Court File and Parties

COURT FILE NO.: CV-13-473825 MOTION HEARD: 20160419 SUPERIOR COURT OF JUSTICE - ONTARIO

RE: Ngoc Phu My Tran, plaintiff AND: Daniel Martins Arezes, Jose Arezes, Patricia Bernardino, Rui Da Rocha and State Farm Mutual Automobile Insurance Company, defendants

BEFORE: Master Lou Ann M. Pope

COUNSEL: Boris Goryayev, Bougadis, Chang LLP, Counsel for the plaintiff Fax: 416-703-2406

Matthew MacIsaac, Bell Temple LLP, Counsel for the defendants, Daniel Martins Arezes and Jose Arezes Fax: 416-596-0952

HEARD: April 19, 2016

Reasons for Endorsement

[1] The main issue to be determined on this motion is whether discovery questions relating to the defendant’s homeowners’ policy were proper questions.

[2] The plaintiff was injured in a motor vehicle accident which occurred on June 29, 2012. The plaintiff alleges that her injuries were caused by the negligence of the defendants, Daniel Martins Arezes, as operator of the vehicle, and Daniel’s father, Jose Arezes, as owner of the vehicle who rear ended the vehicle in which the plaintiff was a back-seat passenger. (“defendants”) The plaintiff claims general and special damages of $2,000,000; however, as she has been designated as “catastrophic” under the statutory accident benefits portion of her policy, plaintiff’s counsel advised that the plaintiff will likely amend the statement of claim to increase the quantum of her general damage claim.

[3] In addition, there is a companion action arising out of the same accident in which the plaintiffs in that action seek $1,000,000 in total in damages against these defendants.

[4] The defendants have defended this action. Through their counsel, who were retained by Jose Arezes’ insurer, the defendants advised plaintiff’s counsel that Jose Arezes’ had an automobile insurance policy in effect at the time of the accident which would respond to the claim and that the policy’s liability limit were $1,000,000.

[5] Based on the above, there may be insufficient money available under the defendants’ auto insurance policy to pay the respective claims if the plaintiffs are successful at trial.

Refusals Regarding Homeowner’s Policy

[6] At the examinations for discovery the defendant, Jose Arezes, he was asked questions by plaintiff’s counsel regarding any homeowner’s policy he may have had in place on the date of loss. For example, he was asked to produce the policy and declarations page, whether his insurer was put on notice of the subject auto claim, if so the claim number, the liability limits, the coverage position if any, name of insurance adjuster, name of counsel, and to produce the insurance broker’s file one year pre-accident.

[7] Similar questions were asked of the defendant, Daniel Martins Arezes, who resided with his father, Jose, at the relevant time. He was asked if he was an insured or deemed insured under the homeowner’s policy in effect at the relevant time, policy number and limits, declarations page, etc.

[8] The defendants refused to answer the questions on the grounds of lack of relevance. Frank J. Kosturik, a partner with Bell, Temple LLP, lawyers for the defendants, gave evidence that his office inquired of Jose Arezes’ insurer that issued the homeowner’s policy. Defence counsel advised plaintiff’s counsel by letters in November and December 2015 that the homeowner’s policy would not respond to the plaintiff’s claim. He further testified that he was unaware of any other insurance policies that would respond to the plaintiff’s claims against the defendants. (Affidavit of Frank J. Kosturik sworn January 12, 2016, paragraphs 2 -4)

[9] The plaintiff relies on rules 30.02(3) and 31.06(4) for the position that the homeowner’s policy is producible in the circumstances of this action.

[10] Rule 30.02(3) relates to the scope of documentary discovery and makes producible any insurance policy under which an insurer may be liable to satisfy all or part of a judgment in the action, or to indemnify or reimburse a party for money paid in satisfaction of all or part of the judgment. Rule 31.06(4) relates to the scope of examinations for discovery and makes the existence, contents, amount of money available and any conditions of an insurance policy proper questions.

[11] There is no issue on this motion that the defendants’ insurer complied with its duty to disclose under section 258.4 of the Insurance Act, R.S.O. 1990, c.I.8, as amended, as to the existence of Jose Azeres’ auto policy, the policy limits and whether the insurer would respond under the policy to the plaintiff’s claim. As stated above, the policy limits are $1,000,000.

[12] Further, there is no evidence that the defendants disclosed the existence of any other policy in place at the relevant time that would respond to this claim.

[13] The plaintiff submits that the defendant’s homeowner’s policy of insurance is relevant because if he had an umbrella policy, liability coverage may be extended under his auto policy.

[14] A general understanding of what umbrella insurance is necessary. Definitions of umbrella insurance describe it as extra liability insurance. It refers to liability insurance that is in excess of specified other policies and also potentially primary insurance for losses not covered by the other policies such as with a homeowner’s policy that often excludes false arrest, libel, slander and invasion of privacy. It was designed to help protect a person from major claims and lawsuits by providing additional liability coverage above the limits of a person’s homeowners, auto and boat insurance policies. When an insured is liable to someone, the insured’s primary insurance policies pay up to their limits, and any additional amount is paid by the umbrella policy (up to the limit of the umbrella policy). The “umbrella” nomenclature is a reference to the broader coverage of the policy. Personal umbrella policies are typically made excess of a person’s homeowner’s and automobile insurance.

[15] The plaintiff’s evidence includes pages from an insurance company’s website entitled “What’s covered under home insurance? Under the “Coverage” column, is a long list of the items covered under home, tenant and condominium unit insurance. Under the subheading “Liability coverage,” it sets out in the next column that “Broad/Classic” coverage is up to $2 million followed by a statement: “ Increased limits may be available. ” Following the four-page list of covered perils, and characteristics of a home insurance policy, the website includes the following statement:

Personal Umbrella Liability

With Personal Umbrella Liability, you can add between $1 million to $5 million of liability coverage over and above your current policy limits, and with no deductible. While this is a valuable addition to your Home policy, the extended liability coverage also applies to your auto, seasonal, watercraft policies and more.

[16] It is the defendants’ position that the plaintiff has provided no authority that suggests that a homeowner’s policy of insurance will respond to claims arising from a motor vehicle accident.

[17] Seaway Trust Co. v. Markle, 1992 CarswellOnt 340, relied on by the plaintiff, dealt with the issue of the extent to which an insured party must give to opposite parties on discovery information as to its insurance situation. The plaintiff, Seaway Trust, made allegations against the defendant lawyer for breaches of fiduciary duty and conspiracy to defraud the plaintiffs in relation to real estate transactions. The lawyer and his firm were insured under a policy of insurance. In my view, this decision is of limited assistance, as it relates primarily to the reasons for the amendments to rule 31.06(4) when subrule (b) was added which required disclosure of the amount of money available under the policy and any conditions affecting its availability.

[18] In my view, the plaintiff has misinterpreted the information regarding personal umbrella policies on the insurance company’s website. That information does not state that liability coverage under a homeowner’s policy where the insured also has an umbrella policy will cover auto claims. Under the subheading “Personal Umbrella Liability,” it merely states that extended liability coverage under a homeowner’s policy may also extend to auto and watercraft policies. It is likely that on the same website the same information will be found under the heading “What’s covered under auto insurance?” and under “Personal Umbrella Liability,” it will state that extended liability coverage under an auto policy may also extend to home and watercraft policies. In other words, a person who has a homeowner’s and an auto policy can purchase an umbrella policy that will extend liability coverage under 1) the homeowner’s policy and may extend coverage for such perils as false arrest, libel and slander and, 2) the auto policy for an additional amount in excess of the amount that is specified under the auto policy. Furthermore, where it is stated on the website that “ Increased limits may be available,” it is my view that this statement refers to “increased limits” of liability coverage under the homeowner’s policy if an umbrella policy is purchased.

[19] For those reasons, I find that if the defendant, Jose Arezes, had an umbrella policy that provided additional liability coverage to his auto policy, his insurer was obligated under section 258.4 of the Insurance Act to disclose the existence of that umbrella policy, the umbrella policy’s limits and whether the insurer would respond under that policy to the plaintiff’s claim. The evidence is that the defendant’s insurer did not disclose the existence of an umbrella policy or any additional coverage.

[20] Therefore, I find that the plaintiff has not demonstrated that the defendant’s homeowner’s policy is relevant to the issues in this action. Thus, the questions posed to both defendants regarding the homeowner’s insurance policy were improper questions and need not be answered.

Refusals Regarding Future Investigations

[21] At the discovery of Daniel Arezes, Plaintiff’s counsel asked defence counsel the following questions. The defendant refused to answer the questions on the grounds that it was not the subject of a proper undertaking. However, there was discussion between counsel regarding these questions that spanned five pages of the transcript.

Question 737, Page 117, line 7: Are you prepared to comply with the Evidence Act and the Rules regarding surveillance concerning my client from this day until the commencement of trial?

Answser: If I intend to rely on any surveillance of your client for purposes other than impeachment at trial . . . I will serve it in accordance with my timelines required or seek leave of the Court to rely on it regardless.

Question 737, Pages 117-118, Line 23 : So you intend to rely . . . comply with the Evidence Act and the Rules concerning express surveillance for the purposes of trial to this day until the commencement of trial regarding my client?

Answser : I can’t answer your question, because a request to comply with the Rules or any legislation that I have to comply with isn’t the subject matter of a proper undertaking.

Question 737, Page 118, line 8 : If you should obtain surveillance or investigation of my client between today and the commencement of trial, will you provide me with a copy of it, notice of its existence, and properly list on schedule B in a supplemental executed Affidavit of Documents?

Answer : No. However, if I have to . . . update my Affidavit of Documents due to schedule A productions coming in and I have obtained any other schedule B productions, they will be listed, of course. Otherwise, no. That’s what I understood when you asked me to advise if any surveillance was obtained in the future.

[22] The plaintiff’s position is that this question relates to a party’s ongoing duty to correct answers given at an examination for discovery as set out in rules 30 and 31.09. The plaintiff relies on the Court of Appeal in Iannarella v. Corbett, 2015 ONCA 110. I do not find this decision to be supportive of the plaintiff’s position on this motion. Iannarella involved the appeal of a trial decision where the defendant failed to produce an affidavit of documents setting out in Schedule B the particulars of surveillance which was done up to the date before trial and sought leave to admit it as evidence. Although the decision contains a fulsome overview of how surveillance evidence is handled in civil personal injury actions and the related law, it did not deal with the issue of propriety of discovery questions.

[23] The defendants rely on the Divisional Court’s decision in Pfau v. Engelbrecht, Reasons For Judgment, February 14, 2012, at Hamilton, Ontario, where that court dealt with a similar issue regarding propriety of questions asked at an examination for discovery. The key issue was whether a court can order a defendant to provide an undertaking to disclose particulars of any surveillance which may be conducted in the future.

[24] In my view, the following reasons given by the Divisional Court in Pfau, at pages 3 and 4, should be applied to the issue herein. At pages 2 and 3 of that decision, the court accepted that there was:

no authority for the proposition that the court has jurisdiction to either a) order that a party give a procedural undertaking, for example as opposed to ordering that a party do some act, or b) grant relief with respect to anticipatory potential breach of discovery obligations; in other words, a hypothetical event which may or may not occur.

[25] In dismissing the plaintiff’s appeal, the Divisional Court’s reasons were as follows:

Firstly, Rule 31.06 requires a person examined for discovery to answer any proper question relevant to any matter in issue in the action or to any matter discoverable by sub-rules 2 through 4 of this Rule.

Secondly, the defendant is therefore obliged to comply with this Rule. There is no need for this court to order a promise for future compliance in respect to a situation that may or may not arise.

Thirdly, the Rules afford relief for non-compliance. It is, in our view, inappropriate for this court to provide declaratory or prerogative remedies where another convenient and equally effective remedy is available.

Fourthly, relief is available in the Rules for actual breaches. Relief against potential future breaches considered in the abstract is not need[ed], nor is it appropriate.

[26] Applying the reason in Pfau to the issue herein, I find that the questions regarding future investigations were improper questions and need not be answered.

[27] A copy of the completed chart is attached hereto.

Costs

[28] Both parties filed costs outlines. Defence counsel conceded that the plaintiff was successful on several issues on this motion that were resolved prior to the hearing and that he is entitled to costs for those steps. However, the defendants were successful on the hearing of the subject refusals. In my view, in these circumstances where there is essentially a divided result, it is reasonable that each party pay his own costs.

_ (original signed) _

Master Lou Ann M. Pope

DATE: April 21, 2016