DATE: 20030214

DOCKET: C37340

COURT OF APPEAL FOR ONTARIO

RE: HER MAJESTY THE QUEEN IN RIGHT OF ONTARIO REPRESENTED BY THE ONTARIO MINISTER OF HEALTH AND LONG TERM CARE (Plaintiffs/Respondent) v. E. PAUL BURNS, WILFRID MENNINGA, LEONARD BRYAN, PRUDENTIAL ASSURANCE COMPANY OF CANADA, GENERAL ACCIDENT INDEMNITY COMPANY AND CGU GROUP CANADA LIMITED (Defendants/Appellant)

BEFORE: DOHERTY, ROSENBERG and FELDMAN JJ.A.

COUNSEL: Bill Evans for the appellants, Prudential Assurance Company of Canada, CGU Group Canada Limited, General Accident Indemnity Company

Thomas J. McEwen for the respondent, Bryan

T.C. Wright for the respondent, Burns

W. Menninga appearing in person

Derek Smith for OHIP

HEARD: February 10, 2003

On appeal from the decision of Justice M.C. Cullity dated November 8, 2001.

E N D O R S E M E N T

[1] The factual background to this rather unusual case is concisely set out by Cullity J.:

This action arose out of a collision between two motor vehicles on September 11, 1984. By statement of claim dated 12th April, 1985, the driver of one of the vehicles Ms. Truda Rosborough sued the driver and the owner of the other for damages in respect of injuries she suffered. She was represented by the present defendants, Mr. Bryan – her solicitor – and Mr. Menninga – as counsel retained by Mr. Bryan. After the statement of claim was delivered, Mr. Menninga gave notice to the Ontario Health Insurance Plan (“OHIP”) and was requested to protect its subrogated right pursuant to section 36 of the Health Insurance Act R.S.O. 1980, Chapter 197 (the “Act”) to recover from the defendants in the Rosborough action amounts paid or payable by OHIP under the Act in respect of insured services received by Ms. Rosborough as a consequence of the accident.

The defendants in the Rosborough action were insured by Prudential Assurance Company (“Prudential”) which had carriage of their defence under an automobile accident policy. Prudential retained the present defendant, Mr. Burns, to represent the defendants in the Rosborough action. Liabilities of Prudential were subsequently assumed by General Accident Indemnity Company (“GAIC”) and, later, by CGU Group Canada Ltd. (“CGU”).

An offer to settle sent by Mr. Burns to Mr. Menninga on September 16, 1987 was accepted by him on behalf of Ms. Rosborough on October 19, 1987. The offer provided that “the defendants will pay the plaintiff’s O.H.I.P. claim which is to be negotiated”. A consent order dismissing the action was signed, and entered, on November 10, 1987 and Ms. Rosborough signed a release of the defendants on November 19, 1987. Neither the order, nor the release, as originally drafted by Mr. Menninga referred to OHIP’s subrogated claim as signed, however, the release – but not the order – contained a handwritten note: “OHIP’s subrogated interest is excluded from this release”.

[2] In December 1987, OHIP wrote to Mr. Burns, counsel for Prudential, and requested payment of OHIP’s claim in the amount of about $12,000. Mr. Burns did not respond. OHIP made sporadic attempts in the years that followed to engage Prudential, through its counsel in negotiations with a view to settling OHIP’s claim. These attempts were unsuccessful. Eventually, in 1999, OHIP commenced this action.

[3] With the exception of the argument based on the limitation defence, the submissions advanced by the appellant can succeed only if this court sets aside the trial judge’s finding that Prudential, through its counsel, entered into an agreement with OHIP at the time the main action was settled.

[4] The trial judge (at paragraphs 29-34) found there was an agreement between Prudential and OHIP which included the following terms:

• OHIP’s subrogated claim was not extinguished by the consent dismissal of the main action.

• Prudential would deal directly with OHIP concerning the subrogated claim.

• Only the quantum of the subrogated claim would be in issue.

• If no agreement was reached between OHIP and Prudential as to the amount owing, OHIP could proceed with a claim against Prudential and prove the amounts to which it was entitled.

[5] We are satisfied that it was open to the trial judge, based on the evidence of the solicitors who were involved in negotiating the settlement, the expert evidence, and the documentation pertaining to the offer to settle and the settlement to conclude that an agreement between Prudential and OHIP on the terms set out above had been reached. An agreement on those terms goes beyond simply an agreement to negotiate a settlement. While the eventual amount to be paid by Prudential was uncertain, the terms of the agreement were not.

[6] The arguments advanced on appeal essentially ask this court to substitute its view of the evidence for that taken by the trial judge. We cannot do that. The appellant has not demonstrated any basis upon which we can properly interfere with the finding that an agreement was reached between Prudential and OHIP on the terms described above.

[7] Counsel for the appellant argued that if the trial judge’s finding that Prudential and OHIP entered into an agreement withstood appellate review, then the trial judge erred in holding that OHIP’s claim was not barred by the six-year limitation period governing actions in contract.

[8] The trial judge found that Prudential was estopped, by the terms of its agreement with OHIP, from raising a limitation defence against OHIP (paras. 42, 43). In the trial judge’s view, that estoppel extended not only to the limitation period underlying the original negligence action, but also to any other limitation period that might apply to OHIP’s claim against Prudential. The appellant submits that while the agreement could properly be seen as excluding the former limitation period, it could not reasonably be interpreted as excluding reliance on the six-year limitation period governing contracts.

[9] We find it unnecessary to decide this issue. Even if there is merit to the appellant’s submission, the six-year limitation period could not begin to run until OHIP had notice of Prudential’s repudiation of the contract or reasonably ought to have known of Prudential’s repudiation of the contract. As Cullity J. found, OHIP first received notice of the repudiation in 1994, some five years before it started the action, and could not reasonably have been expected to have known of the repudiation before 1994.

[10] The appeal is dismissed. The cross-appeals were contingent upon the main appeal being allowed in whole or part. They are dismissed as moot.

[11] The respondents should have their costs of the appeal on a partial indemnity basis. Counsel have agreed on the following amounts which we take to include both fees and disbursements:

the respondent, Menninga - $8,500

the respondent, Burns - $8,900

the respondent, OHIP- $8,465

the respondent, Bryan - $8,900

“Doherty J.A.”

“M. Rosenberg J.A.”

“K. Feldman J.A.”