Court File and Parties

Court File No.: CV-15-6199 Ontario Superior Court of Justice

Endorsement

Plaintiffs: ALYKHAN KANANI a person under a disability by his Litigation Guardian Gisele Kanani, Gisele Kanani, Litigation Administrator for the Estate of AZADALI KANANI, GISELE KANANI and SHAHEEDKHAN KANANI Counsel: Almeda Walbridge

Defendants: ECONOMICAL INSURANCE COMPANY, BRIAN CLIFFORD, TRACY BROSS, PEGGY KNOX, HELEN BAILEY, LINDA WATT, MARIE YEE, ACCLAIM DISABILITY MANAGEMENT INC., ANNE DESJARDINS, CATHY PRIOR, CATHY TAIT, THE PUBLIC GUARDIAN AND TRUSTEE, VANI SANTI, ELIZABETH PROBIZANSKI, ROXANNE MAYER VARCOSE, ANDREA WATSON, DAN SKWAROK, MURRAY MISKIN, and HER MAJESTY THE QUEEN IN RIGHT OF THE PROVINCE OF ONTARIO AS REPRESENTED BY THE MINISTRY OF THE ATTORNEY GENERAL Counsel for Brian Clifford, Tracy MacDonald (Bross), Peggy Knox, Helen Bailey, Linda Watts and Marie Yee: Helen D. K. Friedman

Heard: September 24, 2018

Overview

[1] The Plaintiffs bring this motion for directions to the Case Management Judge regarding the Summary Judgment motion brought by these six Defendants in August, 2018. The Plaintiffs also seek a dismissal of that Summary Judgment motion submitting that the trial is the proper procedure to resolve all of the issues on the basis of efficiency and affordability and proportionality. That Summary Judgment motion is essentially seeking an Order dismissing the Plaintiffs’ claims against these six individual insurance adjusters.

[2] This motion was scheduled by me to be heard on September 24, 2018. A further two day pre-trial was also set for December 13 and 14, 2018, and the trial was projected to begin for four weeks on January 21, 2019. It is estimated that the trial will require three or four months to complete.

[3] After I heard the submissions on this motion for directions on September 24, 2018, Counsel for the Plaintiffs requested that I allow their providing the Court with the reply to the Marie Yee Affidavit before arriving at a decision on this motion. While hearing another motion in this file involving these same Counsel on September 28, 2018, I orally advised Counsel for the Plaintiffs that I would allow them to provide the Court with their reply to the Marie Yee Affidavit before making a decision on this motion.

[4] On October 2, 2018, I received correspondence from Counsel for the Plaintiffs which I subsequently determined to be further argument to the Court after the hearing of this motion without leave of the Court. I therefore allowed Counsel for these Defendants to make further reply submissions in writing to respond to the October 2, 2018 correspondence from Counsel for the Plaintiffs and the submissions therein. I received that further reply submissions from Counsel for these Defendants on October 9, 2018.

[5] Although I requested on October 2, 2018 that these be provided to the Court within the next 10 days, the reply to the Marie Yee Affidavit was not filed until October 17, 2018. On October 18, 2018, I received correspondence from Counsel for these six Defendants expressing concerns about the three volumes of “responding material” to the Marie Yee Affidavit. On October 23, 2018, I received a response to these concerns from Counsel for the Plaintiffs.

[6] Although I have attempted to proceed with diligence as Case Management Judge in this file, the mounting volume of material provided on these motions, including those that I have now heard on September 24 and September 28, 2018, has been a challenge to case manage with these ever-developing and cascading issues. I am also advised by Counsel for the Plaintiffs that a further, as of yet unscheduled, motion must be heard before this matter can proceed to trial; a motion for undertakings, undertakings given under advisement, refusals, and in particular reserve documentation relevant to how the Economical Defendants managed the claim. It has been suggested by Counsel for the Plaintiffs that this yet unscheduled motion may be relevant to the Summary Judgment motion of these six Defendants.

The Positions of the Plaintiffs and the Adjusters

[7] In their Factum of the Moving Party in this motion for directions, the essential submission is that the partial Summary Judgment motion brought by these six Defendants is incomplete, that there is an incomplete motion record based on Affidavits not reflective of and inconsistent with transcript evidence, the adjusters acknowledge a duty to act in good faith, there was a breach of a duty to act in good faith, supported by extensive documentary evidence. The Plaintiffs also point out that the Summary Judgment motion was served after a tentative trial date was set by me, and that the claims in the Summary Judgment motion are all matters for trial. The Plaintiffs also list a number of reasons why partial summary judgment is not appropriate in this case.

[8] The Plaintiffs also submit that the Summary Judgment motion may be dismissed on a motion for directions such as this, and that it is not in the interests of justice, timeliness, affordability, and proportionality to bring a partial summary judgment motion when it will delay the commencement of trial, particularly when the trial will proceed regardless of the disposition of the Summary Judgment motion. The Plaintiffs also argue that the reserve information as well as the Facility Association information is relevant to determining whether these six Defendants breached their duty to act in good faith, and that this Summary Judgment motion should not proceed in the absence of this evidence.

[9] In their Factum of these six Defendants, the adjusters submit that the other Defendants have no cross-claims against them, and that since they were acting in the course and scope of their duties at all material times the Statement of Claim by the Plaintiffs contains no reasonable cause of action as against any of the individual adjusters. They submit that there were other adjusters who adjusted this file over 22 years who have not been named in this action. They submit there is no evidence on these proceedings to support their personal liability to the Plaintiffs.

[10] These adjusters argue the irrelevance of the reserve information and redacted material on that motion, which is an issue for that motion and is in the purview of Economical, not these six adjusters. It is submitted their Summary Judgment motion is not a delay tactic, and it seeks to reduce the costs of and to simplify the trial by eliminating the improper claims of the Plaintiffs made against these six individually-named adjusters.

[11] These adjusters state that their Summary Judgment motion is not for partial summary judgment, it is brought to dismiss the claims as against them entirely. They point out the pleadings disclose no allegations specifically against the adjusters individually, and only appear to allege the tort of negligence and the tort of breach of duty to act in good faith and/or fiduciary duty against them, along with claims for punitive and other damages. The adjusters state they were not parties to the insurance contract at issue here. Their Summary Judgment motion is to determine whether these adjusters are independently negligent and/or breached a duty to act in good faith, and thus personally owe damages to the Plaintiffs.

[12] They submit that the wider issue, which is whether the adjusters were acting in the scope of their duties, and thus whether there is a viable independent cause of action against them, is to be left for the main hearing of the Summary Judgment motion; as is the discrete issue of whether the adjusters were acting outside of the scope of their duties or authority as adjusters and whether they can be found independently liable. They further submit that making the adjusters defend themselves at trial, when there is no evidence that they should be found independently liable, is entirely disproportionate in the circumstances of this case.

[13] These individual adjusters state that whether Economical acted in good faith or not with respect to the Plaintiffs, or even Alykhan Kanani, is not an issue in their Summary Judgment motion. What is at issue is whether these adjusters owed a duty to Alykhan Kanani, whether they breached that duty, and in any event if they could be found personally liable if they were acting within the scope of their authority of employment with Economical.

[14] In its Supplementary Factum, the Plaintiffs submit that unsettled law is not appropriate for this Summary Judgment motion. It is argued that there is no appellate decision in Ontario on the issue of an adjuster’s personal liability for breach of a duty of good faith, and that this Court should be reluctant to grant summary judgment on conflicted or undeveloped issues of law. They further submit that these adjusters have oversimplified the issues that will have to be determined should their Summary Judgment motion proceed. They request that it be dismissed now, and that all matters be determined at trial.

[15] With respect to the correspondence and additional information filed subsequent to the hearing of this motion for directions on September 24, 2018 as I described in paragraphs 3, 4 and 5 of the this Endorsement, the Plaintiffs submit that all that information is relevant to whether or not the trial is the most proportionate, least expensive and most expeditious means to achieve a just result without the risk of appeal, duplication and inconsistent findings of facts. These six Defendants argue that the Affidavit of Marie Yee relates to their Summary Judgment motion, not this preliminary motion for directions as to whether Summary Judgment is appropriate in this case.

Analysis

[16] This preliminary motion brought by the Plaintiffs is whether the Summary Judgment motion brought by these six Defendants is the appropriate method of dealing with the claims brought against these individual adjusters personally. For the following reasons, after reading the voluminous materials presented to me since I became the Case Management Judge on October 13, 2017 and specifically for this motion for directions, I have determined that it is. The Summary Judgment motion of these six Defendants shall proceed to a hearing of that motion.

[17] The Supreme Court of Canada, in Hyrniak v Mauldin, 2014 SCC 7 and Bruno Appliances and Furniture Inc. v Hyrniak, 2014 SCC 8, has reinterpreted Rule 20, taking into account the recognized need for access to justice for the majority of Canadians. The Supreme Court held that summary judgment rules must be interpreted broadly, favouring proportionality and fair access to the affordable, timely and just adjudication of claims. It found that the Court of Appeal, in Combined Air Mechanical Services Inc. et al v. Flesch et al, 2011 ONCA 764, placed too high a premium on the "full appreciation" of evidence that can be gained in a conventional trial, given that such a trial is not a realistic alternative for most litigants. It held that a trial is not required if a summary judgment motion can achieve a fair and just adjudication, if it provides a process that allows the judge to make the necessary findings of fact, apply the law to those facts and is a proportionate, more expeditious and less expensive means to achieve a just result than going to trial.

[18] Madam Justice Karakatsanis, writing for the Court in Hyrniak, outlined as follows:

“57 On a summary judgment motion, the evidence need not be equivalent to that at trial, but must be such that the judge is confident that she can fairly resolve the dispute. A documentary record, particularly when supplemented by the new fact-finding tools, including ordering oral testimony, is often sufficient to resolve material issues fairly and justly. The powers provided in Rules 20.04(2.1) and (2.2) can provide an equally valid, if less extensive, manner of fact finding.

58 This inquiry into the interest of justice is, by its nature, comparative. Proportionality is assessed in relation to the full trial. It may require the motion judge to assess the relative efficiencies of proceeding by way of summary judgment, as opposed to trial. This would involve a comparison of, among other things, the cost and speed of both procedures. (Although summary judgment may be expensive and time consuming, as in this case, a trial may be even more expensive and slower.) It may also involve a comparison of the evidence that will be available at trial and on the motion as well as the opportunity to fairly evaluate it. (Even if the evidence available on the motion is limited, there may be no reason to think better evidence would be available at trial.)

59 In practice, whether it is against the "interest of justice" to use the new fact-finding powers will often coincide with whether there is a "genuine issue requiring a trial". It is logical that, when the use of the new powers would enable a judge to fairly and justly adjudicate a claim, it will generally not be against the interest of justice to do so. What is fair and just turns on the nature of the issues, the nature and strength of the evidence and what is the proportional procedure.

60 The "interest of justice" inquiry goes further, and also considers the consequences of the motion in the context of the litigation as a whole. For example, if some of the claims against some of the parties will proceed to trial in any event, it may not be in the interest of justice to use the new fact-finding powers to grant summary judgment against a single defendant. Such partial summary judgment may run the risk of duplicative proceedings or inconsistent findings of fact and therefore the use of the powers may not be in the interest of justice. On the other hand, the resolution of an important claim against a key party could significantly advance access to justice, and be the most proportionate, timely and cost effective approach.”

[19] Also indicated in Hyrniak is the following:

“Our civil justice system is premised upon the value that the process of adjudication must be fair and just. This cannot be compromised. However, undue process and protracted trials, with unnecessary expense and delay, can prevent the fair and just resolution of disputes. The full trial has become largely illusory because, except where government funding is available, ordinary Canadians cannot afford to access the adjudication of civil disputes. The cost and delay associated with the traditional process means that, as counsel for the intervener the Advocates' Society (in Bruno Appliance) stated at the hearing of this appeal, the trial process denies ordinary people the opportunity to have adjudication. And while going to trial has long been seen as a last resort, other dispute resolution mechanisms such as mediation and settlement are more likely to produce fair and just results when adjudication remains a realistic alternative. Prompt judicial resolution of legal disputes allows individuals to get on with their lives. But, when court costs and delays become too great, people look for alternatives or simply give up on justice.”

[20] In this preliminary motion for directions the Plaintiffs rely heavily on Butera v. Chown, 2017 ONCA 783, [2017] O.J. No. 5267 (Ont. C.A.), which stated the following:

“29 The caution expressed pre- Hryniak in Corchis is equally applicable in the post- Hryniak world. In addition to the danger of duplicative or inconsistent findings considered in Baywood and CIBC, partial summary judgment raises further problems that are anathema to the stated objectives underlying Hryniak.

30 First, such motions cause the resolution of the main action to be delayed. Typically, an action does not progress in the face of a motion for partial summary judgment. A delay tactic, dressed as a request for partial summary judgment, may be used, albeit improperly, to cause an opposing party to expend time and legal fees on a motion that will not finally determine the action and, at best, will only resolve one element of the action. At worst, the result is only increased fees and delay. There is also always the possibility of an appeal.

31 Second, a motion for partial summary judgment may by very expensive. The provision for a presumptive cost award for an unsuccessful summary judgment motion that existed under the former summary judgment rule has been repealed, thereby removing a disincentive for bringing partial summary judgment motions.

32 Third, judges, who already face a significant responsibility addressing the increase in summary judgment motions that have flowed since Hryniak, are required to spend time hearing partial summary judgment motions and writing comprehensive reasons on an issue that does not dispose of the action.

33 Fourth, the record available at the hearing of a partial summary judgment motion will likely not be as expansive as the record at trial therefore increasing the danger of inconsistent findings.

34 When bringing a motion for partial summary judgment, the moving party should consider these factors in assessing whether the motion is advisable in the context of the litigation as a whole. A motion for partial summary judgment should be considered to be a rare procedure that is reserved for an issue or issues that may be readily bifurcated from those in the main action and that may be dealt with expeditiously and in a cost effective manner. Such an approach is consistent with the objectives described by the Supreme Court in Hryniak and with the direction that the Rules be liberally construed to secure the just, most expeditious, and least expensive determination of every civil proceeding on its merits.

35 Lastly, I would observe the obvious, namely, that a motion for partial summary judgment differs from a motion for summary judgment. If the latter is granted, subject to appeals, it results in the disposal of the entire action. In addition, to the extent the motion judge considers it advisable, if the motion for summary judgment is not granted but is successful in part, partial summary judgment may be ordered in that context.”

[21] Similar to this motion, in Vandermarel Investment Corp. v. Silver & Goren, [2015] O.J. No. 2192 where the plaintiff brought a motion for directions concerning a pending summary judgment motion, and to stay that motion, that Court indicated:

“46 While there is a small risk that an appeal or motion for leave to appeal arising from the disposition of Silver’s pending summary judgment motion may threaten to delay the trial of this proceeding, for the reasons expressed below, in my view the potential benefits outweigh any such risk.

49 The trial of this proceeding will no doubt "resolve everything". However, a successful summary judgment motion will "resolve everything" insofar as VIC’s claims for liability and damages against Silver.

51 While the trial time may not be significantly reduced, a successful summary judgment motion would narrow the legal issues to be decided by the trial judge, and would also result in Silver reducing or avoiding significant expense associated with attending a trial currently scheduled for seven days.”

[22] This Court in Lorizza v. Royal Bank of Canada, [2017] O.J. No. 5301 outlined that:

“49 In more recent decisions, the Court of Appeal for Ontario has cautioned against granting partial summary judgment except where there is "no risk of duplicative or inconsistent findings at trial and that granting summary judgment [is] advisable in the context of the litigation as a whole": Canadian Imperial Bank of Commerce v. Deloitte & Touche, 2016 ONCA 922 at para. 4. See also: Hamilton (City) v. Their + Curran Architects Inc., 2015 ONCA 64 wherein, at para. 22, the Court held that "a summary judgment motion judge commits an error in principle when he or she fails to assess the advisability of the summary judgment process in the context of the litigation as a whole".

[23] The Court of Appeal for Ontario subsequently determined in that matter as follows at [2018] O.J. No. 3679:

“39 Thirdly, the appellant submits that this was not the clearest of cases in which partial summary judgment was appropriate, and that given the ongoing litigation against other defendants, there was a risk of duplicative or inconsistent findings. Moreover, she argues that partial summary judgment presented an access to justice issue because any adverse costs award could prejudice the appellant's ability to continue her claims against the other defendants.

40 I do not accept these submissions. The dangers outlined in Butera v. Chown, Cairns LLP, 2017 ONCA 783, 137 O.R. (3d) 561, do not present themselves in this case. The claims against Faskens are standalone and limited in nature. There is no real concern about duplicative or inconsistent findings arising with respect to the claims asserted against the remaining defendants. This was the clearest of cases where the issues raised in the appellant's claims against Faskens were readily separable from the balance of the case.

41 Moreover, although the motion judge would not have had the benefit of this court's decision in Butera, she expressly or implicitly considered the issues of delay, expense, and the possibility of inconsistent findings. She was satisfied that the issues could be readily bifurcated from those in the main action and could be dealt with in a focused and cost-effective manner.”

[24] In their Summary Judgment motion, the individual adjusters submit that the action should be dismissed as against them because the Plaintiffs cannot succeed since there is no genuine issue to be tried as to their independent personal liability to the Plaintiffs. They argue that the questions of whether they were acting within the scope of their duties or outside of their authority as adjusters to render them independently from the insurer potentially personally liable to the Plaintiffs are discrete, severable issues properly appropriate for summary judgment in these circumstances, as is the question of whether there was a breach of any duty of good faith or a breach of any fiduciary duty by these six adjusters to the Plaintiffs. I agree that these issues are readily severable and their determination of the personal individual liability of these adjusters will facilitate the efficient resolution of the trial of this action. And contrary to the factual situation in Butera, such a partial summary judgment here would not risk duplicative proceedings or inconsistent findings of fact. And it appears to me, as it has been presented to this Court, that the law regarding the personal liability of insurance adjusters is not a novel question of law. Furthermore, Rule 20.04(4) makes it clear that questions of law may be raised in summary judgment motions, and the Rules are to be interpreted broadly, favouring proportionality and the affordable, timely and just adjudicator of claims as indicated in Hyrniak.

[25] With regard to the timing of the Summary Judgment motion by these six Defendant adjusters, having been the Case Management Judge for over one year now with a view of providing these litigants with the most timely adjudication of these claims, and having set the tentative trial date prior to hearing this motion and also the motion heard on September 28, 2018 for which my decision remains under reserve, I am satisfied that the Summary Judgment motion was brought in accordance with the availability of this Court and the parties. Having conducted many case management conferences with Counsel for these litigants to date, I know that Counsel for the Plaintiffs was made aware that the Summary Judgment motion was being brought. And as indicated herein there are still other outstanding motions, such that this action is clearly not yet ready to commence a trial on January 21, 2019.

Conclusion

[26] In my thorough review of these voluminous materials, having considered the exhaustive submissions from Counsel, this Summary Judgment motion will provide the just and proportionate outcome for these litigants in these circumstances. These six adjusters deserve, in these circumstances, the opportunity to move for summary judgment for this Court to determine if there is a genuine issue requiring a trial on the question of their independent individual liability to the Plaintiffs. On the record presently before me, I am confident that I can find the relevant facts and apply the relevant law to the evidence, and that it is in the interest of expedient, proportional and affordable justice to proceed to the Summary Judgment motion of these six Defendant insurance adjusters.

[27] I therefore make an Order on this motion for directions that the Summary Judgment motion brought by Brian Clifford, Tracy MacDonald (formerly Bross), Peggy Knox, Helen Bailey, Linda Watts, and Marie Yee proceed to a hearing of that motion, and I will make an Order providing directions to the parties relating to cross-examinations on affidavits and the filing of material for the Summary Judgment motion, if necessary. My Trial Coordinator will be contacting all Counsel in this action to convene a teleconference as soon as possible regarding scheduling of outstanding motions, and to discuss the upcoming pre-trial and trial dates.

[28] If these Counsel are unable to agree as to an appropriate costs award for this motion for directions, any party seeking costs shall within 15 days provide written submissions (up to five pages) supported by a Bill of Costs. Any responding submissions (up to five pages) shall be provided within a further 15 days.

Released: November 29, 2018 The Honourable Mr. Justice David J. Nadeau