Insurance Binder - Spring 2009

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Insurance Binder - Spring 2009
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[LEGAL ISSUES OF INTEREST TO THE INSURANCE INDUSTRY]=
Volume 1, No. 1
Spring 2009
Pages 1– 8
The Insurance Defence Practice Group is
pleased to send you the inaugural issue of our
new insurance defence newsletter. The objective
of this newsletter is to offer the insurance
industry a defence counsel perspective on claims
management, from the initial investigation
through to trial, with reference to relevant court
decisions.
La Responsabilité des Assureurs
Automobile hors de l’Ontario
Given that our Insurance Defence Group
practices in both official languages, we have
included articles in both French and English.
Le contrat d’assurance est-il assujetti à la
Loi sur les assurances1 de l’Ontario? (ciaprès la « Loi »)
Articles
Même si l’assureur n’émet pas de police en
Ontario, une police d’assurance émise dans
une autre Province ou État des État-Unis se
trouvera assujettie à la Loi si l’assureur a
déposé l’engagement [ ci-après
« l’engagement »]d’assurer la couverture
minimum prévue par cette Loi. Une liste des
assureurs qui ont déposé l’engagement se
trouve au site web de la Commission des
services financiers de l’Ontario au
http://www2.fsco.gov.on.ca/misc/s226.htm.
Pg. 1
La Responsabilité des Assureurs
Automobile hors de l’Ontario
Pg. 4
Ontario Judge Enforces Release of
Liability Despite Negligence and Breach
of Contract
Pg. 6
A Primer on Interim Benefits in Accident
Benefits Arbitrations – What You Need
Cet article vise la manière d’éviter certains
résultats imprévus qui peuvent arriver aux
assureurs hors de l’Ontario lorsqu’un de leurs
assurés blesse un particulier lors d’un accident
d’automobile en Ontario.
Le fait d’avoir déposé l’engagement en
Ontario produit pour l’assureur étranger
d’importants effets. Premièrement, l’assureur
profite du seuil législatif, qui protège
l’assureur de toute responsabilité pour
1
L.R.O. 1990, c. I. 8, tel que modifié
1
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dommage non-pécuniaire au cas où le
réclamant ne réussirait pas à établir une
incapacité « permanente et sérieuse »2
résultant des blessures causées par l’assuré.
Par contre, l’engagement rend l’assureur
responsable de la couverture minimum de
200,000$3 et ce, même si l’assuré aurait fait
quelque chose qui rendrait nul le contrat. En
fait, les causes de nullité relative entre
l’assureur et l’assuré ne sont pas opposables
aux réclamants tierce parties à concurrence de
la limite minimum de 200,000$4.
Spring 2009
L’assureur étranger qui ne dépose pas
l’engagement peut opposer les causes de
nullité contractuelle et contre son assuré et
contre la victime de l’accident. Cependant,
dans l’absence de nullité de contrat, cet
assureur étranger risque être responsable
jusqu’à la limite de la police pour tout
dommage que le réclamant puisse prouver et
ce, même pour les incapacités non
permanentes ou sérieuses, car l’assureur
étranger qui ne dépose pas l’engagement ne
profite pas du seuil légal concernant les
dommages non-pécuniaires.
Par exemple, si un automobiliste assuré par
une police québécoise blesse par sa négligence
quelqu’un en Ontario, la victime de l’accident
aura droit à 200, 000$ d’indemnité malgré tout
geste de l’assuré qui rendrait nulle la police
entre ce dernier et l’assureur. Alors, si l’assuré
a opéré son véhicule pour des fins
commerciales alors que la police excluait cette
utilisation, l’exclusion ne serait pas opposable
à la victime de l’accident. En ce sens, la Loi
impose à l’assureur étranger la même
responsabilité qu’elle impose à un assureur
ontarien.
La responsabilité absolue des assureurs
étrangers pour les frais de soins de santé
des réclamants
Même aux assureurs étrangers qui ont déposé
l’engagement, la Loi ontarienne impose une
responsabilité unique pour les frais de soins de
santé encourus par une victime auprès du
régime public, le Régime d’assurance-santé de
l’Ontario (la « RASO ».) En effet, la RASO
conserve un recours subrogé contre tous les
assureurs étrangers pour s’indemniser de ces
frais.
Un troisième effet pour l’assureur étranger
ayant déposé l’engagement est l’obligation de
fournir la couverture minimum ontarienne
concernant les indemnités sans égard à la faute
(appelées les indemnités « légales »). Si
l’assuré se blessait lui-même dans l’accident,
il aurait droit aux mêmes indemnités légales
qu’un assuré ontarien. De plus, même le
réclamant tierce partie pourrait avoir droit aux
indemnités légales de l’assureur étranger si le
réclamant n’a pas de couverture semblable5.
La Loi sur l’assurance-santé 6de l’Ontario
oblige aux demandeurs des actions en justice
pour dommages corporelles résultant d’un
accident automobile d’inclure une demande
subrogée7 de la part de la RASO pour les frais
de soins de santé affectés au traitement des
blessures pertinentes. Cependant, la RASO n’a
pas de tel recours contre les assureurs
ontariens8. Puisque la majorité des
demandeurs en Ontario poursuive des
défendeurs assurés par des assureurs ontariens,
les procureurs des demandeurs ont l’habitude
de ne pas inclure à la demande un recours
subrogé de la part de la RASO. Cette omission
2
défini depuis le 1er octobre 2003 au Règlement
461/96, aux articles 4.1 et seq.
3
art 251 de la Loi
4
art. 258(4) de la Loi
5
art. 268(2) de la Loi
6
L.R.O. 1990, c. H.6, tel que modifié
voir la note 6 à l’art. 31
8
voir la note 6, à l’art. 30(5)
7
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risque d’induire en erreur un assureur étranger
lors d’un règlement ou même d’un jugement.
Spring 2009
RASO. En ce faisant, les assureurs ontariens
paient les frais de soins de santé d’avance et
sont en droit, selon la Cour d’appel, de profiter
de l’immunité légale des frais de la RASO que
leur confère la Loi.
Pour les accidents ayant eu lieu le ou après le
1er octobre 2003, la Loi sur les assurances
rend responsable des frais de soins de santé de
la victime tout assureur étranger à condition
que la victime établisse une incapacité qui
atteint le seuil légal, c’est-à-dire une
incapacité permanente et sérieuse9. Même si
la victime ne demande pas d’indemnisation
pour ces frais à son action en justice, la Loi
sur l’assurance-santé confère à la RASO un
recours indépendant que cette dernière
conserve malgré toute quittance ou jugement
en faveur de la victime10. Pour ce motif, il est
impératif pour les assureurs étrangers
d’insister sur une quittance signée de la RASO
avant de régler avec une victime qui s’est fait
soigner en Ontario pour une séquelle d’un
accident automobile.
Conclusion
L’engagement d’un assureur étranger de
fournir la couverture minimum en Ontario est
souvent cité comme une protection pour
l’assureur (« défendeur exclu » ou Protected
Defendant Undertaking). Il est vrai que cet
engagement donne à l’assureur étranger les
même protections qu’ont les assureurs
ontariens lorsque l’incapacité d’une victime
n’atteint pas le seuil légal d’incapacité
permanente et sérieuse. Il faut dire cependant
que la majorité des décisions concernant le
seuil accorde à la victime la qualité de
l’incapacité permanente et sérieuse. Alors,
l’utilité du seuil légal pour l’assureur est
souvent remise en question.
D’ailleurs, la Loi sur l’assurance-santé oblige
tout assureur de notifier la RASO avant de
négocier un règlement d’une réclamation qui
pourrait comprendre des frais de santé qui ont
été d’abord payés par la RASO11. Les
assureurs ont l’option de payer la RASO
directement pour l’indemnisation de ces frais.
Ce paiement libère l’assureur de sa
responsabilité envers la victime à
concurrence du montant payé.
Il importe alors de souligner la situation
défavorable dans laquelle un assureur étranger
pourrait se trouver lorsque son assuré blesse
quelqu’un en Ontario. Premièrement,
l’assureur étranger demeure responsable pour
tout frais de soins de santé d’une victime qui
atteint le seuil. Deuxièmement, l’assureur sera
responsable de la négligence de son assuré
jusqu’à 200, 000$ malgré toute exclusion de la
police qui pourrait s’appliquer entre les parties
à la police. Troisièmement, l’assureur étranger
s’engage, en déposant l’engagement, à fournir
les indemnités légales ontariennes non
seulement à son assuré mais également à la
victime tierce partie lorsque cette dernière n’a
pas de couverture semblable provenant du
véhicule impliqué dans l’accident .
La Cour d’appel12 a justifié le traitement
inégal des assureurs étrangers concernant la
responsabilité des frais de soins de santé en se
référant au système de subvention de la
RASO. En effet, tout assureur automobile
ontarien, à condition de recevoir son permis
d’opération, doit payer une subvention à la
9
arts. 267.5(3), 267.8(5) et 267.8(18) de la Loi
voir la note 6, aux arts. 36.0.1 et 34
11
voir la note 6, à l’art. 35
12
Georgiou c. Scarborough (Ville de) (2002), 217
D.L.R. (4e) 613
Mark Seebaran
Lawyer, Insurance Defence Group
613-231-8352
[email protected]
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Ontario Judge Enforces Release of
Liability Despite Negligence and
Breach of Contract
Spring 2009
liability that purported to waive his legal
rights (and those of his estate, heirs and
beneficiaries) and exempted the dive shop and
its instructors from all liability for personal
injury or wrongful death whether caused by
active or passive negligence. The instructors
read the document aloud during the orientation
session and provided the students with an
opportunity to ask questions about it. Three
days after signing the release of liability, Mr.
Isildar died while participating in the deep
dive portion of the course.
From scuba diving to bungee jumping, white
water rafting to sky diving, the popularity of
high-risk sports is undeniable. For some,
these sports offer the thrill of adventure while
for others the allure is in confronting the
unpredictable. For all, however, there is a
heightened risk of injury and in some cases,
even death. In order to protect themselves
from law suits, most companies in the
business of extreme sports or events require
that participants sign releases of liability
preventing them from suing in the case of an
accident. Whether and under what
circumstances such releases will be enforced
in the province of Ontario was, until recently,
wholly unclear. A recent Ontario decision
has, however, provided some guidance on the
matter. In Isildar v. Kanata Diving Supply, a
division of Rideau Diving Supply Ltd.13, an
Ontario Judge enforced a release of liability
despite having found that both the dive shop
and the diving instructor were in breach of
contract and had acted negligently.
Analysis
Having found a breach of contract and
negligence on the part of both the dive shop
and the instructor, Justice Roccamo moved on
to consider whether the release of liability
signed by the deceased was enforceable. After
reviewing the case law, Justice Roccamo held
that a three-staged analysis was required:
1. Is the release valid in the sense that the
plaintiff knew what he was signing?
Alternatively, if the circumstances are
such that a reasonable person would
know that a party signing a document
did not intend to agree to the liability
release it contains, did the party
presenting the document take
reasonable steps to bring it to the
attention of the signator?
Facts
The case was brought by the wife and son of a
28 year-old engineer from Ottawa who died
during a deep-dive in the St. Lawrence. In the
spring of 2003, after completing a five-week
recreational scuba diving certificate program
developed by the Professional Association of
Dive Instructors (PADI), Mr. Isildar enrolled
in an advanced course that included three
compulsory open water dives, one of which
was a deep dive. During the orientation class
for the course, Mr. Isildar signed a release of
2. What is the scope of the release and is
it worded broadly enough to cover the
conduct of the defendant?
3. Whether the waiver should not be
enforced because it is unconscionable?
13
[2008] O.J. No. 2406 (Sup. Ct.). The defendant
diving instructor, Sara Dow, was represented by Peter
Cronyn and Joseph Griffiths from Nelligan O’Brien
Payne.
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Spring 2009
own safety; and a reasonable person in Mr.
Isildar’s position would have understood that
the release of liability addressed the possibility
of human error and the negligent exercise of
judgment.
On the first stage of the analysis, Justice
Roccamo concluded that Mr. Isildar, an
educated and careful man, knew that he was
signing a release of liability. He was thus,
barring a finding that the release was
unconscionable, bound by its terms.
Considerations
Although not required in light of the preceding
conclusion, Justice Roccamo further held that
the reasonable steps requirement was also met
as the instructors had read the release of
liability verbatim in class and had offered
students the opportunity to ask questions.
Among other things, it was also highlighted
that the deceased had signed an almost
identical release just months earlier in his
certification course.
On the second stage of the analysis, Justice
Roccamo held that the release of liability was
sufficiently broad to capture the defendants’
negligent conduct and breach of contract. The
release, which was accompanied by a
Statement of Understanding on Safe Diving
Practices, referred specifically to injury or
death by active or passive negligence. In
particular it “specifically contemplate[d] the
types of harm that resulted in Mr. Isildar’s
death, including panic, hyperventilation and
drowning.”
The final leg of the analysis was whether the
release was unconscionable. Based on the
nature of the release and the circumstances in
which it was signed, Justice Roccamo
concluded that the release was not divergent
from community standards and was thus
enforceable. This conclusion was based
largely on the following: Mr. Isildar knew of
the inherent risks associated with scuba
diving; nothing had forced him to sign the
release of liability; Mr. Isildar had chosen to
participate in the advanced scuba diving
course; despite the failures of the defendants,
Mr. Isildar had a joint responsibility to control
the circumstances of the dive and to ensure his
•
Judges are willing to enforce waivers
of liability, even in the face of
negligence and breach of contract.
•
Individuals signing waivers of liability
should read the terms of the contract
carefully and not just assume that they
will not be enforced.
•
Companies should ensure that releases
of liability are carefully drafted.
Among other things, the release
should clearly detail the risks that are
involved in the sport or event, as well
as the parties and scope of conduct
that the release intends to cover.
•
Although in some circumstances there
will be no obligation to take
reasonable steps to ensure that a
release is read by a participant and the
risks of the event understood, it is
prudent for companies to take
reasonable steps in all circumstances.
* An appeal and cross-appeal of this decision
have been taken.
Jessica Fullerton
Lawyer, Insurance Defence Group
613-231-8366
[email protected]
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A Primer on Interim Benefits in
Accident Benefits Arbitrations –
What You Need to Know
Spring 2009
delay by way of an award of interest, the
damage may already be done.
In an effort to balance these competing
concerns, the past jurisprudence has developed
a two-part test, requiring the claimant to
demonstrate: (a) a prima facie case on
entitlement; and (b) urgency. In applying
this test, arbitrators have held that
demonstrating a prima facie case requires
more than the existence of conflicting medical
opinions (Ayoub v. Aviva Canada Inc., FSCO
No. A05-001045 (Sone)). Similarly, unless a
claimant is deprived of a substantive right,
mere non-compliance with the SABS will not
be sufficient (Galati v. Aviva Canada Inc.,
FSCO No. A04 B 001256 (Feldman), and
Ayoub v. Aviva Canada Inc., supra). The
requirement of urgency means something
more than the ordinary financial need resulting
from the denial of weekly benefits which can
be compensated through interest or a special
award (Coutu v. Wawanesa Mutual Insurance
Co., FSCO No. A01-001446 (Renahan), and
Ayoub v. Aviva Canada Inc., supra).
The world of accident benefits claims is
largely a world unto itself. This is especially
true where a claimant elects to have a dispute
over benefits determined by way of an
arbitration proceeding before the Financial
Services Commission of Ontario (“FSCO”).
Unlike the traditional court proceedings,
arbitration proceedings follow their own set of
rules, and sometimes include their own
specialized remedies. One of the lesser known
remedies that is available in FSCO
proceedings is the payment of benefits on an
interim basis pending the outcome of the
proceedings, otherwise known as “interim
benefits”. While motions requesting interim
benefits are not common, a motion for interim
benefits has the potential to radically alter the
dynamics of the arbitration proceedings, and
the potential risk faced by the insurer. As a
result, it is important to have an understanding
of this remedy, and the potential impact it can
have on the arbitration.
Although motions for interim benefits are
typically seen for claims involving income
replacement benefits, the relief is available for
any of the benefits available under the
Statutory Accident Benefits Schedule.
The authority to award interim benefits stems
from s.279(4.1) of the Insurance Act, R.S.O.
1990, c.I.8. However, this section does not
provide any guidance as to how the
discretionary power is to be applied.
Attendant care benefits have been awarded
where there is evidence that a claimant is at
serious risk for injury (see eg. Dolmovic v.
Zurich Insurance Co., FSCO No. A08-000460
(Kominar); Haimov v. ING Insurance Co. of
Canada, FSCO No. A05-002734 (Murray)
and Keyes v. Personal Insurance Co. of
Canada, FSCO No. A06-001156 (Muir)).
Historically, arbitrators have been concerned
over the proper balance of the rights of the
parties. Decided by way of motion, awards of
interim benefits are granted on an incomplete
evidentiary record. Such an award has the
potential to deprive the insurer of its right to
procedural fairness, especially where the
interim benefits cannot practically be repaid.
On the other side of the coin, the delays
inherent in the process may irreparably harm a
claimant who may ultimately be awarded the
benefit months or years later. Although that
claimant will likely be compensated for the
Caregiver benefits and medical or
rehabilitation benefits are similarly available
on an interim basis (see eg. Huynh v. TD
Home and Auto Insurance Co., FSCO No.
A05-002369 (Sampliner) where the arbitrator
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Spring 2009
supra), or in circumstances where a hearing
date is delayed on account of the
unavailability of defence counsel (see eg.
Akehurst v. Aviva Canada Inc., FSCO No.
A06-001680 (Wilson)). Similarly, interim
benefits can even be awarded on an interim
interim basis, pending the hearing of the
interim benefits motion itself (see eg.
Dolmovic v. Zurich Insurance Co., supra)).
considered a claim for interim caregiver
benefits, but decided not to award the benefits
based on the evidence; and Barrett v. State
Farm Mutual Automobile Insurance Co.,
FSCO No. A03-001565 (Wilson), where
portions of a treatment plan were ordered on
an interim basis).
Presumably housekeeping benefits could also
be ordered on an interim basis, although,
unlike other benefits, it would appear to be
difficult to establish the degree of urgency
required to meet the test (see the comments
made in Ananthamoorthy v. TD Home and
Auto Insurance Co., FSCO No. A06-001533
(Feldman)).
Because a successful motion for interim
benefits could potentially result in rendering
the dispute a fait accompli where the claimant
does not have the financial ability to repay the
benefits, insurers need to be wary when these
motions arise. Typically, the evidence filed
by a claimant will determine the success of a
motion for interim benefits. These motions
will typically fail where the claimant fails to
adduce any evidence on one part of the test
(see eg. Ayoub v. Aviva Canada Inc., supra;
Ananthamoorthy v. TD Home and Auto
Insurance Co., supra; and Huynh v. TD Home
and Auto Insurance Co., supra). Where the
claimant is able to adduce some evidence of
entitlement (even if that evidence is disputed
by evidence of the insurer) coupled with some
legitimate basis of urgency, arbitrators will
often err on the side of caution and make the
interim award subject to a right of repayment
should the insurer succeed at the ultimate
hearing.
Even expenses can be awarded on an interim
basis where the claimant is financially unable
to gather the evidence required to otherwise
prove the claim (see eg. Bernicky v. Guardian
Insurance Co. of Canada, FSCO No. A006268; Champaigne v. Co-operators General
Insurance Co., FSCO No. A03-001344
(Blackman); and Kabala v. TD Home and
Auto Insurance Co. FSCO No. A04-002743
(Ashby)).
However, the test for interim awards of
expenses varies from the traditional test for
interim benefits in that a claimant must
establish: (a) a bona fide issue in the
arbitration; (b) that the expenses being sought
are reasonable and necessary for the conduct
of the arbitration; and (c) that the claimant is
financially unable to pay for the expenses
being sought pending the arbitration hearing
(see Bernicky v. Guardian Insurance Co.,
supra)).
Where interim benefits are awarded, the
benefits are typically made payable as of the
date that the motion was filed, and will
typically be free of any interest (see Saunders
v. Royal & Sunalliance Insurance Co. of
Canada, FSCO No. A07-000499 (Wilson).
Not only are interim benefits available as a
temporary form of relief in and of themselves,
but interim benefits can also be imposed upon
an insurer as a condition for the granting of an
adjournment request (see eg. Barrett v. State
Farm Mutual Automobile Insurance Co.,
Insurers need to be alert to the possibility of
these motions in order to effectively respond
to arbitrations. With the removal of
Designated Assessment Centres as of March
1, 2006, and the corresponding requirement to
pay benefits pending the dispute of a positive
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DAC, it was expected that the number of
motions for interim benefits would increase.
A review of the decisions reported by FSCO
suggests that there has been some increase in
the number of these motions, and the
frequency of these motions might increase
further with the greater number of decisions
being released. Insurers will need to be ready
to address such motions as they arise.
Similarly, insurers need to be cautious in
requesting adjournments or taking any other
steps that might delay a hearing since to do so
places the insurer at risk for having an order
for interim benefits imposed upon it.
Spring 2009
Nelligan O’Brien Payne is a multi-service law
firm with offices in Ottawa, Kingston, Vankleek
Hill and Alexandria. We have over 40 talented
lawyers and consultants whom you can ask for
advice in these key areas:
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James Brown
Lawyer, Insurance Defence Group
613-231-8345
[email protected]
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legal advice or opinion as neither can be given
without reference to specific events and
situations.
Questions and comments concerning materials in
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contact the author of the article.
Copies of this newsletter are also posted on our
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© Copyright 2009 Nelligan O’Brien Payne LLP
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