SUPERIOR COURT OF JUSTICE - ONTARIO

COURT FILE NO.: CV-11-442764

DATE Heard: March 17, 2015

RE: CYNDEE TODGHAM CHERNIAK and BRADLEY CHERNIAK, Plaintiffs

AND:

SECURITY NATIONAL INSURANCE COMPANY LA SECURITE NATIONALE COMPAGNIE D’ASSURANCES, Defendant

BEFORE: Master Lou Ann M. Pope

COUNSEL: George Tsakalis, Brown & Partners LLP, for moving defendant

Fax: 416-869-0271

Andrew Lokan, Paliare Roland Rosenberg Rothstein LLP, for plaintiffs

Fax: 416-646-4301

REASONS FOR ENDORSEMENT

[1] The defendant seeks an order that this action (“insurance action”) be tried together with action number CV-10-413130 (“negligence action”) pursuant to rule 6.01 of the Rules of Civil Procedure, R.R.O. 1990, Reg. 194. In the negligence action, the defendants, Ricki and Gordon Fenwick (“Fenwicks”) consent to this motion, on the basis that the two actions be tried together or one immediately following the other. None of the remaining defendants in the negligence action are opposed to the relief sought in this motion. Therefore, this motion is opposed by the plaintiffs only.

Background

[2] Both actions arise out of damages allegedly sustained by the plaintiffs as a result of extensive renovations undertaken by their neighbours, the Fenwicks, who reside in the other half of a duplex where the plaintiffs reside. The subject building, a semi-detached residence, shares a common wall and foundation. It is alleged that the renovations caused damages including cracks in the exterior masonry on one wall, the indoor swimming pool, chimney and interior fireplaces and finishes.

[3] The plaintiffs had a home insurance policy with the defendant, Security National Insurance Company LaSecurite Nationale Compagnie D’Assurances (“Security National”), effective from the date they purchased the property in 2006 which remained in force at all material times. In late 2010 the plaintiffs submitted to their insurer a proof of loss form under the policy. Shortly thereafter, Security National denied coverage.

[4] In 2010 the plaintiffs commenced an action against the Fenwicks, a general contractor, subcontractors, architects and engineers for damages allegedly sustained by them as a result of the subject renovations. They claim damages for negligence, nuisance, trespass and breach of privacy of $1,500,000, mental anguish and suffering of $250,000, compensation for their time spent monitoring and responding to activities of the defendants of $100,000, punitive damages of $200,000, and other relief including injunctions. The defendants delivered statements of defence in which they deny that any actions or activities on their part led to any damages allegedly sustained by the plaintiffs.

[5] In 2011, the plaintiffs commenced this action for breach of contract and damages of $2,000,000 arising out of its denial of coverage for the alleged damages sustained as a result of renovations undertaken by the Fenwicks. Security National pleads that the damages sought by the plaintiffs are specifically excluded under the policy of insurance issued to the plaintiffs, which include cost of making good faulty material or workmanship, earth movement, property undergoing any process, structural movements, vacancy, water damage and wear and tear.

Status of Proceedings

[6] In the negligence action, discoveries were substantially completed in 2014 with the exception of one more day approximately to complete the discovery of the plaintiffs. Undertakings have not been fully satisfied. The plaintiffs reserved the right to discover one individual defendant. Undertaking motions may be required. No expert reports have been served. Mediation has not been held.

[7] After discoveries, the plaintiffs dismissed the action on consent against defendants, Howard Soloman, Absolute Alliance HVAC Solutions and Air-Point Heating & Cooling Inc., the parties who allegedly undertook the installation of the new HVAC system at the Fenwick residence. Mr. Tsakalis advised the court that there is an agreement in principle to dismiss the action against defendants, P.L. Poon and Lam & Associates, who were the engineers who planned and oversaw the installation of the HVAC system.

[8] In this insurance action, discoveries have not been held and no expert reports have been delivered. This action is subject to a court-ordered timetable wherein it is to be set down for trial before May 31, 2015.

Issues and Law

[9] The issue to be determined on this motion is whether this insurance action and the negligence action should be tried together.

[10] The applicable law with respect to motions for an order that two actions be tried together is set out below.

[11] Section 138 of the Courts of Justice Act provides that as far as possible, multiplicity of legal proceedings shall be avoided.

[12] Rule 6.01 of the Rules outlines the court’s discretion to order that proceedings be tried together.

6.01(1) Where two or more proceedings are pending in the court and it appears to the court that,

(a) they have a question of law or fact in common;

(b) the relief claimed in them arises out of the same transaction or occurrence or series of transactions or occurrences; or

(c) for any other reason an order ought to be made under this rule, the court may order that,

(d) the proceedings be consolidates, or heard at the same time or one immediately after the other; or

(e) any of the proceedings be,

(i) stayed until after the determination of any other of them, or

(ii) asserted by way of counterclaim in any other of them.

(2) In the order, the court may give such directions as are just to avoid unnecessary costs or delay and, for that purpose, the court may dispense with service of a notice of listing for trial and abridge the time for placing an action on the trial list.

[13] Subrule 6.01(1) provides that if any one of the criteria in subrules (a) through (c) are met, the court may exercise its discretion to order trial together. Once one or more of these criteria have been met, the Rule states that “the court may order that” (emphasis) various relief, including trial together be ordered. The court may then consider all relevant factors and section 138 of the Courts of Justice Act which discourages a multiplicity of proceedings.

[14] In considering all relevant factors, Master Dash in 1014864 Ontario Ltd. v. 1721789 Ontario Inc., 2010 ONSC 3306, 2010 CarswellOnt 4183, at paragraph 18, provided the following non-exhaustive list of considerations on ordering trial together:

(a) the extent to which the issues in each action are interwoven;

(b) whether the same damages are sought in both actions, in whole or in part;

(c) whether damages overlap and whether a global assessment of damages is required;

(d) whether there is expected to be a significant overlap of evidence or of witnesses among the various actions;

(e) whether the parties [are] the same;

(f) whether the lawyers are the same;

(g) whether there is a risk of inconsistent findings or judgment if the actions are not joined;

(h) whether the issues in one action are relatively straightforward compared to the complexity of the other actions;

(i) whether a decision in one action, if kept separate and tried first would likely put an end to the other actions or significantly narrow the issues for the other actions or significantly increase the likelihood of settlement;

(j) the litigation status of each action;

(k) whether there is a jury notice in one or more but not all of the actions;

(l) whether, if the actions are combined, certain interlocutory steps not yet taken in some of the actions, such as examinations for discovery, may be avoided by relying on transcripts from the more advanced action;

(m) the timing of the motion and the possibility of delay;

(n) whether any of the parties will save costs or alternatively have their costs increased if the actions are tried together;

(o) any advantage or prejudice the parties are likely to experience if the actions are kept separate or if they are to be tried together;

(p) whether trial together of all of the actions would result in undue procedural complexities that cannot easily be dealt with by the trial judge;

(q) whether the motion is brought on consent or over the objection of one or more parties.

[15] In 1206953 Ontario Inc. (c.o.b. Confederation Place Hotel) v. Dominion of Canada General Insurance Co., 2014 ONSC 1454 (Ont. Master) (“Confederation Place”), Master Graham ordered the trial together of an insurance coverage and property damage claim. The facts in that motion are very similar to the facts in the herein motion. In Confederation Place, the underground parking garage of the hotel collapsed. The owner of the hotel commenced an action against its insurer for indemnity and two negligence actions against various contractors, general contractors and engineering firms. It was accepted by the Master that the issue of causation for the collapse and resultant property damage were common in all the actions. The Master ordered the insurance action to be tried with the other negligence actions. In making his decision, he looked at the fact that the majority of the witnesses in all the actions would be required to testify twice if the actions were tried separately. The Master ruled that this factor overwhelmingly favoured a trial of both actions together.

[16] In Meincke v. Unifund Assurance Co., 2013 ONSC 7675, Master Muir considered the issue of trial together in the context of a tort action arising out of a car accident and an action against the plaintiff’s insurer for property damage coverage. The plaintiff commenced the tort action under the ordinary rules where a jury notice had been delivered. The insurance action was commenced under the simplified procedure rules where no jury notice was delivered. The insurer had been unable to determine who was at fault for the accident as it took place in the middle of the intersection and both the plaintiff and the owner of the other vehicle took the position that that they entered the intersection with a green light. The Master found that the principles of convenience, expediency and prejudice to the parties outweighed any benefit of hearing the matters together.

[17] The defendant submits that the critical issue in this action is that insurance coverage might be available to the plaintiffs if the plaintiffs’ damages were caused by renovations undertaken by their neighbours subject to any exclusion under the policy of insurance. If the plaintiffs’ damages were not caused by the renovations then there would be no coverage for their losses under the policy of insurance issued by the defendant.

[18] The defendant further submits that as the facts in the Confederation Place action are similar to the case at bar, this court should follow the same reasoning to conclude that the actions be tried together. It is further submitted that as the relief claimed in both actions arose out of the same occurrence and the issue of causation is common to both actions, the considerations in rule 6.01(a) and (b) have been met. The defendant also contends that the issues of liability and damages and the relief claimed in both actions arise out of the same series of occurrences or transactions. Further, it is submitted that there are common questions of fact and law. The defendant also submits that as the issue of causation is common to both actions, there would be significant inconvenience if tried separately because the plaintiffs and the defendants in the negligence action would have to testify twice. Further, the defendant contends that given the common issue of causation, trial together would avoid inconsistent findings of fact.

[19] The plaintiffs submit that the factors in rule 6.01 do not exist here as there are no questions of law in common and only one question of fact arguably in common. They contend that the issue in the insurance action is whether the damage should be covered and that the legal determination of whether the exclusions apply is not impacted in any way by determinations of liability in the negligence action. Essentially, it is the plaintiffs’ position that causation is not a relevant issue in the insurance action. Simply put, they state that the damages are either covered by the Policy or they are excluded. They contend that the only arguable question of fact in common may be the extent of the damage caused by the renovations or otherwise. They state further that in any event the defendant will undoubtedly wish to make its own assessment of the damage and tender its own expert evidence in that regard. It is also argued that if the damage was caused by a mix of factors, complex questions may arise that do not arise in the negligence action. In addition, the plaintiffs submit that the relief claimed in the actions is different and does not arise out of the same transaction or occurrence. They argue that in the negligence action, the damages sought are in connection with renovations that caused damage to their home; whereas, in the insurance action, damages are sought in connection with Security National’s breach of contract in denying coverage.

[20] The plaintiffs submit that an order for trial together will result in delays in reaching trial and a significantly longer trial which will be to the plaintiffs’ detriment and will outweigh any potential benefits of trial together. They estimate that the insurance action will require three to five days for trial. It is required to be set down for trial by May 31, 2015. They state that the action can be made ready to move forward with relatively few steps. In contrast, they argue that the negligence action involves approximately ten parties and 12 to 15 days for the trial. It is argued that the plaintiffs should not be forced to wait until 15 to 20 days of court time is available, which will entail more delay when scheduling that length of trial between five counsel and one-self-represented litigant. The plaintiffs rely on the reasons of Master Muir in Meincke in refusing to order trial together for their submissions that Security National will suffer no prejudice if the actions are tried separately.

[21] Respectfully, I do not agree with the plaintiffs’ submission that causation is not a relevant issue in this action. By their own argument that “if the damage was caused by a mix of factors . . .” (emphasis) as set out above and in their factum, causation will be a critical issue in this action. This is further confirmed by a close reading of the provisions of the policy where, in my view, the determination of whether an exclusion applies is dependent on the cause of the alleged damage. The following several examples illustrate this point. In Section 1 – Property Insurance, under subheadings “Insured Perils” and “Exclusions” on page 5, exclusion seven under Perils Excluded states: “We do not insure loss or damage: Earth movement”, which is followed by the words “caused by snowslide, earthquake, landslide or any other earth movement” (emphasis). Clearly, the cause of any damage from earth movement will be in issue. Another example can be found under exclusion 19 which states: “We do not insure loss or damage: Structural movements”, which is followed by the words “caused by settling, expansion, contraction, moving, bulging, buckling or cracking except resulting damage to building glass” (emphasis). It is obvious that the cause of alleged structural movements will be in issue. Another example can be found at exclusion 25 which states: “We do not insure loss or damage: Water damage” which is followed by the words “direct or indirect caused by: . . . .” (emphasis) The possible causes are many and are specifically set out. For the above reasons, I find that causation for the alleged damage to the plaintiffs’ residence will be a common issue in both actions.

[22] Subrules 6.01(1)(a) and (b) set out several factors where if any one of them exist, the court may order trial together. The factors are that the proceedings have a question of law or fact in common, the relief claimed in them arises out of the same transaction or occurrence or series of transactions or occurrences, or for any other reason an order ought to be made. For my reasons set out above, I find that the relief claimed in the two actions arises out of the same occurrence or series of occurrences; that is, the alleged damages to the plaintiffs’ home due to the Fenwick’s home renovations. Further, there is a common question of fact regarding the cause of the alleged damages. Therefore, I am satisfied that the requirements of rule 6.01 have been met to invoke the court’s discretion to order trial together.

[23] I will now canvass the list of factors set out by Master Dash in 1014864 Ontario Ltd. v. 1721789 Ontario Inc., supra. My finding for each factor is as follows: (references are to Master Dash’s factors)

(a)(b) and (c) My findings are essentially the same as Master Graham’s findings in Confederation Place at paragraph 21 (a), (b) and (c); that is, the actions share a common issue of causation. The measure of damages in the insurance action is based on the terms of the insurance policy. The damages in the negligence action are based on the amounts required to restore the plaintiffs to the position that they would have been in had the negligence not occurred. Although the causes of action are different, the damages overlap to a significant degree and would likely be assessed based on the evidence of mostly the same witnesses. As such, these factors favour trial together.

(d) and (e) Only the plaintiffs are the same in both actions. The evidence of all the parties in both actions will overlap with respect to the causation issue. Although no expert reports have been delivered to date, it is expected that any expert evidence with respect to causation and damages, and the evidence of the damage witnesses will overlap. These factors favour trial together.

(f) The plaintiffs have the same lawyer in both actions whereas there are four lawyers who represent separate defendants in both actions. If the actions are tried together, plaintiffs’ counsel will be required to prepare for trial once and, along with the plaintiffs, attend one trial as opposed to two. In addition, the plaintiffs will be able to call most of their witnesses once instead of twice. These factors favour trial together.

(g) For my reasons above, if these actions are tried separately, there is a risk of inconsistent findings regarding causation of the alleged damages. This factor favour trial together.

(h) Given the number of defendants in the negligence action, the issue of causation will be more complex. There will be additional liability evidence which will relate to the standard of care required of each defendant. This factor will lengthen the trial of the negligence action to some degree. As stated above, there will be overlapping evidence regarding damages. As such, the negligence action will be slightly more complex than the insurance action although given the number of exclusions relied on by the insurer, a significant amount of time will be required at trial to address each exclusion relative to the finding on causation. In my view, this factor is neutral.

(i) I follow the same reasoning as Master Graham in Confederation Place, at paragraph 21(i), as follows:

If the insurance action were tried first and the plaintiff were successful, the negligence actions would still proceed with the same issues in play. The only difference would be that the negligence action would likely be advanced as a subrogated claim. However, the resolution of the insurance action would not likely put an end to the other action or narrow the issues in that action or increase the likelihood of settlement. This factor is neutral.

I would add to Master Graham’s reasons the following. If the insurance action were tried first and the plaintiffs were not successful, the negligence action would proceed to trial with possible inconsistent findings on causation and damages. This factor favours trial together.

Conversely, if the negligence action were tried first, which is likely the case here as it is closer to being ready for trial than the insurance action, and the plaintiffs were successful, the insurance action would likely proceed with the same issues in play, in particular, causation and damages. This would pose the possibility of inconsistent findings on causation. This factor favours trial together.

Lastly, if the negligence action was tried first and the plaintiffs were not successful, it would likely put an end to the insurance action or significantly increase the likelihood of settlement. This factor favours separate trials.

(j) The negligence action was commenced first. Examinations for discovery in that action are substantially completed with the exception of one or more days to complete the discovery of the plaintiffs. The plaintiffs also reserved their right to examine one of the individual defendants. There is the possibility of a discovery motion. Mediation has not been held. That action has not been set down for trial. The insurance action is subject to a court-ordered timetable made at a status hearing on June 5, 2014. Examinations for discovery were to be completed by March 31, 2015 and mediation by May 22, 2015. It was to be set down for trial by May 31, 2015. It is unlikely this action will be set down for trial by May 31, 2015 given the delay due to this motion which was scheduled in October 2014. The defendant seeks an order that if the two actions are ordered to be tried together, that a further order be made that the transcripts of the examinations for discovery in the negligence action, which have been substantially completed, by produced to the defendant in the insurance action. As neither action has been set down for trial, this factor is neutral.

(k) In the negligence action, the only party that filed a Jury Notice was the defendant, Air-Point Heating & Cooling Inc.; however, that action has been dismissed against that party. In the insurance action, Security National filed a Jury Notice; however, it is willing to try the action without a jury. Given Security National’s position, there is no issue with respect to one action being tried by a judge and one by a jury. This factor is neutral.

(l) It is possible that if the actions are tried together, the discovery evidence of the plaintiffs given in the negligence action may be used in the insurance action. This factor favours trial together.

(m) Neither party took the position that there was delay in bringing this motion. However, the delay of some five months in obtaining a timely motion date has meant that the timelines in the Timetable Order in this action have not been met. Examinations for discovery in this action still need to be completed; however, if the actions are to be tried together and the plaintiffs’ discovery evidence in the negligence action is to be used in this action, there may not be much delay if only a representative of the Security National is to be examined. Furthermore, both actions require that mediation be held. This factor is neutral.

(n)and (o) Any cost savings to the plaintiffs will depend on the outcome of the trial in the insurance action. As stated above, if the plaintiffs succeed, it is likely that the negligence action will proceed as a subrogated claim by Security National. This would result in a cost savings to the plaintiffs. However, Security National would likely incur more costs of having to conduct two trials. If, on the other hand, the plaintiffs fail in the insurance action, they will incur additional costs of a second trial and there would be cost savings to Security National of having to conduct only one trial. As the outcome of the trials is unknown, this factor is neutral.

(p) none of the parties identified any undue procedural complexities that would result from trial together that could not easily be dealt with by the trial judge. This factor is neutral.

(q) This motion was brought on the consent of the defendants, Ricki and Gordon Fenwick, in the negligence action. The balance of the defendants in that action is not opposed to the relief sought in this motion. Only the plaintiffs oppose this motion. This factor is neutral.

[25] The only factor that favours separate trials is in the event that the negligence action proceeds to trial first and the plaintiffs are not successful. It would likely put an end to the insurance action or significantly increase the likelihood of settlement. The other factor is the likely delay in obtaining a trial date if tried together of approximately 15 to 20 days involving five counsels’ schedules. However, in my view, if tried separately, the same problem would exist – four counsel in the negligence action would likely find delay in obtaining a trial date for a 12 to 15 day trial. On the other hand, there will be significant cost savings if tried together given the large number of witnesses, including experts, who would be expected to testify at both trials.

[26] In my view, the overriding factors that favour trial together are the common issues of causation and damages and the risk of inconsistent findings or judgment if the actions are tried separately. In addition, the resultant cost savings of avoiding duplication of evidence if tried together is a key factor. The fact that a trial together of both actions will take longer than the trial of the insurance action alone, in my view, is outweighed by the overriding factors above. Furthermore, trial together complies with s. 138 of the Courts of Justice Act which discourages multiplicity of legal proceedings.

[27] In conclusion, as the criteria in rule 6.01 has been met, and considering the list of relevant factors above which favours trial together, the defendant’s motion is hereby granted.

[28] It is ordered as follows:

1. action number CV-10-413130 and action number CV-11-442764 shall be tried together or one immediately following the other, subject to the discretion of the trial judge;

2. the parties in both actions shall disclose and exchange evidence obtained through the discovery process in the respective actions;

3. the parties in both actions shall be entitled to participate in any further examinations for discovery;

4. a joint mediation session and joint pre-trial conference of both actions shall be held;

5. a copy of the transcripts of the examinations for discovery in the Court File Number CV-10-413130 shall be produced to the defendant in Court File Number CV-11-442764, at Security National’s expense;

6. Security National shall withdraw its Jury Notice in writing to the plaintiffs forthwith;

7. The timeline to set this action down for trial shall be extended from May 31, 2015 to August 31, 2015 in order for the parties to determine the timing of the outstanding steps and to obtain an amended Timetable Order.

Costs

[29] As agreed between the parties, there shall be no order as to costs.

_(original signed)

Master Lou Ann M. Pope

Date: May 26, 2015