NOVA SCOTIA COURT OF APPEAL
Citation: Wagner v. Day, 2003 NSCA 13
Date: 20030123
Docket: CA 177136
Registry: Halifax
Between:
Raymond F. Wagner
Appellant
Respondent on Cross-Appeal
v.
Terri Leah Anne Day
Respondent
Respondent by Cross-Appeal
- and -
The Guarantee Company of North America, a body corporate
Respondent
Appellant by Cross-Appeal
Judges: Roscoe, Cromwell and Saunders, JJ.A.
Appeal Heard: November 18, 2002, in Halifax, Nova Scotia
Held: Appeal allowed; Cross-Appeal dismissed, with costs to the Applicant in both proceedings, as per reasons of Saunders, J.A.; Roscoe and Cromwell, JJ.A. concurring.
Counsel: Robert L. Barnes, Q.C. and Jennifer Ross, for the appellant/respondent by cross-appeal
M. Joseph Rizzetto, for the respondent Day/respondent by cross-appeal
David Farrar and Christa Hellstrom for the respondent/appellant by cross-appeal
Reasons for judgment:
INTRODUCTION:
[1] This is an appeal and cross-appeal from the interlocutory decision and order of Nova Scotia Supreme Court Justice C. Richard Coughlan sitting in chambers.
[2] The appellant, Raymond F. Wagner (“Wagner”), is a lawyer practicing in Halifax who once represented Kitchener, Ontario resident Terri Leah Anne Day (“Day”) seeking recovery of damages for injuries Day sustained in a motor vehicle accident at L’Ardoise, Nova Scotia, on September 4, 1994.
[3] Wagner now appeals from the chambers judge’s decision which dismissed his application to disallow the limitation defence relied upon by the respondent/appellant by cross-appeal, The Guarantee Company of North America (“Guarantee”).
[4] Guarantee cross-appeals the chambers judge’s decision that the law of Nova Scotia ought to apply to this proceeding rather than the law of Ontario, which Guarantee says “covers the contract of insurance both in form and substance”.
BACKGROUND:
[5] In order to lend context to the issues arising in this case it will be necessary to provide a somewhat lengthy summary of the background.
[6] Day suffered injuries in a single car collision in L’Ardoise, Cape Breton, Nova Scotia on September 4, 1994, when the 1987 GM Camaro she was driving went into a ditch after she took evasive action to avoid an oncoming truck. It is alleged that the truck was racing with another car on the two-lane highway. Unable to ascertain the identity of the other motorists, Day retained Wagner on a contingency fee basis and sued the Registrar of Motor Vehicles on May 23, 1995, to recover her damages from Judgment Recovery (N.S.) Ltd.
[7] A Defence was filed by Judgment Recovery (N.S.) Ltd. on behalf of the Registrar of Motor Vehicles on February 2, 1996.
[8] Day was a resident of Kitchener, Ontario and was insured by a policy of insurance issued in Ontario by Guarantee.
[9] Wagner entered into an extensive correspondence with Guarantee having promptly notified that company of their insured’s accident and injuries by letter dated September 29, 1994. The claim was acknowledged by Guarantee’s officials and in a letter to Wagner dated October 21, 1994, Guarantee provided Wagner with a copy of Day’s insurance policy. The letter’s author, J. Stephen Hague, Claims Examiner, confirmed to Wagner their telephone conversation a day earlier and further reported:
... As discussed, the writer is handling the bodily injury claim, or uninsured motorist claim, on behalf of your client. As discussed, our insured will be able to claim for her injuries from the Nova Scotia Uninsured Motorist Fund. The limits of this fund are $200,000.00, as advised by you. If, for some reason, our insured’s claim exceeded the $200,000.00, she would be able to claim under her own policy for uninsured motorist coverage, for the difference between her policy limits and those of the Fund. Our insured’s policy limits are $1,000,000.00. (Underlining mine)
As discussed, we are enclosing a copy of our policy wording.
Please keep the writer advised as to how our insured’s claim is proceeding against the Fund and if there is any likelihood of it exceeding the $200,000.00.
As also discussed, we advised you that the limitation period for claims against our insured’s policy, for uninsured motorist claims, is two years from the date of the loss. Any action for recovery under the uninsured motorist section of the policy must be commenced in Ontario with the Ontario court presiding.
As discussed, I will only be supervising the uninsured motorist claim for our insured. In regard to our insured’s accident benefit claims, a separate file is being maintained by Mr. Don Wright of this office and he is processing our insured’s claim with the assistance of the independent adjuster assigned to meet with your client. If you have any questions, in regard to this aspect of the loss, please contact Mr. Wright
We look forward to dealing with you and remain,
Yours truly,
J. Stephen Hague
Claims Examiner
Woodstock Branch
[10] Wagner notified Guarantee of Day’s claim against Judgment Recovery and promised to advise Guarantee if the claim appeared to exceed Judgment Recovery’s $200,000.00 liability limits. Wagner also confirmed his understanding — imparted by Guarantee — that Day’s claim for accident benefits would be processed directly by a different claims’ representative with the company.
[11] Matters continued as expected and Day began receiving her statutory accident benefits following the September 1994 accident.
[12] By letter dated September 19, 1995, Guarantee’s claims examiner Stephen Hague alerted Wagner to a mistake he had made in his earlier correspondence, a portion of which was highlighted in para. 9, above. Mr. Hague’s September 19, 1995 letter is brief and I will reproduce it here in its entirety:
September 19, 1995
Wagner & Associates
P.O. Box 2618, Station “M”
Halifax, Nova Scotia
B3J 3N5
ATTENTION: Raymond F. Wagner
RE; Our Claim No. : W94-21852
Our Insured : Day
Date of Loss : September 4, 1994
Your Client : Terry Day
Dear Sir:
Further to our correspondence of October 21st, 1994, we would like to make a correction in that correspondence. Unfortunately, the writer erred in giving you his opinion in regard to the coverage available to your client. Since the driver of the vehicle that is alleged to have caused this accident was unidentified, there would be no coverage available to your client in excess of the uninsured motorist funds in your Province. In order for the S.E.F. 44 Endorsement to become available, the owner of the vehicle has to be identified. Therefore, the only recourse for your client would be the claims fund in Nova Scotia. Once you have reviewed our policy I am sure you will agree with the above. We apologize for any inconvenience this may have caused you and, if you have any questions, please contact the writer, otherwise we will be retiring our file within 30 days.
Yours truly,
J. Stephen Hague
Claims Examiner
Woodstock Branch
[13] Wagner acknowledged receipt of Guarantee’s correspondence. He confirmed his understanding that Day’s only recourse would be through the Registrar of Motor Vehicles in Nova Scotia.
[14] Guarantee cut off Day’s weekly accident benefits on April 30, 1995. It purported to notify Day of the threatened termination by letter dated April 15, 1995, signed by Don Wright, Guarantee’s employee in charge of Day’s separate accident benefits file. There is a dispute between Wagner and Day as to Wagner’s knowledge of Wright’s letter. In paragraph 18 of the affidavit sworn by Wagner on February 2nd, 2001, filed in support of his chambers application, he deposed:
THAT I have been advised and do verily believe that on April 15, 1995, Wright wrote to Day indicating that her weekly benefits would cease as of April 30, 1995 unless Day had an assessment which showed that the benefits should continue. I did not receive a copy of Wright’s letter to Day in 1995 and have only recently been made aware of the letter and its contents. ...
[15] This sworn averment by Wagner is challenged by Day who states in her affidavit sworn June 15, 2001:
25. THAT at no time, either then or afterwards, did Mr. Wagner advise me to attend for this assessment, and more importantly, at no time did he ever advise me that a failure to attend for this assessment could seriously jeopardize my rights to claim for lost earnings on my policy. In addition, at no time did he ever discuss wit (sic) me the contents of the Insurance Act, my policy, or most importantly, the Statutory Accident Benefits Schedule as it related to the requirement for assessments or court actions being commenced.
26. THAT I had absolutely no reason not to go for the assessment as I was very seriously ill and could not work, and would have went (sic) immediately had Mr. Wagner advised me to do so.
27. THAT Mr. Wagner’s sworn evidence that he was only recently made aware of this letter and its contents is simply not true, as I kept strict document records and I clearly remember discussing this with him.
[16] This clear conflict in the evidence between Wagner and Day has not, to this point, been judicially considered.
[17] In June 1997 Day retained counsel in Ontario (“Pitcher”) to represent her interests and to pursue any recovery on her behalf.
[18] In August 1998 Day moved from Ontario to Cold Lake, Alberta. In early 1999 Day moved from Alberta to Nova Scotia.
[19] On February 23, 1999, Day advised Wagner of a potential negligence claim against him relating to a missed limitation period in Ontario for failing to bring an action against Guarantee and, in particular, Wagner’s failure to respond to Wright’s letter of April 15, 1995, regarding the termination of Day’s benefits effective April 30, 1995.
[20] On April 1, 1999, Wagner contacted the Nova Scotia Barristers’ Society liability claims fund advising them of a potential negligence claim for his handling of Day’s file.
[21] In August, 1999, Day retained Joseph Rizzetto (“Rizzetto”), a lawyer practicing in Sydney, Nova Scotia to represent her interests and she terminated Wagner’s retainer.
[22] On June 22, 2000, Rizzetto started an action on behalf of Day against Guarantee suing the insurer for breach of contract and claiming damages for, among other things, unpaid benefits, medical and health care services, pecuniary and non-pecuniary loss and loss of earning capacity.
[23] Guarantee defended (as variously amended) on the basis that the proceeding filed by Rizzetto on Day’s behalf was out of time as not having been commenced within two years of the cause of action arising; that the proper law of the contract was Ontario and that the courts in Nova Scotia did not have jurisdiction to deal with the case; and in the alternative that “the uninsured motorists’ provisions contained in the policy are not applicable in the circumstances and do not operate to cover any of the Plaintiff’s alleged losses”. In the further alternative Guarantee relied upon the Nova Scotia Limitation of Actions Act, R.S.N.S. 1989, c. 258, as amended.
[24] The position taken by Guarantee prompted Wagner to apply to be added as an Intervenor pursuant to Civil Procedure Rule 8, and to strike out the limitation defence pursuant to s. 3 of the Limitation of Actions Act.
[25] The two actions, that is the one initiated by Day against the Registrar of Motor Vehicles in May 1995 and her second suit against Guarantee in June 2000 were consolidated by consent order dated February 6, 2002.
[26] The matter came on for hearing before Coughlan, J. in chambers on November 2, 2001. He reserved judgment and released written reasons on January 18, 2002.
[27] Wagner’s application in chambers to add himself as an Intervenor went unopposed, and it is not in issue on appeal.
ISSUES:
[28] This appeal and cross-appeal arise from Justice Coughlan’s disposition of the application. The written submissions filed by the parties list several grounds of appeal and cross-appeal. In my view, these various grounds may be reduced and restated as two questions to better reflect the positions asserted by Guarantee and Wagner, respectively. That is, whether or not the chambers judge erred:
(1) by, as Guarantee submits, failing to find that the proper law in this proceeding was the law of Ontario;
(2) by, as Wagner submits, failing to disallow the limitation defence relied upon by Guarantee in its defence of the action taken against it by Day.
By failing to find that the proper law of the contract in this proceeding was the law of Ontario
[29] Guarantee submits that the chambers judge erred in applying s. 127 of the Nova Scotia Insurance Act which, it says, has no bearing on the circumstances of this case where Day has sued her insurer for unpaid benefits and damages. The insurer says that the reciprocity rules cited by the chambers judge apply only to claims based in tort and not to contractual claims as between an insurer and its insured. Guarantee submits that any application of Nova Scotia law to that contract issued in Ontario is inconsistent with Day’s claim and that therefore the Nova Scotia Limitation of Actions Act has no bearing on these proceedings.
[30] Guarantee, the appellant by cross-appeal, relying upon principles of contract law and conflicts of law, argues that Coughlan, J. erred in failing to find that the proper law applicable to this proceeding was that of Ontario. Guarantee says that the contract under which Day seeks recovery is an Ontario standard automobile insurance policy; that issues of contract and not tort are raised in the pleadings as between Day and Guarantee; that considerations of the proper law of tort are, therefore, irrelevant; and that the contract of insurance at issue in this case is covered both in form and in substance by the law of Ontario.
[31] Nova Scotia law extends to Day an opportunity to seek judicial intervention in striking out a limitation defence when equity demands it. The exercise of such a judicial discretion is not available to Day under Ontario legislation, hence Guarantee’s assertion that the law of Ontario ought to bind this proceeding. However, in my view Guarantee has framed this issue too broadly. As I will explain with a more detailed analysis of the legislation and the contractual provisions later in these reasons, Guarantee’s obligation, whether considered under s. 127 of the Nova Scotia Insurance Act, or s. 45 of the Ontario Insurance Act, or the terms of the policy itself, is not to set up any defence to a claim under the policy that might not be set up if the contract were sold here. The issue therefore is not, as Guarantee suggests “what is the proper law” in this proceeding, but rather whether the invocation of the limitation period, absent the discretionary authority that exists under Nova Scotia law to set that defence aside, constitutes “setting up” a defence that might not be set up if the contract were issued in Nova Scotia.
[32] Unlike the Limitation of Actions Act in Nova Scotia, the Ontario Limitations Act, R.S.O. 1990, c. L-15 as amended, does not provide any discretion to a Court to extend the limitation period except in circumstances when the Court is prepared to grant an amendment in the face of an expired limitation period after finding that sufficient “special circumstances” exist to justify the amendment.
[33] Accordingly, Guarantee seeks to rely upon Ontario law and jurisprudence in order to uphold its limitation defence.
[34] Having considered the record and all of counsel’s submissions, I find no error in Coughlan J.’s finding that the law of Nova Scotia ought to apply, and that therefore Day is entitled to seek the court’s assistance available to her under s. 3 of the Limitation of Actions Act, (the “Act”).
[35] With respect, Guarantee’s arguments misapprehend the legal effect of the statutory provisions and reciprocity rules which apply to this litigation. In my opinion, Coughlan, J. applied those reciprocity rules correctly in finding that they modify the common law rules of choice of law.
[36] The applicable reciprocity rules are established by statute in provincial insurance legislation across Canada. They are included in motor vehicle insurance policies issued by insurers licensed to transact business in any one of the provinces or territories. The purpose of the rules is to establish a higher level of uniformity with respect to coverages where claims arise outside of the contracting jurisdiction.
[37] The reciprocity rules have several sources found in both the legislation and the terms of the contract between the parties. These provisions form a matrix precluding insurers from making objections to jurisdiction and from relying on certain defences that might otherwise be available to them. I will now turn to a consideration of each of the sources that are engaged in the particular circumstanes of this case.
[38] The principal statutory source in Nova Scotia is the Insurance Act, R.S.N.S. 1989, c. 231. For the purposes of this case I need only cite s. 127(1) which provides:
Action within Province where contract made outside
127 (1) In any action in the Province against an insurer transacting the business of automobile insurance in the Province or its insured arising out of an automobile accident in the Province, the insurer shall appear and shall not set up any defence to a claim under a contract made outside the Province, including any defence as to the limit or limits of liability under the contract, that might not be set up if the contract were evidenced by a motor vehicle liability policy issued in the Province, and the contract made outside the Province shall be deemed to include the benefits prescribed pursuant to Section 140.
[39] Guarantee executed a power of attorney and undertaking dated February 18, 1983 which provides, in part:
THE GUARANTEE COMPANY OF NORTH AMERICA the head office of which is in the City of Montreal in the Province of Quebec in the Canada, [sic] hereby, with respect to an action or proceeding against it or its insured, or its insured and another or others, arising out of a motor-vehicle accident in any of the respective Provinces or Territories, appoints severally the Superintendents of Insurance of ... Nova Scotia ... or such official as may from time to time be designated by the Provinces or Territories concerned, to do and execute all or any of the following acts, deeds, and things, that is to say: To accept service of notice or process on its behalf.
THE GUARANTEE COMPANY OF NORTH AMERICA aforesaid hereby undertakes:
A. To appear in any action or proceeding against it or its insured in any Province or Territory in which such action has been instituted and of which it has knowledge:
...
C. Not to set up any defence to any claim, action, or proceeding, under a motor-vehicle liability insurance contract entered into by it, which might not be set up if the contract had been entered into in, and in accordance with the law relating to motor-vehicle liability insurance contracts of the Province or Territory of Canada in which such action or proceeding may be instituted, and to satisfy any final judgment rendered against it or its insured by a Court in such Province or Territory, in the claim, action, or proceeding, up to
(1) the limit or limits of liability provided in the contract; but
(2) in any event an amount not less than the limit or limits fixed as the minimum for which a contract of motor-vehicle liability insurance may be entered into in such Province or Territory of Canada, exclusive of interest and costs and subject to any priorities as to bodily injury or property damage with respect to such minimum limit or limits as may be fixed by the Province or Territory.
[40] The power of attorney and undertaking (PAU) filed by Guarantee is also part of the statutory reciprocity regime. The legal significance of the PAU is described in s. 236 of the Motor Vehicle Act, R.S.N.S. 1989, c. 293 as follows:
(4) A person who is not a resident of the Province may, for the purposes of this Act, give proof of financial responsibility as provided in subsection (1), or by filing a certificate of insurance in a form approved by the Registrar issued by any insurer authorized to transact insurance in the province or state in which the person resides, provided the insurer has filed with the Registrar, in the form prescribed by him,
(a) a power of attorney authorizing the Registrar to accept service of notice or process for itself and for its insured in any action or proceeding arising out of a motor vehicle accident in the Province;
(b) an undertaking to appear in any such action or proceeding of which it has knowledge; and
(c) an undertaking not to set up as defence to any claim, action or proceeding under a motor vehicle liability policy issued by it, a defence which might not be set up if such policy had been issued in the Province in accordance with the law of the Province relating to motor vehicle liability policies, and to satisfy up to the limits of liability stated in the policy, any judgment rendered and become final against it or its insured by a court in the Province in any such action or proceeding.
[41] The Ontario Insurance Act, R.S.O. 1990, c. 1.8 contains similar provisions to our s. 127. See, for example s. 45(1) and s. 252(1). All other provinces have analogous provisions in their respective insurance legislation.
[42] Guarantee’s own insurance policy also recognizes these rules of reciprocity. For example, article 3.3.3 of the policy reads:
Outside Ontario
If the incident happens in a Canadian province or territory in which the minimum liability coverage required is higher than the limit shown on the Certificate of Automobile Insurance we will honour the higher amount. We also agree not to use any legal defence that would not be available if the policy had been issued in that jurisdiction.
Example
You have an accident in a province where the minimum liability coverage required is $500,000. Even though you are only carrying $200,00 worth of liability insurance, we will pay up to $500,000.
[43] It would be useful at this point to set out the material provisions of s. 3(2) of the Act:
Application to proceed despite limitation period
(2) Where an action is commenced without regard to a time limitation, and an order has not been made pursuant to subsection (3), the court in which it is brought, upon application, may disallow a defence based on the time limitation and allow the action to proceed if it appears to the court to be equitable having regard to the degree to which
(a) the time limitation prejudices the plaintiff or any person whom he represents; and
(b) any decision of the court under this Section would prejudice the defendant or any person whom he represents, or any other person.
Application to terminate right of action
(3) Where a time limitation has expired, a party who wishes to invoke the time limitation, on giving at least thirty days notice to any person who may have a cause of action, may apply to the court for an order terminating the right of the person to whom such notice was given from commencing the action and the court may issue such order or may authorize the commencement of an action only if it is commenced on or before a day determined by the court.
Factors considered
(4) In making a determination pursuant to subsection (2), the court shall have regard to all the circumstances of the case and in particular to
(a) the length of and the reasons for the delay on the part of the plaintiff;
(b) any information or notice given by the defendant to the plaintiff respecting the time limitation;
(c) the extent to which, having regard to the delay, the evidence adduced or likely to be adduced by the plaintiff or the defendant is or is likely to be less cogent than if the action had been brought or notice had been given within the time limitation;
(d) the conduct of the defendant after the cause of action arose, including the extent if any to which he responded to requests reasonably made by the plaintiff for information or inspection for the purpose of ascertaining facts which were or might be relevant to the plaintiffs cause of action against the defendant;
(e) the duration of any disability of the plaintiff arising after the date of the accrual of the cause of action;
(f) the extent to which the plaintiff acted promptly and reasonably once he knew whether or not the act or omission of the defendant, to which the injury was attributable, might be capable at that time of giving rise to an action for damages;
(g) the steps, if any, taken by the plaintiff to obtain medical, legal or other expert advice and the nature of any such advice he may have received.
[44] Thus, it can be seen that in Nova Scotia a judge may allow a law suit to proceed notwithstanding a missed limitation period in circumstances where it is equitable to do so, having regard to all of the circumstances, and in particular to the factors listed in 3(2)(a), (b) and s-s. (4)(a) through (g). The essence of Guarantee’s position, acknowledged in argument before us, was that all Guarantee undertook to do in its PAU was promise:
. . . not to set up any defence to any claim . . . which might not be set up if the contract had been entered into in, and in accordance with the law relating to motor-vehicle liability insurance contracts of the Province . . . in which such action or proceeding may be instituted . . .
[45] Guarantee says that it is not mounting a limitations defence to this action which is any different from the limitations defence available to it in Nova Scotia. As counsel for the appellant by cross-appeal put it, “raising a defence is not the same as disallowing a defence”. With respect, Guarantee’s argument is nothing more than semantics. The fact is that Guarantee is attempting to adopt a defence position which is not consistent with the law in this province, in order to limit its contractual obligations to Day.
[46] From my reading of the cases it is apparent that an insurer’s statutory obligation to not set up “any defence” to a claim under a contract made outside of Nova Scotia (or the particular province where the claim arose) has been liberally construed. These provisions have not been limited to issues of third party liability coverage, but have been applied to first party claims; and to defences that were based on misrepresentations by the insured; limitation defences; failure to properly register a motor vehicle; and other limitations or restrictions on coverage. In virtually every case the court has “written up” the insurance policy to conform with the law of the jurisdiction where the suit is commenced. See, for example, Shannon v. Insurance Corp. of British Columbia (1996), 40 C.C.L.I (2d) 49 (B.C.C.A.); Wawanesa Mutual Insurance Co. v. Lindblom (2001), 281 A.R. 127(Alta. C.A.); Alberta v. Saskatchewan Government Insurance (1981), 29 A.R. 582 (C.A.); Thai v. Dao (1998), 39 O.R. (3d) 791 (Ont. Gen. Div.); Potts v. Gluckstein (1992), 8 O.R. (3d) 556 (C.A.); Berg v. Farm Bureau Mutual Insurance Co. (2000), 50 O.R. (3d) 109 (C.A.), leave to appeal to S.C.C. dismissed (2001), 149 O.A.C. 200 (note) (S.C.C.); Healy v. Interboro Mutual Indemnity Insurance Co. (1999), 44 O.R. (3d) 404 (C.A.), affirming (1998), 40 O.R. (3d) 270 (Ont. Gen. Div.), leave to appeal to the Supreme Court of Canada dismissed [1991] S.C.C.A. No. 384; and, Bissky v. Co-operators General Insurance Co., (1986) 17 C.C.L.I. 149 (B.C.S.C.).
[47] In reviewing the circumstances of this case, it seems to me that the observations of the British Columbia Court of Appeal in Shannon, supra, when considering the reciprocal arrangements between provinces at ¶ 7 are especially apt:
7 It is not necessary for the purposes of this appeal, which is concerned only with the issue of a stay, to delve deeply into those provisions, but it is enough to say that the general scheme of the legislation in the various provinces which have it is to the effect that, where the limits of coverage or other terms required by law are more favourable in the province in which the accident takes place, then the claimant, whether under a liability insurance policy or a no-fault provision, will be entitled to those superior benefits even though they are not provided for in the coverage in the policy.
[48] In my view the same observations apply here, where the essential point in issue is a narrow one. The Act in Nova Scotia extends an advantage to Day, injured while traveling upon our highways. A judge in Nova Scotia may exercise a discretion which would render inoperative a limitation defence. Day does not lose that advantage or what the British Columbia Court of Appeal described in Shannon, as a “superior benefit” by virtue of the fact that she was sold her motor vehicle insurance policy in Ontario.
[49] Bissky, supra, was a case very similar to this one as it dealt with the question of which province’s limitation period should govern. In argument counsel for Guarantee conceded the correctness of the decision but attempted to distinguish it from this case. In my opinion any differences are insignificant. The plaintiff was involved in a motor vehicle accident in British Columbia. The defendant was insured by a motor vehicle liability policy issued in Ontario. The plaintiff sued the defendant in British Columbia. The defendant was found wholly liable for the accident. In defending the action the defendant’s Ontario insurer tried to rely upon a one-year limitation set out in the Ontario Insurance Act in circumstances where the applicable British Columbia limitation period was two years. Justice MacKinnon considered the applicable reciprocity rules including a provision in the Ontario Act (now s. 252(1)), which stated:
[t]he insurer shall not set up any defence to a claim that might not be set up if the policy were a motor vehicle liability policy issued in that province or territory . . .
and concluded at ¶ 13:
The limitation of one year contained in the Ontario statute cannot be set up in the Province of British Columbia and the defendant is precluded from doing so under s. 220(1)(b).
[50] On the same basis I would find that Guarantee is precluded from relying upon the Ontario limitation provisions which lack the discretionary authority to set aside the limitation defence available in Nova Scotia, in defending Day’s suit commenced in this province.
[51] Before leaving this subject, I wish to dispose of a collateral submission put forward by the cross-appellant. Had reciprocating provinces intended to limit the protection afforded motorists visiting their provinces to coverage for strictly tort-based claims, yet deny protection for claims said to arise from the “substance” of the insurance contract, they could have easily and explicitly said so. They did not. I decline to give the reciprocal provisions in this case the restricted interpretation urged upon us by the cross-appellant as to do so would, in my respectful view, lead to an absurd result and a flood of litigation concerning the proper characterization of the subject-type to be ascribed to any given claim, all of which could never have been intended by the legislatures.
[52] I turn now to a consideration of the second question, that is whether the chambers judge erred by failing to disallow the limitation defence asserted by Guarantee.
By failing to disallow the limitation defence relied upon by Guarantee in its defence of the action taken against it by Day
[53] After determining he could resort to s. 3 of the Act, the chambers judge then turned his mind to the question whether the limitation defence asserted by Guarantee should be struck down pursuant to s. 3(2) of the Act. He recognized that he had a discretion to disallow a limitation defence in certain circumstances. He was mindful of the jurisprudence in this province outlining the proper approach to be taken in any s. 3 analysis. See for example MacCulloch v. McInnes Cooper & Robertson (1995), 140 N.S.R. (2d) 220 (C.A.); Anderson & Anderson v. Co-operative Fire & Casualty Company (1983), 58 N.S.R. (2d) 163 (N.S.S.C., T.D.). The chambers judge then went on to consider the evidence before him as it applied to each of the factors set out in s. 3(4).
Standard of Review
[54] The standard of review on an appeal from a discretionary order has been considered by this court in a number of cases. We will intervene to overturn a discretionary interlocutory order where wrong principles of law have been applied, or where a patent injustice would result, or in cases where no weight or insufficient weight has been given to relevant circumstances or where the judge has misapprehended the evidence or where all of the facts are not brought to the attention of the judge. See for example, Canada (Attorney General) v. Foundation co. of Canada (1990), 99 N.S.R. (2d) 327 (C.A.); and Minkoff v. Poole (1991), 101 N.S.R. (2d) 143.
[55] The issue here is whether the chambers judge correctly applied the test to strike Guarantee’s limitation defence. In my respectful view, although the chambers judge articulated the proper test, he erred in law by failing to apply those principles properly and by misconstruing the evidence before him.
[56] As noted earlier, s. 3 of the Act gives the court a discretion to set aside a limitation defence if it appears equitable to do so. This discretion is not open ended. S. 3(6) of the Act stipulates that the court may not exercise its jurisdiction to set aside a limitation defence if the action is commenced or notice is given more than four years after the expiry of the limitation.
[57] The test to strike a limitation defence requires a consideration of prejudice flowing to both the plaintiff and the defendant. This is clearly set out in s. 3(2) of the Act.
[58] In deciding whether it is equitable to disallow the limitation defence, the court must have regard to all the circumstances of the case and in particular to a series of factors enumerated in s. 3(4) of the Act.
[59] The relief provisions of the Act are remedial in nature and ought to be construed liberally with a view to obtaining their objective. See McGuire v. Fermini (1984), 64 N.S.R. (2d) 60 (S.C.A.D.). Limitation periods are harsh instruments. The discretionary provisions of the Act are intended to afford a plaintiff relief from the strict limitation period where it is equitable to do so. The provisions of the Act balance the need for achieving justice with the need to maintain clear and cogent evidence regarding the claim.
[60] The key to assessing whether a limitation period should be struck is to compare the relative degrees of prejudice to both the plaintiff and the defendant. As noted by this court in MacCulloch, supra:
[t]he weighing of the degrees of prejudice is an important and required prerequisite to any conclusion which may be reached by a court.
In my opinion the chambers judge failed to consider the existence or consequence of any prejudice to Day, and impliedly found that there was prejudice to Guarantee, despite an absence of any evidence to that effect and in spite of clear evidence to the contrary. The chambers judge further erred by failing to weigh the prejudice to both parties before arriving at his final decision not to strike the limitation defence.
[61] The learned judge makes no mention of the nature and extent of prejudice to Day in the event that the limitation defence were upheld. The decision is silent with respect to the potential prejudice which would be suffered by Day through the loss of her cause of action.
[62] The chambers judge also failed to give effect to the fact that Day claims to have been rendered permanently disabled and unemployable as a result of the 1994 motor vehicle accident.
[63] If Day’s claim is meritorious, then obviously the impact upon her in not striking out the limitation defence is enormous. The result is that she would be denied the insurance benefits for which she contracted and paid premiums.
[64] This situation is similar to Butler v. Southam Inc. (2001), 197 N.S.R. (2d) 97, where at ¶ 163 Cromwell, J.A. observed:
In my respectful view, the judge erred by failing to give significant weight to the prejudice flowing to the plaintiffs from the fact that the notice and limitation provisions would foreclose their action. While, as noted, this is not a controlling factor, it is entitled to significant weight. It must not be discounted completely as the chambers judge seems to have done; this consideration is not mentioned anywhere in his extensive reasons. [underlining mine]
[65] In reviewing the factors outlined in s. 3(4) of the Act, the chambers judge did not recognize any equities in favour of Day. For example, in considering the first factor under s. 3(4)(a) of the Act (the length and reasons for the plaintiff’s delay) the judge determined that Day was represented by experienced counsel and that the delay in commencing the action against Guarantee in Nova Scotia was inordinate. However, the judge gave no apparent consideration to the diligence shown by Day in pursuing her claim against Guarantee. As noted in Butler, supra, the diligence of a plaintiff in pursuing her claim is an important consideration.
[66] The judge also failed to consider the “cogency of evidence” factor outlined in s. 3(4)(c) of the Act when addressing potential prejudice to the parties. Although it was acknowledged that there was no issue of cogency in relation to the tort claim because of the lack of identification of the other drivers, there was no consideration given as to whether the plaintiff or the defendant were able to bring forward evidence bearing on the statutory accident benefits portion of her claim. The statement of claim lists various heads of damage claimed by Day and some of the medical evidence addresses the nature, extent and effect of her injuries at various periods in time. It is clear from the record that there was ample evidence bearing upon Day’s medical condition from 1994 onward, but this was not considered by the judge.
[67] For example, the evidence had revealed that Day had retained Pitcher in Ontario to represent her interests in 1997 and that she had applied for mediation of her claim against Guarantee under the Ontario mediation scheme. Day also retained Rizzetto to pursue her claim in Nova Scotia. For several years following the accident, Day attended a number of medical and rehabilitation experts with the clear knowledge of or at the request of Guarantee. Day settled part of her action for medical and rehabilitation benefits with Guarantee. These are all factors which should have, but were apparently not considered by the judge in the exercise of his discretion.
[68] When determining whether to strike a limitation defence, the court must also consider the factor of prejudice to the defendant, including statutory factor 3(4)(c), that is, the extent to which, having regard to the delay, the evidence to be adduced by the defendant is or is likely to be less cogent. Here, there was no basis in the record from which it could reasonably be inferred that Guarantee’s ability to properly defend the case on its merits had been prejudiced. Instead, the record supported only the opposite inference. Guarantee was not entitled therefore to have prejudice or the risk of prejudice to it weighed in the balance.
[69] In my respectful view, not only did the chambers judge fail to assess any prejudice to Day, he misconstrued the evidence regarding any prejudice flowing to Guarantee. There was no basis upon which he could conclude that there was any prejudice to Guarantee, yet he held that it would be inequitable to disallow the limitation defence. There is nothing in the affidavit evidence of Stephen Hague, Guarantee’s claims examiner, which discusses or sets out any conceivable prejudice which would flow to Guarantee in the event of striking the limitation defence. As their counsel acknowledged during argument, Guarantee was only “in the dark” about the status of Day’s claim and her treatment between December 1999 - June 2000 when the action was commenced. Clearly this is not a case where Day “surfaced” years after her cause of action arose to assert a claim that had never been disclosed or was long since forgotten by the insurer.
[70] As noted earlier in these reasons, the chambers judge found that despite Guarantee’s continued involvement with the case and the unsuccessful mediation of her claim, Guarantee “may have taken” other steps (such as arranging for independent medical assessments) had the action been commenced in a timely fashion. With respect, this is pure speculation but more important, is contradicted by the evidence before the judge. Not only did Guarantee fail to present any evidence of any prejudice which would flow to it in the event of striking its limitation defence, there was ample evidence to demonstrate that Guarantee was well aware of Day’s potential claim and medical condition throughout the years following the accident. Guarantee had, in fact, commissioned three independent medical and vocational examinations of Day in 1998. Included in the record are copies of requests to physicians for medical reports, occupational therapy assessments, rehabilitation assessments, progress reports, independent neurological and orthopaedic medical examinations, and an occupational therapy home assessment. These are all important items which have a bearing on the cogency of evidence.
[71] In these circumstances, the cogency or the loss of evidence cannot be a factor favouring Guarantee when it is clear that extensive documentation relating to her condition was available to the insurer from the time of the accident onward. Guarantee did not lose the ability to determine whether its insured would have qualified for statutory accident benefits after the spring of 1995. The chambers judge did not refer to this extensive material or to its significance as it affected the issue of prejudice to Guarantee.
[72] In summary, I find that the chambers judge erred in law by failing to apply the proper principles which require the weighing of relative degrees of prejudice to both parties. There was no consideration given to any prejudice suffered by Day and there was no evidence before the court of any real prejudice flowing to Guarantee. Consequently there was no analysis weighing the relative degrees of prejudice inuring to both sides. The suggestion that Guarantee had lost an opportunity to take steps to defend its position, including the commissioning of independent medical examinations, is simply conjecture and is contradicted by the evidence. Whereas the chambers judge having erred in principle in dismissing the application, it is open to this Court to exercise the discretion conferred by s. 3 of the Act. Considering all the factors therein set out in accordance with the reasons already given, I would disallow the defence.
Disposition
[73] In conclusion, I would direct that the respondent Guarantee’s cross-appeal be dismissed with costs to the appellant. The chambers judge did not err in finding that he had a discretion to disallow the limitation defence.
[74] I would direct that the appellant’s appeal from the chambers judge’s interlocutory decision be allowed, that his order be set aside and that the respondent Guarantee’s limitation defence be struck out.
[75] In light of Wagner’s success both on appeal and in resisting the respondent Guarantee’s cross-appeal, I would award Wagner costs of $1,500 inclusive of disbursements in each proceeding, resulting in a total costs award of $3,000 in favour of Wagner, payable by Guarantee.
Saunders, J.A.
Concurred in:
Roscoe, J.A.
Cromwell, J.A.