Our first case will be of particular interest to insurers as it deals with an issue which is increasingly prevalent: the Privacy Commissioner’s powers and jurisdiction over a third party legal action
Our second case deals with a no coverage claim made by an insurer. The Ontario Court of Appeal held that an insurance company that takes three years to assert a no coverage claim effectively waives the insured’s breach of the policy.
State Farm v. Canada (Privacy Commissioner) (2008), 331 N.B.R. (2d) 362)
The matter came to light within a context of a third party claim presented by a plaintiff against a defendant insurer. In the course of its investigations, the defendant insurer hired an investigator to conduct a session of surveillance on the plaintiff.
The plaintiff subsequently made a written request to the defendant insurer for disclosure of all personal information the defendant insurer had gathered, which included copies of all surveillance documentation. This request was made pursuant to the Privacy Act, R.S.C 1985, c. P-21. The defendant insurer denied the plaintiff’s request. As a result, the plaintiff’s solicitor filed a complaint with the Privacy Commissioner against the defendant insurer.
In the course of completing its investigation into the complaint, the Privacy Commissioner requested that the defendant insurer make written submissions on the issue. The defendant insurer refused. The defendant insurer filed an application with the court seeking declaratory relief respecting the constitutional validity of portions of the Personal Information and Electronic Documents Act S.C. 2000 c.5 (hereinafter “PIPEDA”) and a Declaratory Order that the Privacy Commissioner lacked the authority to require disclosure in accordance with the Act.
The Privacy Commissioner brought a Motion seeking an Order that the defendant insurer’s application be stayed on the ground that the Court of Queen’s Bench is not the appropriate forum for the matter to be heard. At the hearing of the Privacy Commissioner’s Motion, the Motion’s Judge granted a stay of proceedings. The Motion’s Judge found that the respondent, The Attorney General of Canada, was a party to the proceedings by virtue of the defendant insurer raising the issue of the constitutionality of the federal legislation.
The Motion’s Judge ordered a stay of proceedings and held that the Federal Court of Canada was the appropriate jurisdiction to determine the matter.
The defendant insurer appealed to the New Brunswick Court of Appeal. The New Brunswick Court of Appeal found that the substance of the defendant insurer’s application concerned both the constitutionality of PIPEDA as well as the authority of the Privacy Commissioner under PIPEDA. The Appeal Court further held that the defendant insurer’s request for an Order of declaratory relief against the Privacy Commissioner with respect to their authority to investigate the issue could not be decided by a Superior Court of the provinces, but rather fell within the exclusive jurisdiction of the Federal Court of Canada.
In short, the New Brunswick Court of Appeal held that in matters where the authority of the Privacy Commissioner to investigate certain complaints is questioned, as well as the constitutionality of federal legislation, the Federal Court of Canada maintains exclusive jurisdiction and any such issues cannot be determined within a provincial Superior Court.
Logel Estate v. Wawnesa Mutual Insurance Company, 2009 ONCA 252
Lori Logel was killed in a single vehicle accident. Her passenger, Byran Gill, was seriously injured and subsequently sued the estate of Ms. Logel. At the time of the accident Ms. Logel’s blood alcohol level was 143mg/100ml, a direct contravention of the terms of her G2 driver’s licence which required her blood alcohol level to be zero while operating a motor vehicle. The appellant, Wawnesa Mutual Insurance Company, took the position that the breach of the statutory condition of her policy voided the $1,000,000 limit for third party liability, potentially limiting Gill to a maximum recovery of $200,000 under the Wawnesa policy.
The Ontario Superior Court held that Wawnesa’s interpretation of the policy was correct but that their conduct from January 2002 to August 2005 constituted “a continuing election that amounted to a waiver by conduct of Ms. Logel’s breach.” Wawnesa appealed the decision arguing that only a “conscious intention” to abandon its rights under the policy will suffice for waivers and in this case it had not waived the breach of the statutory condition. The Ontario Court of Appeal agreed with the Motions Judge. Both Courts agreed that Wawnesa had inferred an intention to abandon the right to rely on the policy breach from its conduct over three and a half years. The Motions Judge was entitled to apply the law as cited in Rosenblood Estate v. Law Society of Upper Canada,  O.J. No. 420 (S.C), where Justice Holland stated “...the insurer finally took an off coverage position but...much too late.” In addition, because of the appellants conduct in defending the action for over three years, it would be prejudicial to the respondent if they were now allowed to raise a coverage issue three years into the action. The appeal was therefore dismissed.