As 2017 comes to a close, it is a good time to take a look back at changes and developments in the law that will affect how adjusters handle claims going forward.
In one of the year’s most anticipated decision, the Court of Appeal for Ontario has now ruled on the application of the rate of pre-judgment interest for general damages claims arising from an MVA. In the case of Cobb v. Long Estate, 2017 ONCA 717, heard together with El-Khodr v. Lackie, 2017 ONCA 716, the Court concluded that the 1.3% rate of pre-judgment interest found in the Courts of Justice Act is to be applied immediately to both pending and future claims. However, the Court upheld the trial judge’s earlier ruling that a rate of 3.0% applied on the basis there was no reason to interfere with the trial judge’s discretion in that regard. Moving forward, defendants may use the Courts of Justice Act rate when calculating pre-judgment interest, bearing in mind that it is subject to a trial judge’s discretion.
In the same decision, the Court also ruled on the application of the indexed deductible for general damages. For all current and future claims, the new, inflation-adjusted deductible applies to all pending cases. Similarly, the Court ruled that costs are to be determined on the “net” amount for general damages. Now, costs are to be calculated after the statutory deductible is applied.
In one of FSCO’s last decisions before transitioning to the LAT, Arbitrator Benjamin Drory released a surprising and unexpected decision with respect to the constitutionality of the Minor Injury Guideline (“MIG”) under the SABS. Ultimately, Arbitrator Drory found that the definition of “minor injury” is unconstitutional as it unjustifiably infringes upon a claimant’s equality rights under the Charter of Rights and Freedoms on the basis of physical disability. While the decision has been criticized for evidentiary reasons, namely that the Attorney General of Ontario and the insurer were not called upon to make submissions, Arbitrator Drory stressed that his decision applied only to the case before him, suggesting it will not have wider application. Nevertheless, it is expected the Attorney General will make submissions if and when a claimant advances similar arguments in subsequent cases.
Whenever the Supreme Court of Canada rules on an issue, it is important to pay close attention. In the case of Saadati v. Moorhead, 2017 SCC 28, the Court ruled that an injured claimant does not need to have a diagnosed psychological / psychiatric injury in order to recover for a mental injury sustained in an accident. Because the law treats mental and physical injuries the same, the Court found that requiring a claimant to prove that a mental injury meets a recognized psychiatric illness when there is no corresponding requirement that a physical injury fall into a classificatory category would be treating those with mental injuries unfairly. This case places an increased burden on adjusters as it may be difficult to determine whether or not a claimant may assert a mental injury if they have not provided any expert reports evidencing a psychological or psychiatric diagnosis.
In a case that garnered media attention, the Ontario Superior Court considered whether a standard form exclusionary clause applies where the claim arose from a house fire set by the plaintiff’s abusive husband who burned the house down and attempted to kill her. The plaintiff in Soczek v. Allstate Insurance Co., 2017 ONSC 2262, argued that the standard exclusionary clause that excludes intentional or criminal acts by an insured under a homeowner’s policy would be unfair in the circumstances. The Court ruled that the intentional act triggered the exclusion clause and granted summary judgment in favour of the insurer. Throughout the decision, however, the Court was critical of the application of the exclusion in the circumstances. In April 2017, an Ontario MPP announced his intention to introduce a Bill aimed at allowing an innocent co-insured to recover under a policy where appropriate.
Looking forward to 2018, there are several cases and issues the insurance industry will be closely following. We await a decision from a motion’s judge on the question of whether jury trials in MVA cases are inherently unfair. The Plaintiff in Kapoor v. Kuzmanovski, 2017 ONSC 1790, brought a motion to exclude potential jurors who drive and pay insurance premiums paid on their behalf, on the basis that these jurors have an inherent conflict of interest. If the Court agrees, this will have significant impacts upon MVA litigation and the civil litigation system more generally. The motion will be heard on December 18, 2017.
As the Federal Government moves forward with legalizing marijuana, the insurance industry will be keeping a close eye on how it will affect client activities. For instance, how will commercial policies issued to licensed producers, dispensaries and cafes respond in the cases of third party liability claims? Personal lines will also be affected, particularly as it relates to automobile policies. Roadside determination of whether someone is driving while high is not as straightforward as determining whether a driver is drunk.
Finally, the rise of self-driving cars are expected to change the way in which we investigate liability and litigate MVAs, particularly in the absence of government regulations for autonomous vehicles. While autonomous vehicles have the potential to improve road safety, reduce traffic congestion, and produce many environmental benefits, the focus at present is on addressing the new and unique safety challenges that these vehicles create. MVAs involving self-driving cars create a novel mix of liability on the part of manufacturers, hackers and operators.