CITATION: 1562860 Ont. Ltd v. Insurance Portfolio et al, 2010 ONSC 529
COURT FILE NO.: 4022A/07
DATE: 2010-01-21
ONTARIO
SUPERIOR COURT OF JUSTICE
DIVISIONAL COURT
B E T W E E N:
1562860 ONTARIO LTD., carrying on business as SHOELESS JOE’S
Katherine I. Henshell, for the Plaintiff/Respondent
Plaintiff/Respondent
- and -
INSURANCE PORTFOLIO INC. and CHRISTOPHER CONIGLIO
Mikel C. Pearce, for the Defendants/Respondents
Defendants/Respondents
- and -
THE DOMINION OF CANADA GENERAL INSURANCE COMPANY
Christopher I.R. Morrison, for the Third Party/Moving Party
Third Party/Moving Party
HEARD: December 29, 2009 at Milton, Ontario
Michael G. Quigley J.
Reasons For Judgment
[1] The Dominion of Canada General Insurance Company seeks leave to appeal a decision of Bielby J. dated April 1, 2009 in which Dominion claims he dismissed its motion for an order dismissing the defendants’ third party claim against it. In the same endorsement, however, he granted the principal relief that Dominion was seeking. He ordered a stay of the third-party action brought by the defendants in this matter against Dominion and a stay of the main action brought by the plaintiff against the defendants.
[2] The plaintiff has appealed the stay order granted by Bielby J. and the defendants have cross-appealed. Those appeals are currently pending in the Court of Appeal. Since the particular “decision” for which Dominion seeks leave to appeal here relates to an interlocutory matter, it would normally proceed to the Divisional Court if leave is granted. However, in light of the appeals that are already pending at the Court of Appeal, Dominion expects that the appeal of this interlocutory question would be joined with the plaintiff’s appeal and the defendants’ cross-appeal under section 6(2) of the Courts of Justice Act, and heard at the same time if leave to appeal is granted by this court. By order of Laskin J.A., the plaintiff’s appeal and the defendants’ cross-appeal have been adjourned in that court to allow leave to be sought from this court.
[3] All of these matters, the appeal and this putative appeal, arise out of the settlement of an insurance claim and a release given by the plaintiff to the insurer, Dominion, who is the third party in this action. As part of that settlement, the plaintiff undertook not to commence any claim against any party that might make a claim for contribution and indemnity against Dominion under the Negligence Act. After its insurance claim was settled, however, the plaintiff brought this action against the defendant for damages. It claims the defendants were professionally negligent in the advice they provided as insurance brokers respecting the amount of business interruption insurance coverage that Shoeless Joe’s should have had. The defendants then brought the present third party claim against Dominion for contribution and indemnity. It is alleged that the sole purpose of the defendants in asserting that third party claim against Dominion is to defeat the plaintiff’s claim against the defendants by triggering the provisions of the release.
[4] Dominion asserts that the issue before the Court of Appeal is essentially whether the defendants have a valid cause of action against it as third party for contribution and indemnity. It says that if there is a valid cause of action, the terms of the release will demand that the stay be maintained. If there is not, then Dominion says there will be no need for the stay and it will be lifted. However, since the third party’s motion to determine whether or not there is a valid claim was interlocutory, Dominion says that it is required as third party to seek leave so that the third party claim will be dismissed in the event that the stay is lifted.
[5] To my mind the issue here is much simpler than Dominion paints it. Here, the motion judge only considered whether the Defendants have a valid cause of action for contribution and indemnity against the third party as an alternative ground of relief. More importantly, he determined that Dominion should be granted the stay orders it sought as its principal ground of relief as against the defendant’s third party claim and the plaintiff’s action. In that context, the real question here is whether Bielby J. made any interlocutory decision which is capable of being appealed and for which leave of this court must be obtained. In my opinion, the learned motion judge made no such decision. Consequently, this leave application is dismissed for the reasons set out below.
Summary of Facts
[6] Shoeless Joe’s restaurant is the plaintiff in this action. It sustained flood damage to its premises in August, 2005. Dominion was its insurer. The plaintiff initiated an insurance claim against Dominion which included a claim for business interruption compensation. Dominion took the position that the plaintiff was only entitled to recover $248,000 by way of indemnity for the interruption to its business operations caused by the flood, based on the terms of the insurance contract and a formula that applied in circumstances where coverage was determined to have been inadequate based on the actual loss experience. The plaintiff’s insurance recovery was materially less than its loss. Initially Shoeless Joe’s had taken the position that the insurance amount to which it was entitled under the terms and conditions of the policy for business interruption loss was a substantially higher amount.
[7] Ultimately, the entire claim was settled. The plaintiff received about $520,000 which included $248,000 by way of business interruption coverage, and it executed a release in favour of Dominion with respect to the business interruption claim as part of the settlement. That release included a promise by the plaintiff not to make any claim or take any proceedings against any other person or corporation, who or which might claim contribution or indemnity from Dominion under the provisions of any statute. The wording of the indemnity clause in the release at issue here is understood to be substantially similar to the wording used in the overwhelming majority of releases in most civil litigation disputes. Moreover, the wording in this release is the same wording as can be found in the standard form of release prepared by the Insurance Bureau of Canada for use by its members. As such, obviously it is important to the insurance industry that the terms of the form of release are understood and that they are achieving their intended purpose.
[8] Not long after the insurance claim was settled and the release was given, the plaintiff commenced this action against its insurance broker, Insurance Portfolio Inc. and its principal, Christopher Coniglio, the defendants in this action. Shoeless Joe’s claims that its insurance brokers were negligent in failing to secure adequate business interruption loss insurance for the Shoeless Joe’s restaurant. In October, 2007, the Defendants issued a third-party claim against Dominion seeking contribution and indemnity in reliance on the Negligence Act. In the third-party claim, the defendant insurance brokers allege that Dominion owed a duty of care to the defendants, not only to properly adjust the plaintiff’s claim but also to ensure that the settlement was reasonable and fair. They also allege that duty of care required Dominion to include the broker within the terms of the Release.
[9] In contrast, Dominion asserts that the entire purpose of the third party claim by the defendants was to trigger the provisions of the release. As a result, it brought a motion under section 106 of the Courts of Justice Act to stay the main action by the plaintiff against the defendants and the third party claim against it on the grounds that the claim was an abuse of process having regard to the final release given by the plaintiff. It is important here that Dominion also made two alternative prayers for relief at that motion: first for an order under Rule 21 dismissing the defendant’s third party claim as disclosing no reasonable cause of action against Dominion, and second, in the further alternative, for summary judgment under Rule 20 dismissing the brokers’ third party claim on the ground that no triable issue is disclosed.
[10] Dominion succeeded on the first ground on the motion – Bielby J. stayed the third party claim, and he also stayed the main action. He granted the stay on the simple basis that the third party was not entitled to bring its claim if there was any possibility of contribution and indemnification being sought from Dominion. Moreover, he granted a stay of the plaintiff’s action against the defendants because of the interlinkage between the third party claim and the main action. At paragraph 55, drawing on Woodcliffe Corp. v. Rotenburg, 2005 31292 (ON CA), [2005] O.J. No. 2800 (C.A.), Bielby J. concluded that having settled its insurance claim and executed the release without excepting the Defendants, and having obtained the benefits of the settlement, the plaintiff had to bear the burden of the release imposed in terms of precluding claims over against Dominion. Consequently, there was no foundation for either the third party claim or the main action – the release precluded both and effectively demanded that the plaintiff be held to its promise.
[11] Since both the third party claim against it and the action behind that claim were brought to an end, it is clear that Dominion was successful on its motion. Although the plaintiff has appealed that order to the Court of Appeal, Dominion will remain successful even if that appeal succeeds. This follows since the plaintiff’s notice of appeal does not seek to lift the stay imposed with respect to the third party claim – it seeks relief only against the stay granted by Bielby J. in the main action. In its cross-appeal, however, the defendants have sought to have the stay of the third party claim lifted as well.
[12] Nonetheless, while it was Dominion that succeeded on its motion, it is Dominion that now seeks leave to appeal. Dominion claims the cross-appeal brought by the defendants in response to the plaintiff’s appeal now forces it to seek leave in this court to appeal the “decision” of Bielby J. on one of the alternative grounds of relief sought in the original motion, that is, with respect to the relief sought under Rule 21. Dominion’s reasoning goes as follows. It says that if the plaintiff succeeds on appeal, and if the defendant’s cross-appeal is also allowed such that the stays granted by Bielby J. are lifted, it will once again find itself joined as a third party in this action. If that were to happen, Dominion claims it will need to be in a position where it can contest what it asserts was Bielby J.’s erroneous “decision” on the alternative relief it sought under Rule 21 and Rule 20.
[13] However, having granted the stays sought by Dominion, Bielby J. had no need “to decide” whether to grant either of the alternative prayers for relief sought by Dominion. As noted, the first of those sought an order under Rule 21 dismissing the third party claim as disclosing no reasonable cause of action against Dominion, and the second sought summary judgment dismissing the third party claim as disclosing no triable issue with respect to Dominion. I note here that Bielby J. specifically noted in his reasons that he did not need to decide either of those questions in light of his disposition of the matter. He said:
…it is unnecessary for me to deal with the other issues. However, had a stay not been in order, I make the following comments.(my emphasis)
[14] Bielby J. went on to comment that he would have dismissed those aspects of the motion had he not reached his primary determination. He would have done so on the basis of his stated belief that the law was not clear as to whether or not a duty of care was owed to the defendants by Dominion in these circumstances. He stated that “there was a real issue” whether or not such a duty of care was owed. However, he also observed that it would not have been appropriate for him as motions judge on an interlocutory matter to determine the point had he not stayed the proceedings. Instead, Bielby J. said that he would have dismissed Dominion’s alternative prayers for relief on the basis that novel causes of action should not be prevented from proceeding in a motion brought under Rule 21, and that he ought not to determine novel points of law when the law is not settled and when it was not “plain and obvious” that there was not a reasonable cause of action. This is the alleged “decision” of the motion judge in respect of which Dominion now seeks leave to appeal before this court.
Analysis
[15] Under ss. 19(1)(b) of the Courts of Justice Act, an appeal lies to the Divisional Court from an interlocutory order of a judge of the Superior Court of Justice with leave as provided in the Rules. The test for leave to appeal to the Divisional Court is set out in Rule 62.02 (4)(b) and Brownhall v. Canada (Minister of National Defense).[^1] Leave to appeal is not to be granted unless there appears to the judge hearing the motion to be good reason to doubt the correctness of the order in question and the proposed appeal involves matters of such importance that, in his or her opinion, leave to appeal should be granted. On this motion for leave, it is not necessary for Dominion to convince the court that the earlier decision is wrong or probably wrong. It need only show that there is good reason to doubt the correctness of the decision. The case law establishes that the court should ask itself whether “the decision is open to very serious debate" and, if so, whether “the decision warrants resolution” by a higher level of judicial authority. Moreover, the jurisprudence shows that leave under Rule 62.02 (4)(b) ought to be granted for matters of public importance and matters relevant to the development of the law and the administration of justice.
[16] Dominion says that apart from interest and costs, the sole prayer for relief in the third party claim is a claim for indemnity. Looked at in that light, it says that there is good reason to doubt the correctness of the decision of Bielby J. in refusing to grant the orders sought under Rule 20 and 21, based on his findings in paragraph 59 where the motion judge said:
I believe there is a real issue is to whether or not a third party, Dominion, has a duty of care to the defendant brokers. I am advised by counsel for both parties that they are unable to find any case on this point. It is therefore a novel point of law.
[17] Dominion says that Bielby J. was incorrect in reaching this conclusion. It asserts that the law is fully settled on the point, that there is no tortious remedy for contribution and indemnity,[^2] and that it is specifically because of the "gap" in the common law that the Negligence Act, R.S.O. 1990, c. N-1 exists to provide a statutory remedy. Section 1 of that Act reads as follows:
Where damages have been caused or contributed to by the fault or neglect of two or more persons, the court shall determine the degree in which each of such persons is at fault or negligent, and, where two or more persons are found at fault or negligent, they are jointly and severally liable to the person suffering loss or damage for such fault or negligence, but as between themselves, in the absence of any contract expressed or implied, each is liable to make contribution and indemnify each other in the degree in which they are respectively found to be at fault or negligent.
[18] In light of this assertion, Dominion claims that it is imperative that leave be granted to permit the Court of Appeal to deal with the cause of action claim at the same time as it considers whether the stay ordered by Bielby J. of the plaintiff’s action and the defendants’ third party claim ought to be upheld. At present, it says the situation is that Beilby J. concluded incorrectly and improperly that the defendants’ third party claim should not be struck as disclosing no reasonable cause of action. In light of that alleged erroneous “decision”, Dominion claims that leave ought to be granted here to permit the Court of Appeal to consider not only whether the stays ought to be maintained or lifted, but also whether the defendants’ third party claim ought to be struck as disclosing no reasonable or known cause of action.
[19] Dominion evidently has a commercial concern, a concern that arises in the context of what it says is well settled law and practice within the insurance industry in Canada. Its concern is that Bielby J. expressed an opinion that it believes to be incorrect, or at least not in conformity with settled law – it says the duty of care of an insurer to a broker is not a novel point of law but rather one settled as being non-existent. As such, it claims that if the primary relief had not been granted, Bielby J. ought to have granted Dominion’s motion under Rule 21 to strike the claims as disclosing no reasonable cause of action, or ought to have granted summary judgment under Rule 20 dismissing the claim and the third party claim as disclosing no triable issue. It is concerned that the opinion expressed by Bielby J. may be seized upon by n’err-do-well litigants involved in insurance claims as a foundation to assert rights to damages for what is nothing more than a claim for contribution and indemnity under the Negligence Act which is precluded by the standard terms of release used in the industry. It says this could be done merely by asserting the existence of a duty of care between the insurer who has been released as part of an insurance settlement and a defendant who may be pursued by the insured for any number of related or unrelated reasons.
[20] Without having considered or researched the issue, perhaps there is reason to doubt the correctness of Bielby J.’s opinion on that point given counsel’s professed certainty on the state of the law on this issue. Perhaps it would be desirable for the Court of Appeal to be in a position where it can comment on the issue if it decided to reverse Bielby J.’s order staying the third party claim and the plaintiff’s action. However, these considerations do not determine that leave to appeal that question ought to be granted. An appeal does not lie to this court from every interlocutory question raised in the Superior Court. An appeal lies to this court with leave only from an interlocutory “order” of the Superior Court, which also meets the double-barreled test enunciated under Rule 62.02. In order to be appealable, the matter in question must amount to or constitute “a decision,” and as section 19 of the Courts of Justice Act makes clear, it is the “order” of the Superior Court that is appealable to this court with leave.
[21] In this case, Bielby J. made only one order after the hearing of the motion. He granted the stay order sought by Dominion with respect to the plaintiff’s action and the defendants’ third party claim. As a final order it is the Court of Appeal that will properly determine the correctness of that decision. Contrary to Dominion’s assertion, Justice Bielby made no order that the alternative grounds of relief sought by Dominion were dismissed. Rather, he indicated that if he had not reached the conclusion he had on the primary ground, then he would have dismissed Dominion’s motion for alternative relief under Rule 21 and Rule 20. However, that hypothetical statement of what he would have done had he not disposed of the matter as he did is not an appealable decision. Moreover, in making that statement, Bielby J himself specifically recognized that he was under no obligation to reach a decision on those lines of argument and he specifically described his views as mere “comments.”
[22] Given that recognition, I can see no basis to regard the alleged “decision” as anything other than:
(i) a non-binding statement of opinion or views, that
(ii) has no decisive effect in the context of these proceedings, and that
(iii) cannot be regarded on any basis as amounting to an order capable of being appealed.
It is in the nature of obiter dictum.[^3] It is not a decision having legal import, and it did not give rise to an order.
[23] In my opinion, the only decision that was made by Bielby J. and that is capable of being appealed is already under appeal at the Ontario Court of Appeal. There is no further decision which is appealable to this court. As such, obviously there is nothing in respect of which this court can grant leave. The application for leave to appeal is dismissed.
[24] The defendant/respondent is entitled to its costs from the third party/moving party. The plaintiff/respondent had no involvement in the leave motion and so is not entitled to costs. If the parties are unable to agree on costs they may arrange a 9:30 appointment in Milton to speak to the matter.
Michael G. Quigley J.
Released: January 21, 2010
COURT FILE NO.: 4022A/07
DATE: 2010-01-21
ONTARIO
SUPERIOR COURT OF JUSTICE
B E T W E E N:
1562860 ONTARIO LTD., carrying on business as SHOELESS JOE’S
Plaintiff/Respondent
- and –
INSURANCE PORTFOLIO INC. and CHRISTOPHER CONIGLIO
Defendants/Respondents
- and –
THE DOMINION OF CANADA GENERAL INSURANCE COMPANY
Third Party/Moving Party
REASONS FOR JUDGMENT
Michael G. Quigley J.
Released: January 21, 2010
[^1]: (2006), 2006 7505 (ON SC), 80 O.R. (3d) 91(S.C.J.O.). [^2]: Plazek v. Green, 2009 ONCA 83, [2009] O.J. No. 326 (C.A.) Footnote 4. [^3]: B. Garner (Ed.), Black’s Law Dictionary (7th)(St. Paul, Minnesota: West Group, 1999) defines “obiter” as something said “in passing”, and “obiter dictum” as “a judicial comment made during the course of delivering a judicial opinion , but one that is unnecessary to the decision in the case and therefore not precedential (although it may be considered persuasive).