SUPERIOR COURT OF JUSTICE - ONTARIO
DIVISIONAL COURT
Re: GAIL WARNER (RAMLOCHAN)
Applicant
- and -
MARYLYN R. BALSDON, MEGAN BALSDON and DOMINION OF CANADA GENERAL INSURANCE COMPANY, RICK SHIELDS and 1426052 ONTARIO LTD., operating as YOGI & PARTNERS
Respondent
Before: The Honourable Mr. Justice Arthur M. Gans
Counsel: Alan L. Rachlin, for the Applicant
Natalie Leon, for the Respondent
Heard at Toronto: September 28, 2007
ENDORSEMENT
1This is a motion for leave to appeal the decision of Lederer J. in which he dismissed a motion brought by the Defendants, Balsdons, for an order striking out the Crossclaim of the Defendant Shields and 1426052 Ontario Ltd. as against these defendants.
2Not unlike some motions of this nature, the argument that was made before me was markedly different in form and substance from that which was advanced before the Motions Judge, at first instance. One need only have regard to the case brief and factum filed in the instant application to understand the magnitude of the analysis that was now requested by the Applicant.
3That being said, the bald pleading of the form of ‘cause of action’ found in paragraph 18 of the Defence and Crossclaim was not only woefully inadequate, but bordered on the incomprehensible, which observation was all but agreed to by counsel for the Respondent. Indeed, counsel, at my invitation, prepared a draft amendment to the pleading, which she says would better characterize the impugned cause of action, with greater specificity, as the one that should be considered by the Divisional Court, if I determine to grant leave. I have attached the work product of Respondents’ counsel as a schedule to this endorsement and considered the issue as if it were argued on the pleading as amended, in the interests of judicial efficiency.
4The matter has taken on a new caste to the one that what was argued originally as demonstrated by the Applicant’s argument found at paragraphs 32-38 of the factum, which arguments I doubt were raised or at least underscored by counsel before the Motions Judge. The effect of that observation, however, gives some merit to the argument that the judgment under review might not now be correct. The issues upon which the Applicant seeks to focus my attention are best summarized as follows:
(a) is an insured vicariously liable for the actions of the insurer for the manner in which the latter had purportedly dealt with a third party;
(b) does an insurer owe an independent common law duty to third parties who have made claims against its insured, assuming that the claimant is not a party to the insured’s contract of insurance.
5I agree with the Applicants’ counsel that the issues just described are of such importance to the insurance industry that leave should be granted, particularly when one has regard to the fact that a similar issue was raised in another leave application, which apparently did not result in a firm determination by a panel of the Divisional Court. (See the decision of Crane J. in Lohr v. Antoine (2001), O.J. No. 1798.) Leave will, therefore, be granted under subrule 62.02 (4) (b). I decline to opine to the applicability of subrule (a) because of the manner in which the matter was argued at first instance.
6In light of the circumstances surrounding the challenged pleading and argument before the Motions Judge, counsel are in agreement that there should be no order as to costs of this application, which I so order.
Gans J.
Released: October 5, 2007
Addendum
Defence and Crossclaim:
These defendants state that pursuant to the terms of the insurance policy between the Balsdon defendants and their motor vehicle insurance company and the terms of the Insurance Act, the insurer of the Balsdons acted as agent for the Balsdons and negotiated a settlement with the plaintiff.
These defendants state that the Balsdons are vicariously liable for the negligence of their agent, their insurer.
These defendants state that the Balsdon defendants, and their insurer, for whose actions the Balsdons are vicariously liable, were negligent in that:
a) They negotiated a settlement with the plaintiff through a paralegal whom they knew or ought to have known was prohibited from negotiating with them by the terms of the Insurance Act;
b) They negotiated a settlement with the plaintiff in a high-handed and callous manner and took advantage of the plaintiff’s vulnerability in negotiating the Release; and
c) They had in their possession records which showed that the plaintiff’s tort claim was worth significantly much more than they paid her and they sought to take advantage of the plaintiff’s ignorance with respect to her rights as against them by settling through an unauthorized agent and without recommending that the plaintiff obtain independent legal advice.