Mujagic v. State Farm Mutual Automobile Insurance Company, 2009 CarswellOnt 5037

This matter involved a motion by the defendant (State Farm) for leave to appeal a ruling of Fedak J., who dismissed a prior motion to strike portions of the plaintiff’s pleadings. The plaintiff’s mother was in a motor vehicle accident. She allegedly suffered a complete mental and physical breakdown after the defendant refused to provide coverage for accident benefits. The plaintiff pleads that, as a result of the loss of her mother’s care and guidance at the age of 11, she “lost her way of life,” was put into foster care, went from an A student to a dropout, compromised her education and ruined her life. According to the Ontario Insurance Act and Regulations, the daughter is considered an insured person, even though she did not sign the contract, as a dependant occupying the vehicle and as a dependant who suffered psychological or mental injury as a result of physical injury to the mother. However, she was not suing on either of these bases, but rather in contract, tort and under the Family Law Act for the loss of her mother’s care and guidance caused by the wrongful denial by the defendant of her mother’s claim for accident benefits.

The motion judge ruled that the claims were adequately pleaded and consequently rejected the defendant’s motion to strike the claims. At the Court of Appeal, however, the judge found that it was reasonable to doubt the motion judge’s findings, except for the one relating to bad faith, as he deemed that the motion judge’s interpretation of the Insurance Act informed his ruling adequately. There was reason to doubt that the insurance contract was one made for the peace of mind, as it is obligated by statute. The court also questioned whether the daughter was in a position to claim damages for the wrongful denial of her mother’s claim. The tort of negligent infliction of mental illness does not exist, it is the negligent infliction of psychiatric damage that is a recognized tort; however, the daughter did not plead mental distress amounting to psychiatric illness. As to the infliction of pecuniary loss, the judge found that it was not foreseeable that the mother would suffer psychiatric injury from the denial of an accident benefits claim, even if accompanied by acts of bad faith. Consequent damage to the injured person’s dependant is one step further removed from foresee ability. The claim under the Family Law Act would have been valid was the loss of income due to a tort and not a breach of contract. As the judge found no tortuous basis for the claim due to the lack of foresee ability, he deemed that this last claim was also tainted with doubt.

In conclusion, considering that it was reasonable to doubt the motion judge’s findings, the judge granted leave to appeal. It will be interesting to see how the Ontario Court of Appeal will decide on each of these questions. We will follow up on this case in a future edition, when it becomes available.

Wingtat Game Bird Packers (1993) Ltd. v. Aviva Insurance Company of Canada, 2009 BCCA 343

This matter involved an appeal following a summary trial where it was declared that the insurer was required to indemnify the insured for the full value of lost stock that had been held in storage by a third party and lost due to a fire that broke out in the storage facilities. The insured operated a business dealing with slaughtering poultry, and the lost stock was $800,000 worth of dead chickens.

The main issue in this case revolved around the wording of the insurance policy. The policy limits for equipment and stock were $1,015,600. However, there was a Multi-Peril Extension Endorsement which included a clause pertaining to temporary storage locations, which read as follows: “The limits applicable to the following extensions are in addition to the limits provided elsewhere [...] On stock and equipment while located at temporary locations [...] Limit of loss: $25,000.00 any one occurrence”.

This matter involved an appeal following a summary trial where it was declared that the insurer was required to indemnify the insured for the full value of lost stock that had been held in storage by a third party and lost due to a fire that broke out in the storage facilities. The insured operated a business dealing with slaughtering poultry, and the lost stock was $800,000 worth of dead chickens.

The main issue in this case revolved around the wording of the insurance policy. The policy limits for equipment and stock were $1,015,600. However, there was a Multi-Peril Extension Endorsement which included a clause pertaining to temporary storage locations, which read as follows: “The limits applicable to the following extensions are in addition to the limits provided elsewhere [...] On stock and equipment while located at temporary locations [...] Limit of loss: $25,000.00 any one occurrence”.