Court File and Parties

Court File No.: CV-18-31 Date: 2021-04-19 Ontario Superior Court of Justice

Between: Celine Rosina Rochon Plaintiff/Moving party

– and –

Commonwell Mutual Insurance Group, R. Paquette Insurance Broker Inc. and R. Paquette Insurance Broker (1997) Inc. Defendants/Respondents

Counsel: Michael Switzer for the plaintiff/moving party Cynthia Verconich for Commonwell Mutual Insurance Group Timothy Alexander for R. Paquette Insurance Broker Inc. and R. Paquette Insurance Broker (1997) Inc.

Heard: April 16, 2021

Endorsement on Motion to Amend and Motion for Directions

S. Gomery J.:

[1] On August 18, 2016, Celine Rochon’s home in Newington, Ontario was destroyed in a fire. In May 2018, she sued her property insurer, Commonwell Mutual Insurance (“Commonwell”)[^1] as well as R. Paquette Insurance Broker Inc. and R. Paquette Insurance Broker (1997) Inc. (“Paquette”), the broker who sold her the policy. In her amended statement of claim issued in August 2018, Ms. Rochon alleges that she is entitled, pursuant to her policy, to the replacement value of her house and its contents, which she says total $2 million. She claims this amount, as well as $100,000 for the cost of loans she has allegedly had to take out since the fire, and $250,000 for loss of income, from Commonwell. She asserts that Paquette was negligent in failing to ensure that the stated coverage limits on her policy reflected the replacement value of the house and contents, and also claims $2 million in damages against it. Finally, Ms. Rochon alleges that Commonwell has acted in bad faith in its handling of her insurance claim, and so seeks $1 million in “punitive, aggravated and exemplary damages” from the insurer. Although the total amounts claimed from all defendants exceed $5 million, in her amended claim she limits the aggregate of the damages sought to this amount.

[2] Paquette and Commonwell have served statements of defence denying any liability. Commonwell has counterclaimed for amounts paid to Ms. Rochon to date on the policy, alleging that she made a fraudulent claim or willfully false statements in a statutory declaration, thereby vitiating coverage.

[3] Both Ms. Rochon and Commonwell have served jury notices.

[4] In this motion, Ms. Rochon seeks:

(i) an order permitting her to amend the amended statement of claim; and

(ii) directions from the court with respect to the determination of the value of the contents of the house, specifically a possible order directing the issue to a reference.

[5] Commonwell opposes one of the proposed amendments to the statement of claim. Both defendants oppose a reference on the valuation of items lost in the fire.

Preliminary issue: affidavit sworn by Commonwell’s counsel

[6] In response to the motion, Commonwell filed an affidavit sworn by James Wilson, its counsel of record. Most of the affidavit sets out the history of the litigation. At paragraph 22, however, Mr. Wilson states that he “verily believes” that the proposed increase in the claim for punitive, aggravated and exemplary damages to $100 million is “frivolous, vexatious and an abuse of process” and is not “bona fide”. At paragraph 28, Mr. Wilson states that he “verily believes that this is not an appropriate case for the direction of a reference”. Some other paragraphs consist of arguments about inferences to be drawn based on the evidence.

[7] At the hearing, I raised concerns about the statements about Mr. Wilson’s belief, which are inappropriate whether they are tendered as evidence or as argument.

[8] In Mapletoft v. Christopher J. Service, 2008 6935 (ONSC), at para. 15, Master MacLeod (as he then was) provided guidelines with respect to lawyers’ affidavits. These guidelines have since been followed in other cases such as Ferreira v. Cardenas, 2014 ONSC 7119. Counsel of record may swear an affidavit for use on a motion on matters of record, such as the status of undertakings at discovery. In some circumstances, if counsel of record has other information or belief that should be before the court on a motion, that lawyer’s affidavit may also be tendered, so long as another lawyer argues the motion. Master MacLeod cautioned, however, that:

This approach will not be appropriate for highly contentious issues that may form part of the evidence at trial. If the evidence of counsel becomes necessary for trial on a contentious issue, it may be necessary for the client to retain another law firm.

[9] Mr. Wilson’s associate attended the hearing and made submissions on Commonwell’s behalf, without any objection by the plaintiff’s counsel. In my view, however, the issues addressed at paras. 22 and 28 of Mr. Wilson’s affidavit fall into the category of highly contentious issues. Ms. Rochon’s good faith in advancing her claim is a central issue in the litigation as a whole. Mr. Wilson does not state the basis for his assertion that Ms. Rochon’s punitive damages claim is not bona fide. If Mr. Wilson is a potential trial witness, however, his firm should get off the record.

[10] Even if Mr. Wilson is simply expressing his personal views in paragraphs 22 and 28, his statements remain inappropriate. Rule 5.2 of the Law Society of Ontario’s Rules of Professional Conduct states:

5.2-1 A lawyer who appears as advocate shall not testify or submit their own affidavit evidence before the tribunal unless

(a) permitted to do so by law, the tribunal, the rules of court or the rules of procedure of the tribunal, or

(b) the matter is purely formal or uncontroverted.

[11] The commentary with respect to rule 5.2-1 states that “A lawyer should not express personal opinions or beliefs or assert as a fact anything that is properly subject to legal proof, cross-examination, or challenge”. A commentary to rule 5.1-1 reiterates that a lawyer “should refrain from expressing the lawyer’s personal opinions on the merits of a client’s case to a court or tribunal”. In Ferreira, at para. 22, Myers J. reviewed the caselaw upholding this principle and the rationale for it, and concluded that: “in the client’s eyes, the lawyer who swears in her belief as to the appropriate outcome of a proceeding is implicitly criticizing the court should it come to a different view”. In so doing, the lawyer undermines the administration of justice.

[12] When I raised these concerns at the hearing, Commonwell’s lawyer agreed to withdraw the statements about Mr. Wilson’s beliefs in paragraphs 22 and 28 of his affidavit. I accordingly did not take these statements into account in deciding the motion.

Amendment of the amended statement of claim

[13] Through the proposed amendments to the amended statement of claim, Ms. Rochon would:

• Increase her claim against Commonwell for damages for breach of contract/proceeds from the insurance policy from $2 million to $4 million;
• Increase her claim against Commonwell for punitive, aggravated and exemplary damages from $1 million to $100 million;
• Add a claim against Commonwell for $250,000.00 for additional living expenses beyond the coverage available in her policy, and allege facts in support of it;
• Eliminate her waiver of aggregate damages above $5 million; and
• Amend some allegations about her interactions with Paquette and the basis of her claim in negligence against it.

The parties’ positions

[14] Ms. Rochon argues that, pursuant to r. 26.01 of the Rules of Civil Procedure, the court must grant leave to amend a pleading unless prejudice would result that cannot be compensated for by costs or an adjournment. She says that the burden of showing prejudice falls on Commonwell and that it has not provided the court with any evidence that the proposed amendments will have any negative impact on it.

[15] Although it reserves the right to defend any part of the claim on the basis of limitations, for the purpose of this motion Commonwell opposes only the amendment that would increase Ms. Rochon’s claim for punitive, aggravated and exemplary damages to $100 million. It contends that the claim in this amount is frivolous, vexatious and an abuse of process. Commonwell argues that, even if Ms. Rochon succeeds in proving a claim for punitive damages, an award above $1 million would be untenable.

[16] Paquette takes no position on the motion to amend.

Principles governing motions to amend pleadings

[17] R. 26.01 states that: “On motion at any stage of an action the court shall grant leave to amend a pleading on such terms as are just, unless prejudice would result that could not be compensated for by costs or an adjournment.”

[18] In Marks v. Ottawa (City), 2011 ONCA 248, at para. 19, the Ontario Court of Appeal held that, although amendments are presumptively authorized pursuant to r. 26.01, a court may leave to amend in certain circumstances:

Although the general rule is that amendments are presumptively approved, there is no absolute right to amend pleadings. The court has a residual right to deny amendments where appropriate: Daniele v. Johnson (1999), 1999 19921 (ON SCDC), 45 O.R. (3d) 498 (Div. Ct.) at paras. 11 -15.[2] Further, I would agree that the proper factors to be considered are those first set out in Simrod v. Cooper, [1952] O.W.N. 720 (H.C.J. Master) at p. 721, aff’d at p. 723 (H.C.J.), and quoted with approval in Vaiman v. Yates (1987), 1987 4345 (ON SC), 60 O.R. (2d) 696 (H.C.J.) at p. 698, which can be summarized as follows:

• An amendment should be allowed unless it would cause an injustice not compensable in costs.

• The proposed amendment must be shown to be an issue worthy of trial and prima facie meritorious.

• No amendment should be allowed which, if originally pleaded, would have been struck.

• The proposed amendment must contain sufficient particulars.

Analysis

[19] Commonwell argues that the proposed increase of the claim for punitive damages to $100 million is not, on its face, meritorious, because the largest punitive damages award that a plaintiff has ever obtained to date in Canada is $1 million.

[20] In Whiten v. Pilot Insurance Co., 2002 SCC 18, [2002] 1 SCR 595, a majority on the Supreme Court restored a $1 million award of punitive damages by a jury against an insurance company in a fire claim with some similarity to this one. At paras. 107 to 127, it held that the amount of punitive damages must be rationally proportionate to the ends sought to be achieved, which include retribution, denunciation, and deterrence. Proportionality is a function of:

• the blameworthiness of the defendant’s conduct;
• the plaintiff’s degree of vulnerability;
• the harm or potential harm directed specifically at the plaintiff;
• the need for deterrence;
• other penalties, both civil and criminal, which have been or are likely to be inflicted on the defendant for the same misconduct; and
• the advantage wrongfully gained by the defendant through its misconduct.

[21] The majority in Whiten concluded, at para. 128, that $1 million for punitive damages awarded by the jury in the circumstances of the case was more than it would have awarded, but “not so disproportionate as to exceed the bounds of rationality”.

[22] Post-Whiten, various plaintiffs have sought punitive damages over $1 million dollars, without success. In Zurich Life Insurance Company Limited v. Branco, Sask R 176, rev’d 2015 SKCA 71, leave to appeal to SCC refused, 36696 (21 April 2016) a Saskatchewan judge awarded $4.5 million in punitive damages on an insurance claim, which was reduced to $675,000 on appeal. In Barker v. Barker, 2021 ONSC 158, a trial judge held that two plaintiffs’ claims for $1.25 million in punitive damages were excessive and awarded them $150,000 and $100,000 respectively. Based on the Supreme Court’s explanation of the factors informing an appropriate amount of punitive damages, Morgan J. held at para. 240 that “it is important in assessing punitive damages to express the court’s denunciation of the Defendants’ conduct and to foster a deterrence policy, but at the same time not to “overshoot the purpose”.” Citing Zurich Life Insurance Co. v. Branco, at para 122, he stated that the court could “articulate its disapprobation of the punishing attitude” shown to insured but should not do so by imposing punitive damages that were “unwarrantedly high”.

[23] Finally, the Supreme Court of Canada has itself reiterated that a punitive damages award in the $1 million range is appropriate only in very rare circumstances. When the Quebec Superior Court awarded this amount in punitive damages in Robinson v. Films Cinar inc., 2009 QCCS 3793, the Supreme Court reduced it to $500,000 on appeal, finding the trial judge’s award was too high, and that half that amount “reaches an appropriate balance between the overarching principle of restraint that governs these damages, on the one hand, and the need to deter conduct of this gravity, on the other”: Cinar Corporation v. Robinson, 2013 SCC 73, [2013] 3 SCR 1168, at para. 141.

[24] Notwithstanding the Supreme Court’s decision in Cinar, based on the superficial similarity between the allegations in this case and the facts in Whiten, it is conceivable that a jury could award Ms. Rochon punitive damages of over $1 million. In Whiten, at para. 127, the majority cautioned that punitive damages should not be quantified based on a ratio between compensatory damages and non-compensatory damages. I have no insight into the evidence that might be led with respect to the considerations that would properly inform an appropriate award, nor would it be make any judgment on the merits of the case in the context of a motion to amend: Smith v. Simmons (1985), 49 C.P.C. 28 (Ont. Master).

[25] On the other hand, I have no hesitation in saying that a claim for punitive damages of $100 million is, on its face, preposterous. In the unlikely event that such an award by a jury were endorsed by the trial judge, it would be overturned on appeal. In Pereira v. Hamilton Township Farmers' Mutual Fire Insurance Company, 2006 12284 (ON CA), at para. 111, the Ontario Court of Appeal held that a jury award of punitive damages of $2.5 million in a fire insurance claim was both “grossly excessive” and “irrational”. There is no scenario that would permit an award of punitive damages by an Ontario court for forty times this amount.

[26] The question, then, is whether in light of the excessive amount Ms. Rochon seeks to claim in her amended amended statement of claim, leave to make the amendment should be denied.

[27] At the hearing, Ms. Rochon’s counsel suggested that, if I find that a claim for $100 million in punitive damages is too high, I could authorize an amendment for a lesser amount that I deem appropriate. I disagree. My role as a judge on this motion is not to provide the plaintiff with direction on the maximum level of damages that she is entitled to claim.

[28] Commonwell has not provided me with any caselaw suggesting that the amount claimed for a particular head of damages is a basis to deny a proposed pleadings amendment. In fact, in Plante v. Industrial Alliance Life Insurance Co., 2003 64295 (ON SC), a plaintiff was permitted to add claim for $100 million in punitive damages.[^2] It does not appear that the defendant raised any concerns about the quantum of the claim, but the court was certainly alive to the test under r. 26.01 and the need to ensure that proposed new claims are tenable.

[29] Commonwell has not led any evidence to show that the proposed amendment will cause it any prejudice that it does not already face as a result of defending Ms. Rochon’s current claim for punitive, aggravated and exemplary damages. Commonwell will have a right to serve an amended statement of defence in response to the amended amended statement of claim. Further examinations for discovery may also be required. None of this gives rise to prejudice that would prevent me from granting leave to amend. This action is not yet set down for trial, no pre-trial conference has been held and no trial date set.

[30] I therefore conclude that the proposed amendment does not give rise to a claim which is, on its face, unmeritorious, and that Commonwell has furthermore not shown that it will face any prejudice not compensable by costs as a result of the amendment.

[31] Finally, I note that the actual quantum of punitive damages sought in the statement of claim will not have a significant impact on the actual award, except insofar as it establishes a ceiling. Whether the plaintiff claims $1 million or $100 million in punitive damages, the trial judge will have to instruct the jury on the appropriate considerations in making an award for punitive damages. Given the Supreme Court’s directions at para. 94 of Whiten, this instruction will state, among other things, that punitive damages are “very much the exception rather than the rule”; that they “are given in an amount that is no greater than necessary to rationally accomplish their purpose”; and that Canadian judges and juries “have usually found that moderate awards of punitive damages, which inevitably carry a stigma in the broader community, are generally sufficient”.

[32] As a result, allowing the proposed amendment will do no more than allow Ms. Rochon to claim over $1 million in punitive, aggravated and exemplary damages. Potential exposure to a claim that might have merit is not a basis to deny an amendment under r. 26.01: Hanlan v. Sernesky 1996 1762 (ON CA).

[33] I therefore conclude that the proposed amendments ought to be allowed.

Directions

[34] Ms. Rochon seeks the court’s direction on how she should prove the value of the contents of her house at the time of the fire. She specifically proposes that I direct a reference pursuant to r. 54.02(1)(b). She alleges that she lost 2348 separate items in the fire, ranging from furniture and appliances to clothing and food. She says that the defendants have refused to admit the loss of any of these items, and that it may consume up to twelve weeks of trial time to prove this part of her claim.

[35] Both Commonwell and Paquette contest any reference to determine the value of Ms. Rochon’s loss. They contend that she is effectively seeking an order to bifurcate the issue of liability and damages, and that this is impermissible without their consent.

[36] R. 54.02(1) states:

54.02 (1) Subject to any right to have an issue tried by a jury, a judge may at any time in a proceeding direct a reference of the whole proceeding or a reference to determine an issue where,

(a) all affected parties consent;

(b) a prolonged examination of documents or an investigation is required that, in the opinion of the judge, cannot conveniently be made at trial; or

(c) a substantial issue in dispute requires the taking of accounts.

[37] I find that, in the circumstances of this case, this rule does not permit me to direct a reference to quantify Ms. Rochon’s loss in the house fire.

[38] The list of circumstances permitting a reference at r. 54.02(1) is disjunctive. A reference may be directed to determine an issue requiring “a prolonged examination of documents or an investigation that … cannot conveniently be made at trial” (subpara. (b)) even if all affected parties do not consent (subpara. (a)). This means that a judge could, in appropriate circumstances, direct a reference over the objections of one or more of the parties.

[39] Any exercise of discretion under r. 54.02 is, however, “[s]ubject to any right to have an issue tried by a jury”. I interpret the introductory words in the rule to mean that a judge may not direct that the issue be determined by way of reference if (i) a party has served a jury notice; (ii) an issue is one that would properly be put to the jury at trial; and (iii) the party who has served the notice declines to waive his right to have the jury decide the issue. Commonwell has served a jury notice. The quantification of Ms. Rochon’s loss in the fire is an issue that would be put to the jury. I therefore do not have the power to direct that this issue be subject to a reference unless Commonwell waives its right to have it put to the jury. It does not.

[40] My conclusion on this point is informed by the Court of Appeal’s recent decision in Duggan v. Durham Region Non-Profit Housing Corporation, 2020 ONCA 788. That case concerned a court’s ability to bifurcate a trial into separate hearings on liability and damages in a non-jury civil case pursuant to r. 6.1.01.[^3] In Duggan, the Court held that r. 6.1.01 precludes a judge from bifurcating the issue of liability and damages without the consent of the parties. It reached this conclusion based not only on the plain language of the rule, but on the observation that “it is a basic right of a litigant to have all issues in dispute resolved in one trial”: Duggan, at para. 37, citing its earlier decision in Elcano Acceptance Ltd. v. Richmond, Richmond, Stambler & Mills, 1986 2591, 55 O.R. (2d) 56, at p. 5.

[41] Alternatively, even if I could direct a reference on the value of the contents of the house lost in the fire pursuant to r. 54.02(1)(b), I would decline to do so.

[42] Ms. Rochon has prepared a spreadsheet calculating the value of 2348 items that she says were lost in the fire. To prove her losses, she must establish two things. First, she must establish the value of each item listed on the spreadsheet. Second, she must prove that each item was in her house when it burned down.

[43] On the first element, Ms. Rochon’s counsel concedes that the valuation on the spreadsheet is based on her own estimate of what she would have to pay to replace the items allegedly lost. She does not have receipts for any of them. Ms. Rochon has retained an appraiser who is preparing a valuation. Once the appraisal is complete and has been served on the defendants, they may be willing to concede the value of at least some of the items.

[44] Establishing that the items listed on the spreadsheet were lost in the fire is, however, a more difficult exercise. To take a few examples, Ms. Rochon will have to prove that, as of August 18, 2016, she had purchased or otherwise acquired eight frozen turkeys and ten frozen chickens, two fur coats and nine computer printers. Her counsel says that her evidence on this point will consist of her testimony and the testimony of others who lived in the house or were knowledgeable about its contents. Given that Commonwell contends that Ms. Rochon’s loss claim is fraudulent or knowingly false, this evidence will be challenged on the basis that it is not credible.

[45] Ms. Rochon’s credibility and the credibility of other witnesses is within the sole purview of the trier of fact. It would be inappropriate to delegate this function to a referee. It could give rise to conflicting findings on a key issue. It is furthermore hard to see how a reference would save any significant time or expense for the parties, since it would require significant viva voce testimony.

[46] Aside from a possible reference, Ms. Rochon’s counsel did not suggest any other directions. He did however propose that this action, along with the companion action between Ms. Rochon and Commonwell in Court file no. CV-18-48, be subject to case management. The defendants are seeking instructions from their clients with respect to this proposal.

[47] I accept that Ms. Rochon’s counsel sought directions because he genuinely wants to find a way to shorten the length of the trial of the action. I agree with the defendants, however, that it would be premature, at this stage, to make any other case management orders at this time. This is something that the parties should explore further once pleadings are finalized, discoveries are complete, and any expert reports have been exchanged. I am not persuaded, even in the absence of any potential trial management orders, that twelve weeks of hearing time will be required for evidence on the value of the contents of the house, particularly if the defendants accept the appraiser’s valuation of some or all of the value of discrete items.

Disposition

[48] The motion is granted in part. The plaintiff is authorized to serve and file an amended amended statement of claim, subject to the defendants’ right to raise a limitations defence in respect of any new claim or cause of action. The amended amended statement of claim shall be in the form attached to the notice of motion, except that the plaintiff shall separate the claim for aggravated damages from the claim for punitive and exemplary damages.

[49] The defendants shall have the right to serve amended pleadings within 30 days of service of the amended amended statement of claim. Counsel shall confer on any further discovery that may be required as a result of the amendments of any of the pleadings. If they cannot agree on an appropriate allocation of time for any further discoveries that may be required, they should seek a case conference for a ruling on this issue.

[50] Since success on the motion was divided, the parties may wish to consider whether any of them wish to seek costs. If they are unable to agree on the issue, they may each serve and file a costs outline, no longer in three pages in length, within ten days of the issuance of this endorsement. Each outline shall attach a bill of costs and any other document relevant to the court’s determination of this issue.

Justice Sally Gomery

Released: April 19, 2021

[^1]: In its statement of defence, Commonwell states that its correct name is “The Commonwell Mutual Insurance” and that the title of proceedings should be corrected. This correction has not yet been made, however.

[^2]: This was subject to the proviso that the plaintiff, in its amended statement of claim, distinguish between its claim for aggravated damages (which are compensatory in nature) and punitive damages (which are non-compensatory). Re-drafting the amended amended statement of claim in this case in the same way would be appropriate to avoid any confusion about what Ms. Rochon is seeking.

[^3]: R. 6.1.01 provides that: “With the consent of the parties, the court may order a separate hearing on one or more issues in a proceeding, including separate hearings on the issues of liability and damages”.