The first case this month deals with a claim of negligence against an insurance broker for allegedly failing to offer optional income replacement benefit coverage.
Our second case is an appeal of a trial judge’s determination of fault for a two-vehicle accident, showing which statutory “rule of the road” has priority over another.
Our last case this month considers an insurance policy for total disability benefits, which was voided by the insurer on the ground of the insured’s failing to disclose material facts.
Our Francophone Litigation Team
Since its beginnings, Foster & Company has strived to provide unequaled service to insurers and their insureds in both official languages.
In this edition of our Newsletter, we are pleased to introduce two of our French speaking defence lawyers, T ammy Moreau and Katherine Toner-Muzey.
Both Tammy and Katherine hail from the Grand Falls area of New Brunswick and studied at English and French speaking universities. We are certain their hard work, dedication and professionalism will exceed your expectations!
Tammy and Katherine look forward to working with all of our insurance industry clients.
Zefferino v. Meloche Monnex Insurance Company, 2013 ONCA 127
The plaintiff bought automobile insurance from the defendant insurance broker beginning in September 2003. Following a motor vehicle accident in May 2005 in which the plaintiff suffered personal injuries and was unable to return to work, his policy entitled him to receive statutory- minimum income replacement benefits in the amount of $400 per week. However, the plaintiff’s weekly net income at the time of the accident would have qualified him for income replacement benefits of $1000 per week under optional additional income replacement coverage, if such coverage had been in place.
The plaintiff sued the defendant broker for negligence in failing to properly offer him the optional income replacement benefit coverage. He alleged that he would have purchased such coverage if it had been explained to him. At a motion for summary judgment, the motions judge found that the broker did owe a duty of care to the plaintiff, and that it did breach the standard of care expected of it as a licensed seller of insurance by not offering the optional benefit coverage in any meaningful way.
The case turned on whether the plaintiff would likely have purchased optional benefits if they had been properly offered. In that regard, the evidence demonstrated that over a 10-year period dealing with five different insurers, the plaintiff had never purchased anything other than basic automobile insurance coverage.
His choice of insurers had been based on price. The defendant broker’s records indicated that the optional coverage had been declined at the initial policy purchase and again on renewal, due to a stated lack of need for it. The motions judge found the plaintiff’s discovery evidence that he would have purchased the optional coverage was clearly self-serving after the fact of the accident and inconsistent with his previous actions.
The motions judge determined that the plaintiff chose to purchase the least expensive form of insurance available, and therefore he was not likely to have purchased the optional benefits even if they had been properly offered. Because of this, the plaintiff had failed to show the necessary causal connection between the broker’s breach of duty and his loss, and the claim was dismissed.
On appeal, the Ontario Court of Appeal upheld the motions judge’s decision. Whether the plaintiff would have purchased the additional coverage was a finding of fact and therefore entitled to deference absent a palpable and overriding error. The Court was not persuaded any such error occurred.
Nerval v. Khehra, 2012 BCCA 436
A motor vehicle accident occurred in October 2007 when a motorist at an intersection turning left across an oncoming wide single lane was struck by a vehicle driving through the intersection.
At a trial on liability, fault for the accident was apportioned 60% to the plaintiff (the left-turning driver) and 40% to the defendant (the other driver). The trial judge found that the plaintiff had misjudged the risks and started turning when it was unsafe to do so. However, he also concluded that the defendant bore substantial responsibility for the accident because she drove through the intersection at an excessive speed and unsafely passed to the right of a stopped left-turning vehicle in her lane of travel.
The plaintiff appealed the order apportioning 60% of the fault to her, alleging the defendant was solely responsible for the accident.
The trial judge referred to the statutory obligations placed on each of the two drivers by the Motor Vehicle Act. In so doing, the Court of Appeal held that he correctly put priority on the plaintiff’s obligation to yield the right of way to approaching traffic on a left turn at an intersection, over the defendant’s obligation not to pass on the right when such movement could not be made safely. The onus was on the plaintiff to demonstrate that when she began her turn, there was no immediate hazard. Since she failed to do so, the trial judge was entitled to assume that the defendant was an immediate hazard.
As for the apportionment of fault, the Court of Appeal was unable to detect any palpable and overriding error in the trial judge’s findings of fact or in the inferences he drew from those facts. As such, the Court of Appeal could not disturb the judge’s eventual conclusion on the facts and inferences.
In the result, the appeal was dismissed.
Badenhorst v. Great-West Life Assurance Co., 2013 MBCA 5
The plaintiff, a physician, experienced a breakdown in her marriage beginning in the spring of 2006. During this period, she sought professional counselling, both alone and with her husband. The consulting psychiatrist diagnosed the plaintiff with certain psychiatric conditions, although these diagnoses were not shared with her at the time. The plaintiff was also referred to another psychiatrist for individual psychotherapy, which she started on November 27, 2006.
In November 2006, the plaintiff applied for disability insurance with the defendant insurer. In filling out the first part of the insurer’s application form, the plaintiff answered ‘no’ to having ever received treatment or counselling for burnout, depression, or any psychiatric disorder; to having received treatment or therapy in the previous year; and to having consulted a physician, psychologist or therapist in the previous 5 years.
In December 2006, the plaintiff completed the second part of the application, again answering ‘no’ to the same questions as in part one.
The day after the plaintiff had her first individual session with the psychiatrist, she was interviewed by phone by a representative from the insurer. Asked if she had ever consulted a psychiatrist, psychologist or counsellor for any reason, and if she had ever had any symptoms of anxiety, depression, stress or fatigue, she answered ‘no.’
The psychiatrist diagnosed the plaintiff with chronic depression in October 2007. By January 2008 he diagnosed her with a severe major depressive episode. She stopped working at the end of that month. She returned to work part-time in May 2009, and was still disabled as of June 2011.
The plaintiff made a claim for total disability benefits in April 2008. The insurer conducted an internal review, after which it voided the plaintiff’s policy. The plaintiff then commenced an action against the insurer for disability benefits, mental distress, aggravated and punitive damages.
At trial, the plaintiff testified that the considered her early meetings with the psychiatrist to be marriage counselling, and not ‘treatment’ or ‘therapy’. She argued that the insurer’s questions were ambiguous, and as such she was entitled to put a reasonable interpretation on the questions in order to provide sensible answers. The trial judge agreed, finding the plaintiff did not consult the psychiatrists for any reason related for her health. He determined the plaintiff was a credible witness, allowed the action and awarded $30,000 in damages for mental distress.
On appeal by the insurer, the Court found that the trial judge, in reaching his decision, considered the subjective opinion of the plaintiff as to the interpretation of the insurer’s application and ignored the materiality of the questions in it. According to the Court of Appeal, this approach was in error, as was the conclusion drawn from it. The opinion or belief of an insured was irrelevant; on an objective test, there were material facts within the knowledge of the plaintiff, which were not disclosed. The plaintiff’s credibility was not relevant to this question.
The appeal was allowed.