS) under the Municipal Act, 2001 when defending road authority cases.

With Giuliani, the Court of Appeal has adopted a strict construction of the MMS, and has narrowed the scope of defences available to municipalities under section 44(3)(c) of the Act.

The likely effect of the case will be to make it harder for municipalities to defend against road authority cases.

Background

On a snowy morning in April 2003, the plaintiff suffered catastrophic injuries when she lost control of her vehicle and collided with a vehicle in the oncoming lane.

She commenced an action claiming that the defendant road authorities had failed to keep the road in a condition that was reasonable in the circumstances.

The trial judge found that the defendants did not take reasonable steps to maintain the road by monitoring the weather or inspecting the roadway, and found them liable. He further concluded that the MMS under O. Reg. 239/02, did not apply and did not afford the defendants with a defence. He deemed the plaintiff 50% contributorily negligent for driving too fast and awarded her $375,000 in damages.

The defendants appealed, claiming that the trial judge had erred by finding that a defence under the MMS did not apply.

Section 44 of the Municipal Act, 2001

Section 44(1) of the Municipal Act, 2001 requires municipalities to maintain roadways in a reasonable state of repair. Section 44(2) creates legal liability where municipalities fail to meet the standard under subsection (1).

Section 44(3) sets out three defences to a municipality’s liability:

a. When the municipality did not know or could not have been expected to have known about the state of repair of the highway or bridge;

b. It took reasonable steps to prevent the default from arising; or

c. At the time the cause of action arose, the minimum standards established under the regulations to the Act applied to the highway in question and to the alleged default and those standards have been met.

The subparagraphs under subsection 3 are disjunctive, and will be satisfied if any one of the three criteria is met.

A municipality is not liable for negligently failing to maintain a highway if it complied with the minimum standards that applied to its failure.

Minimum Maintenance Standards for Municipal Highways

The minimum standards referred to in section 44(3)(c) of the Act, are embodied in the MMS. Originally set out in O. Reg 239/02, the MMS were amended by O. Reg 23/10. In Giuliani, O. Reg. 239/02 applied.

Section 4 of the MMS sets out minimum standards for clearing accumulated snow after it reaches a specified depth. Section 4 establishes for different classes of roadway the depth at which the MMS are triggered, and time frames within which a municipality must a) deploy snow removal resources, and b) clear accumulated snow.

Section 5 of the MMS establishes similar standards for icy roadways regarding the deployment of municipal resources and the treatment of roadway surfaces.

The Appeal

The trial judge made finding with regards to both section 4 and 5 of the MMS; however, the appeal dealt specifically with the trial judge’s finding regarding section 5.

The Court of Appeal held that the standards under section 5 of the MMS are directed at situations when the roadway has become icy, not before, and that the requirement to deploy resources and treat the roadway is only triggered by the municipality’s knowledge that the roadway is icy, and not by knowledge that it may or will become icy.

In Giuliani, the trial judge did not find the defendants for failing to treat the roadway after becoming aware that it was icy. Rather, the trial judge’s finding of liability was directed at the failure of the defendants to take reasonable steps to avoid the formation of ice before it became icy by monitoring the weather and deploying resources much earlier so as to avoid the formation of ice. Accordingly, section 5 did not apply, and the requirement under section 44(3)(c) of the Act that the MMS apply to both the highway where the accident occurred and to the alleged default was not met, with the result that the defence under the MMS did not apply.

The appeal was dismissed.

 

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No Suit for You: The Right to Sue Provisions of the Workplace Safety and Insurance Act

By Bronwyn Martin

Feb6

Under the Workplace Safety and Insurance Act, a worker employed by a Schedule 1 employer who is injured in the course of employment is barred from commencing a civil action against another Schedule 1 employer. This is because Schedule 1 employers are required to contribute to the WSIB insurance fund.

The rationale behind this legislative provision is rooted in the historic “trade-off” which forms the foundation of the Ontario worker’s compensation system. This trade-off ensures that workers who are injured in the course of employment receive benefits through a non-fault insurance plan while at the same time employers are protected against civil actions by those same workers.

The protection that is offered to employers serves as a useful tool for Schedule 1 employers who are named as defendants in civil actions. Where the evidence suggests that the plaintiff was injured while they were in the course of their employment with a Schedule 1 employer, an application may be brought before the Workplace Safety and Insurance Tribunal (WSIAT) to determine if the plaintiff’s right to sue is statute barred.

On such an application, the WSIAT considers the nature of the employment relationship as well as the place, time and activity surrounding the accident. Where it finds that either the worker was in fact an independent operator, as opposed to a worker, the plaintiff will be permitted to continue with their action. Similarly, where there the place, time and activity giving rise to the accident are not sufficiently connected with the employment itself, the civil action may proceed.

The Divisional Court recently considered the employment relationship of the plaintiff in Wood v. Enbridge Gas Distributions Inc. 2011 ONSC 5494. In Wood, the plaintiff was a pipe fitter who was injured in an explosion. He then commenced an action, alleging that he was an independent contractor of Double G Gas Services (“Double G”) at the time of the explosion. The defendant brought a right to sue application before the WSIAT, in which it alleged that the plaintiff was in fact a worker. The WSIAT agreed, and the plaintiff appealed.

In dismissing the appeal, the Court emphasized a number of findings of the WSIAT. Particularly, while it was accepted that the both the plaintiff and Double G intended that the plaintiff would be an independent contractor, it did not mean that he actually was an independent contractor. In this regard, the WSIAT focused on the realities of the employment relationship, and not simply on what the contractual arrangement reflected.

This case highlights the importance and nuance of the right to sue provisions contained in the Workplace Safety and Insurance Act. However, it also serves as a reminder to look beyond the contract, tax returns and labels and to instead focus on the true nature of the employment relationship. By thinking outside the box, the exposure that comes with a civil action may be avoided.

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You Can’t Spell Catastrophic Without CA

By Forough Ghorbani

Feb2

On December 23, 2011 the Ontario Court of Appeal released a decision which has clarified the method by which catastrophic impairment may be assessed under the Statutory Accident Benefits Schedule (SABS).

The case, called Kusnierz v. Economical Mutual Insurance Co., deals with the situation where a person’s injuries do not fall under one of the specific categories of injuries described in the SABS. In earlier decisions, such as Desbiens v. Mordini¹ , our courts had allowed for the combination of physical and psychological impairments in order to assess whether an individual is “catastrophically impaired”; however, in October 2010, in determining that Mr. Kusnierz was not catastrophically impaired, Justice Lauwers held that the combination of physical and mental impairments was not permitted under the SABS. Now, the Court of Appeal has respectfully disagreed, and overturned Justice Lauwers’ lower court decision. In doing so, the Court of Appeal has affirmed that, in fact, the SABS permits the combination of mental and physical impairments for the assessment of catastrophic impairment.

This decision is important because if an individual is found to be catastrophically impaired, meaning their injuries result in a 55% whole person impairment, he or she is entitled to enhanced medical and rehabilitation benefits up to $1 million rather than the standard coverage provided in the SABS ($100,000 for accidents before September 1, 2010 and $50,000 for accidents on or after September 1, 2010).

In this particular case, Mr. Kusnierz was involved in a motor vehicle accident in 2001 which resulted in the loss of his left leg below the knee. Following the accident and as a result of the amputation of his leg Mr. Kusnierz began to suffer from depression which was found to meet the DSM-IV diagnostic criteria for both a major chronic depression disorder and post-traumatic stress disorder.

Mr. Kusnierz was insured by Economical Insurance Company at the time of the accident and he sought accident benefits under the SABS. The parties agreed that Mr. Kusnierz was entitled to benefits; however, they disagreed as to whether his injuries and sequelae resulted in “catastrophic impairment”. If Mr. Kusnierz’s physical and mental impairments were considered separately for the determination of catastrophic injury, he would not meet the 55% whole body impairment requirement.

“… the SABS permit the combination of mental and physical impairments for the assessment of catastrophic impairment.”

The Court of Appeal’s decision involved a review of the SABS as well as the American Medical Association’s Guides to the Evaluation of Permanent Impairment. The Court of Appeal determined that the SABS and the Guides allowed for and in certain instances called for the assessment of an individual’s physical impairments in combination with his/her mental impairments.

Economical argued that allowing combinations of psychiatric and physical impairments would expand the number of persons deemed catastrophically impaired. The Court of Appeal disagreed. In oral argument, Economical conceded that there are only a very few cases where an individual has a permanent physical impairment and a permanent psychiatric impairment which if assessed separately would not be catastrophic but would be if assessed together.

The Court of Appeal concluded that allowing this approach promotes fairness and the objectives of the statutory scheme.

Overall this case is in line with the tendency of the courts to allow for an integrated interpretation of a person’s injuries under the SABS. It is now clear that a person’s psychological injuries can be taken into consideration in combination with their physical injuries in an assessment of catastrophic impairment.

¹ [2004] O.J. No. 4735

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Is the Tort of Invasion of Privacy Actionable in Ontario?

By Claire Walker

Feb1

On January 18, 2012, the Ontario Court of Appeal released its decision in Jones v. Tsige, 2012 ONCA 32. At issue was whether invasion of personal privacy was a recognized tort in Ontario.

Ms. Jones and Ms. Tsige worked for the same bank, but at different branches. They did not know each other, but Ms. Tsige had formed a common law relationship with Ms. Jones’ former husband. As a bank employee, Ms. Tsige had access to Ms. Jones’ personal bank account, which she looked at more than 170 times over a period of four years. Ms. Tsige did not publish, distribute or record the information in any way. Ms. Jones became suspicious and, when confronted, Ms. Tsige admitted to looking at her banking records, her explanation was that she had done so because she was involved in a financial dispute with Ms. Jones’ former husband and wanted to confirm whether he had been paying child support.

The central issue on this appeal was whether the motions’ court judge was wrong in dismissing Jones’ claim on the basis that Ontario law does not recognize the tort of breach of privacy.

Although the motions court judge had found some support for the existence of the tort of invasion of privacy in some academic writing, and noted that in several cases the Ontario Superior Court had refused to strike out such actions at the pleadings stage, he concluded that he was bound by the Court of Appeal’s decision in Euteneier v. Lee (2005), 77 O.R. (3d) 621, in which the court had held that there is no “free-standing” right to privacy at common law.

Sharpe, J. A., writing for the Court of Appeal observed that whether common law should recognize the tort of invasion of privacy had been debated for the past 120 years. He observed that whether common law recognized a distinct right of action for breach of privacy remained uncertain. He noted that in the United States, the tort of invasion of privacy was recognized as four distinct torts tied together by a common theme, as opposed to a single tort, and that the classification of the four torts is as follows:

1. Intrusion upon the plaintiff’s seclusion or solitude, or into his private affairs.

2. Public disclosure of embarrassing private facts about the plaintiff.

3. Publicity which places the plaintiff in a false light in the public eye.

4. Appropriation, for the defendant’s advantage, of the plaintiff’s name or likeness.

The Court of Appeal accepted the four tort classification and observed that it was important to maintain the appropriate analytical distinction between the categories so as to avoid confusion.

Relevant to this case was number 1, which the Court observed had been defined in the United States in the Restatement (Second) of Torts (2010) as follows:

One who intentionally intrudes, physically or otherwise, upon the seclusion of another or his private affairs or concerns, is subject to liability to the other for invasion of privacy, if the invasion would be highly offensive to the reasonable person.

The Court reviewed the Ontario, Canadian, American and Commonwealth caselaw and held that it was appropriate for Ontario courts to recognize the existence of a right of action for invasion of privacy.

The court went on to state that damages for invasion of privacy where the plaintiff suffered no pecuniary loss should be modest, but sufficient to mark the wrong that has been done. It fixed the upper limit of such damages at $20,000. The court did not exclude awards of aggravated or punitive damages, but held that such awards were not encouraged and should be awarded only in truly exceptional cases.

 

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Court of Appeal Establishes New Test for Summary Judgment

By Colin Chant

Jan4

In an important decision released December 5, 2011, a five-judge panel of the Ontario Court of Appeal has clarified when summary judgment may be available to litigants. In doing so, the Court of Appeal has departed from the existing framework of summary judgment case law and established a fresh approach to the interpretation and application of the amended Rule 20 that came into force on January 1, 2010.

Rule 20 governs summary judgment. The 2010 amendments broadened the scope of a motions judge to make findings of fact, weigh credibility and draw inferences. Now, Combined Air Mechanical Services Inc. v. Flesch, 2011 ONCA 764 (“Combined Air”) provides direction as to how this broadened scope is to be used by clarifying the types of cases amenable to summary judgment and by establishing a new threshold issue and a new test.

The Cases

The Combined Air decision encompasses five appeals from decisions dealing with the amended rule: Combined Air Mechanical v Flesch, a dispute about unlawful competition; Mauldin v Hyrniak and Bruno Appliance and Furniture v. Hyrniak, an action involving civil claims of fraud against an entrepreneur, his lawyers and his lawyers’ law firm; 394 Lakeshore Holdings Inc. v. Misek, concerning the existence of a prescriptive easement; and Parker v. Casalese, a claim for damage to houses arising from the construction of neighbouring homes which addresses the application of Rule 20 in actions brought under simplified procedure.

Types of Cases Amenable to Summary Judgment

The Court of Appeal identified the following types of cases as amenable to summary judgment under the amended Rule 20:

  • cases where the parties agree that it is appropriate to determine an action by way of a motion for summary judgment;
  • claims or defences that are shown to be without merit; and
  • cases where there is “no chance of success”.

The first two types of cases existed under the previous version of the rule; the last type was added by the amended rule. It is not necessary for the motion judge to try to categorize the type of case in question.

Threshold Issue: “Interest of Justice”

The threshold issue in understanding when summary judgment can be granted is whether it is in the “interest of justice” to do so. The phrase “interest of justice” provides limiting language that guides the determination of whether a motion judge should exercise the powers to weigh evidence, evaluate credibility, and draw reasonable inferences from the evidence on a motion for summary judgment, or if these powers should be exercised only at trial.

The Test: “Full Appreciation Test”

In order for the “interest of justice” to be served, certain types of cases require a trial for their fair and just resolution. In deciding whether to grant summary judgment or if a trial is necessary, the motion judge must ask the following question:

“Can the full appreciation of the evidence and issues that is required to make dispositive findings be achieved by way of summary judgment, or can this full appreciation only be achieved by way of a trial?”

The Court called this question the “full appreciation test”.

According to the Court, the “full appreciation test” is unlikely to be met “in cases that call for multiple findings of fact on the basis of conflicting evidence emanating from a number of witnesses and found in a voluminous record”. In such cases, the motion judge cannot achieve the full appreciation of the evidence and issues required to make dispositive findings, and the “interest of justice” requires a trial.

Types of Cases Where the “Full Appreciation Test” May be Met

In contrast, the full appreciation test may be met in the following cases:

  • document-driven cases with limited testimonial evidence;
  • cases with limited contentious factual issues; and
  • cases where the record can be supplemented to the requisite degree at the motion judge’s direction by hearing oral evidence on discrete issues.

The motion judge is required to assess whether the attributes of the trial process are necessary to enable him or her to fully appreciate the evidence and the issues posed by the case by considering whether he or she can accurately weigh and draw inferences from the evidence without the benefit of a trial narrative, without the ability to hear the witnesses speak in their own words, and without the assistance of counsel.

Evidentiary Obligations

Established principles regarding evidentiary obligations, including the obligation that each party must put its “best foot forward”, continue to apply under the amended rule 20.

Oral Evidence

Under the amended Rule 20, the motion judge may order oral evidence pursuant to Rule 20.04(2.2). This power is circumscribed.

The Court was very clear that it is the motion judge who maintains control over the extent of the evidence to be led and the issues to which the evidence is to be directed, and that the discretion to order oral evidence is confined to appropriate cases on discrete issues.

A party who moves for summary judgment must be in a position to present a case capable of being decided on the paper record before the court.

Costs

Under the previous version of Rule 20, there was a presumption that parties who brought unsuccessful motions for summary judgment would have costs awarded against them on a substantial indemnity scale. Under the amended rule, the onus is now on the party seeking substantial indemnity costs to convince the court that the other side acted unreasonably or in bad faith for the purpose of delay in bringing or responding to a motion for summary judgment.

Why is this important?

Now that the rules of the game have been spelled out by the Court of Appeal, we are likely to see a greater number of motions for summary judgment in Ontario courts as defendants in particular seek to try their luck. Whether our courts will take a liberal view of the “full appreciation test” and actually grant summary judgment in these cases remains to be seen.

 

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THE MORNING AFTER THE NIGHT BEFORE: WHEN IS ZERO TOLERANCE NOT?

By Forough Ghorbani

Dec5

In violation of a statutory condition of his insurance policy, a young man with a G2 license was driving with a blood alcohol level over one and a half times the legal limit. The young man was involved in a car accident. His passengers were injured and they sued. His insurance company, RBC, denied coverage. This denial, however, would not withstand the scrutiny of the courts and RBC was ordered to provide him with a defence.¹ Within the context of an insurer’s duty to defend, the court will generally give the insured the benefit of the doubt.

Nagraj Singh Tut (“Nagraj”) celebrated his 20th birthday with friends on the night of June 22, 2007.  Some of his friends spent the night at his house.  His parents were out for the night and Nagraj drank heavily.

Next morning, Nagraj asked his mother, Gurmeet Kaur Tut (“Gurmeet”), if he could borrow her car to drive his friends home.  Nagraj was attempting to pass another car on the gravel shoulder of a highway when he lost control and ran his mother’s car off the road.  As a result of the accident his passengers were hurt and sued Nagraj and Gurmeet.  Lab results indicated that Nagraj’s blood alcohol level was 26.8 mmol/L – well above the legal limit.

At the time of the accident Nagraj held a G2 driver’s license.  Pursuant to s. 6(1) of the O. Reg.  340/94 enacted pursuant to the Highway Traffic Act, R.S.O. 1990, c. H-8 (“HTA”) the holder of a G2 driver’s license is not permitted to have a blood alcohol concentration greater than zero when s/he operates a motor vehicle.  RBC denied coverage to Nagraj because he was not “authorized by law to drive” at the time of the accident pursuant to s. 4(1) of the Statutory Conditions – Automobile Insurance, O. Reg. 777/93.  RBC also denied coverage to Gurmeet as she permitted Nagraj to drive when he was not authorized by law to do so.

Nagraj and Gurmeet brought an application for coverage.  Justice Frank found that RBC could not deny coverage on the basis of statutory condition 4(1).  Justice Frank concluded that s. 6(1) of O. Reg. 340/94 creates a strict liability offence and therefore a due diligence defence is available to the offender².  In this case, Justice Frank found that Nagraj had slept between 6 and 9 hours after his birthday party and that “his belief that he was qualified to drive was a reasonable mistake of fact”³.

Justice Frank found that Gurmeet acted reasonably in the circumstances and therefore was not in breach of the statutory condition.  She confirmed that Nagraj had slept that night and did not observe any behaviours in her son that would indicate that he was still under the influence of alcohol.

RBC appealed the decision of Justice Frank on the following grounds:

  1. The test for a breach of s. 6(1) should be that of an absolute liability offence;
  2. If s. 6(1) is a strict liability offence, the onus should have shifted to Nagraj once RBC established a prima facie breach.
  3. The onus should have shifted to Gurmeet once RBC established a prima facie case.
  4. The evidence of RBC’s expert should not have been discounted, and
  5. The evidence of Gurmeet was misapprehended.

The Court of Appeal found that s. 6(1) is a strict liability offence and therefore a due diligence defence was available to Nagraj.

The Court gave deference to Justice Frank’s finding that Nagraj had a reasonable belief that his blood alcohol was zero.  This finding was supported by testimony of witnesses who observed Nagraj the morning of the accident and spoke to him as well as the fact that he had slept for 6 to 9 hours prior to driving.

RBC relied on the expert testimony of a toxicologist whose report was discounted by Justice Frank as the expert had relied on inaccurate information (Nagraj’s weight and height as well as the number of hours he had slept). Justice Frank was entitled to prefer the testimony of witnesses who observed Nagraj and spoke to him on the morning of the accident.

The test applied for Gurmeet was whether she knew, or ought to have known, under all the circumstances that her son had a blood alcohol level above zero and therefore was not authorized to drive her car. Justice Frank found that Gurmeet had acted reasonably in the circumstances and the Court of Appeal gave deference to her decision.

The Court of Appeal dismissed the appeal and upheld Justice Frank’s order requiring that RBC defend both Nagraj and Gurmeet.

This case suggests that the courts will give the insured the benefit of the doubt in situations where the insurer is denying coverage under the statutory conditions of an auto policy.

¹ Nagraj Singh Tut and Gurmeet Kaur Tut (Applicants) v. RBC General Insurance Company (Respondent), 2011 ONCA 644, on appeal from the order of Justice Frank of the Superior Court of Justice, dated February 1, 2011 [2011 ONSC 823].
² There are no defences for absolute liability offences. i.e. if the offender is found to have prima facie committed an absolute liability offence, a conviction follows regardless of the intentions of the offender. A due diligence defence is available for strict liability offences – the offender can avoid liability if s/he can establish that s/he took all reasonable steps to avoid the breach.
³ Nagraj Singh Tut and Gurmeet Kaur Tut v. RBC Insurance Company, 2011 ONSC 823 at para 10.

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Pole Dancing in a Limo: Yes, It Can Cause Accidents

By Bronwyn Martin

Nov2

Someone attempts a headstand against a stripper pole in a moving limo bus. Injuries ensue. Is it an accident? This age-old question has finally been answered. In the recent decision Economical Mutual Insurance Company v. Whipple, the Financial Services Commission of Ontario (FSCO) determined that this was indeed an accident pursuant to section 2(1) of the SABS-1996.

This case arose as a result of golf trip to New York State with the insured, Mr. Whipple, and a number of his friends. The group of men, described as “respectable business and professional men over the age of 50”, rented a 24-passenger luxury limousine coach for the trip. The limo bus was advertised as a party bus and included a number of amenities, including a stripper pole.

During the return trip, the men began playing with the stripper pole, experimenting with a “rudimentary form of pole dancing”. After one man slid down the stripper pole upside down, Mr. Whipple tried to top that antic with a headstand. Unfortunately, when Mr. Whipple flipped his legs up in the air he missed the pole, his arms gave out and his neck snapped. As a result, Mr. Whipple was rendered an incomplete quadriplegic and is now confined to a wheelchair.

Economical, in denying benefits, took the position that this was not an accident pursuant to section 2(1) of the SABS, which defines accident as “an incident in which the use or operation of an automobile directly causes an impairment.” In determining this issue, FSCO relied upon the purpose test, as set out by the Supreme Court of Canada in Citadel General Assurance Co. v. Vytlingam, 2007 SCC 46. Under the purpose test, the question is: “Did the accident occur in the course of the ordinary and well-known activities to which the automobile is put?”

FSCO answered this question in the affirmative. The limo bus was advertised as a party vehicle that included a stripper pole. Advertising, FSCO held, could alone make for a well-known use. Moreover, the inclusion of the stripper pole in the limo was an invitation to the very type of behaviour engaged in by Mr. Whipple. Accordingly, this case involved the ordinary and well-known use of a stripper pole in a limo bus and Mr. Whipple’s injuries were the result of an accident.

In addition to reminding us all of the dangers of amateur pole dancing, this cases acts as a reminder that when FSCO is asked to consider the ordinary and well-known uses of an automobile, FSCO will look to the particular automobile involved in the incident. Accordingly, there is no list of generic, standard automobile uses. Rather, the automobile will always be judged according to its distinct characteristics and amenities.

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At MMW, we are building a great law firm – one great lawyer at a time

By Ian Mair

Nov2

Moodie Mair Walker LLP is pleased to announce that Forough Ghorbani has joined the firm as our newest associate lawyer.

Forough was called to the Ontario Bar and the New Brunswick Bar in 2010 after completing her articling year with a large Atlantic law firm. Prior to joining MMW, she practiced insurance litigation with a Toronto insurance litigation firm.

A native of Fredericton, Forough holds a B.Sc. from the University of New Brunswick and she is a graduate of the U.N.B. Faculty of Law.

We are all looking forward to working with Forough, and to introducing her to you, our friends and clients.

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A Word to the Wise: Administrative Dismissals Under Rule 48.15

By Colin Chant

Oct11

One of the main complaints raised against the Canadian justice system of late is the amount of time it takes for cases to work their way through the system. Delay has joined judicial activism, an absence of civility by counsel and skyrocketing legal fees as one of the hobgoblins bedevilling the justice system.

With the changes to the Ontario Rules of Civil Procedure in January 2010, the courts now have a potent tool in the form of Rule 48.15 with which to weed out languishing cases.

Master Short has been patiently educating the profession on the workings of Rule 48.15 in ex parte motions court in Toronto, and a select few, this writer included, have benefitted from a direct lesson from him on the topic. For those of you who have yet to be educated, here is what you need to know:

Rule 48.15 states:

ACTION ABANDONED

Dismissal

48.15 (1) The registrar shall make an order dismissing an action as abandoned if the following conditions are satisfied, unless the court orders otherwise:

1. More than 180 days have passed since the date the originating process was issued.

2. No statement of defence has been filed.

3. The action has not been disposed of by final order or judgment.

4. The action has not been set down for trial.

5. The registrar has given 45 days notice in Form 48E that the action will be dismissed as abandoned.

The application of the Rule is clouded somewhat by the transitional provisions under Rule 48.15(6), which applies to actions commenced before the change in the Rules on January 1, 2010. For example, Rule 48.15(6), paragraph 2 states:

(6) In the case of an action commenced before January 1, 2010, other than an action governed by Rule 76 or 77, the following rules apply, unless the court orders otherwise:

2. If no step is taken in the action on or after January 1, 2010, and before January 1, 2012, the action is deemed on January 1, 2012 to be dismissed as abandoned on that date, unless the plaintiff is under a disability.

The Rule provides no definition for the term “step”. Master Short has expressed concern that unless a “step” is filed with the court, an action will be deemed to be dismissed as abandoned, despite the fact that any number of things could be happening in an action.

In Stephenson’s Rental Services Inc. v 2047330 Ontario Ltd. 2010, CarswellOnt 5674 (Ont. Master), Master Short, under a heading entitled “Word to the Wise”, advised counsel to diarize a date in advance of the six month anniversary from the start of every matter to facilitate the timely bringing of any motion to extend the time for service, and if necessary, taking appropriate steps to avoid the registrar’s administrative dismissal. Counsel would do well to heed Master Short’s words of advice.

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Loss Transfer Limitation Periods: Are We Lost Or Limited?

By Michael Kealy

Oct11

When does the limitation period start to run on a loss transfer dispute?

Until recently, this question was answered with reference to the Court of Appeal’s 2005 decision State Farm v. Dominion, in which the Court held that a “rolling limitation” applies (under the pre-2004 Limitations Act), such that a new limitation period arises with each payment made by the first party insurer.

A recent decision by Arbitrator Lee Samis, ING v. Markel (April, 2011) suggests that the “new” Limitations Act (enacted January 1, 2004) has put an end to the rolling limitation period. In this case, the target insurer (Markel) argued that first party insurer (ING) should not be permitted to advance claims with respect to payments made more than two years prior to the commencement of the arbitration (i.e. Markel was applying the rolling limitation period). ING argued that the applicable limitation commences with denial of indemnification by Markel.

Arbitrator Samis agreed with ING. Essentially, the “new” Limitations Act requires that a claim, as that term is defined in the Act, has arisen before the limitation period will start. A claim under this Act will not arise until the respondent insurer has denied the loss transfer request for indemnification.

This arbitration decision raises the concern of a first party insurer failing to put the target insurer on notice, allowing the payments to the insured to build up in the meantime. What would happen if the payments accrued for years, with the target insurer unaware of this potential liability? The target insurer could lose both the opportunity to investigate the underlying liability issues, and to have a say in the payments which are being made to the insured.

It remains to be seen whether Arbitrator Samis’s approach will be adopted as the right interpretation of the effect of the new Limitations Act on loss transfer cases.

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