COURT FILE NO.: CV-15-527293
DATE: 20210819
ONTARIO
SUPERIOR COURT OF JUSTICE
BETWEEN:
Rosanna Lucarelli and Domenico Lucarelli
Plaintiffs
– and –
Christoper MorrisoN, will Davidson and dominion of canada general insurance company
Defendants
Thomas J. Hanrahan, for the Plaintiffs (Responding parties)
Andrew A. Evangelista and Justine L. Ajandi, for the Defendant Dominion of Canada General Insurance Company (Moving party)
HEARD: July 29, 2021, in Toronto, by video conference
R. A. LOcoco J.
REASONS FOR Decision
I. Introduction
[1] The defendant Dominion of Canada General Insurance Company brings a motion for summary judgment, seeking dismissal of the action against Dominion brought by the plaintiffs Rosanna Lucarelli and Domenico Lucarelli.
[2] The action arose out of the settlement in 2013 of the Lucarellis’ insurance claim under a homeowner’s policy with Dominion. The insurance claim related to damage caused by a fire in 2012 at the Lucarellis’ residential dwelling (then under construction) in Stoney Creek, Ontario. The action was brought two years to the day after the settlement.
[3] In the action, the Lucarellis claim damages from Dominion and their outside lawyers for a negligent misrepresentation that the Lucarellis say occurred at the settlement meeting. They claim that as a result of the defendants’ misrepresentation, the Lucarellis agreed to settle the insurance claim for less then they were entitled to under the policy. The Lucarellis used the insurance proceeds to fund construction costs for the build.
[4] On the summary judgment motion, Dominion says that there is no genuine issue requiring a trial since (i) the Lucarellis are bound by the release the Lucarellis signed upon the settlement, and (ii) the action was not brought within the limitation period, which began on the date of the fire. The Lucarellis say there are triable issues relating to their position that (i) the release does not bind the Lucarellis in light of Dominion’s misrepresentation, (ii) in the alternative, the release should be set aside as being unconscionable, and (iii) the limitation period began on the settlement date, not the date of the fire.
[5] For the reasons below, I am dismissing Dominion’s summary judgment motion.
II. Background facts
[6] The Lucarellis are co-owners of a 6,000 square foot residential dwelling in Stoney Creek Ontario, where they currently reside. Mr. Lucarelli owns an auto collision repair business and has since 1992. He regularly interacts with insurers (including Dominion) in the course of dealing with repairs to insured vehicles.
[7] Construction of the Lucarelli’s current residence began in or about May 2010. Mr. Lucarelli acted as his own general contractor for the construction. The Stoney Creek property was one of two locations insured under a multi-peril homeowner’s insurance policy issued by Dominion. The policy was brokered through the Lucarellis’ former insurance broker. The maximum coverage for the Stoney Creek property under the policy was $3,484,950.
[8] It is common ground that the homeowner’s policy covering the Stoney Creek property provided higher maximum coverage than would have been provided by a builder’s risk insurance policy, the type of policy that should have been issued for a dwelling under construction. A builder’s risk policy would have provided maximum coverage of $1,659,500, less than half the coverage provided under the homeowner’s policy.
[9] On May 7, 2012, a fire occurred at the Stoney Creek dwelling, which was then 80 per cent complete. The damage was extensive, resulting in a total loss. The Lucarellis reported the fire to Dominion. Douglas Hawkins, a claims specialist with Dominion, was assigned to adjust the claim. Dominion initially reserved its rights under the policy but later in May 2012 decided to provide coverage for the damage caused by the fire. Dominion made two advance payments to the Lucarellis of $500,000 each in June and August 2012 to fund construction costs while the claim was being processed.
[10] The Lucarellis had a number of discussions and meetings with Mr. Hawkins to resolve the claim. As part of the claim adjustment process, the Lucarellis were actively involved with Dominion in the investigation and valuation of the loss from the fire. As general contractor for the construction, Mr. Lucarelli provided information about costs incurred prior to the fire for trades and suppliers, many of whom had been paid in cash. Dominion obtained quotes for completion of the construction, including from Andrew Bachly of Bachly Construction, whom Dominion retained to assist with loss assessment. The quotes were shared with the Lucarellis for their input, leading to revised quotes being obtained. Mr. Bachly’s initial quote in October 2012 to complete the construction was for $1,807,048.31, revised in November 2012 to $3,034,913.38 after the Lucarellis’ input.
[11] By Mr. Hawkins’ letter dated December 10, 2012, Dominion offered to settle the claim by covering constructions costs of $3,034,913.38, the amount of Mr. Bachly’s revised quote. Alternatively, Dominion offered to settle the claim on a cash value basis by payment of $2,511,000. In their December 2012 letter, Dominion asked the Lucarellis to submit a sworn proof of loss form and advised them that they had two years from the date of loss to present their claim.
[12] On December 11, 2012, Mr. Hawkins met with the Lucarellis, who were unhappy with the offer. Mr. Lucarelli advised Mr. Hawkins that he had consulted a lawyer and would be suing Dominion. By letter dated January 4, 2013, Mr. Hawkins again advised the Lucarellis that since there was a dispute about the amount of damages, they needed to complete a proof of loss form with support documentation. Mr. Hawkins also advised that upon receipt of the proof of loss, they would be able to resolve the dispute under the appraisal process set out in the policy’s statutory conditions and s. 128 of the Insurance Act, R.S.O. 1990, c. I.8. As well, Mr. Hawkins again advised that the Lucarellis had two years from the date of loss to present their claim.
[13] The Lucarellis did not provide a proof of claim form and advised Dominion that they wanted to settle their claim by a cash payment, rather than use the appraisal process. Discussions between Mr. Hawkins and the Lucarellis continued on that basis. The Lucarelli’s new insurance broker referred them to another builder, who provided an estimate of $3,447,177 to complete the construction.
[14] On March 18, 2013, Dominion advanced a further $500,000 to the Lucarellis to fund constructions costs, bringing the total amount advanced to $1.5 million.
[15] On April 18, 2013, Mr. Bachly provided Dominion with a further revised quote to complete the construction, increasing the amount by $139,536.40 to $3,174,449.79.
[16] On April 30, 2013, Mr. Hawkins again met with the Lucarellis in order to settle the claim. Also present were the Lucarellis’ new insurance broker, two other Dominion claims people and Mr. Bachly. The Lucarellis were seeking $3.4 million, consistent with the quote they had received from the other builder. After further discussion, the parties agreed to settle the claim for $3,083,300.88. The settlement amount was set out in a document signed that day entitled “Final Release”, which provided for the payment to the Lucarellis of $1,425,000, in addition to $1,658,300.88 previously paid to the Lucarellis, for a total of $3,083,300.88. In response to the Lucarellis’ request, Dominion provided the Lucarellis with a copy of the release in September 2013. Dominion also provided a breakdown of the settlement amount, indicating that it consisted of (i) $2,925,000 to complete the construction, (ii) $112,943.14 for previously-reimbursed construction costs, and (iii) $45,357.88 for certain other expenses covered under the policy.
[17] As agreed, Dominion paid $1,425,000 to the Lucarellis to satisfy the unpaid balance of the settlement amount. The Lucarellis used the amount paid to fund construction costs for the build.
[18] In August 2013, the Lucarellis retained their current lawyer of record. The Lucarellis’ lawyer subsequently advised them that they did not have a viable claim against their former insurance broker because (i) the insurance coverage that the Lucarellis received from Dominion under the policy (as arranged through the Lucarellis’ former insurance broker) provided them with more insurance coverage than they should have received for a building under construction, and (ii) there was no underinsurance since the claim had been settled within the policy limits. He also advised them that Dominion was suing the Lucarellis’ former insurance broker with respect to the excess coverage.
[19] On April 30, 2015, the Lucarellis commenced the current action against Dominion, Christopher Morrison (Dominion’s outside lawyer) and Will Davidson (Mr. Morrison’s law firm). In the Statement of Claim, the Lucarellis claim damages of $2,000,000 from the defendants for negligent misrepresentation. The Lucarellis alleged that: (i) at the settlement meeting on April 30, 2013, Mr. Morrison and Dominion claims representatives told the Lucarellis that they should not worry about settling the claim for less than the amount they believed they suffered since the Lucarellis had a potential claim against their former insurance broker; (ii) based on that advice, the Lucarellis agreed to the settlement amount; (iii) the Lucarellis were subsequently advised that they do not have a viable claim against their former insurance broker and as a result, the unpaid amount of their claim will not otherwise be recoverable; (iv) the Lucarellis would not have entered into the settlement but for the representations of Mr. Morrison and Dominion; and (v) the Lucarellis relied on the representations to their economic detriment. As particulars of the defendants’ negligence, the Lucarellis allege (among other things) that (i) the defendants knew or ought to have known that the Lucarellis were at a disadvantage by not being represented by counsel at the settlement meeting and were giving up significant legal rights without the advice of counsel, and (ii) the defendants breached their duty of utmost good faith to ensure that the Lucarellis were receiving a fair settlement under the policy.
[20] In a letter dated January 25, 2021, responding to Dominion’s demand for particulars, the Lucarellis’ counsel maintained their position that Mr. Morrison was present at the settlement meeting (as stated in the Statement of Claim), and also identified Mr. Hawkins as being present along with other Dominion claims representatives whom the Lucarellis were unable to identify.
[21] On February 25, 2021, Dominion provided its Statement of Defence. In that document, Dominion pleads that the action should be dismissed as being barred by (i) the release signed upon the settlement, (ii) the one-year limitation period under the policy as set out in Statutory Condition 14 under s. 148 of the Insurance Act, and (iii) the two-year limitation period in the Limitations Act, 2002, S.O. 2002, c. 24, Sched. B.
[22] On April 19, 2021, Dominion brought a motion for summary judgment, seeking dismissal of the action on the same grounds.
[23] In Mr. Lucarelli’s affidavit in the material responding to the summary judgment motion, Mr. Lucarelli identified Mr. Hawkins as the Dominion claims representative who advised the Lucarellis that they had a potential claim against their former insurance broker. Mr. Lucarelli also deposed that Mr. Morrison was included in error in the action, stating that Mr. Morrison attended the first meeting with Dominion regarding policy coverage issues but he was not at the settlement meeting on April 30, 2013. During the cross-examination on Mr. Lucarelli’s affidavit, he confirmed that the action was being discontinued against Mr. Morrison and his law firm, Will Davidson. At the motion hearing, the Lucarellis’ counsel confirmed his clients’ intention to discontinue the action against those parties and also advised that notice of discontinuance had not yet been provided.
III. Parties positions and issues to be decided
[24] Dominion seeks summary judgment dismissing the Lucarellis’ action against Dominion, arguing there is no genuine issue requiring a trial. As set out in the Notice of Motion, Dominion says that the action is barred by (i) the full and final release signed by the Lucarellis, which explicitly released Dominion from any and all claims for known and future damages arising from the fire, (ii) the one-year limitation period in Statutory Condition 14, and (iii) the two-year statutory limitation period.
[25] The Lucarellis do not agree. They say that the motion record discloses triable issues relating to their position that the release does not bind them in light of their reliance on Dominion’s negligent misrepresentation, which they say caused them to settle the claim for less than they were entitled to under the policy. In the alternative, they say there are triable issues relating to their position that the release should be set aside as being unconscionable. They also submit that there is a triable issue relating to the commencement of the statutory limitation period, which they say began on the settlement date, not the date of the fire. They also dispute that Dominion is entitled to rely on the one-year policy limitation period in Statutory Condition 14, noting Dominion’s written advice to them on two occasions that they had two years from the date of loss to submit their claim.
[26] The issues to be determined are as follows:
a. Release: Is a trial required to determine whether the Lucarellis’ action is barred by the release?
b. Limitation period: Is a trial required to determine whether Dominion has a limitation defence?
[27] In the balance of these reasons, I will first set out the applicable legal principles and then address the issues set out above.
IV. Legal principles
A. Summary judgment
[28] Summary judgment will be granted if the court is satisfied that there is no genuine issue requiring a trial: r. 20.04(2)(a). In Hryniak v. Mauldin, 2014 SCC 7, [2014] 1 S.C.R. 87, at para. 49, the Supreme Court of Canada interpreted this provision as follows:
There will be no genuine issue requiring trial when the judge is able to reach a fair and just determination on the merits on a motion for summary judgment. This will be the case when the process (1) allows the judge to make the necessary findings of fact, (2) allows the judge to apply the law to the facts, and (3) is a proportionate, more expeditious and less expensive means to achieve a just result.
[29] In determining whether the test for summary judgment has been met, the motion judge has enhanced fact-finding powers that entitle the judge to weigh the evidence, evaluate credibility and draw any reasonable inference from the evidence, unless it is in the interest of justice for such powers to be exercised only at a trial: r. 20.04(2.1). These enhanced powers are discretionary and presumptively available: Hryniak, at para. 45. Using these powers will not be against the interest of justice if using them will lead to a fair and just result and will serve the goals of timeliness, affordability and proportionality in light of the litigation as a whole: Hryniak, at para. 66. For the purpose of exercising these enhanced powers, the motion judge is authorized to hear oral evidence, referred to as a “mini-trial”: see r. 20.04(2.2).
[30] In Hryniak, at para. 66, the court suggests a roadmap or approach to a summary judgment motion. The motion judge should first determine whether there is a genuine issue requiring a trial based only on the evidence before the court on the motion, without using the enhanced fact-finding powers. If there appears to be a genuine requiring a trial, the motion judge should then determine if a trial can be avoided by using those fact-finding powers. If summary judgment is refused or granted only in part, the motion judge has comprehensive trial management powers that may be used “to craft a trial procedure that will resolve the dispute in a way that is sensitive to the complexity and importance of the issue, the amount involved in the case and the effort expended on the failed motion”: see Hryniak, at para. 77, referring to r. 20.05. The court also suggests that where a summary judgment motion is dismissed, the motion judge should seize herself of the matter as the trial judge in the absence of compelling reasons to the contrary: Hryniak, at para. 78.
[31] The onus of establishing that there is no genuine issue requiring a trial is on the moving party, in this case Dominion. However, each side is required to “put its best foot forward” or “lead trumps or risk losing”: see Sweda Farms v. Egg Farmers of Ontario, 2014 ONSC 1200, at para. 26, aff'd 2014 ONCA 878, leave to appeal refused, [2015] S.C.C.A. No. 97; Canada (Attorney General) v. Lameman, 2008 SCC 14, [2008] 1 S.C.R 372, at para. 11. This requirement is consistent with r. 20.02(2), which requires the responding party to place before the motion judge evidence of specific facts showing that there is a genuine issue requiring a trial.
[32] The courts have also indicated that the fact that both sides to a summary judgment motion bear evidentiary burdens does not alter the moving party’s legal burden of proof. If the defendant is the moving party, it is only after it has discharged its evidentiary burden of proving there is no genuine issue requiring a trial that the burden shifts to the responding plaintiff to prove that its claim has a real chance of success: see Dia v. Calypso Theme Waterpark, 2021 ONCA 273, at paras. 25-26; Sanzone v. Schechter, 2016 ONCA 566, 302 D.L.R. (4th) 135, at para. 30. Generally, the motion judge is entitled to assume that the summary judgment motion record contains all the evidence the parties would present at trial, but the motion judge is not required to make that assumption if in the circumstances of a particular case it is against the interests of justice to do so: see Dia, at para. 26; Sweda Farms (ONSC), at para. 27.
B. Negligent misrepresentation
[33] The Lucarellis’ action against Dominion is for damages for negligent misrepresentation. As set out in Queen v. Cognos, Inc., 1993 146 (SCC), [1993] 1 S.C.R. 87, at p. 110, there are five general elements to establish negligent misrepresentation, as follows:
a. there must be a duty of care based on a "special relationship" between the representor and the representee;
b. the representation must be untrue, inaccurate or misleading;
c. the representor must have acted negligently in making the misrepresentation;
d. the representee must have relied in a reasonable manner on the negligent misrepresentation; and
e. the reliance must have been detrimental to the representee in the sense that damages resulted.
(See also Krawchuk v. Scherbak, 2011 ONCA 352, 106 O.R. (3d) 598, at para. 68.)
C. Duty of good faith
[34] The Lucarellis allege as a particular of Dominion’s negligence that Dominion breached its duty of utmost good faith to ensure that the Lucarellis were receiving a fair settlement under the insurance policy. The Lucarellis’ counsel relied on Whiten v. Pilot Insurance Co., 2002 SCC 18, [2002] 1 S.C.R. 595, at para. 79, as authority that an insurer had a duty of utmost good faith and fair dealing to their insured. The nature of that duty was considered in more detail by the Court of Appeal in 702535 Ontario Inc. v. Non-Marine Underwriters, Lloyd's of London (2000), 2000 5684 (ON CA), 184 D.L.R. (4th) 687 (Ont. C.A.), paras. 27-30, as follows:
The relationship between an insurer and an insured is contractual in nature. The contract is one of utmost good faith. In addition to the express provisions in the policy and the statutorily mandated conditions, there is an implied obligation in every insurance contract that the insurer will deal with claims from its insured in good faith…. The duty of good faith requires an insurer to act both promptly and fairly when investigating, assessing and attempting to resolve claims made by its insureds.
The first part of this duty speaks to the timeliness in which a claim is processed by the insurer…. The duty of good faith obliges the insurer to act with reasonable promptness during each step of the claims process. Included in this duty is the obligation to pay a claim in a timely manner when there is no reasonable basis to contest coverage or to withhold payment….
The duty of good faith also requires an insurer to deal with its insured's claim fairly. The duty to act fairly applies both to the manner in which the insurer investigates and assesses the claim and to the decision whether or not to pay the claim. In making a decision whether to refuse payment of a claim from its insured, an insurer must assess the merits of the claim in a balanced and reasonable manner. It must not deny coverage or delay payment in order to take advantage of the insured's economic vulnerability or to gain bargaining leverage in negotiating a settlement…. This duty of fairness, however, does not require that an insurer necessarily be correct in making a decision to dispute its obligation to pay a claim. Mere denial of a claim that ultimately succeeds is not, in itself, an act of bad faith….
What constitutes bad faith will depend on the circumstances in each case. A court considering whether the duty has been breached will look at the conduct of the insurer throughout the claims process to determine whether in light of the circumstances, as they then existed, the insurer acted fairly and promptly in responding to the claim. [Citations omitted.]
V. Analysis and conclusion
[35] As explained further below, I have concluded that Dominion has not satisfied its onus of establishing that there is no genuine issue requiring a trial to determine whether (i) the Lucarellis’ action against Dominion is barred by the release, or (ii) Dominion has a limitation defence.
A. Release
[36] Is a trial required to determine whether the Lucarellis’ action against Dominion is barred by the release?
[37] Dominion submits that the release signed at the settlement meeting bars the Lucarellis’ claim against Dominion for any further amount. Dominion relies on the plain meaning of the release, which states that the release covers “not only all known injuries, losses and damages but also all future injuries, losses and damages not now known or anticipated but which may later develop or be discovered, including all the effects and consequences thereof.” Dominion argues that the Lucarellis’ action clearly fall within the scope of the release, barring a claim for any further amount. Dominion also says that enforcement of the release was consistent with the court’s policy in favour of promoting settlement.
[38] In addition, Dominion disputes that the Lucarellis were treated unfairly in the claims process or at the settlement meeting given that (i) Mr. Lucarelli was an experienced businessman who was accustomed to dealing with insurers as part of his business and who acted as his own general contractor, (ii) the Lucarellis were actively involved in the loss assessment throughout the claims process, (iii) they had the benefit of advice from their new insurance broker, who was with them at the settlement meeting, and (iv) while no lawyers were present at the settlement meeting, Mr. Lucarelli had access to legal advice, having previously advised Dominion that he had consulted a lawyer about suing Dominion with respect to the insurance claim. Dominion also relies on those considerations to support its submission that the evidence does not support the Lucarellis’ alternative position that the release should be set aside on the basis of unconscionability.
[39] As well, Dominion disputes that the Lucarellis have any legal entitlement to rescind the release (which evidences the settlement), since among other things (i) the Statement of Claim does not plead that remedy, and (ii) the Lucarellis cannot restore Dominion to their pre-contractual position, having used the settlement funds in the completion of the build: see Riding Mountain Excavating Ltd. v. K & D Farm Corporation, 1999 BCCA 319, 68 B.C.L.R. (3d) 63, at para. 12.
[40] As legal support for its position that the release bars the Lucarellis’ action, Dominion relies on the recent Supreme Court of Canada decision in Corner Brook (City) v. Bailey, 2021 SCC 29. In that case, the court held that there was no special rule of contractual interpretation that would require general words in a release to be limited to matters specially within the parties’ contemplation at the time the release was given. Instead, courts are directed to read the release as a whole, giving the words their ordinary and grammatical meaning consistent with the surrounding circumstances known to the parties at the time the release was given: see Corner Brook, at paras. 33-34. The Supreme Court also indicates that this approach is consistent with the parties’ desire to “bargain for finality” when entering into a release: see Corner Brook, at para. 27.
[41] On the evidence before me on the motion, I have concluded that Dominion has not satisfied its onus of establishing that there is no genuine issue requiring a trial to determine whether the Lucarellis’ action against Dominion is barred by the release.
[42] In response to the motion, the Lucarellis are not arguing that the terms of the release are not broad enough to cover their claim. As well, they are not seeking the equitable remedy of rescission, arguing that there is no issue as to their entitlement to at least the settlement amount to compensate them for their loss resulting from the fire. Their action is for damages, for the amount they say they are entitled to recover beyond the settlement amount. That damages claim is grounded in tort, based on Dominion’s alleged negligent misrepresentation which they say they are entitled to pursue against Dominion despite the release: see BG Checo International Ltd. v. British Columbia Hydro and Power Authority, 1993 145 (SCC), [1993] 1 S.C.R. 12.
[43] The Lucarelli’s position is that (i) they agreed to the settlement amount based on Dominion’s misrepresentation that they could claim against their former insurance broker for the balance they believed is owed to them, (ii) they relied on that misrepresentation to their detriment, and (iii) it was reasonable for them to rely on Dominion’s misrepresentation, given their insurer’s utmost duty of good faith and fair dealing with respect to their claim.
[44] I agree with the Lucarellis that the evidence gives rise to triable issues that it would not be appropriate to resolve in the context of a summary judgment motion. On the evidence, there are factual disputes about (among other things) whether Dominion represented that the Lucarellis had a potential claim against their former insurance broker and whether it was reasonable for them to rely on that representation. In my view, a trial is necessary to resolve those and other factual disputes in the context of Dominion’s course of conduct in processing the Lucarellis’ insurance claim, which they say was not consistent with Dominion’s utmost duty of good faith and fair dealing.
[45] In reaching that conclusion, I considered Dominion’s submission that I should reject Mr. Lucarelli’s evidence about the alleged misrepresentation and accept Dominion’s position that no such representation was made, based on Mr. Hawkins’ evidence. Having reviewed Mr. Hawkins’ evidence, however, it was somewhat more nuanced than an unequivocal statement that no such statement was made.
[46] In Mr. Hawkins affidavit, he states that (i) “he does not recall” any such statement being made to the Lucarellis, (ii) he does not believe that anyone from Dominion made that statement as they would not generally advise insureds to pursue insurance brokers with whom Dominion has a business relationship, and (iii) his contemporaneous meeting notes do not disclose any recommendations relating to further action. On cross-examination, when Mr. Hawkins was asked if it was possible that he or one of the other two Dominion claims representative made such a statement as part of the settlement discussions, he answered that he would not have made that statement himself but it was possible (but very unlikely) that someone else from Dominion made such a statement. Mr. Hawkins was also asked why Dominion would hesitate to recommend that the Lucarellis sue their former insurance broker when Dominion itself was doing so. His response was that “it wasn’t his role”, that he was at the meeting to “handle the first party loss”, agreeing that the meeting’s purpose was to settle the claim.
[47] In Mr. Lucarelli’s affidavit, he states that Mr. Hawkins advised him that if he felt he was not getting everything he wanted from the settlement, he could always bring a lawsuit against the broker to recover the rest. On cross-examination, Mr. Lucarelli had obvious difficulty explaining the rationale for his belief that he would have a cause of action against his former insurance broker but explained that he put his trust in Dominion as his insurer to protect his interests by giving him accurate information.
[48] Dominion’s counsel argues that I should resolve the conflict in evidence in Dominion’s favour given (i) Mr. Lucarelli’s vague and uncertain answers on cross-examination, and (ii) his late-breaking identification of Mr. Hawkins as the person who made the statement, after previously identifying by name only Mr. Morrison (who Mr. Lucarelli now agrees was not at the meeting).
[49] On the evidence, I do not agree that I am in a position to resolve the evidentiary conflicts on this motion. As set out in the Statement of Claim, it was always the Lucarellis’ position that the representation was made by Dominion claims representatives as well as Mr. Morrison. Mr. Lucarelli now acknowledges his error in saying that Mr. Morrison was at the settlement meeting. In subsequent correspondence from the Lucarellis’ counsel and in Mr. Lucarelli’s affidavit on the motion, the only Dominion claim representative at the meeting he was able to identify was Mr. Hawkins. I also note that there were two other Dominion claims representatives at that meeting, one of whom is still with Dominion. No sufficient explanation was provided as to why Dominion did not provide affidavit evidence from one or both of those persons, given the conflict in the evidence about what was said at the meeting.
[50] The initial evidentiary burden was on Dominion to demonstrate that there was no genuine issue requiring a trial. Dominion has not satisfied that burden.
B. Limitation period
[51] Is a trial required to determine whether Dominion has a limitation defence?
(i) One-year limitation period in Statutory Condition 14
[52] Subject to exceptions set out in s. 143(1) in Part IV of the Insurance Act, certain statutory conditions are deemed by s. 148(1) to be included in every policy made in Ontario providing for insurance against property loss or damage arising from fire. Those statutory conditions include Statutory Condition 14, which provides as follows:
Every action or proceeding against the insurer for the recovery of a claim under or by virtue of this contract is absolutely barred unless commenced within one year next after the loss or damage occurs.
[53] If the one-year limitation period in Statutory Condition 14 applies in this case, the Lucarellis’ action (commenced April 30, 2015) would be barred under the policy, whether the limitation period commenced on the date of the fire (May 7, 2012) or the settlement date (April 30, 2013).
[54] While Dominion raised the one-year limitation period in the Notice of Motion and its factum and referred to it at the hearing, Dominion’s counsel did not press the issue during oral submissions. Dominion relied instead on the parties’ release and the two-year statutory limitation period as the bases for their summary judgment motion. Given Dominion’s twice-stated written advice that the Lucarellis had two years from the date of loss to submit their claim, continued reliance on the one-year limitation period would not have been a winning strategy to persuade the court of the absence of a triable issue relating to the application of a one-year limitation period.
[55] A further challenge to that position would be provided by s. 22(1) of the Limitations Act, which limits the circumstances in which the parties may contract out of the statutory limitation period. Section 22(5) of that Act permits the parties to “business agreements” to vary a statutory limitation period in certain circumstances, but the definition of business agreements excludes an individual acting “for personal, family or household purposes” (adopting for this purpose the definition of “consumer” in s. 1 of the Consumer Protection Act, 2002, R.S.O. 1990, c. 30). In this case, there is no issue between the parties that the Lucarellis were insured under a homeowner’s insurance policy, providing (at least) a reasonable basis for the position that the parties were not permitted to contract out of the statutory limitation period because the homeowners policy was not a business agreement, based on the Lucarellis’ subjective intention: see Boyce v. Co-operators General Insurance Co., 2013 ONCA 298, 116 O.R. (3d) 56, at para. 21-25, leave to appeal refused, [2013] S.C.C.A. No. 296.
[56] As well, as Dominion’s counsel concedes in their factum, it is an open question in Ontario whether Part IV of the Insurance Act relating to fire insurance applies to comprehensive (multi-peril) insurance policies, although the question has been answered in the affirmative by courts in other provinces: see Aviva Insurance Company of Canada v. Thomas, 2011 NBCA 96, 378 N.B.R. (2d) 343, at para. 8; Casey v. Federated Insurance, 2004 MBQB 99, 240 D.L.R. (4th) 567, at paras. 4, 27 and 28.
[57] Accordingly, there is no need to further consider whether there would be a triable issue relating to the application of the one-year limitation period in Statutory Condition 14. As Dominion’s counsel indicated in oral submissions, he is relying on the two-year statutory limitation period to establish a limitation defence to the Lucarelli’s action, rather than the one-year period in Statutory Condition 14.
(ii) Statutory limitation period
[58] The basic limitation period for Ontario actions is set out in ss. 4 and 5 of the Limitations Act. Under s. 4, a proceeding shall not be commenced in respect of a claim more than two years after the claim was discovered. Under s. 5(1), a claim is discovered on the earlier of (a) the day on which the claimant first knew of an actionable claim for a loss arising from the act or omission of the person against whom the claim is made, and (b) the day a reasonable person in the claimant’s circumstances ought to have known of the matters giving rise to the claim. Under s. 5(2), a claimant shall be presumed to have known of the matters giving rise to the claim on the day that the act or omission took place unless the contrary is proved.
[59] Dominion submits that the Lucarellis’ action was not brought within the statutory limitation period. While the action is framed as a claim for damages that arose at the settlement meeting on April 30, 2015, Dominion argues that what the Lucarellis are really seeking is damages that arose under a policy of insurance as a result of a fire that occurred in 2012. Since the fire occurred more than two years prior to the action’s commencement, the action was statute barred, according to Dominion.
[60] I disagree. The Lucarellis’ action is for damages for negligent misrepresentation. The statement that gave rise to the action was made within the two-year period prior to the action’s commencement. The Lucarellis could not possibly have known (or ought reasonably to have known) about the statement that gave rise to the action until the statement was made. In these circumstances, there can be no question that there is at least a triable issue as to whether the action was brought within the statutory limitation period.
C. Other matters
[61] Having determined that there are genuine issues requiring a trial on the evidence in the motion record, Hryniak, at para. 66, suggests that the motion judge consider whether a trial can be avoided by having a mini-trial or otherwise using the court’s fact-finding powers in rr. 20.04(2.1) and (2.2). Neither side has suggested a mini-trial nor do I see the case for one, given the scope of the matters to be determined.
[62] I also note that while the action was commenced in 2015, the Statement of Defence was not delivered until February 2021. I was provided with no other information about the status of the action, but I am assuming that it is not far advanced in terms of trial-readiness. In all the circumstances, I see no advantage in seizing myself of the trial (see Hryniak, at para. 78). However, the order today provides some general trial management directions in an effort to get the action on track for trial or resolution.
V. Disposition
[63] Accordingly, an order will issue as follows:
a. Dominion’s motion for summary judgment is dismissed.
b. If they have not already done so, the parties shall agree to a schedule for future steps in the action (setting reasonable timelines) that shall include a deadline for setting the action down for trial. If the parties fail to agree on a schedule, any party may initiate a case conference or bring a motion for directions.
c. On consent, the Lucarellis’ costs of the motion are fixed at $15,000 including disbursements and tax, payable by Dominion within 30 days.
[64] I am grateful for counsel’s helpful submissions as well as for the parties’ prior agreement on the costs to be awarded to the successful party.
R. A. Lococo J.
Released: August 19, 2021
COURT FILE NO.: CV-15-527293
DATE: 20210819
ONTARIO
SUPERIOR COURT OF JUSTICE
BETWEEN:
ROSANNA LUCARELLI and DOMENICO LUCARELLI
Plaintiffs
- and –
CHRISTOPER MORRISON, WILL DAVIDSON and DOMINION OF CANADA GENERAL INSURANCE COMPANY
Defendants
REASONS FOR DECISION
R. A. LOCOCO J.
Released: August 19, 2021