CITATION: Mitchell v. HMQ, 2017 ONSC 6238

COURT FILE NO.: CV-13-0902

DATE: 2017 10 18

SUPERIOR COURT OF JUSTICE - ONTARIO

RE: DENTON EARL MITCHELL, Plaintiff

AND:

THE SUPERINTENDENT OF FINANCIAL SERVICES COMMISION OF ONTARIO also known as the MOTOR VEHICLE ACCIDENT CLAIMS FUND HER MAJESTY THE QUEEN IN RIGHT OF ONTARIO as represented by the MINISTER OF FINANCE, Defendant

BEFORE: Shaw J.

COUNSEL: W. Daniel Lee, counsel for the Plaintiff

H. Sterling, counsel for the Defendant

HEARD: September 18, 2017

ENDORSEMENT

[1] There are two motions before the court. The plaintiff has brought a motion to compel the defendant her Majesty the Queen in right of Ontario as represented by the Minister of Finance (“HMQ”) to produce the Claims Pro adjuster handling the plaintiff’s accident benefit file for attendance at an examination for discovery in connection with an accident benefit claim commenced by the plaintiff.

[2] HMQ has brought a cross motion to strike the plaintiff’s claim for aggravated and punitive damages.

Background

[3] This action arises from a motor vehicle collision which occurred on December 6, 2010 (”the accident”). The plaintiff was a passenger in a single motor vehicle accident. At the time of the accident, the vehicle was uninsured.

[4] The Motor Vehicle Accident Claim Funds Act. R.S.O. 1990, c. M. 41 (“MVAC Act”) sets out a statutory scheme for individuals to follow who have been injured in an accident where there is no available automobile insurance. Section 6(1) of the MVAC Act sets out the mechanism for an application for accident benefits. That section states as follows:

Statutory accident benefits

6. (1) Any person who has recourse against the Fund for statutory accident benefits under section 268 of the Insurance Act may make application, in a form approved by the Superintendent, for the payment of benefits out of the Fund. 2002, c. 22, s. 145 (1).

[5] Counsel for the plaintiff sent The Motor Vehicle Accident Claims Fund (“the Fund”) a letter dated February 8, 2011 on behalf of the plaintiff regarding the accident. That letter informed the accident benefit department at the Fund that Mr. Chiodo had been retained by the plaintiff with respect to injuries he sustained in the accident and to assist him with respect to the recovery of potential disability, medical and rehabilitation benefits under the automobile policy. Included in that letter were the plaintiff’s application for accident benefits and other forms necessary to commence an accident benefits claim. The letter specifically said as follows:

Please be advised that I have been retained by the above noted client with respect to injuries sustained in the above noted motor vehicle accident and to assist him with the recovery of potential disability, medical and rehabilitation benefits under the automobile policy.

Enclosed please find the following documentation:

1. My client’s executed Authorization;

2. My client’s duly completed and executed Application for Accident Benefits;

3. My client’s duly executed OCF-10.

Please be advised that my client has requested that all telephone calls and correspondence be sent to the care of this office not to her residence.

I look forward to your kind and continued co-operation and assistance in this matter and your prompt response.

[6] In that letter there is no indication that the plaintiff was advancing a claim for negligence and/or bad faith in connection with the accident benefit claim.

[7] By way of correspondence dated February 15, 2011, on letterhead from the Financial Services Commission of Ontario Motor Vehicle Accident Claims Fund, Lori Gillepsie, on behalf of the Fund, noted that the application was incomplete and some additional documentation was needed.

[8] By way of correspondence dated March 14, 2011, counsel for the plaintiff wrote to the Financial Services Commission of Ontario, to the attention of Lori Gillepsie, and included a number of documents including the police report and other reports and documentation required for the accident benefit claim. Again, there was no reference made to a claim for negligence and/or bad faith on behalf of the adjuster handling the accident benefits claim. That letter specifically said as follows:

Further to your correspondence dated February 15, 2011 enclosed please find the following:

1. Police report;

2. Form 3;

3. Notice of Collection of Personal Information; and

4. Assessment of Attendant Care Needs (Form 1) prepared by Remik Zakrzewski, Toronto Central Diagnostics dated February 25, 2011; and

5. OCF-1 and OCF-10 (they were submitted on February 8, 2011).

Should you have any further questions please feel free to contact me at the office.

[9] At some point after receiving the application for accident benefits, the defendant appointed Claims Pro, an adjusting company, to adjust the accident benefit claim.

[10] The plaintiff commenced an action by way of a Statement of Claim dated March 1, 2013 naming as defendant “The Superintendent of Financial Services Commission of Ontario also known as the Motor Vehicle Accident Claims Fund”. The claim seeks a declaration that the defendant is required to pay the plaintiff accident benefits including but not limited to non-earner benefits, attendant care benefits etc. In paragraph 1(c) of the claim, the plaintiff is also seeking damages for mental distress and aggravated damages in the sum of $250,000 for breach of contract and breach of the defendant’s duty to deal with the plaintiff in good faith. In paragraph 1(f) the plaintiff is also seeking punitive and exemplary damages for breach of contract and breach of the defendant’s duty to deal with the plaintiff in good faith.

[11] According to information from Lori Gillespie, the claims adjuster for the Fund, prior to receipt of the Statement of Claim, no written notice was ever received from the plaintiff with respect to an intention to commence an action for aggravated and punitive damages.

[12] The defendant’s filed a Statement of Defence dated March 17, 2013 In paragraph one, the Statement of Defence states:

The defendant, “The Superintendent of Financial Services Commission of Ontario also known as the Motor Vehicle Accident Claims Fund” does not exist”. There is such a person as the Superintendent of Financial Services (the “Superintendent”). The Superintendent is providing the Statement of Defence on the assumption that the plaintiff intended to name the Superintendent as defendant.

[13] Paragraph three of the Statement of Defence states:

The Superintendent does not now have, nor has it ever had, any responsibility or liability in regard to accident benefit claims. The Superintendent is also known as the Motor Vehicle Accident Claims Fund. The Superintendent can be a proper defendant to a tort claim as a substitute for an alleged at-fault unidentified driver or owner. However, the Superintendent is never a proper defendant to a claim for accident benefits. Notwithstanding anything in this pleading, the Superintendent denies that a proper and valid proceeding has been commenced under the Insurance Act or the Motor Vehicle Accident Claims Act for accident benefits in respect of the plaintiff’s accident benefits claim. If the plaintiff wants to make a claim for accident benefits, the proper defendant would be Her Majesty the Queen in Right of Ontario as represented by the Minister of Finance (“HMQ”). The Motor Vehicle Accident Claims Fund is an office of HMQ. Hereinafter in this pleading, HMQ or the Motor Vehicle Accident Claims Fund may be referred to as the “Fund.”

[14] With respect to the claim for punitive and aggravated damages, in addition to denying that claim, the Statement of Defence pleads the following at para. 37:

The Fund states that the claim for punitive and aggravated damages is a claim made outside the ambit of the Motor Vehicle Accident Claims Act and therefore is subject to the Proceeding against the Crown Act. The Fund states that a claim for such damages is barred because the plaintiff failed to give notice of the claim sixty days prior to the commencement of the action, contrary to s. 7 of the Proceedings against the Crown Act.

[15] By way of order of Master Wiebe dated May 31, 2016, the plaintiff obtained an order amending the Statement of Claim to name as defendant “Her Majesty the Queen in Right of Ontario as represented by the Minister of Finance.” A further amendment was made seeking a declaration that the plaintiff is found to have suffered a catastrophic impairment as a result of the accident. Further amendments were made seeking additional accident benefits given the application made for catastrophic impairment. The Amended Statement of Claim was served on the defendant on or about June 8, 2016.

[16] The examination for discovery of the plaintiff was held on April 10, 2015.

[17] On October 31, 2016, the plaintiff served the defendant with the Trial Record. The Trial Record has yet to be filed with the court.

Position of the Parties

Notice

[18] The plaintiff does not dispute that at least 60 days’ notice is required before the commencement of an action pursuant to s. 7(1) of the Proceeding Against the Crown Act R.S.O. 1990 c. P27 (“PACA”). His position is that correspondence addressed to the Fund in February and March 2011 in which the Fund was informed that plaintiff was making an application for accident benefits was sufficient notice not only of the application but also notice of a claim for punitive and aggravated damages.

[19] The defendant’s position is that the letters delivered by plaintiff’s counsel in February and March 2011 were not notice of a claim seeking aggravated and punitive damages but simply notice that the plaintiff was applying for accident benefits. The defendant’s position is that as no notice was provided, the claim for those damages should be dismissed.

Right to Discovery

[20] The plaintiff’s position is that pursuant to rule 31.03 (1) of the Rules of Civil Procedure, the plaintiff has a prima facie right to examine any other party adverse in interest and that includes HMQ. The plaintiff’s position is that the claims examiner who has been handling his accident benefit claim is the proper party to be questioned at examinations for discovery as that person would have the most knowledge

[21] The defendant’s position is that the Trial Record has now been passed and pursuant to Rule 48.04 of the Rules of Civil Procedure, any party who has set an action down for trial shall not initiate or continue any form of discovery without leave of the court.

[22] It is also the defendant’s position there is no right to examine HMQ in civil matters in Ontario except for those actions commenced pursuant to PACA. The defendant’s position is that the MVAC Act is not governed by PACA. Accordingly, while there are limited discovery rights provided for in PACA, those discovery rights do not apply to claims commenced pursuant to the MVAC Act.

Analysis

[23] The relevant sections of the PACA are as follows:

Acts not affected

2. (1) This Act does not affect and is subject to the Expropriations Act, the Public Transportation and Highway Improvement Act, the Land Titles Act and the Registry Act, as to claims against The Land Titles Assurance Fund, the Motor Vehicle Accident Claims Act, Parts V.1 (Debt Retirement Charge) and VI (Special Payments) of the Electricity Act, 1998, the Workplace Safety and Insurance Act, 1997and every statute that imposes a tax payable to the Crown or the Minister of Finance.

Right to sue Crown without fiat

3. A claim against the Crown that, if this Act had not been passed, might be enforced by petition of right, subject to the grant of a fiat by the Lieutenant Governor, may be enforced as of right by a proceeding against the Crown in accordance with this Act without the grant of a fiat by the Lieutenant Governor. R.S.O. 1990, c. P.27, s. 3.

Liability in tort

5. (1) Except as otherwise provided in this Act, and despite section 71 of the Legislation Act, 2006, the Crown is subject to all liabilities in tort to which, if it were a person of full age and capacity, it would be subject,

(a) in respect of a tort committed by any of its servants or agents;

(b) in respect of a breach of the duties that one owes to one’s servants or agents by reason of being their employer;

(c) in respect of any breach of the duties attaching to the ownership, occupation, possession or control of property; and

(d) under any statute, or under any regulation or by-law made or passed under the authority of any statute. R.S.O. 1990, c. P.27, s. 5 (1); 2006, c. 21, Sched. F, s. 124.

Notice of claim

7. (1) Subject to subsection (3), except in the case of a counterclaim or claim by way of set-off, no action for a claim shall be commenced against the Crown unless the claimant has, at least sixty days before the commencement of the action, served on the Crown a notice of the claim containing sufficient particulars to identify the occasion out of which the claim arose, and the Attorney General may require such additional particulars as in his or her opinion are necessary to enable the claim to be investigated.

Limitation period extended

(2) Where a notice of a claim is served under subsection (1) before the expiration of the limitation period applying to the commencement of an action for the claim and the sixty-day period referred to in subsection (1) expires after the expiration of the limitation period, the limitation period is extended to the end of seven days after the expiration of the sixty-day period.

Notice of claim for breach of duty respecting property

(3) No proceeding shall be brought against the Crown under clause 5 (1) (c) unless the notice required by subsection (1) is served on the Crown within ten days after the claim arose. R.S.O. 1990, c. P.27, s. 7.

Discovery

8. In a proceeding against the Crown, the rules of court as to discovery and inspection of documents and examination for discovery apply in the same manner as if the Crown were a corporation, except that,

(a) the Crown may refuse to produce a document or to answer a question on the ground that the production or answer would be injurious to the public interest;

(b) the person who shall attend to be examined for discovery shall be an official designated by the Deputy Attorney General; and

(c) the Crown is not required to deliver an affidavit on production of documents for discovery and inspection, but a list of the documents that the Crown may be required to produce, signed by the Deputy Attorney General, shall be delivered. R.S.O. 1990, c. P.27, s. 8.

[24] In instances where a motor vehicle is not insured, there is a scheme set up pursuant to the provisions of the MVAC Act through which an injured party may seek compensation from the fund for injuries sustained in the accident. As noted above, s. 6 of the MVAC Act deals with a person having recourse against the Fund for statutory accident benefits under s. 268 of the Insurance Act.

[25] Neither party is disputing that at least sixty days’ notice before the commencement of an action is required for proceedings commenced pursuant to PACA. As noted in s. 7, the notice must contain sufficient particulars to identify the occasion out of which the claim arose.

[26] In Sidhu v. Ontario (Attorney General) [2010] O.J. No 560, in dealing with the s. 7 notice provisions of PACA, Gray J. at para 48 noted:

However, the documents collectively must make it clear that the particulars set out relate to, and identify, a claim that may be made against the Crown that ultimately is pursued in the civil action that is commenced.

[27] At para 54, Gray J. stated:

As noted by the Court of Appeal in Leclair, supra at para 1, in affirming the decision of Master Beaudoin, “the Crown should not be left to guess what possible liability it might have in situations such as these.” In my view, on the Plaintiff’s best case here, assuming that the requisite notice could be a combination of the Release, the application before Hill J, and Mr. Sidhu’s Factum, the Crown would be left to guess what possible liability it might have.

[28] This issue of sufficient notice was also addressed in Mattick Estate v. Ontario (Minister of Health), 2001 24086 (ON CA), 2001 CarswellOnt 1. That case involved a claim that emergency medical attendants employed by the Crown failed to provide CPR. At paras 15-16 and 18, Goudge J. A. held:

[15] Section 7(1) requires that at least 60 days prior to the commencement of an action, the Crown must receive notice that sufficiently identifies the occasion out of which the claim arose [so] that the Crown can investigate the claim. Investigation at this early point makes it possible to discuss the complaint and settle it before the claimant may have irrevocably fixed on litigation. Thus, in my view, the purpose of this provision is to allow the Crown to gather sufficient information to permit it to resolve the complaint to the mutual satisfaction of itself and the complainant in advance of any litigation, and failing that, to allow the Crown to properly prepare a defence to the litigation which may result.

[16] The language of s. 7(1) requires only that the notice contain sufficient facts to identify the occasion at issue in order that the Crown can investigate. There is nothing in the subsection that expressly requires the claimant to go beyond these facts to expressly state in the notice that the claimant intends to take legal action to recover damages or other relief. Nor do I think that such a requirement is dictated by the definition of "claim". This is an undefined term in the Act. While the Shorter Oxford Dictionary includes the definition relied on by Cumming J., it also offers a simple "contention" or an "assertion" as equally acceptable definitions of a "claim".

[18] Rather, I think that s. 7(1) requires that a claimant must serve a notice that communicates a complaint which, if not satisfied, could reasonably be anticipated to result in litigation against the Crown. When coupled with particulars that sufficiently identify the occasion in question to permit the Crown to investigate, such a notice fulfils the legislative purpose. It allows the Crown to gather sufficient information to permit resolution of the complaint in advance of legal action or, if that fails, to prepare to defend the litigation which the notice makes it reasonable to anticipate. Not every complaint to the Province must be treated as a s. 7(1) notice. The complaint must be such that, in the circumstances, it could reasonably be anticipated by the Crown that if not resolved, litigation could result.

[29] Based on the above judicial authorities, in my view, the February and March letters from plaintiffs’ counsel were not sufficient notice of a claim for aggravated and/or punitive damages based on the allegation that the defendant failed to deal with the plaintiff’s accident benefits claim in good faith. A claim seeking damages for the tort of bad faith can only be commenced after the alleged bad faith has occurred. When an accident benefit claim is opened, the expectation is that the claim will be handled in good faith. There is, at that time, no expectation that there could be a claim seeking punitive or aggravated damages based on a breach of duty to deal with the plaintiff in good faith. When the defendant received the letters in 2011, there was no information available to it to cause any investigation to occur other than the investigation of the accident benefit claim itself. When the letters were sent by plaintiff’s counsel in February and March 2011, there could be no notice of a claim for bad faith as the letters were only in connection with the application for accident benefits. If, in the handling of the accident benefit claim, there was conduct that amounted to bad faith, at that point, a tort might have existed and the plaintiff would be required to put the defendant on notice pursuant to s. 7 of PCAC. Prior to that, the plaintiff could not put the defendant on notice for a claim for damages flowing from that type of conduct as the conduct had not yet occurred.

[30] Notice must be of an alleged tort that has occurred and not of one that might or might not occur in the future. Notice of a claim for breach of handling a claim in good faith, thereby opening the door to a claim for aggravated and/or punitive damages, must say more than simply that an accident has occurred, counsel has been retained and the injured party is seeking accident benefits.

[31] In Latta v. Ontario, 2002 CarswellOnt 3585, MacPerson, J also addressed the notice issue and wrote at paras 26 and 27:

[26] Adequate notice, then, entails two distinct requirements. The first is that it must contain sufficient particulars to allow the Crown to identify the source of the potential problem, so that it can investigate. Considering Latta's statements to the guards and nurse, and his written Accident/Injury Report, I think it is clear that he provided sufficient particulars. He identified the nature (fall), time (when leaving school), location (stairs), cause (sand bucket) and consequences (back injury) of his accident. Indeed, it appears that the Crown did investigate the accident. On December 11, 1998, a day after Latta completed the Accident/ Injury Report, Gary Hogarth, the superintendent of the correctional facility, made this notation in the box on the report titled Superintendent's Remarks: "Apparent minor injuries. Appropriate action by staff -- no further action required".

[27] The second requirement is that notice entails an element of "complaint". This requirement flows from the word "claim", and the legislative purpose of the provision. Section 7(1) is intended to allow the Crown either to avoid litigation, or to have an early opportunity to prepare its defence. The court in Mattick Estate indicated that notice of a "claim" does not entail mere notice of the facts underlying the claim. Rather, notice must inform the Crown of a potential conflict "that could reasonably be anticipated to result in litigation against the Crown". It is knowledge of a potential conflict that will alert the Crown to take advantage of the early notice to investigate and resolve the problem prior to the commencement of litigation.

[32] In my view, the notice letters from plaintiff’s counsel would have notified the defendant of a claim for accident benefits but not a claim for any type of tort. There was, therefore, no potential problem that it could investigate. Furthermore, the notice letters do not contain an element of “complaint”. There was no notice of potential conflict that would have alerted the defendant to take advantage of the early notice and investigate and resolve the problem prior to the commencement of the litigation.

[33] I am therefore satisfied that as a result of the lack of notice, the claims for aggravated, punitive and exemplary damages as claimed in paragraphs 1(d), (e) and 25 to 36 should be struck from the Statement of Claim.

Discovery

[34] The defendant’s position is that the plaintiff has foregone any rights to question the defendant as the Trial Record has been passed. According to Rule 48.04(1), once an action has been set down for trial, that party shall not initiate any form of discovery.

[35] Rule 48.02 describes how an action is set down for trial. It includes serving and filing the Trial Record with proof of service.

[36] In this matter, the Trial Record was served but not filed. According to the Rules of Civil Procedure, the matter was therefore not set down and rule 48.02 does not apply.

[37] The defendant takes the position that the plaintiff has no common law right to question the Crown except where such a right is created such as in section 8 of PACA.

[38] This action for accident benefits has been commenced pursuant to the MVAC Act. Section 2 of PACA states that it does not affect and is subject to the MVAC Act. Based on this section of PACA, the discovery rights found in s. 8 would not apply to MVAC Act. There is no provision in the MVAC Act for discovery.

[39] This issue was canvassed by Cory, J in Wren v. Superintendent of Insurance [1976] O.J. No. 2012. The issue to be determined was whether, in cases where the Superintendent of Insurance is made a defendant pursuant to the provisions of the MVAC Act, it could be compelled to attend and be examined for discovery. At paras. 23 to 28, Cory J held as follows:

At common law, there exists a royal prerogative and as a result of it the Crown cannot be compelled to give discovery. Pursuant to the provisions of the Crown Agency Act, that prerogative would appear to apply to the Superintendent.

The royal prerogative exists unless it is taken away by clear and precise language of a statute.

The Proceedings against the Crown Act, R.S.O. 1970, c. 365, specifically provides in s. 2 [am. 1973, c. 10, s. 1], that it does not affect the Motor Vehicle Accident Claims Act.

It would seem, therefore, that the Legislature specifically provided that the provisions of the Proceedings Against the Crown Act were not to be applicable in those actions where the Superintendent was named as defendant.

I am strengthened in this view by a comparison of the provisions of the Motor Vehicle Accident Claims Act and the Proceedings Against the Crown Act. In the latter statute, by s. 12, specific provisions are made with regard to discovery and production by or on behalf of the Crown. By s. 15 of the Motor Vehicle Accident Claims Act, it has been noted that general allegations may be pleaded by the Superintendent. There is no comparable provision providing for production and discovery of the Superintendent.

I have therefore concluded that the Superintendent is not compellable upon an examination for discovery, and the application by way of appeal will be dismissed. It is not necessary for me to consider the reasons given by the learned Master.

The point raised is a new one, and I do not think it proper to award costs under the circumstances.

Appeal dismissed.

[40] I have been provided with no contrary judicial authority to Wren.

[41] I therefore find that the plaintiff has no right to request that the defendant attend at an examination for discovery in the context of the action commenced for accident benefits pursuant to section 6(1) of the MVAC Act.

[42] If the parties cannot agree on costs, they can file written submissions, of no more than two pages, by November 15, 2017.

Shaw J.

Date: October 18, 2017

CITATION: Mitchell v. HMQ, 2017 ONSC 6238

COURT FILE NO.: CV-13-0902

DATE: 2017 10 18

ONTARIO

SUPERIOR COURT OF JUSTICE

BETWEEN:

DENTON EARL MITCHELL, Plaintiff

AND:

THE SUPERINTENDENT OF FINANCIAL SERVICES COMMISION OF ONTARIO also known as the MOTOR VEHICLE ACCIDENT CLAIMS FUND HER MAJESTY THE QUEEN IN RIGHT OF ONTARIO as represented by the MINISTER OF FINANCE, Defendant

ENDORSEMENT

Shaw J.

Released: October 18, 2017