COURT FILE NR. CV-15-65711

SUPERIOR COURT OF JUSTICE – ONTARIO

RE: Barbara Lynn Carroll, by her litigation guardian Shannon Luknowsky, Plaintiff

AND:

Aviva Canada Inc. and Pilot Insurance Company, Defendants

BEFORE: Master Kaufman

COUNSEL: Joseph Y. Obagi, for the Plaintiff Lawrence E. Thacker, for the Defendants

HEARD: July 30, 2020

REASONS FOR DECISION

[1] The plaintiff brings this motion for an Order compelling the defendants to serve a further and better affidavit of documents.

[2] The plaintiff brings this action for punitive damages against her insurer, Pilot Insurance Company (“Pilot”) based on an alleged breach of duty of good faith. The plaintiff was catastrophically injured when she was hit by a car driven by Robert McEwen and owned by Caroline McEwen. She brought an action against the McEwens. Because the plaintiff’s damages exceeded the 1-million-dollar coverage available under the McEwens’ insurance policy, the plaintiff made a claim under her own automobile insurance policy, which included coverage for “inadequately insured motorist” (OPCF 44R Family Protection Endorsement). At trial, she was awarded 2.6M in damages plus $375,000 in costs. In this action, she alleges that Pilot failed to act in good faith and attempted to gain strategic advantages by colluding with the McEwens. Among other things, the plaintiff alleges that Pilot shared information obtained for the purpose of adjusting the accident benefits file with the McEwens, and negotiated jointly with them, to the plaintiff’s detriment.

[3] The defendants produced an unsworn affidavit of documents which lists 320 documents under schedule “A”. The defendants’ schedule “B” does not list or describe any specific documents but contains the general description of three classes of privilege (solicitor-client, litigation and without prejudice communications).

[4] It is not uncommon for counsel to draft a schedule “B” of an affidavit of documents in this manner, and in most cases the parties do not object. Indeed, the plaintiff herself drafted a schedule “B” in similar fashion. However, this kind of sidestep does not comply with Rule 30.03(2), which requires parties to list and describe in separate schedules all documents relevant to any matter in issue in the action.

[5] To order a further and better affidavit of documents, the Court must be satisfied by evidence that a relevant document in a party’s possession, control or power may have been omitted from the party’s affidavit of documents.[^1] The plaintiff relies on SNC-Lavalin Engineers v. Constructors Inc. v. Citadel General Assurance Co.[^2] for the proposition that an insured can only ascertain whether his or her claim was treated in bad faith by production of the insurer’s internal file, and that almost every document in the insurer’s file will be critical and relevant to the issue of bad faith.[^3] The defendants do not seriously dispute this authority. They argue however that some documents could have be included in the file by mistake or may concern clearly irrelevant issues. They also assert that the plaintiff has not proven that any documents have been omitted.

[6] The plaintiff filed the affidavit of Shannon Luknowsky, her litigation guardian. Ms. Luknowsky states that the defendants’ affidavit of documents does not list the following categories of documents: correspondence that must exist between the defendants’ counsel and the McEwans’ counsel, including emails, faxes, telephone memos and the like; adjusters’ notes; reserve information; and any part of the defendant’s file that relates to the adjusting of this claim. I agree that, based on the admitted fact that Pilot and the McEwens made joint offers and used the same expert at trial, there must have been at least some communication between these parties, which would be relevant to the allegations of bad faith being advanced.

[7] The plaintiff has therefore satisfied the Court by evidence that relevant documents in the defendants’ possession may have been omitted from its affidavit of documents, and the defendant is accordingly ordered to produce a further and better affidavit of documents. My order only requires the defendants to list and describe the documents contained in Pilot’s file (except for documents that were included by mistake or are clearly irrelevant) in one of the schedules to its affidavit of documents. Whether privilege attaches to any of these documents is beyond the scope of this motion.

[8] The parties disagree on when the disclosure obligation ends. The plaintiff argues that the duty of good faith is one that persists until the proceedings are fully and finally concluded. In this case, she argues that the defendants should list and describe every document from the time the insurance file was opened until the Supreme Court of Canada denied leave to appeal. The defendants for their part argue that only documents created between the date the file was opened and when this action was commenced would be relevant. They argue that, by the time the action was commenced on September 11, 2015, all the facts upon which the action is based had crystallised and documents created subsequently would not be relevant.

[9] It is difficult to determine relevance in a vacuum solely based on the date a document was created. I do not agree that a document created after September 11, 2015 could never be relevant. For example, if a document created after that date made reference to an understanding between counsel for Pilot and the McEwens regarding how to respond to the plaintiff’s action, such a document would clearly be relevant even though it post-dates the commencement of this action.

[10] The plaintiff relies on Khazzaka v. CGU Insurance Company of Canada. In that case, the plaintiff claimed punitive damages arising from an insurer’s handling of the plaintiff’s claim for loss. The adjuster and the defence expert clung to their theory that the fire was caused by arson notwithstanding that there was no credible evidence to support this theory. The Court of Appeal upheld the award for punitive damages relying in part on the defendant’s conduct at trial (concocting evidence). The Court held that the insurer’s obligation of good faith continues through trial.[^4]

[11] On the pleading before me, the plaintiff impugns the defendants’ conduct throughout its investigation and assessment of the plaintiff’s claim, the settlement negotiation process and at trial.[^5] There are no allegations made in respect of the appeal process leading up to the denial of leave to the Supreme Court. I am not prepared to find that every document created after trial is relevant on the pleading as constituted. I hasten to add, however, that documents created after trial may be relevant, and their relevance should be assessed based on the pleadings.

[12] The plaintiff’s motion is allowed. The defendants shall serve a further and better affidavit within 30 days or within such other time as the parties may agree.

[13] The defendants have brought a cross-motion which will be heard on September 22, 2020. Costs of this motion are reserved until the defendants’ motion is determined.

Master Kaufman

Date: July 31, 2020

[^1]: Rule 30.06(b) of the Rules of Civil Procedure, RRO 1990 Reg. 194.

[^2]: 2003 64289 (ON SC), 2003 CarswellOnt 213, [2003] O.J. No. 310, 120 A.C.W.S. (3d) 415, 24 C.L.R. (3d) 186, 31 C.P.C. (5th) 371, 46 C.C.L.I. (3d) 281, 63 O.R. (3d) 226, (Ont. Master).

[^3]: Ibid, at para 29.

[^4]: Khazzaka v. CGU Insurance Company of Canada, 2002 45018 (ON CA), 2002 CarswellOnt 2605, [2002] O.J. No. 3110, [2003] I.L.R. I-4138, 115 A.C.W.S. (3d) 984, 162 O.A.C. 293, 28 C.P.C. (5th) 15, 43 C.C.L.I. (3d) 90, 66 O.R. (3d) 390.

[^5]: The plaintiff provides particulars of the alleged breaches of the insurer’s duty of good faith at paragraph 25 of the Statement of Claim.