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01 Jun 2014

From Bad to Worse: Insurers Accused of Bad Faith Face New Defence Costs

by Admin
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Wade v. Wawanesa, 2014 NBQB 96

This April 14, 2014 decision from New Brunswick’s Court of Queen’s Bench, (presently under appeal) may force all insurers to conduct new, costly and time-consuming production of documents when their insureds accuse them of ending insurance benefits in bad faith.

In 2005, Shirley Wade was involved in a motor vehicle accident and suffered injuries.  Ms. Wade’s insurer, Wawanesa Mutual Insurance Company, began paying income replacement benefits of $250 per week to her.  Three years later, Wawanesa ceased making payments to Ms. Wade.  Ms. Wade filed a claim against Wawanesa for breach of contract and for acting in bad faith.  Ms. Wade also sought punitive damages.

During the examination for discovery, Ms. Wade’s solicitor sought information from Wawanesa related to the bad faith claim.  Questions included:

1. How has Wawanesa dealt with income replacement claims similar to Ms. Wade’s?
2. What profit or loss did Wawanesa’s sale of similar insurance policies yield?

Wawanesa refused to answer these questions and refused to provide any relevant documents connected to these questions.

Ms. Wade filed a Motion to compel Wawanesa to hand over documents summarizing all of Wawanesa’s insurance claims for income replacement.  Wawanesa argued its conduct toward other insureds was not relevant to Ms. Wade’s claim. 

The Motions Judge rejected Wawanesa’s argument. Justice Dionne felt that this information was relevant to Ms. Wade’s bad faith claim against Wawanesa, accepting that it would help to assess whether what happened to Ms. Wade was an isolated incident or a systemic problem.  He ordered Wawanesa to disclose the documents, with the exception of any that were confidential or privileged.

On May 12, Wawanesa was granted leave to appeal this decision.  We will report back on this interesting development once the New Brunswick Court of Appeal makes its final judgment.