Newsletter

December 23, 2020

Newsletter – December 2020

Winter slip and fall update:

Since our Newsblast last month, Bill 118 received Royal Assent and has been enacted as Chapter 33 of the Statutes of Ontario, 2020. The text of the Act indicates that it comes into effect on a date to be proclaimed by the Lieutenant Governor. We will continue to monitor the situation to see when it comes into force, though we assume that it will apply to slip and falls that occur in the 2021-2022 winter season, if not earlier. This means now is the time for brokers, insurers and property owners to update their risk management systems to take advantage of this new notice period.

British Columbia (“BC”) limitation period update:

The suspension of limitation periods for starting a civil or family action or appeal in BC courts will end on March 25, 2021, the one year anniversary from the date the first ministerial order suspending limitation periods (Ministerial Order M086) was made. March 25, 2021 is the final end date for the suspension of limitation periods. There is no transition or grace period (90 days or 45 days) after March 25, 2021. BC notably provided the longest suspension of limitation periods of any province in Canada.

Social Host Liability: Determining the Limits of Adult Hosts Where Minors Drinking

By Dan Richardson, Dolden Wallace Folick Vancouver, Email: drichardson@dolden.com

In a recent decision, the British Columbia Supreme Court found that two parents who allowed their daughters to host a party at their home where minors were drinking, were not liable for a subsequent motor vehicle accident that involved a minor who attended the party. It was not reasonably foreseeable that guests who arrived at the party on foot would subsequently have access to cars and would drive them.

The plaintiff and the defendant, Ryan Plambeck, attended a party at the home of the Pearson defendants on Salt Spring Island. The plaintiff was 17 years old at the time. Evidence was given that the island had a culture of drinking and cannabis consumption and that it was not uncommon for parents to allow their teenaged children to host parties in their home.

When the Pearsons agreed to host the party, they did so with conditions: the Pearsons would not provide alcohol but the guests could consume their own; the Pearsons would mostly stay upstairs in their rooms but circulate through the party occasionally; anyone who drove to their party would have their car keys taken away; guests were expected to call their parents for rides home at the end of the night, and the Pearsons would drive home any guests in need of a safe ride.

Both the plaintiff and Mr. Plambeck consumed their own alcoholic drinks at the party. As planned, the Pearson daughters took car keys from everyone who drove to the party and at the end of the night the Pearsons drove home any guests who were left without a safe ride.

The plaintiff and Mr. Plambeck left the party on foot and later stole a vehicle that was left unlocked with the keys inside. Mr. Plambeck drove, although he did not have a driver’s licence. While attempting to navigate a curve in the road, the vehicle left the roadway and crashed causing fatal injuries to Mr. Plambeck and seriously injuring the plaintiff.

The plaintiff brought a claim against the Pearsons, alleging they owed him a duty of care, and that they breached that duty by allowing him to become intoxicated in their home and failing to prevent him from leaving their property in an intoxicated state. The Pearsons denied owing any such duty.

The Court found that although Mr. Plambeck had been drinking, his blood alcohol levels indicated he was not intoxicated.

The Court considered the previous social host liability case of Childs v Desormeaux, in which the Supreme Court of Canada held that without more, simply hosting a party where alcohol is served does not give rise to a duty of care owed by the host to third party users of the road who may be injured by intoxicated party guests. The plaintiff, however, asked the court to expand the ambit of a duty of care previously recognized by Canadian courts, arguing that the facts of this case indicated there was a paternalistic relationship by virtue of his age. In the plaintiff’s view, by inviting the plaintiff to the party and allowing him to become intoxicated, the Pearsons accepted control over him and willingly undertook to care for him.

The Court rejected the notion that the Pearsons owed a duty of care to the plaintiff, finding that it was not foreseeable that after leaving the party on foot the plaintiff and Mr. Plambeck would steal a car and sustain injuries. Therefore, the court dismissed the claim on the basis that the Pearsons did not owe a duty of care to the plaintiff.

In the alternative, the Court held that if the Pearsons did owe a duty of care to the plaintiff, it was met. The Court measured the conduct of the Pearsons against “what the careful and prudent parent would do according to the ‘community standards of the time,’” noting that the immediate community is relevant in this analysis. Because it was not uncommon for Salt Spring Island parents to hold house parties where they permitted underage drinking, the Court found it was not outside the community standards for the Pearsons to do the same.

While the plaintiff argued there were additional steps the Pearsons could have taken to ensure the plaintiff arrived home safely and to limit the intoxication levels of the guests, the court concluded that the standard of care is one of reasonableness and not perfection, noting that “…the standard proposed by the plaintiff is essentially one of perfection; anticipating all possibilities and avoiding any risks. That is simply not the way the world works. The duty is to act reasonably, not to act perfectly. It is never possible to eliminate all risks and the Pearsons were not required to do so.”

Take Away

Social host liability involving underage party guests continues to evolve. Social hosts are required to take reasonable steps to minimize the risk of harm to guests, but the applicable standard is not perfection. Nor will the duty of care extend beyond what is foreseeable. While a paternalistic relationship exists where guests are minors, the duty of care will not extend in situations where an injury is not reasonably foreseeable as a result of a defendant’s conduct.

Ontario Court of Appeal Rules That, Yes, You Can Fight Fire Loss Lawsuits

By Robert Smith, Dolden Wallace Folick Toronto, Email: rsmith@dolden.com

Defending a fire loss lawsuit can feel daunting. The plaintiff usually gets a causation report that indicates that a worker’s torch was the likely cause of the fire and then demands payment. A recent Ontario Court of Appeal decision reminds us that, in many cases, merely providing evidence of the cause of the fire is insufficient to find liability against the worker. This decision should inject some steel into the spines of insurance professionals and defence counsel alike and prevent that reflexive reach for the chequebook that can sometimes occur when faced with a causation report.

In Metropolitan Toronto Condominium Corporation No 1100 v A & G Shanks Plumbing & Heating Limited, the Ontario Court of Appeal heard an appeal from a trial judgment that found no liability against a plumber after a fire started while he was using a soldering torch. The trial judge found against the plaintiff because the plaintiff chose not to call any expert evidence regarding the standard of care of a plumber. Rather, the plaintiff chose to rely on an earlier Court of Appeal precedent, 495793 Ontario Ltd (Central Auto Parts) v Barclay, to argue that no expert evidence is needed to establish the standard of care if the impugned actions are so egregious that it is obvious that the defendant’s conduct has fallen short of the standard of care. The defendant also did not tender expert evidence, but instead noted all of the steps the plumber took to ensure a safe working environment to argue against liability. The trial judge found the plumber credible and reliable and concluded that there was no evidence provided of the boundaries of the standard of care, nor that the plumber’s actions fell below that standard.

In a judgment written by the incomparable Justice Strathy, the Court of Appeal upheld the trial judge in a ringing reaffirmation of the fundamental aspects law of negligence. The crux of the Court of Appeal’s decision can be found in the following paragraph:

[18] Where, as here, the plaintiff has done nothing to cause the fire, and the defendant is effectively in control of the place or thing that is the source of the fire, an inference of a breach of the standard of care, or of factual causation, or of both, may arise from the very happening of the fire. The defendant can rebut those inferences by adducing evidence that undermines the plaintiff’s case, points to other non-negligent causes of the fire, or supports the exercise of reasonable care. The precise nature of the evidence required to do so will be different in every case, depending on the relative strength of the plaintiff’s evidence in support of the finding. [Emphasis added]

This pithy paragraph provides a pep talk for all defence counsel and insurance professionals dealing with fire loss claims. Though there may be sufficient evidence to allow a court to infer causation and a breach of the standard of care, this inference may be rebutted by appropriate evidence. An expert causation report is not the sine qua non of liability. Rather, it is behaviour that falls below the standard of care, a standard that must be proven with evidence and may be rebutted.

Take Away

A & G Shanks shows that fire loss claims can be disputed and can be defeated by relying on the fundamental principle that nothing is self-evident in a courtroom. Insurance professionals and defence counsel should always remember that proof of causation is not necessarily proof of liability.

British Columbia’s Top Court Considers Auto Dealer’s Liability for Failing to Secure Vehicle on its Lot

By Dolden Wallace Folick Kelowna

The British Columbia Court of Appeal recently held that a police officer injured in a truck theft was not entitled to compensation from the dealership where the truck was stolen. The Court held that while it was reasonably foreseeable that injury or damage to third parties would occur when a vehicle is stolen from a dealership, reasonable foreseeability is limited to the theft and the immediate aftermath of the theft.

On April 24, 2012, David Bolton stole a pickup truck from the defendant auto dealer. The vehicle had been left unlocked and running for over 40 minutes with the keys in the ignition.

The defendant dealer reported the theft to OnStar, a GPS system that can track and disable a vehicle, and the police. OnStar located the vehicle but refused to disable it because it had not been transferred to the new owner. Police located it. Initially, Bolton was driving normally, but once he realized he was being followed by the police, he began driving dangerously and at high speeds. This resulted in a collision with the plaintiff police officer, Cst. Provost, and then with a civilian.

The police officer and civilian filed personal injury lawsuits against multiple defendants, including the auto dealer, Bolton and police officers engaged in the pursuit. The trial judge found liability against Bolton, the police officers and the auto dealer. This decision was appealed by the auto dealer and cross appealed by the Minister of Justice with respect to the police officers’ liability.

The Court of Appeal overturned the finding of liability against the auto dealer. Leave to appeal to the Supreme Court of Canada was recently denied.

One of the issues on appeal was whether the trial judge erred in finding the auto dealer owed the plaintiffs a duty of care – a requirement for establishing liability in negligence. A Court must consider the circumstances of the theft, including the close temporal and physical proximity between the negligent acts of the tortfeasor and the injury to the third party.

The trial judge relied on the 2016 Ontario Court of Appeal in JJ v CC. However, it was overturned by the Supreme Court of Canada in 2018. On appeal, the SCC held that “[a] business will only owe a duty to someone who is injured following the theft of a vehicle when, in addition to theft, the unsafe operation of the stolen vehicle was reasonably foreseeable.” Rankin involved a vehicle theft from a commercial garage by an intoxicated minor. The SCC found that there was not sufficient evidence to establish a duty of care.

The British Columbia Court of Appeal determined that there was not sufficient “foreseeability” of harm or “proximity” between the injured plaintiffs and the auto dealer, both of which are required to establish a duty of care. In terms of foreseeability, the auto dealer had no history of car theft of security problems with people in the area, and the vehicle had OnStar technology, which would have minimized the risk of a thief harming a third party. With respect to proximity, the collision occurred over an hour after the vehicle was stolen and relatively far away from the auto dealer. The Court found that the motor vehicle collision, which arose from an active police pursuit, was not reasonably foreseeable to the auto dealer.

Take Away

This case and the Rankin decision both illustrate the Canadian judiciary’s reluctance to find a duty of care owed by auto dealers to the general public who may be injured in a collision with a stolen vehicle. However, the Courts have not closed the door entirely, and we can expect that a duty of care may be established specific circumstances.

Further Developments in Ontario’s Law Relating to Additional Insureds

By Dolden Wallace Folick Toronto

The Ontario Court of Appeal’s recent reasons for decision in Sky Clean Energy Ltd (Sky Solar (Canada) Ltd) v Economical Mutual Insurance Co are of note for two reasons.

Sky Clean Energy Ltd. (“Sky”) developed rooftop solar systems. Marnoch Electrical Services Inc. (“Marnoch”) was an electrical contractor. Sky contracted with Marnoch for two projects. Under the contracts, Marnoch agreed to indemnify Sky against Marnoch’s failure to perform contractual obligations and for the negligence of Marnoch. It also agreed to name Sky as an additional insured under its CGL policy with Marhnoch’s insurer (the “Insurer”), but “only with respect to liability, other than legal liability arising out of [Sky’s] sole negligence, arising out of the operations of [Marnoch] with regard to the Work”. Two certificates of insurance were issued to Sky to such effect.

Fires occurred at both installations. As a result, Sky incurred liability to the owners. Sky settled the claims, and then commenced an arbitration against Marnoch, as required by the contracts. The arbitrator dismissed Sky’s claims. Sky then commenced an action against the Insurer. The trial judge dismissed Sky’s claim against the Insurer, and among other things found that Sky’s liability did not “arise out of the operations” of Marnoch. Sky appealed that finding among others. The Court of Appeal dismissed the appeal.

The first point of note is that the Ontario Court of Appeal expressly approved and adopted the British Columbia Court of Appeal’s reasons for decision in Vernon Vipers Hockey Club v Canadian Recreation Excellence (Vernon) Corp with respect to the meaning to be given to “arising out of” and “operations”, concluding that the approach in Vernon is consistent with the approach in Ontario precedents:

To summarize, the phrase “arising out of the operations” requires more than a “but for” connection between the liability of the additional insured and the operations of the named insured. There must be “an unbroken chain of causation” and a connection that is more than “merely incidental or fortuitous”: Vernon, at para. 52. Furthermore, the word “operations” includes “the creation of a situation, or circumstance, that is connected in some way to the alleged liability. It does not necessarily imply an active role by the named insured in creation of the liability event”: Vernon, at para. 54.

The second point of note is that the Court confirmed that, as between the additional insured and the insurer, it is the language of the insurance policy that governs the duty to defend analysis, and not the language of the contract. The contract is relevant only to the inquiry into the nature of the operations and the scope of the work.

Sky argued that the trial judge failed consider the language of the insurance provision in the underlying contract, which referred to “liability, other than legal liability arising out of their sole negligence, arising out of the operations of the Contractor with regard to the Work”. Sky argued that, since the contract only carved out liability arising out of the owner’s “sole negligence” and Sky has not been found negligent, there must be coverage. In dismissing this argument, the Court stated:

… the insurer is not privy to the construction contract. It typically does not know what the particular parties agreed to and does not underwrite different risks with each new contract entered into by its insured. … It follows that I reject the appellant’s submission that the language of the contract between Sky and Marnoch should affect the interpretation of Economical’s policy, other than to explain the commercial context.

That said, the Additional Insured Endorsement in the present case does provide insurance with respect to liability arising out of the operations of the named insured. The contractor’s contractual obligations, including the scope of the work, are part of the inquiry into whether the owner’s liability arises out of the contractor’s operations. The work the contractor actually performs or is alleged to have failed to perform, may also be part of that inquiry.

What is interesting here is that if it is solely the language of the policy(ies) that governs, and if the only role of the underlying contract in the duty to defend analysis is in determining the nature of the operations and the scope of the work, this arguably opens the door for the insurer to argue that the additional insured’s own CGL coverage should generally “come to the table” and participate in the defence, assuming the Other Insurance clauses do not rule this out. Because if the defence analysis is proceeding solely on the basis of policy wordings, and if the underlying contract has no other impact on the analysis than determining the nature of the operations and the scope of the work, there would appear to be no basis for the additional insured’s own CGL carrier to argue that, as between the two carriers, the defence obligation is allocated by, and therefore should follow, the contract.

Take away

Apart from providing guidance and certainty on the meaning to be given to “arising out of the operations”, the decision may open the door for the insurer to argue that the additional insured’s own CGL coverage should generally “come to the table” and participate in the defence, assuming the Other Insurance clauses do not rule this out.

Historic Case of Sexual Abuse: Addressing Vicarious and Independent Liability of School Board

By Dolden Wallace Folick Toronto

A school board was recently found vicariously liable for historical sexual abuse that the plaintiff was subjected to by her high school teacher. The teacher was also a named defendant but did not attend the trial. He had not been criminally convicted for any related offences.

The school board did not contest the plaintiff’s allegations against the teacher. The plaintiff alleged that the teacher sexually abused her when she was 16 years old on 10 occasions in 1983. The abuse occurred on and off school property. The teacher took on a mentor/confidant role with the plaintiff as she confided in him about personal and family problems. He abused his position of power and trust and groomed the plaintiff to engage in sexual acts. Assault, battery, sexual assault and sexual battery were made out civilly.

The plaintiff disclosed the abuse to a co-op student counsellor who in turn reported the abuse to the principal. The principal met with the teacher and the teacher ultimately resigned.

Other than speaking with the co-op student, no further support was provided to the plaintiff. The Court found that the school board fell below the standard of care by not seeking available counselling for the plaintiff and by not even suggesting such an option to the plaintiff. The school board breached its duty owed to the plaintiff to protect her from an unreasonable risk of harm.

The school board was also negligent for failing to immediately remove the teacher. Despite the abuse being reported in April, the teacher was permitted to continue working until the end of the school year without any restrictions. The teacher should not have been permitted to return to work after the allegations, which were believed, were disclosed.

By virtue of his position as the plaintiff’s teacher, the teacher had power over the plaintiff, which also augmented by the teacher’s role as leader of the school band, which the plaintiff was a member of. In these positions, it was accepted practice for the teacher to drive students places, perform individual instrument testing with students and attend overnight school trips. The school board’s policies and procedures at the time permitted the foregoing activities. The Court found that in this time period there was a growing awareness of teacher/student sexual abuse and inferred that the school board could have had policies in place to prevent this situation from arising. However, in 1983, the school board did not have any policy dealing with teacher/student transport. Such a policy only came into existence in 2017.

The teacher’s wrongdoing was strongly connected with his employment with the school board, which the Court held materially and significantly increased the risk of harm to the plaintiff. The Court thus held that the school board was vicariously liable for damages resulting from the teacher’s wrongdoing.

The school board was jointly and severally liable for the plaintiff’s damages, which amounted to $300,000 in general and aggravated damages, as well as $200,000 for loss of income. Punitive damages of $100,000 were awarded against only the teacher.

Take away

School boards will not necessarily be vicariously liable in situations arising from employees wrongdoings. However, school boards should ensure that the have adequate policies and procedures to protect their students from abuse at school, and that the policies and procedures are followed.

Where abuse of any kind is alleged or discovered, school boards must deal with it and the individuals involved in a timely and serious manner. The school board must protect students and act in their best interest. Abusers must not be permitted to remain in their employment and should be reported to the authorities.

Impact of BC Ferry Settlement Agreement on Non-Settling Parties

By Jonathan Weisman, Dolden Wallace Folick Vancouver, Email: jweisman@dolden.com

The BC Supreme Court recently released a decision which will give parties increased confidence in structuring partial settlements. The Owners of Strata Plan KAS3204 v Navigator Development Corporation (“Navigator”) confirms that the form of BC Ferry agreements commonly used does not sever liability among non-settling parties, who remain jointly and severally liable for the portion of the plaintiff’s loss attributable to them as a group.

BC Ferries Settlement Agreements

Named for British Columbia Ferry Corp v T & N, a BC Ferry settlement agreement (elsewhere referred to as “Pierringer agreement” after the 1963 Wisconsin case of Pierringer v Hoger) is the most common means used to achieve an effective partial settlement. The plaintiff provides settling parties releases from liability and amends its pleadings to remove the settling parties and forego any claims based on their liability. This has the effect of excising the settling parties and their share of liability from the litigation, eliminating any basis for claims for contribution and indemnity against them from nonsettling parties.

The Application

Navigator arose from a multi-party construction dispute where the plaintiff entered into two BC Ferry agreements (the “Agreements”). The Agreements provided that the plaintiff would limit its claim “to the several extent of liability of the Remaining Defendants”. Greyback Construction Ltd., (“Greyback”), which was named only as a third party and not as a defendant, sought a declaration that, by limiting its claim in this way, the plaintiff had released the remaining parties from joint liability, and that therefore any third party claim against Greyback for contribution should be dismissed.

Greyback relied, in part, on an excerpt from Huang v Canadian National Railway Co (“Huang”), where the Court had concluded that:

Pursuant to ss. 1 and 4 of the of the Negligence Act, R.S.B.C. 1996, c. 333, the liability of multiple tortfeasors is several if a plaintiff is contributorily negligent and joint and several if the plaintiff is not: Henry v. British Columbia, 2016 BCSC 1038, aff’d 2017 BCCA 420. As the defendants noted, this is so whether all tortfeasors are sued as defendants or not: Leischner v. West Kootenay Power & Light Co. (1986), 1986 CanLII 889 (BC CA), 24 DLR (4th) 641 (B.C.C.A.) at 174. Similarily, under a BC Ferries agreement, a plaintiff settles with one or some but not all of the defendants and agrees to sever joint and several liability among the settling and non settling defendants. The plaintiff is only entitled to recover against the non-settling defendants the portion of damages attributable to the fault apportioned to them by the trial judge.

This language, it was argued, suggested that the effect of a BC Ferry agreement was the same as that of contributory negligence – a severance of liability among tortfeasors. Greyback argued that it was entitled to seek a dismissal in reliance on the Agreements despite not being a party to them. Greyback relied on the exception to privity provided by London Drugs v Kuehne & Nagel International Ltd.

The Decision

The Court agreed that, in some cases, a BC Ferry agreement could result in the dismissal of a third-party claim, but this was not because the agreement would sever liability among non-settling parties:

“I have already explained the principle that may be drawn from BC Ferry; a third party claim will be summarily dismissed as bound to fail where the plaintiff has expressly waived, in its pleadings, any right to recover from the defendants any portion of the loss which the court may attribute to the fault of the settling third party… BC Ferry simply does not decide that a partial settlement extinguishes the joint liability of the non-settling parties.”

Where a BC Ferry agreement releases liability that encompasses the claim against a third party, that party may succeed. But if the contribution sought from them is for liability of non-settling parties, no such summary dismissal is available. The Court stated that it would be “commercially absurd” for a plaintiff in a BC Ferry settlement agreement to limit their right to recover from the remaining defendants jointly. This would represent a significant detriment to the plaintiff without any corresponding benefit to the settling parties.

This question of benefit represented an additional defect in Greyback’s application. Greyback premised the dismissal on the Agreements, but was not a party to them. As it was not the plaintiff’s intention to confer any benefit on non-settling parties such as Greyback, Greyback could not rely on the London Drugs exception to privity to sue on the Agreements.

How, then, would third parties seek relief where claims against them for contribution are resolved by a BC Ferry agreement? By reference to the pleadings – it is the amended pleadings which a plaintiff files pursuant to a BC Ferry agreement which redefine its claim, and it is their wording, and not that of the agreement between a plaintiff and settling defendants, which impacts the position of non-settling parties.

The Court distinguished Huang because its plaintiff had admitted contributory negligence. With no such admission in Navigator, the Court concluded that any portion of Huang addressing BC Ferry settlements and the liability of remaining defendants was irrelevant.

Impact

Navigator confirms that BC Ferry settlement agreements, as commonly drafted, do not sever liability between non-settling parties. Their effect on non-settling parties is only “to the extent that it results in an amendment to the plaintiff’s pleadings”.

This focus on pleadings may result in other challenges, and illustrates an important point in implementing partial settlements: settling parties will be happy to ensure their liability is carved out, but plaintiffs must focus on what remains. For more information on contractual releases from multi-party litigation, see the Dolden Wallace Folick publication Extricating Yourself from Multi-Party Litigation and the Effectiveness of Contractual Releases, by Steve Wallace and Scott Baldwin.