Court File and Parties

COURT FILE NO.: CV-08-367027
DATE: 20120918
SUPERIOR COURT OF JUSTICE - ONTARIO

RE: Yvonne Morgan, Plaintiff

AND:

The Economical Insurance Group, Defendant

BEFORE: Carole J. Brown J.

COUNSEL: Zisckind I. , for the Plaintiff

Henderson J. , for the Defendant

HEARD: June 13, 2012

ENDORSEMENT

[ 1 ] The appellant/defendant, the Economical Insurance Group (“the Economical” or “the defendant”) appeals from the Order of Master Haberman dated January 26, 2012 which permitted the plaintiff to amend her original statement of claim. It is the position of the defendant that the Master erred in law by allowing the plaintiff to amend her statement of claim after the expiry of the limitation period to add a new and distinct claim for uninsured coverage; that she erred in fact and law by finding that the statement of claim was ambiguous enough to include a claim for uninsured coverage, that she erred in her application of the "special circumstances" doctrine in light of the caselaw and that she failed to properly consider the prejudice to the defendant caused by allowing the amendment.

The Facts

[ 2 ] The plaintiff was involved in a motor vehicle accident which occurred on November 3, 2005. She sued the owner and operator of the other vehicle involved on September 26, 2007. On May 14, 2008, the plaintiff notified the Economical of a “potential claim under the unidentified/uninsured portion of the coverage” afforded by the insurance policy issued by the Economical to the plaintiff. Further, on October 22, 2008, plaintiffs’s counsel notified the Economical that they had learned that the driver of the third party vehicle was not insured at the date of the loss and they would be issuing a claim against the Economical.

[ 3 ] On November 25, 2008, the plaintiff commenced an action against the Economical with respect to the motor vehicle accident. Pursuant to the statement of claim, the plaintiff claims damages under the underinsured provisions of the policy of insurance issued to the plaintiff. The plaintiff, in her statement of claim at paragraph 5 through 7 pleads that at the material times, the owner and operator of the vehicle were "insufficiently insured" and pleads that she is "entitled to claim damages against Economical, as her damages were caused by the negligence of the underinsured motorist."

[ 4 ] The defendant served the statement of defence with respect to this claim on January 19, 2009.

[ 5 ] On October 11, 2011, the plaintiff served a notice of motion seeking, inter alia , to amend paragraph 7 of the statement of claim to plead that the plaintiff's damages "were caused by the negligence of the underinsured/ uninsured motorist.

[ 6 ] On January 26, 2012, Master Haberman released her decision, permitting the said amendment. In arriving at her decision, Master Haberman found that the claim as issued was "perhaps equivocal in tenor" and that the plaintiff referred to both defendants as having insufficient coverage, when she ought to of stated that they had no coverage to respond to this loss. Further she observed that the statement of claim, paragraph 7, claimed entitlement to damages from Economical in view of the negligence of the underinsured motorist. Master Haberman found that the errors, in the context of two references to the Insurance Act and the fact that the claim stated, at paragraph 3, that the policy provided for uninsured coverage, was sufficient to overcome any limitation period that may have expired. She held as follows:

“The claim contains sufficient details to allow it to be read to extend to uninsured coverage. The pleading is equivocal, not well drafted and clearly replete with errors. The fact that they [the defendant] went so far as to admit that the policy was issued by Co-Operators suggests they took pains to avoid drawing any attention to any errors in the pleading. For them to now try to take advantage of errors they had to have been aware of is simply a sharp practice.

The pleading is clear enough as it is to permit an amendment such as is thought to make it even clearer.

As regards prejudice, this is raised in evidence and in the factum, but was not the subject of oral submissions. In any event, if the defendant was of the view that their failure to third-party the driver/owner earlier will now cause them prejudice, they ought to have brought a cross-motion for that relief to be dealt with together with this motion.”

The Standard of Review

[ 7 ] The parties agree that the standard of review of a Master's decision is as set forth in Zeitoun v. Economical Insurance Group (2008), 91 O. R. (3d), aff’d C. A. l 2009 ONCA 415 () , [2009] O.J. No. 2003, 90 6O. R. (3 d) 639 (ON CA). The standard of review is correctness, whether the decision be final or interlocutory. Consideration will be given to whether the Master erred in law or exercised her discretion upon wrong principles, misapprehended the facts, disregarded, misapprehended or failed to appreciate relevant evidence, made a finding not reasonably supported by the evidence or drew an unreasonable inference from the evidence. This is an appeal and not a trial de novo .

The Issues

[ 8 ] The issues to be determined on this appeal are as follows:

1. Whether the amendment sought to be made to the statement of claim adds an entirely new and unrelated cause of action under section 265 (uninsured coverage);

2. Whether the amendment should be permitted at this juncture or whether there is prejudice which is uncompensable;

3. Whether a judicial declaration determining that there is ambiguity in the statement of claim which would permit it to be read as including uninsured coverage.

New Cause of Action

[ 9 ] The Master found that the original statement of claim, as pleaded, while perhaps “equivocal” was clear enough to put the defendant on notice of the claim to be met, including a claim for both underinsured and uninsured coverage as against the Economical. She further found that paragraph 3 of the claim, while equivocal, was sufficient enough to allow it to be read to extend to uninsured coverage. She noted that the defendant admitted paragraph 3 in the statement of defence. She found that, based on the entire claim as pleaded, "there can be no question that Economical knew that the pleading intended to advance claims for both uninsured and underinsured coverage.”

[ 10 ] Based on a careful reading of the pleadings, I do not find that material facts were pleaded, based on which the Economical could know that the claim included or was for uninsured coverage, nor that the claim was pleaded in such a way as to permit them to know “what had been intended”. Indeed, the only material facts pleaded, at paragraphs 5, 6 and 7 of the statement of claim, state that the third parties were “insufficiently insured” and that the plaintiff's damages, claimed against the Economical, “were caused by the negligence of the underinsured motorist.” The plaintiff did not plead as material facts that the third parties were not insured. The statement of claim, read in its entirety, pleads that the third parties were “insufficiently insured” or “underinsured” which does not bring the claim within section 265 of the Insurance Act . While plaintiff’s counsel’s letter of notice advised that the third parties were not insured, the actual claim was for underinsured coverage and not uninsured coverage.

[ 11 ] Although the Master found, and the plaintiff argues that paragraph 3 of the statement of claim pleads material facts necessary to found the uninsured claim, and was clear enough to be read as including a claim under the uninsured provisions of the policy or, at least, is ambiguous with respect thereto, I find that this paragraph is a general description of the coverage afforded to the plaintiff pursuant to the policy of insurance and the OPCF-44R – Family Protection Coverage endorsement. I do not find it sufficient to establish a claim as against the Economical for uninsured coverage, particularly in light of the specific pleadings at paragraphs 5, 6 and 7.

[ 12 ] While the plaintiff argues that the statement of claim, read with the notice letters makes clear what the claim was, the statement of claim is ultimately paramount in establishing and giving the defendant notice of the claim actually being brought and must be properly pleaded so that the defendant knows the case to be met. I do not find anything in the four corners of the claim which sets forth a claim for uninsured coverage.

[ 13 ] I find that the amendment sought to be made by the plaintiff advances a new claim and does so after the limitation period set forth in the Limitations Act , and also in breach of s. 8(3), regulation 676 – Uninsured Automobile Coverage, R. R. O. 1990, Reg. 676. Further, even using the extended two year "discoverability" doctrine, the limitation period has expired and did so on October 22, 2010.

[ 14 ] I find that the Master erred in finding that the amendment sought did not constitute a new cause of action, that the statement of claim was sufficiently clear to include a claim for damages under both the underinsured and uninsured coverage of the insurance policy, and was therefore sufficient to overcome any limitation period that may have expired.

Prejudice

[ 15 ] The Master observed that while the defendants raised prejudice in their factum and in the evidence before her, it was not the subject of oral submissions and, if the defendant had wished to argue prejudice due to their failure to third party the third party driver/owner, they should have brought a cross-motion.

[ 16 ] The defendant argues on this appeal, as it did in writing at the time of the motion, that it is prejudiced by the fact that the limitation period has long expired and that the defendant is precluded, due to the plaintiff’s course of action, from issuing a third party claim against the defendants in the companion action, who are the owner/driver of the vehicle involved in the motor vehicle accident. While the plaintiff argues that the defendant is able to bring a subrogated third party action against the alleged tortfeasors once it has provided complete indemnity to the plaintiff, the defendant argues that it is unable to bring a third party claim against the defendants in the companion action as the plaintiff has chosen to issue separate causes of action in this matter and relies on Perell and Morden, The Law of Civil Procedure in Ontario , 1 st Stud. ed. (Markham, ON; LexisNexis Canada Inc, 010), at page 335.

[ 17 ] While the defendants further argue that the Master erred in distinguishing this case from Joseph v. Paramount Canada's Wonderland , 2008 ONCA 469 and holding that the claim, as issued, although poorly drafted, did put the insurer on notice of the claim being advanced, I have found that the Master erred in holding that the original statement of claim was sufficiently drafted to put the insurer on notice of a claim for uninsured coverage. Accordingly, I need not further deal with the issue of the application of the caselaw to the facts. I find, in all the circumstances of this case, that the Master erred in failing to find uncompensable prejudice.

Judicial declaration

[ 18 ] Although not requested in the motion record or mentioned in the supporting affidavit nor addressed by Master Haberman, the plaintiff, in its revised factum, requested a judicial declaration that any “ambiguity” in the statement of claim be read as including an uninsured claim. This was not pursued by the plaintiff in her factum, and I decline to make any such declaration. I note that the declaration is, in its nature, final, and that such a declaration would be premature here.

Order

[ 19 ] In conclusion, I set aside the Order of Master Haberman dated January 26, 2012 and grant the defendant’s appeal.

Costs

[ 20 ] I would urge the parties to agree upon costs, failing which I would invite the parties to provide any costs submissions in writing, to be limited to three pages, including the costs outline. The submissions may be forwarded to my attention, through Judges’ Administration at 361 University Avenue, within thirty days of the release of this Endorsement.

Carole J. Brown J.

Date: September 18, 2012