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Playing Hardball May Have Its Consequences

In the last few years Court decisions have shown that insurance companies are taking stricter positions against plaintiff claims. However, recently an insurer was penalized a substantial amount of money for doing just this. Time will tell whether this decision will deter insurers from playing “hardball”.

In cases that involve a plaintiff delivering an offer to settle that is rejected by the defendant, the Courts rely on Rule 49.10(1) of the Rules of Civil Procedure in determining the amount of legal costs. Rule 49.10(1) states:

49.10 (1) Where an offer to settle,

(a) is made by a plaintiff at least seven days before the commencement of the hearing;
(b) is not withdrawn and does not expire before the commencement of the hearing; and
(c) is not accepted by the defendant,

and the plaintiff obtains a judgment as favourable as or more favourable than the terms of the offer to settle, the plaintiff is entitled to partial indemnity costs to the date the offer to settle was served and substantial indemnity costs from that date, unless the court orders otherwise.

A recent decision from the Superior Court of Justice outlined the importance of Rule 49 offers and the consequences that accompany such offers. In Persampieri v. Hobbs, the insurer, Aviva, made a tactical decision to reject a Rule 49 offer that the plaintiff ended up beating at trial.

Mrs. Persampieri was an 84-year old woman who was rear ended by a driver who was insured by Aviva. Even though liability was admitted, Aviva took a strong position on threshold under section 267.5(5) of the Insurance Act and refused to pay any damages to the plaintiff. On May 15, 2017, the plaintiff served Aviva with a Rule 49 offer to settle her claim for damages for only $10,000, without pre-judgment interest, plus partial indemnity costs. Trial was held from May 29, 2017 to June 15, 2017. Although the plaintiff was awarded only $20,414.83 for her damages, the court ordered costs of $237,000 against the insurer, payable to the plaintiff.

The main issue in regards to costs was whether the amount should reflect all reasonable costs of trial, as submitted by plaintiff’s counsel, or whether it should proportional to the ultimate verdict, as submitted by defence counsel.

Justice Sanderson held that insurers that take positions on modest claims that necessitate a trial should not be allowed to rely on a strict application of the proportionality principle in determining costs. Justice Sanderson stated that Aviva was a sophisticated insurer that made a tactical decision to reject the plaintiff's Rule 49 offer. Furthermore, Aviva knew or ought to have known that resolving issues at trial involved a lengthy hearing and costly evidence.

Justice Sanderson went on to note that when Insurers take such hardline positions on legitimate claims it can discourage plaintiffs from pursuing such actions, and that could seriously jeopardize overall access to justice. Justice Sanderson stated “even though Insurer’s are able to pursue whatever strategy option they deem fit, the use of such strategies should not be encouraged by the giving of cost breaks on foreseeable cost consequences”.

Justice Sanderson found the plaintiff's evidence to be reasonable and ordered the defendant’s to pay costs of $237,017.50 to the plaintiff.

The full decision of the Ontario Court of Justice can be read here.

An article on the decision in the Toronto Sun can be read here.

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Does being injured from spilling coffee in a car entitle you to accident benefits?

According to the Statutory Accident Benefits Schedule (SABS), in order to be entitled to statutory accident benefits, an injury has to arise from an "accident". Section 3(1) of SABS defines an “accident” as “an incident in which the use or operation of an automobile directly causes an impairment or directly causes damage to any prescription eyewear, denture, hearing aid, prosthesis or other medical or dental device”.

So, does spilling coffee in a car fall under “an incident in which the use or operation of an automobile directly causes an impairment”? The Ontario Court of Appeal has answered this question in Dittman v. Aviva.

In Dittman, the Plaintiff bought coffee from a McDonald’s drive-thru and spilled it on her thighs when attempting to transfer the coffee to the vehicle’s cup holder. It is important to note that the car remained in gear, although not in motion, and the Plaintiff was wearing her seatbelt, which limited any reflexive actions to avoid the spill. The analysis of the Court of Appeal focused on causation. Justice Gordon determined that the causation test required the consideration of two questions:

  1. Was the use or operation of the vehicle a cause of the injuries?

  1. If the use or operation of a vehicle was a cause of the injuries, was there an intervening act that resulted in the injuries that cannot be said to be part of the “ordinary course of things?” or in other words, was the use or operation of the vehicle a “direct cause” of the injuries?

Justice Gordon determined that but for the use of the vehicle, the Plaintiff’s injuries would not have occurred. Justice Gordon went on to note that if it was not for the use of the vehicle, the Plaintiff would not have been in the drive thru, would not have received or spilled coffee while sitting, and lastly, if the Plaintiff was not seated and restrained by the seatbelt, she would have been able to take evasive action to avoid or minimize the amount of coffee spilled on her thighs.

Justice Gordon then went on to determine if there was an intervening act that resulted in the injuries that cannot be said to be part of the “ordinary course of things”. Justice Gordon determined that the accidental spilling of a hot beverage is a normal incident of the risk created by the use of a vehicle at a drive-thru. Justice Gordon went on to exemplify that if the drive-thru attendant deliberately threw the coffee on the Plaintiff then that would be an intervening act and would effectively break the chain of causation.

Due to the analysis of Justice Gordon, the act of inadvertently spilling coffee was deemed to be an “accident” according to the SABS. Thus, the Plaintiff was entitled to receive accident benefits. The full decision of the Court of Appeal can be read here.
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Happy Halloween!

Boo! Happy Halloween from Wolfe Lawyers!

It's time for a fun night of trick-or-treating. Here are a few basic tips to help make sure it's a safe one:

Walk Safely:

• Cross the street at corners, using traffic signals and crosswalks.

• Look left, right and left again when crossing and keep looking as you cross.

• Put electronic devices down and keep heads up and walk, don’t run, across the street.

• Teach children to make eye contact with drivers before crossing in front of them.

• Always walk on sidewalks or paths. If there are no sidewalks, walk facing traffic as far to
the left as possible. Children should walk on direct routes with the fewest street crossings.

• Watch for cars that are turning or backing up. Teach children to never dart out into the street or cross between parked cars.

Drive Extra Safely on Halloween:

• Slow down and be especially alert in residential neighbourhoods. Children are excited on Halloween and may move in unpredictable ways.

• Take extra time to look for kids at intersections, on medians and on curbs.

• Enter and exit driveways and alleys slowly and carefully.

• Eliminate any distractions inside your car so you can concentrate on the road and your surroundings.

• Drive slowly, anticipate heavy pedestrian traffic and turn your headlights on earlier in the day
to spot children from greater distances.

• Popular trick-or-treating hours are 5:30 p.m. to 9:30 p.m. so be especially alert for kids during those hours.

For more tips, check out this web site.
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Life Insurance Payout Denied

Some life insurance policies include an exclusion where the policy holder has died while committing a crime or died "as a result of" criminal activity. In such circumstances payout under the policy will be denied by the insurer.

This is precisely what happened to Vanessa Valentyne when she sought payment under her son's life insurance policy from The Canada Life Assurance Company. Vanessa's son, Kevin, was a known drug dealer. In 2013 he was out for lunch with his girlfriend when he was summoned to a house by two of his associates. He drove to the location and left his girlfriend in the running car while he stepped inside the house. He was never seen or heard from again.

Four years later, a British Columbia Supreme Court justice has upheld the insurer's refusal to issue payment under the policy on the grounds that the exclusion applied: "I need only be satisfied on a balance of probabilities that his death was a result of his involvement in criminal activity," wrote Justice Catherine Murray. "The only rational conclusion is that Mr. Valentyne was murdered as a result of his involvement in drug trafficking, a criminal offence."

You can read more about the interesting facts underlying this decision here and here.
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