The Barrister - Fall 2022: All about the Insurance Industry

FALL 2022

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ISSUE 134

Barrister All about the insurance industry

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FEATURES The Insurance Industry & Politics

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By Keith McLaughlin

ACTLA’s Submission to the Alberta Automobile Insurance Rate Board

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The Insurance Lobby & Minor Injury Regulation

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How Forensic Economic Technology can assist Personal Injury Lawyers

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How the Crash of Celcius reveals holes in Insurance & Consumer Protection in Crypto

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Balancing Good Faith Obligations of Parties to an Insurance Contract

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The Laugh of Medusa - Limitation Deadlines from an Insurance Law Perspective

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When Does Using Your Own Capital to Fund Disbursements Stop Making Sense?

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Book Review of Think Again: The Power of Knowing What You Don’t Know

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ACTLA Access to Justice Committee

By Mark McCourt

By Cara Brown

By Elias Ziff

By Catherine Langlois, Andrea Manning-Kroon & Linda Jensen

By Nitin (Nick) Srivastava

Bridgepoint Financial

By Peter Trieu

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The Barrister

COLUMNS Letter from the Executive Director

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Letter from the Chair

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Alberta Weekly Law Digest

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THE BARRISTER EDITORIAL BOARD

Joy Jeong

Editor in Chief

Amani Abdu Committee Chair

Peter Trieu

Committee Member

Kerry Gellrich

Committee Member

Justin Monahan Committee Member

The contents of The Barrister are for informational purposes only and do not constitute legal opinions by the Alberta Civil Trial Lawyers Association, it’s members or contributing authors, and should not be relied upon as such.

Statements and opinions expressed by the editors and contributing authors are not necessarily those of ACTLA. The official position or views of the Alberta Civil Trial Lawyers Association will be stated as such. Copyright © 2022 by the publisher, ACTLA. All rights reserved. Reproduction of any material herein without permission of the publisher is prohibited.

All advertising enquiries should be directed to the Editor-in-Chief, at communications@actla.com Publication Mail Agreement No. 40064387 Return undeliverable Canadian addresses to: Alberta Civil Trial Lawyers Association 777-10339 124 Street, Edmonton, AB, T5N 3W1

The Barrister is published quarterly by the Alberta Civil Trial Lawyers Association 777-10339 124 Street, Edmonton, AB, T5N 3W1 T: 780.429.1133 | 1.800.665.7248 | www.actla.com

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ACTLA Mission Statement: Advocating for a strong civil justice system that protects the rights of all Albertans.

2022-23 BOARD MEMBERS

PAST PRESIDENTS

Chair: Angela Saccomani, KC Past Chair: Maia Tomljanovic Vice Chair: Owen Lewis Secretary: Mike McVey Treasurer: Jillian Gamez

Maia Tomljanovic 2021-22 Jackie Halpern, KC, 2020 - 21 Shelagh McGregor, 2019-20 Mark Feehan, 2018-19 Michael Hoosein, 2017-18 Maureen McCartney-Cameron, 2016-17 Nore Aldein (Norm) Assiff, 2015-16 Craig G. Gillespie, 2014-15 Donna C. Purcell KC, 2013-14 George Somkuti, 2012-13 Constantine Pefanis, 2011-12 James M. Kalyta, 2010-11 James D. Cuming, 2009-10 Richard J. Mallett, 2008-09 Arthur A.E. Wilson KC, 2007-08 Walter W. Kubitz KC, 2006-07 William H. Hendsbee, KC, 2005-06 Kathleen A. Ryan KC, 2004-05 Ronald J. Everard KC, 2002-04 Stephanie J. Thomas, 2000-02 James A.T. Swanson, 1998-2000 Gary J. Bigg, 1996-98 Stephen English KC, 1994-96 Anne Ferguson Switzer, KC, 1992-94 Terry M. McGregor, 1990-92 J. Royal Nickerson KC, 1988-90 Derek Spitz KC, 1986-88

Members-at-Large: Jackie Halpern, KC Joseph A. Nagy Michael Hoosein Geographical District Representatives: North West: Michael Hussey North East: Waverly Mussle Edmonton: Amani Abdu Calgary: Sarah Coderre Central: Ronke Omorodion South East: R. Travis Bissett ACTLA STAFF Executive Director Joy Jeong | executivedirector@actla.com Communications and Events Services Administrator & Editor-In-Chief, The Barrister TBA | communications@actla.com Bookkeeper Leonie Philp | admin@actla.com

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Letter from the

EXECUTIVE DIRECTOR time of writing this letter, we have Kelly Sloan serving as our interim Executive Director. However, at the time you are likely reading this, I will have begun my new role with ACTLA. I am looking forward to continuing my work with this organization in my new capacity. Thank you to our amazing and supportive board for entrusting me with this new role.

And thank you to Kelly for providing her services to ACTLA and for mentoring me through the transition.

Joy Jeong, Executive Director ACTLA

We have had an eventful couple of

months at the ACTLA office since our last issue. Our office bid farewell to Jacqueline Biollo, whom we thank for her 2 years of great work with the organization.

Although I only spent a few months working with her, I am grateful for the mentorship she provided in that short amount of time.

Additionally, we said goodbye to Andrianna Loraas, our Membership Services Administrator. We will miss having her on our team, and thank her for all the work she did in improving membership in our organization.

An announcement I am excited to be sharing is that as of October 1, 2022, I will be stepping up to be the new Executive Director of ACTLA. At the

Our office is going through a meaningful transitional period, and while I have anxiety about the future and the challenges ACTLA may face (COVID-19 was definitely not in the plan), I am excited to work with the organization to meet those challenges. We are committed to advancing and improving in any way that we can to ensure we provide all of you with the best member experience possible.

Before transitioning to be the new Executive Director, I was able to collaborate with our amazing Editorial Committee to bring our members one more issue of the Barrister as the Communications & Event Services Administrator. We’ll soon be having someone new to oversee the editing and publication of the magazine, but I was happy to wrap up one more issue.

our presentation to the Alberta Automobile Insurance Rate Board (AIRB). We invited Nitin (Nick) Srivastava from Crash Injury Lawyers to write about limitations in the auto insurance industry.

Mark McCourt, founder of McCourt Law Offices discusses the insurance lobby and minor injury regulation. And to ensure we bring you a diverse range of content, we also have Elias Ziff, with his article on cryptocurrency and insurance.

I hope that you enjoy this issue of the Barrister, and I thank all our members for their continued support as ACTLA goes through a transitional period.

Please feel free to reach out to me with suggestions for our events, the magazine, or even to just say hello. I welcome feedback on ways that we can improve ACTLA to better serve our members.

Sincerely, Joy Jeong (she/her) Executive Director, ACTLA Editor in Chief, The Barrister

For this issue, our committee decided on the topic of “All about the Insurance Industry”.

Wanting to showcase some of the advocacy work we are doing at ACTLA, we included the Executive Summary of Fall 2022

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Letter from the

BOARD CHAIR Colleagues and Friends, Autumn is already upon us.

I like this time of year; it offers a chance for new learning and fresh starts. For many families, it is the beginning of the school term. While my family is fully grown, the month of September conjures up fond memories in my household of toothless smiles, new backpacks, and great enthusiasm for the year ahead.

Returning after the summer break also allows us to refocus on our priorities.

This fall proves to be no different. Our board work on strategic planning will enable us to set our path for the immediate and midterm range. We continue to offer professional development and advocacy training and aim to be the association of first choice.

We are strong advocates for our clients and promote the administration of justice and the public good. For Albertans as a whole, we argue for personal auto insurance reform that is equitable and fair and with this edition, look closely at the industry.

Our work with government and public relations is top of mind as we remain opposed to no-fault and hybrid no-fault auto insurance in Alberta. We are an association of knowledgeable and committed legal counsel who offer a valuable perspective. We are on record as supporting a period of evaluation of Bill 41 initiatives before further auto insurance is considered, and if so, request the opportunity to help inform any policy changes.

Our vice-chair Owen Lewis has done a tremendous amount of work on submissions to the Alberta Insurance Rate Board. These submissions identify a significant reduction in claims costs in an industry that remains hugely profitable. Thank you to Owen for his leadership on this and many other fronts.

Angela V. Saccomani, KC, Board Chair ACTLA At this critical time in our province’s political sphere, it will be essential to make known our perspective on auto insurance and other relevant matters. We recently launched a webinar series called “Meet our Future Premier”. We have the opportunity to hear from various UCP leadership candidates and ask questions.

We also raise the independence of the judiciary, legal aid funding and the future of our family law courts as important issues for our membership. We do not know who will form the government after the next election. What is certain, however, is to remain active in communicating our message of opposition to no-fault insurance, our support for equitable auto insurance, and matters of importance more broadly.

We have promoted Albertans’ access to justice, including advocating for an independent KB Court Administration and requesting additional resources for the KB Court and its administration.

We are pleased that amendments to the Court of King’s Bench Act change the name of Masters in Chambers to Applications Judge.

It takes commitment, energy, and resources to maintain our message and good relations with our elected officials, other stakeholders, and the public. Our opinion matters, and as reasonable and dedicated legal counsel, we must continue to be strong proponents of our priorities.

We need your help, ask for your participation, and invite ideas.

Fall 2022

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2022 ACTLA

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Webinar - Lunch n Learn

Nov 8 - Legends of Litigation Masterclass CALGARY Seminar (in-person) - Full Day

Nov 10 - Legends of Litigation Masterclass EDMONTON Seminar (in-person) - Full Day

Dec 8 - Civil Enforcement

Webinar - Lunch n Learn Paralegal

visit www.actla.com to register online

The Insurance Industry & Politics

By Keith McLaughlin New West Public Affairs

“Bottom line is politicians want to deliver savings and promote affordability. Insurers will often say they care about these things too, but really, they just want to make money.”

Insurance, and auto insurance in particular, often becomes

a political issue. This is because insurance is a pocketbook issue. Every driver must have it and for many families, auto insurance costs are a significant chunk of their budget.

Premium-payers rightly become very upset when they see their rates increase – sometimes dramatically, as was the case throughout 2019 and 2020. Politicians then start to feel the heat of a backlash and are compelled to make systematic changes in an attempt to lower premium costs.

The types of changes politicians pursue can vary. Alberta’s former NDP government elected to cap premium rate increases while the current UCP government chose to make legislative reforms targeting insurer costs hoping that insurers would pass along savings to consumers.

While premiums have stabilized somewhat for consumers, legislative changes in Alberta coupled with driving reductions associated with COVID-19, has made the auto insurance industry extremely profitable since 2019. ACTLA projects auto insurance industry pre-tax profits were $894 13

million in 2020. And for 2021, they are projected at $1.434 billion. These are significant profits for the industry, but consumers have not seen rate reductions.

For their part, the insurance industry knows well that their business often becomes political. That’s why they invest millions every year in lobbying and government relations through the Insurance Bureau of Canada (IBC). They understand well the motivations of politicians and the political calendar. Quite regularly, the insurance industry itself will create a political problem for governments by engaging in rate shocks to pressure governments to make changes. The insurance industry always has a ready-made solution, too, which is to lower their costs primarily by reducing compensation and payouts to injury victims, with the promise that they will lower rates for consumers.

For several years, Alberta’s Trial Lawyers have noted a pattern of behaviour from the insurance industry that involves using the threat or spectre of large premium increases to push for legal and regulatory reforms that reduce civil rights, restrict access to the courts, and lower

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The government stopped short of instituting a no-fault auto insurance system, electing instead to release a report that recommended its adoption with the promise to consult further on the matter.

The question becomes how to counteract the voice of the insurance industry and its playbook. Here public communication and education is key. Consumers tend to have a healthy distrust of insurance companies and it is important to share information with the public about how their business operates, and how much profit they truly are making.

coverage and compensation for injury victims – all to the benefit of the industry’s bottom line.

The first step in this process is to propose large rate increases that have the effect of shocking Albertans.

The second step is to blame the increases on insurance payouts that are made primarily to injury claimants and propose that access to the courts be restricted and to reduce compensation for legitimate injuries and loss of income.

The third step is to convince government to pass laws to reduce claims costs based on a commitment of insurers to cap or limit premium increases. The insurance industry recently followed this pattern through 2019 and 2020 when it proposed Alberta reform to a private, no-fault insurance system.

It is important to publicly question why insurance premiums have increased so much when the insurance industry is viable, healthy, and experiencing near record profits. There is another package of reforms that the public could get behind that isn’t the usual “solution” of reducing compensation costs for insurers. This package would include legislating more financial transparency in the industry, stronger justification processes for increased premiums, and a review of Alberta Health Services levies for insurance companies.

Consumers care a great deal about affordability, but they also care about industry transparency and fairness. With an election approaching in Alberta where affordability will be an issue, it will become even more critical to share information with the public about auto insurer profitability and to promote an alternative reform agenda. One that seeks to establish greater industry accountability and protects the rights of Albertans

The bottom line is politicians want to deliver savings and promote affordability. Insurers will often say they care about these things too, but really, they just want to make money.

Insurance companies have had several successes in Alberta and convinced governments to make systemic changes to their benefit. In 2004, the Government of Alberta put in place the minor injury cap. Effective 2020, the meaning of minor injury was further expanded and redefined as sprains, strains or whiplash-associated disorder (WAD) injuries. Bill 41, introduced in 2019, contained a number of regulatory changes including reductions to the rate of prejudgement interest. Overall, the bill resulted insignificant one-time and enduring claim cost reductions for industry.

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ACTLA’s Submission to the Alberta Automobile Insurance Rate Board OUR RECOMMENDATION

EXECUTIVE SUMMARY

There should not be rate increases to premiums for basic and additional coverage for private passenger vehicles in 2022.

The Alberta Civil Trial Lawyers Association (ACTLA) appreciates the opportunity to participate in the Alberta Automobile Insurance Rate Board’s (AIRB) 2022 Annual review process.

ACTLA is made up of 600+ members representing thousands of Albertans and legal professionals. We advocate for a strong civil justice system that protects Albertans’ rights, provide continuing legal education and professional development, and promote and uphold the rule of law, administration of justice, and the public good.

RATIONALE 1. Inflation-adjusted bodily injury claims costs and claims costs for all coverages continue their trend of stabilization and decline.

2. Loss and law costs per vehicle from prior accident years continue to be revised downward by Oliver Wyman.

3. The insurance industry is experiencing significant profits.

4. The divergence between declining claim costs and increasing premiums continues.

5. Operating expenses of Alberta auto insurers have increased more than the rate of inflation, while claim costs have declined.

6. Assumptions of a return to prepandemic driving patterns have not yet materialized.

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ACTLA has retained Mr. Craig A. Allen, an independent consulting actuary with extensive experience in the Canadian insurance industry, to conduct a review of the preliminary Oliver Wyman report and associated historical data. Our submission is comprised of Mr. Allen’s technical analysis and this summarizing foreword which provides additional detail and commentary on Mr. Allen’s findings from an ACTLA perspective.

ACTLA regularly participates in the AIRB’s review processes. Our previously submitted analyses, and our predictions of future trends, have been proven correct by our review of the latest data from Oliver Wyman. We have advised in previous submissions that the effect of increased premiums in the face of leveling bodily injury claims and other costs, and significantly reduced total claim costs due to COVID-19 would The Barrister

either lead to decreased premiums for consumers, or excess profits for insurance companies. Experience throughout the last number of annual and semi-annual reviews has shown the insurance industry is experiencing significant windfall profits in the Alberta auto insurance market while most claims cost-drivers for the industry continue on a downward trajectory.

While the trends noted above continue, we also note new trends are also emerging.

These include a pattern of revisions to Oliver Wyman’s loss and loss adjustment expense (LAE) costs per vehicle for previous years and assumptions that private passenger driving patterns will return to a pre-COVID state which have not come to fruition. Additionally, while claims costs have stabilized between 2015-2019 and decreased significantly in 2020 and 2021 as a result of COVID-19, the operating expenses of the insurers have increased significantly more than the rate of inflation during the same period of time. These observations require more analysis as the AIRB establishes industry benchmarks for future coverages.

With supporting actuarial data included in Mr. Allen’s appended findings, ACTLA wishes to highlight the following findings for the AIRB regarding the most recent review of industry experience from Oliver Wyman: • Bodily injury claim costs continue their trend of stabilization and decline

Mr. Allen’s analysis notes that prior projections of bodily injury and LAE costs per vehicle for accident years 2011-2020 have all been adjusted downward. The downward variations in some cases are stark and range from a low of a 0.7% revision in 2011 to a 11.2% variation in 2015. The continued reduction in estimates of prior-year claim costs for the industry, and the resulting lower claim costs than anticipated, affect profitability projections for prior accident years. The continued downward revisions further call into question the certainty of future projections and the need for legislative reforms initiated between 2018 and 2021, which were made under the auspice of an unprofitable industry experiencing acute cost pressures.

Inflation-adjusted bodily injury claims costs have been stable for the period of 2015-2019 and are now declining markedly. This decline is associated with the COVID-19 pandemic and Government of Alberta policy changes. Contrary to key assertions made by the insurance industry, bodily injury claim costs are not the driving factor to premium increases.

The period of excess-of-inflation growth of bodily injury claim costs ended in 2015 and has since stabilized. Since 2020, claims costs – across all coverages – have declined due to transportation disruptions while reforms initiated by Bill 41 in 2021 have further reduced inflation-adjusted bodily injury costs for the industry.

• Loss and LAE costs per vehicle from prior accident years continue to be revised downward by Oliver Wyman

“Industry pre-tax profits for 2020 are now projected at $894 million. For 2021, they are projected at $1.434 billion”

Wyman advises is not captured in its reporting of the realization of the “7% of premium” profit provision.

• The divergence between declining claims and industry costs and increasing premiums continues Albertans have seen dramatic increases to their premiums since 2018. Bill 41, associated regulatory changes, and reductions to the rate of pre- pre-judgment interest enacted in 2021 resulted in both significant one-time and enduring claim cost reductions for the industry. The COVID-19 pandemic further caused a sharp decrease in claims costs beginning in 2020. The Government of Alberta also significantly reduced the Health Cost Recovery fee it collects from the industry by approximately 50% since 2018. This has cut costs for insurance companies by tens of millions annually. As industry costs decline and profits grow, Albertans continue to be subject, through 2021, to premium increases at rates greater than inflation. This experience continues in the latest Oliver Wyman report and underscores the need to not permit further premium increases until more equilibrium between industry costs, industry profits, and consumer premiums can be realized.

• The operating expenses of Alberta auto insurers have increased more than the rate of inflation, while claims costs have declined

• The insurance industry is experiencing significant profits In previous responses to annual and semiannual reviews, ACTLA has submitted projections of the pre-tax profits of the private passenger auto insurance industry in Alberta via Mr. Allen’s analysis. This projection has since been revised for the claims experience observed in the 2021 accident year. Industry pre-tax profits for 2020 are now projected at $894 million. For 2021, they are projected at $1.434 billion. This analysis includes consideration of industry investment earnings on capital, a key factor in industry profitability, which Oliver Fall 2022

While claims costs have stabilized between 2015-2019 and declined significantly post COVID, the operating expenses per vehicle of Alberta auto insurance companies has increased significantly more than the rate of inflation since 2015 (except for the anomaly of 2018). Oliver Wyman further suggests that 16

operating expenses should be assessed at a significantly higher rate for 2022.

There is no explanation provided for the increase in operating expenses. When auto insurance claims reduced significantly and most other industries reduced operating expenses for matters such as rent, advertising, executive compensation and other general administrative expenses during the pandemic, operating expenses per vehicle for Alberta auto insurers increased between 4.8%-6.4% per vehicle.

When combined with the increase in insured vehicles, these operating expense increases are significant. It is submitted that further analysis of operating expenses should be considered prior to simply accepting the rates for the purposes of establishing the Benchmark rates to be applied.

Additionally, the reduction in driving habits due to increased fuel costs will likely further reduce the driving pattern of Alberta passenger vehicles in the upcoming year. However, all of our assumptions for 2022 conservatively estimate a 5% reduction in driving patterns from the 2019 year, being the pre-COVID standard. Thus far, our estimates in past years have proven to be overly conservative, with actual auto insurance company profits far exceeding our projections.

In summary, the most recent Oliver Wyman report continues to demonstrate that inflation-adjusted claim costs are stable, and in some cases, declining.

Combined with the effects of increases in premiums paid by consumers, the enduring impact of COVID-19 on driving patterns, industry savings associated with Bill 41 and other Government of Alberta

• Assumptions of a return to prepandemic driving patterns have not yet materialized COVID-19 effects on transportation habits and driving patterns continue to linger and may endure to a greater extent than assumed by Oliver Wyman. Industry benchmarks for 2022 as drafted by Oliver Wyman assume a return to pre-pandemic driving patterns. However, if experience from 2021 is to be drawn upon, it is unlikely this assumption will come to fruition and should be revised. In the latter half of 2021 frequency rates for both bodily injury and collision remained noticeably down from 2019 at -23% and -28% respectively. It would appear COVID-related impacts on transportation and driving habits may be longer term than previously anticipated as hundreds of thousands of Alberta workers continue to work from home.

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policies, the auto insurance industry in Alberta is experiencing significant windfall profits.

Albertans have seen dramatic increases to their auto insurance premiums since 2018.

Along with inflation and rising energy costs, large premium increases for auto insurance have been a major strain on many Albertans who continue to struggle with the ongoing affordability crisis. In the lieu of the above-described trends, ACTLA reiterates that the AIRB should not consider rate increases to premiums for basic and additional coverage for private passenger vehicles. At minimum, private passenger premiums should be frozen until the long-term impacts of COVID-19 can be observed in the industry and until the relationship between insurer costs and consumer premiums is brought back into some semblance of equilibrium.

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The Insurance Lobby & the

Minor Injury Regulation “In short, by the spring of 2004, it was abundantly evident that the insurance industry had manufactured a crisis”

By Mark McCourt Founder of McCourt Law Offices On October 1, 2004, the Alberta government implemented a number of regulations “reforming” auto insurance law in the province. A grid was established to regulate the premiums that auto insurers could charge motorists.1 Amendments were made to Section B of the Standard Auto Policy, relating to no-fault medical expense benefits payable to or on behalf of an insured.2 Protocols for the diagnosis and treatment of soft-tissue injuries were mandated, with the initial treatments to be covered by the injured party’s insurer on a pay direct, rather than a reimbursement basis.3 And, most controversially, pain and suffering compensation for certain soft-tissue injury victims of auto collisions was capped at $4000, a figure that would be marginally increased to account for inflation on an annual basis beginning in 2007.4 A constitutional challenge to the softtissue injury cap was successful at the trial level in February 2008.5 However, that decision was overturned on appeal in June 2009.6 On December 17, 2009, the Supreme Court of Canada dismissed the plaintiffs’ application for leave to appeal the case.7 19

The Minor Injury Regulation was implemented 18 years ago after a sustained lobbying effort by the auto insurance industry directed at Alberta’s Progressive Conservative government led at the time by Premier Ralph Klein.

In recent years and at the behest of the powerful insurance lobby, the MIR has been “tweaked” -- firstly by Premier Rachel Notley’s New Democratic Party government in 2018 (adding fast-healing TMJ dysfunction and minor psychological trauma to the list of capped injuries) and subsequently by Premier Jason Kenney’s United Conservative Party government in 2020 (adding clinically associated sequelae of minor soft tissue injuries to the cap).8 In this paper, let’s take a look back at how Alberta’s MIR came into existence in the first place, as well as some of the fallout following the enactment of this “minor injury cap”.

The terrorist attacks of September 11, 2001 were tragic, causing significant loss of life. The events of 9/11 also had negative repercussions for the insurance industry, triggering depressed investment revenues and markedly increased reinsurance costs.9 With profits plummeting, the consensus in the industry was that something had to change.

The Insurance Bureau of Canada is a trade organization representing about 95% of the private (non-government) property and casualty (home, auto and commercial) insurance companies in the country. In Alberta, IBC performed the curious dual role of acting as both the industry lobby group and as the Progressive Conservative The Barrister

government’s service supplier for collecting and reporting auto insurance statistics.10 In September of 2001, Alberta IBC Vice President Jim Rivait11, a former executive assistant to two Alberta Progressive Conservative (PC) party cabinet ministers, attended a Canadian Bar Association (CBA) Insurance Law sub-section meeting in Edmonton. About 45 members of the sub-section attended the meeting, mostly insurance defence counsel, but also some plaintiff personal injury lawyers including myself. Mr. Rivait asked those assembled to bear with him, as he was not really an “insurance guy,” but rather had recently been hired by the insurance industry for his “expertise in government relations”. He explained that insurers had experienced significantly reduced profits of late, but had a plan to bounce back.

The plan involved hiking auto insurance premiums quite substantially and sharply, and when policyholders called insurers to complain, they were to be told that injured accident victims were to blame, and that they should call their MLAs and ask what the government was going to do about “skyrocketing” bodily injury claims costs.

The following month, Mr. Rivait penned a letter to Patricia Nelson, complaining on behalf of auto insurers about what he termed the “blatant overcompensation” of insurance claimants.12 Ten years prior, Mrs. Nelson (at that time a rookie MLA using the name “Pat Black”) had chaired a committee formed to consider auto insurance reforms, including a proposed $10,000 deductible on plaintiffs’ personal

injury claims, in response to concerns raised by the Automobile Insurance Board, chaired at the time by Justice Al Wachowich (who later became CJQB).

The scheme to slash victim compensation was shelved after a strongly worded response from CBA Insurance standing committee chairman Neil Wittmann KC (later Mr. Wachowich’s successor as CJQB), who stated, “Bluntly put, that kind of a scheme expropriates an innocent victim’s right to compensatory damages well rooted in the common law.” Mr. Wittmann warned that “Across-the-board elimination of accident victims’ rights of this sort may not be constitutional and if so, the legislation will not be upheld by the courts.”13 Very little came of the Black committee deliberations, but by October 2001, Pat Nelson was Alberta’s rookie Minister of Finance, in charge of the government department responsible for insurance legislation Under cover of his letter to Finance Minister Nelson, Mr. Rivait enclosed an October 9, 2001 document titled “Everyone Pays: Overcompensation in Alberta’s Insurance Industry”. According to that document, “Statistics continue to verify that 16 or 17 year old male drivers are four times more likely to have a claim than drivers over 25 years old. Correspondingly, insurance rates for 4 young male drivers are higher than for experienced drivers.” The document outlined two areas of “significant cost pressure” to insurers and through them to policyholders, namely the Alberta government’s health care levy and its insurance premium tax.14 The health care levy and premium tax reportedly transfer nearly 350 million dollars per year from Albertans to their government.15 The document also stated, “Actuarial analysis by Exactor Insurance Services Inc. suggests that this year, total overcompensation costs incurred by Alberta’s auto insurers will exceed $133 million in 2001.”16 The document continued, “Our analysis indicates that there are five key areas contributing to overcompensation in the auto insurance system directly. Wage and income compensation. Collateral benefits.

Future loss of earnings in fatality cases.

Structured settlements. Pre-judgement interest on non-pecuniary damages.”17 Notable by its absence from this list was general damages compensation for pain and suffering.

Evidently, Mr. Rivait’s document was received favourably by the Alberta government, at least in relation to reductions in cost pressures that would not consequently diminish the flow of insurance cash to government coffers. In 2002, the government passed legislation severely reducing fatal accident victim compensation18 and issued a December discussion paper requesting of interested parties immediate feedback on auto insurance reform proposals to change income loss recovery from gross to net and to eliminate “double recovery” of collateral benefits.19 On January 24, 2003, IBC responded enthusiastically to Alberta Finance’s December 2002 request for stakeholder feedback on proposals to reduce income loss compensation for injured auto accident victims. Additionally, IBC complained about pain and suffering awards, stating that “insurers can pay $15,000 to $20,000 for pain and suffering from soft-tissue injuries to those involved in a low impact crash with minimal damage (under $800 to their car). Those injuries are often hard, if not impossible, to detect and make up 70% to 80% of the bodily injury claims.”20 However, any insinuation of rampant exaggeration on the part of Alberta auto insurance claimants appeared to be unsubstantiated. A self-described “ground-breaking independent study” commissioned by the Canadian Coalition Against Insurance Fraud (an IBC affiliate) reportedly found that Alberta home and auto insurers pay an estimated $34 million annually for personal injury claims “that contain some form of fraud”. CCAIF’s February 11, 2002 “Media advisory” regarding the study failed to mention that even if all $34 million worth of these allegedly tainted claims occurred in auto insurance, that figure would work out to less than 3% of the over $1.2 billion in annual auto insurance claims costs.21

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On March 3, 2003, IBC’s Rivait participated in an insurance industry presentation to the Alberta government’s Standing Policy Committee on Economic Development and Finance. The presentation alleged that auto insurers were losing money, and suggested that in a “Perfect World”, premium revenues would match claims costs and operating expenses, leaving investment income as pure profit.22 This resembled a statement made by IBC in its October 9, 2001 document: “Insurance companies have two main sources of revenue - insurance premiums and investment income. In a perfect world, what an insurance company collects today in insurance premiums should cover operating costs (including government premium taxes, health levies, and other taxes as well as the cost of combating fraud) and pay the claims made by policyholders and third parties.”23 To help insurers reach that “perfect world”, the presenters urged the Alberta government to consider tort reforms relating not only to income loss and to collateral benefits, but to “pain & suffering awards on minor injuries”.24 It is worth noting that in the 25 years from 1978 - 2002, the Canadian insurance industry had never visited this “perfect world”. In each of those years, the industry posted underwriting losses, meaning that the cost of claims and operating expenses combined to exceed premium revenues.

Yet in each and every one of those 25 years, the industry posted net, aftertax profits in the hundreds of millions of dollars, due to the revenues earned investing premiums and accumulated capital.25 Nevertheless, the IBC in 2003 evidently considered it worthwhile to lobby for government intervention to reduce compensation payable by private insurance companies to injured traffic accident victims. The Alberta government proved very receptive to the insurance industry lobby efforts.

Three weeks after the insurance industry presentation to ED & F SPC, Alberta’s PC government presented Bill 33 for first reading in the legislature.26 Government MLA Tony Abbott explained the objectives of Bill 33 a month later when he introduced it for second reading: “one, 20

to eliminate the potential for doubledipping, or recovering compensation for the same expenses from more than one insurer and two, to ensure that income replacement awards are based on an individual’s net versus gross pay.”27 In response to Mr. Abbott’s speech, Liberal MLA Laurie Blakeman appeared to express skepticism as to whether insurers really required government protection from injured claimants.

Said Ms. Blakeman, “Yeah, those poor insurance companies standing on those cold street corners, clutching about them their tattered rags, their little noses running from the cold, and their cheeks gaunt from the lack of nutrition that they’d had. My goodness, I feel so bad about those insurance companies.”28 Despite, or perhaps because of, apparent skepticism on the opposition benches, a number of government MLAs were quick to stand in the Legislature and echo insurance lobby assertions of widespread fraud and skyrocketing injury claims. Edmonton PC MLA Gary Masyk stated, “The incentives of the tort system encourage accident victims to inflate their insurance claims above their actual losses in order to increase their damage awards. Mr. Speaker, it’s noted at some point that when somebody gets in an accident, they open the glove box and there’s already an inflatable neck collar. We have to discourage these things.”29 Mr. Masyk’s caucus colleague Ian McClelland added, evidently unconstrained by the boundaries of truth, “At the same time that cars have been becoming more expensive and the number of accidents has increased and the cost of these repairs has remained constant, the cost of bodily injury has gone up 3,000 percent.”30 The spring sitting of Alberta’s Legislative Assembly concluded in May 2003 without Bill 33 being passed. However, it was clear that the government intended the changes outlined in the bill as merely a “first step” towards more comprehensive insurance reforms.31 On June 6, 2003, Premier Ralph Klein spoke with media on the issue of auto insurance reform. He declined to divulge specific details, but said “I can 21

tell you that some people are going to be mad, probably the personal injury lawyers might not be happy with what we recommend because it will affect their ability to litigate on behalf of their clients.” The Premier expressed particular concern about high premiums charged to young male drivers.32 Any doubt that the Alberta government would make auto insurance reform an urgent priority disappeared on June 9, 2003, when Premier Bernard Lord’s PC government nearly lost the New Brunswick election amidst voter discontent over skyrocketing car insurance premiums. Like the Klein government, Premier Lord’s PCs held all but nine seats in their legislature going into the election.

After coming within one seat of losing his majority, Premier Lord said “The insurance problem is not limited to New Brunswick. It’s an issue in other provinces as well. And it may have an impact on other elections in Canada, too.”33 The New Brunswick election results may have been foreshadowed by George Anderson, the then-immediate past president of the IBC. In an article for the February 2003 Canadian Insurance magazine, Anderson stated: “Our whole system of government has developed in recent years with a bias to respond to crisis and with a pronounced penchant for drift the rest of the time. In insurance, crisis can come in many forms for the industry, but only one matters to governments and that is how voters are reacting to the price of the product. Price increase is the burning platform of political action on automobile insurance. But it is not enough to know that prices are going up. What is really needed is a crisis in pricing on the eve of an election. That is the opportune time, or so it seems, for change.”34 In Alberta, the government called upon Medicine Hat backbench MLA Rob Renner to oversee auto insurance changes.

A year prior, Mr. Renner and IBC VP Jim Rivait had made presentations at a course in Jasper called “Changing Legislation and Lobbying Government.”35 Before that, Renner had ably steered through the Legislative Assembly changes to the Insurance Act, barring public insurance companies from other provinces from The Barrister

competing against private insurers in Alberta.36 Brent Rathgeber KC, now Chief Operating Officer of the Alberta Insurance Council but at the time an Edmonton backbench MLA, appeared to question his caucus colleague’s impartiality, saying “the fact that Mr. Renner may have had some previous involvement on a file, that I’m assuming the insurance industry must have lobbied for, gives me some concern.”37 Mr. Renner, along with Alberta Superintendent of Insurance Dennis Gartner, conducted a whirlwind crossCanada tour, meeting with various government and insurance industry officials in a number of provinces. Mr. Renner claims he quickly concluded that “unless non-pecuniary damages for softtissue injuries were controlled it would be impossible to get insurance costs, and therefore insurance premiums, under control.”38 It is questionable whether Mr. Renner came to this conclusion after a great deal of deliberation or after careful consideration of possible less intrusive means to bring premiums under control.

Indeed, it has been reported that Mr. Renner took no minutes, no notes, and produced no written analysis either during or immediately after his whirlwind tour, so as to explain the logic underlying his conclusion.39 In late June 2003, with no plans to hold any public consultations on auto insurance, the Alberta government did quietly commission an Environics poll to gauge public opinion on possible auto insurance changes. Of 789 Albertans polled, 39 of them (5%) expressed support for a cap on injury settlements, and 7 people (nearly 1%) felt that the Alberta government should “get rid of” or at least imprison injury lawyers in order “to help insure fair automobile insurance rates.” The survey also found that over 59% of Albertans supported adopting a government run automobile insurance system.40 The poll results did not seem to support the government’s auto insurance reform plans, and perhaps accordingly, the government declined to release the poll results to the public until after their insurance reform legislation was passed.

At the government’s July 7, 2003 “Stampede caucus meeting” in Calgary, PC MLAs approved a recommendation that Alberta Finance develop a new regulatory framework that would quantify one’s auto insurance premium on the basis of driving record and not age, gender or marital status.41 Based on that very general policy direction from caucus, Alberta Finance quickly assembled an Auto Insurance Reform Implementation Team. Co-chairing the Team were Renner and Jack Donahue, a Calgary corporate lawyer and friend of Premier Klein.

The other five members of the Team were Gregg Hanson, CEO of Wawanesa Insurance and Deputy Chair of the IBC; Nick Geer, CEO of Insurance Corporation of British Columbia; Alain Thibault, CEO of Meloche Monnex Insurance; Brian Kapusianyk, insurance defence lawyer with Gowlings law firm in Calgary; and Shelley Miller, insurance defence lawyer with Fraser Milner Casgrain in Edmonton.

Ms. Miller had particularly relevant auto insurance reform experience. In 1999, she oversaw changes in New South Wales, Australia, that resulted in the elimination of the pain and suffering compensation rights of over 90% of that jurisdiction’s injured traffic accident victims, as well as nearly a $7/month savings on the average NSW motorist’s insurance premium.42 “It was so much fun,” said Miller of the process.43 Miller noted: “The reform occurred over objections by executives of the Law Society and the Bar Association of NSW, who opposed further restriction of the rights of traffic injury victims to have the monetary value of their pain and suffering judicially determined. The reform also occurred without extensive evidence that awards for pain and suffering were too high for NSW traffic victims and did not effectively console injured persons, or that the price of the average motor accident insurance premium was prohibitive.”44 PC MLA Brent Rathgeber expressed his concerns about the composition of the Team in an August 11, 2003 letter to Renner (later leaked to the media): “Where is the victims’ advocate? Where is the consumers’ rights advocate? I appreciate that the bureaucrats at the

Department of Finance have limited interest in an unbiased and objective analysis; however we as politicians MUST insist on objectivity and fairness both in process and result. I am concerned that the above team will achieve neither.”45 Renner, a career florist prior to his election, reacted to the letter by branding Rathgeber as “uninformed”.46 Rathgeber had practiced personal injury and insurance law, including at McCourt Law Offices, for about 10 years prior to his election. Bureaucrat Jerry Bellikka, spokesperson for Finance Minister Nelson, added, “There’s three lawyers on the team.

Just because none of them run an I-AmHurt injury firm doesn’t mean they don’t know both sides of the business.”47 Also on August 11, 2003, Alberta Finance hired KPMG to provide actuarial services in relation to insurance reform proposals.

KPMG’s report was not released to the public until December 2004. In its report, KPMG notes that in estimating costs savings that could be garnered by limiting injury awards, it relied on 2001 New Brunswick and Nova Scotia closed claims data in the absence of “recent claim data readily available for the Alberta auto insurance industry.”48 To its credit, KPMG acknowledged that the lack of claims data provided by Alberta auto insurers was a “major” limitation to the usefulness of its conclusions.49 Interestingly, KPMG’s report also revealed that Alberta Finance asked it to estimate costs savings for eleven different insurance reform scenarios, all eleven contemplating reduction in pain and suffering awards Fall 2022

for so-called “minor” injuries, by way of either a compensation cap or a deductible payable by the injured victim.50 Consistent with the government’s disinterest in considering less intrusive means to stabilize or reduce premiums, KPMG was not asked to consider costs savings alternatives other than reducing pain and suffering compensation to injured accident victims.

Around the same time that the government was hiring KPMG, the Canadian Bar Association (Alberta Branch) was retaining Gordon Smith of the accounting firm Deloitte & Touche to analyze Alberta auto insurance premium and claim statistics. According to then-CBA (AB) President Don Higa, “The Deloitte report concluded that automobile insurance premium increases of 57% in the last 18 months in Alberta were not being driven by bodily injury claims. In fact, the Deloitte report stated that bodily injury claims costs (per vehicle) have been falling since 1999.”51 However, to the astonishment of the CBA, Deloittes withdrew the report within hours of it being released in September 2003. It was only years later, long after the insurance reforms had been implemented, that an investigation by the Institute of Chartered Accountants of Alberta revealed that Deloittes had wrongfully withdrawn the report for fear of losing millions of dollars of insurance industry business, after receiving an email from the IBC warning “I know that Mr. Smith’s efforts have caused some of your clients to question why they should stay with you.”52 22

On September 10, 2003, IBC ran a full page newspaper advertisement in the Edmonton Sun stating, “In Alberta, claims costs amount to 74.6% of premium revenues.”53 This was a noteworthy admission, considering that IBC had previously admitted that Alberta auto insurer operating expenses were 25% of premium revenues.54 In short, the Alberta auto insurance industry had reached its self-styled “Perfect World”, where premiums meet or exceed claims costs and operating expenses, leaving investment revenue as pure profit. And the destination had been reached without a cap on pain and suffering compensation.

September 2003 also saw the release of an auto insurance reform “Alert” from economist Dr. Mark Mullins on behalf of the Fraser Institute. Dr. Mullins observed that the odds of dying in a car crash are 30 times higher for people 15 - 24 years of age than for the rest of the population.55 Dr. Mullins concluded that provinces that resort to “social risk pricing”, i.e., artificially reducing premiums payable by high-risk young male drivers, suffer sharp increases in accidents involving young people. Said Mullins, “The unintended costs of mispricing risk are more deaths, injuries, and property damage, especially for young drivers.”56 Dr. Mullins was echoing concerns raised by IBC a year prior. In an article titled “False Kindness”, IBC noted, “Inappropriate regulations can have terrible consequences. One disturbing example involves interventions in some parts of Canada to artificially lower the price of insurance for young drivers. This tragic social experiment has contributed to thousands of additional traffic fatalities and hundreds of thousands of preventable injuries over the past quarter decade.

Insurers strive to set prices that reflect the risk of providing coverage. Young drivers are up to three times more likely to be at fault in a motor vehicle collision and so their cost of insurance is higher.

Young male drivers have the highest collision rates, so they should pay more for insurance to offset their higher level of risk.”57 Be that as it may, Edmonton Sun columnist Neil Waugh concisely outlined 23

Alberta Finance’s theory of the “advantage” of introducing social risk pricing as part of its insurance reform package. Said Waugh, “all you have to do is click on the Saskatchewan Government Insurance home page to see just how much better the Saskatchewan Advantage is and why thousands of former Saskatchewan residents continue to run green and white licence plates on their vehicles, make the trek home on Thanksgiving long enough to eat turkey with their folks and renew their insurance. Why not? An 18-yearold called Troy driving a 2002 Ford Taurus with one accident and a $500 deductible pays a crushing $6885 a year in Calgary under Ralph Klein’s wonderful government-mandated insurance system.

His equivalent, Ryan, in Saskatoon, pays only $1270.”58 According to Brent Rathgeber, it was a “standing joke” amongst Mrs. Nelson’s caucus colleagues that she was quite amenable to a rights for rates swap, sacrificing the rights of injured claimants in exchange for reduced rates for “Troy”.59 On October 15, 2003, Rob Renner presented his Team’s recommendations to the ED & F SPC. Renner recommended passage of Bill 33, which his Team estimated would reduce claims costs by $63 million per year. He also recommended increasing the Section B medical expense limit from $10,000 to $50,000, which he estimated would increase costs by $27 million per year.

And most notably, he recommended a $4,000 cap on pain and suffering compensation for non-catastrophic injuries, which he estimated would reduce claims costs by $214 million per year. According to Mr. Renner, KPMG’s analysis was that these three auto insurance reforms would result in net claims costs savings of approximately a quarter of a billion dollars per year.60 Under Mr. Renner’s proposal, auto accident injuries that would not be subject to the $4,000 cap included death, quadriplegia, paraplegia, serious traumatic brain injury, limb amputation, internal organ injury, fracture to the spine or to a weight-bearing bone, third degree burns, loss of one or more of the five senses, TMJ dysfunction, fibromyalgia, chronic pain The Barrister

syndrome, or any other physical injury likely to result in permanent disfigurement or permanent impairment of an important bodily function that substantially interferes with a person’s ability to perform that person’s usual daily activities or regular employment.61 Mr. Renner’s proposal was strongly backed by ED & F SPC member Pat Nelson, but was fiercely opposed by ED & F SPC member Brent Rathgeber, who said, “We have to look for different solutions. I think it’s fundamentally wrong to lump people with injuries into arbitrary categories.” Mr. Rathgeber suggested that the government consider less intrusive means to reduce claims costs and insurer expenses, such as scrapping the premium tax and/or emulating the solution accepted years ago in Victoria, Australia.62 In 1989, Victoria, an Australian province comparable to Alberta in population, decided to markedly increase public spending on traffic safety initiatives from $2 million per year (about what Alberta spends)63 to around $22 million per year. From 1989 - 1992, Victoria invested approximately $88 million in traffic safety, and saw a $968 million reduction in claims costs, an 11 - 1 return on investment. According to Dr. Nigel Waters, a University of Calgary professor, “Victoria became acknowledged as a world leader in traffic safety. Collisions dropped 22 percent, fatalities 44 percent (776 to 396) and injuries 37 percent during four years.”64 The October 15 SPC meeting was adjourned to October 27, 2003 for further discussion and a possible vote.

Between the two meetings, University

of Alberta torts professor Lewis Klar (who subsequently sat for a time on the Auto Insurance Rate Board) expressed his opposition to the proposed cap, saying, “Why would you want to penalize accident victims who have already been hurt? There is no reason to do that, except the myth that they have been taking advantage of the system, which I don’t think has been demonstrated.”65 However, the Alberta government website maintained that a $4,000 compensation cap “is necessary to reduce costs to the auto insurance system, in order to bring down premiums.”66 On October 26, 2003, an article by influential newspaper columnist Danielle Smith (who at the time of writing this article appears to be the frontrunner in the race to replace Jason Kenney as UCP leader and Premier of Alberta) appeared in the Calgary Herald. Stated Smith, “If you believe Nelson, the reason Alberta needs insurance reform at all is because a bunch of summer students are being refused jobs by companies that don’t want to pay astronomical premiums to let them drive the company truck. If you believe Nelson’s critics, it’s because her own son was hit with an eye-bugging insurance rate

increase in recent years.” Smith scoffed at claims by Finance Minister Nelson and lawyer Jack Donahue that the cap would only apply to “minor strains and sprains”, and questioned whether the cap would violate the equality rights provisions set out in section 15 of the Charter of Rights and Freedoms. She wondered why the government was not considering less intrusive means to stabilize and reduce premiums, such as numerous suggestions put forward by the grassroots lobby group Accident Victims/ Insurance Policyholders Advocate (AVIPA).

Concluded Smith, “The province can use whatever terminology it wants to try and sell this scheme, but it still stinks.

If insurance reform is going to work for regular Albertans, preserving the rights and interests of victims must be the starting point.”67 At the October 27, 2003 SPC meeting, Finance Minister Nelson put forward the Renner - Donahue Team’s proposals as a Ministerial Recommendation (MR) and called a vote. Of 33 government MLAs present at the meeting, 16 voted in favor of the MR, and 17 (including Rathgeber) voted against it. On the front page of the Edmonton Journal the following day

under the headline, “Fictional victim helps fell Tory Goliath”, journalist Graham Thomson wrote, “Even Goliath didn’t go down this hard. Finance Minister Pat Nelson’s plan for reforming Alberta’s auto insurance industry was toppled with the help of a seven-year-old accident victim named Rebecca. To add insult to injury, Rebecca isn’t even real. Neither was her accident. She is a fictional character in an ad campaign presented by a lobby group run by personal injury lawyers, the Accident Victims/Insurance Policyholders Advocate or AVIPA.” Thomson concluded, “Finance Minister Nelson must be especially worried. She just got clobbered by a seven-year-old girl.”68 On October 29, 2003, IBC submitted a revised insurance reform proposal to the Alberta government, dropping its demand for a pain and suffering compensation cap. The proposal suggested that “Stabilization of premiums can be accomplished through the following changes to the Tort and Claims environment”, and went on to list ten items including passage of Bill 33, elimination of pre-judgment interest, waiver of Schedule C costs on claims settled at the adjuster level, mandatory mediation on request of either party at six months post accident or later, a freeze

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on the health care levy, streamlining of estate claims, a requirement that plaintiff counsel notify insurers within 30 days of retention, an automatic 25% contributory negligence reduction for failing to wear a seatbelt, a cap on contingency fees and prohibition of advertising lawyer cash advances.69 The next day, under the headline “Insurers back off injury-claim cap”, the Edmonton Sun reported, “The auto insurance industry completed a dramatic U-turn on the road to reform yesterday by dropping demands for a cap on injury claims. ‘They could have a cap and it could be worthless,’ said Insurance Bureau of Canada regional vice-president Jim Rivait, after submitting a new proposal to the Alberta government, minus any mention of a cap. ‘It’s not in the proposal because I don’t think the government will be able to do it. If they manage to do it, it will be watered down.’ Rivait has repeatedly called on the government to introduce a cap on claims, saying injury-related lawsuits are to blame for skyrocketing premiums. The government’s reform implementation team, led by Medicine Hat Tory MLA Rob Renner, proposed a $4,000 cap after heavy lobbying from the industry. But Renner’s proposal was voted down by Tory MLAs earlier this week, amid concerns over the cap.”70 The Accident Victims/Insurance Policyholders Advocate immediately voiced its tacit support for the revised IBC plan. As founder of and counsel for AVIPA, I stated, “If you get rid of that $4,000 cap, I think there is substantial consensus for solutions.”71 I added, “It is almost unthinkable a plan enjoying 25

such consensus and support would be unsatisfactory to the government.”72 With the insurance lobby scrapping its cap demands, the government had a golden opportunity to exercise sober second thought, to switch gears on the road to Alberta auto insurance reform. However, Premier Klein had other thoughts, announcing a premium freeze on October 30, 2003 and expressing frustration that his Finance Minister’s proposal had been defeated at the SPC meeting earlier that week. “I’d like to see this thing resolved as quickly as possible,” said Klein, adding that “hopefully we’ll have this thing resolved by the end of the year.”73 Brent Rathgeber later remarked that “freezing premiums at all time highs and regulating payouts by capping injury awards was going to be a solution to nothing. But logic is no match for pure political brute force.”74 In November 2003, a joint proposal of AVIPA, the Alberta Civil Trial Lawyers Association (ACTLA), the Canadian Bar Association (Alberta branch) and the Fight for Right Coalition was submitted to government. The proposal quoted John Crosbie, former Justice Minister and Attorney General of Canada, who said, “Why should we, because of concern about the mounting cost of automobile insurance premiums, accept a solution that restricts the rights of innocent third parties to be compensated for the pain and suffering they experienced because of the fault or carelessness of a motorist? Surely, we, as a feeling and informed and thinking society can do better than that!” The joint proposal outlined 25 alternative means to reform auto insurance and rein in premiums rather than capping the pain and suffering compensation of innocent victims injured in Alberta traffic accidents.75 By this point, however, the government was preparing for the fall sitting of the Legislature and neither the Premier nor the Finance Department were in any mood to consider changing course. IBC’s revised reform proposal was dismissed summarily, and there is no evidence that the joint proposal of AVIPA, ACTLA, the CBA and Fight for Right Coalition was considered at all.

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Instead, the Alberta government opted to proceed with its $4,000 cap, albeit abandoning the exclusionary “serious injuries” list proposed at the October SPC meetings. In a press release dated November 19, 2003, the government said, “A compensation limit of $4000 will be introduced, but only on minor sprains and strains, as defined by medical experts and only for pain and suffering.”76 Said Mr. Renner, “There was commitment made on my part that we would have a clear understanding of what is meant by minor injury, that being sprains and strains, the kind of injury the average man on the street would clearly understand as a minor injury.”77 Despite Renner’s commitment, orthopedic specialist Dr. Guy LaVoie expressed his serious reservations in a letter dated November 27, 2003, which read, “As a physician, I am troubled by the reports that a task force of insurance industry representatives would like the government to impose reductions on the amount that private insurance companies pay victims of vehicle collisions. I treat patients suffering from soft tissue injuries most every day. Some have what the man on the street would consider a ‘minor sprain and strain’, i.e., an injury that resolves within a few weeks. Many others only recover after several months of treatment, and a significant number never fully recover from their injuries. In my opinion, it would be folly to depart from the current norm, which is to treat each patient as an individual, on a case by case basis, rather than trying to lump them into an arbitrary funding category or rigid treatment protocol. What these changes could do for my patients is deeply concerning to me and I urge these representatives to reconsider their impending action.”78 Bill 53, the Insurance Amendment Act 2003 (No. 2), subsumed Bill 33, the proposed legislation introduced but not passed in the spring sitting. Bill 53 was rushed through all three readings and royal assent between November 24 - December 4, 2003. In the legislature, Premier Klein explained, “Where the discrepancy lies is in the extraordinary amount that young drivers with good driving records are paying and older drivers are paying and

also as it relates to younger drivers, young males in particular. What we want to do is deal with that complaint mostly.”79 PC backbench MLA Jon Lord added that “profiting from accidents is what has been the big concern of everyone for some time now. We have people who get rear-ended and then wind up suing for hundreds of thousands of dollars for what many would consider questionable injuries. This is something that is proving absolutely disastrous to the industry as payments are becoming larger and larger, and that’s driving up premiums, no pun intended.”80 Finance Minister Nelson concluded, “We have not taken access to the courts away from anyone that’s involved in an automobile accident. What we have done, though, is put a cap on for what we call minor strains and sprains, and we’ve put that in place to do a number of things. One is to keep costs down but also to process claims on a quicker basis.”81 In fact, Bill 53 was for the most part a piece of enabling legislation with scant content, designed to allow the Finance Minister to pass the actual details of auto insurance reforms relating to “minor” injuries in subsequent regulations when and as she deemed appropriate, in consultation with her cabinet colleagues.82 With the passage of Bill 53, section 597 of the Insurance Act now says that the Lieutenant Governor in Council (effectively the responsible Minister with approval of cabinet) may make regulations defining what constitutes a “minor” auto accident injury and capping (or limiting by way of a deductible) non-pecuniary damages compensation for minor injuries.83 The government’s tactic, of passing skeleton legislation and leaving the flesh to regulations that can be formulated and passed without debate and behind closed doors, attracted criticism from perhaps an unlikely source. On December 15, 2003, Thompson’s Insurance News reported that it had obtained a copy of a “strongly-worded” letter from Dominion Insurance CEO George Cooke to the Alberta government. The letter expressed doubt that most Albertans would see rate reprieve as a result of the insurance reforms. “The letter said also the Bill

ought to offend the legislature and hence the people of Alberta. It appears to transfer all the authority for reform to cabinet, deferring accountability to a future time.”84 Arguably, the government’s reaction to Mr. Cooke’s letter was illustrative of its general attentiveness to insurer concerns.

According to Finance Minister Nelson, “On November 5 Mr. Cooke did in fact write to the Premier. We responded. On November 11 the Deputy Minister of Finance along with the Assistant Deputy Minister of Finance met with Mr. Cooke and the other Insurance Bureau of Canada representatives in Toronto. On November 25 there was a letter from Mr. Cooke that went to the Deputy Minister of Finance. On November 27 the Deputy Minister of Finance and the assistant deputy met with Mr. Cooke and, again, other IBC representatives in Toronto.

On December 11 and 12, Mr. Speaker, the Deputy Minister of Finance and the ADM of Finance met with Mr. Cooke again in Toronto. On December 16 the Assistant Deputy Minister of Finance met with the IBC representatives. On December 19 I personally met with the IBC representatives.”85

By Order in Council on January 26, 2004, Finance Minister Nelson proclaimed into force the auto insurance reforms eliminating “double recovery” and many subrogated claims, as well as changing income loss recovery from gross to net.86 In mid-March 2004, it was revealed that the Canadian insurance industry had posted all-time record high profits for 2003, a total of about $2.63 billion (up from the industry’s 2002 profit figure of $340 million).87 In the Maritimes, where all four PC governments had also intervened at the auto insurance industry’s request to reduce pain and suffering compensation, provincial politicians expressed shock and chagrin. For example, an angry Nova Scotia Insurance Minister Ron Russell said, “Last year I was being told that 2003 was going to be a disastrous year for the insurance industry... they were an industry teetering on the edge of bankruptcy.”88 But the Alberta government appeared unconcerned. Said Fall 2022

Mr. Renner, “We came to the conclusion the market was not operating effectively in a competitive marketplace, and it was necessary for government to step in and do some regulation. That, I think, is more critical and more important than worrying about if someone made a profit or not.”89 Not only were insurance industry investment profits up sharply, the industry also posted an underwriting profit, something it had not done in any of the previous 25 years. IBC VP Jim Rivait even conceded that the 2003 “auto loss ratio” in Alberta was 71.4%, resulting in underwriting profit in the Alberta auto insurance industry.90 Evidently, the industry had reached and comfortably settled into the “Perfect World” prior to implementation of any of Mrs. Nelson’s insurance reforms.

It had become evident that insurance lobby assertions of skyrocketing bodily injury claims and an industry in crisis were, to borrow a phrase from philosopher Harry Frankfurt, “not germane to the enterprise of describing reality.” Alberta auto insurance premiums certainly had skyrocketed, boosted into the stratosphere with the help of Alberta’s Auto Insurance Board, appointed by the Finance Minister. From 2001 - 2003, the Board approved 412 of 418 insurer rate increase applications.91 According to Statistics Canada, Alberta auto insurance premiums spiked 57% from December 2001 - December 2002.92 But as for bodily injury claims, they were actually decreasing. According to IBC data, the average injury claim payout in Alberta dropped from $20,108 in 2001 to $19,500 in 2002.93 Injury claims frequency rates were in sharp decline from 1999-2004.94 And bodily injury claims costs per insured vehicle in Alberta dropped from $419 in 1999 to $400 in 2003 to $325 in 2004, continuing to plummet all the way down to $154 in 2010.95 In short, by the spring of 2004, it was abundantly evident that the insurance industry had manufactured a crisis, spiking rates not to match injury claims costs (which in fact were going the other way), but rather for two reasons: one, to create an atmosphere conducive to 26

their efforts to lobby the government for tort reforms, and two, simply to make exponentially higher profits than the industry had historically enjoyed. Faced with mounting evidence that a soft-tissue injury cap was completely unnecessary, a government concerned with accountability might have decided not to implement such a cap. But in Alberta, where elections have seen the Conservative party of the day (be it PC or UCP) lose just once in over 50 years, accountability is not nearly the consideration it might be in most democracies.

Premier Klein succinctly stated the impetus for his government’s insurance reforms in a statement in the Legislative Assembly on March 29, 2004: “If the truth be known, the whole government initiative relative to insurances was launched because of the concerns of small businesses, particularly those who use vehicles, plumbing outfits and welding outfits, and those involved in apprenticeship programs. Basically there were a number of complaints to this government that these small businesses couldn’t hire people between the ages of 16 and 25 because their insurance rates would go sky high. So we took action.

We took very definitive and very positive action to make it illegal for insurance companies to penalize good male drivers between the ages of 16 and 25, whereas under the old rules those people were penalized simply because they were between the ages of 16 and 25 and because they were male.”96 However, Fraser Institute economist Dr. Mark Mullins repeated his concerns about government intervention to subsidize young male drivers’ insurance rates: “The evidence is pretty clear here that when you...misprice risk you tend to get too many of these risky people on the road. I would say if I were to do a study in five or 10 years in Alberta, I would probably see a noticeable increase in the number of collisions.”97 Throughout the Legislative Assembly’s 2004 session, which ended in May, Premier Klein defended the government’s insurance reforms in Question Period.

On April 22, 2004, Liberal MLA Hugh 27

was forced, I would say, to mount a coup. As a dictator he was no better then Allende. Of course, the debate still goes on. All you need to do is go on the web site. As a matter of fact, I did a paper on it, and I’ll give it to you.”100

MacDonald asked, “given that this cap is a huge financial break for the insurance industry, which has recently posted record windfall profits, how much money will the $4,000 cap save the insurance industry at the expense of innocent accident victims in this province?” The Premier responded, “Mr. Speaker, could I pose a question to the hon. member? Is he deaf or just stupid?” After hearing from the Speaker that no, he could not pose a question, let alone one so inappropriate, the Premier replied, “I’m sorry, Mr. Speaker. I’m sorry for calling the member stupid and deaf.”98 A couple of weeks later, in response to a question on auto insurance reform from NDP MLA Brian Mason, Mr. Klein replied, “I look forward to the absolute annihilation and elimination of this individual in the next election.”99 And a couple of days after that, in response to a question from Official Opposition Leader Dr. Kevin Taft, the Premier explained his opposition to public auto insurance, stating, “maybe the hon. member will explain to the media outside the House - I know he won’t here - how he plans to dismantle all of the insurance companies that exist here in Alberta and say: with the great hand of government the Liberals will now socialize all insurance. It sounds like Allende in Chile, you know, when he took over all the copper mines and said: the Americans are out; the government now owns all the copper mines, all the minerals, all the resources, all the mining, all the newspapers. Pinochet came in, Mr. Speaker - and I’m not saying that Pinochet was any better, but because of the only elected communist in Chile, Allende, and the socialist reforms he put in, Pinochet The Barrister

On May 12, 2004, Finance Minister Nelson appeared before the Public Accounts Committee and commented, “I have two groups that are warring, the injury lawyers on one side and the insurance companies on the other side.

If both of those are equally mad at me, then I must be doing something right for the consumer in the middle.”101 However, the Consumers’ Association of Canada disputed Mrs. Nelson’s logic and conclusion, stating in a May 25, 2004 press release: “Last year Statistics Canada reported auto insurance rates in Alberta increased by 50%. This past week the Alberta Government announced its solution to these massive price increases.

The Government announced it would roll back auto insurance rates by 5% and cap benefits for innocent victims of car crashes.” Said CAC President Bruce Cran, “The Alberta Government is trying to spin its announcement as good news for consumers. The reality is that it is bad news for consumers. The Government needs to design a solution beneficial to consumers and crash victims.”102 Also on May 25, 2004, Drs. Michael Freeman and Christopher Centeno of the US-based Spinal Injury Foundation provided written comments in relation to a leaked draft of the government’s definition of so-called “minor” injuries to be subjected to a $4,000 cap. Understanding the minor injury definition to be a sprain, strain or minor whiplash “that is expected to recover with prompt diagnosis and treatment and results in no serious ongoing impairment that substantially interferes with the ability to perform: a) essential activities of regular employment, occupation or profession, b) essential activities of training or education, or c) normal activities of daily living”,103 Drs. Freeman and Centeno wrote: “Is the above definition of a ‘minor sprain or strain’ appropriate or does the above definition include much more serious injuries (moderate, serious and/or permanent)?

within 12 weeks.” This pronouncement was consistent with numerous previous letters signed by Mrs. Nelson (including one in June of 2004 to Alberta Civil Trial Lawyers Association member Joe Nagy) succinctly explaining with unmistakable clarity the very limited scope of the Minor Injury Regulation.

Response: The definition is highly inappropriate, and makes assumptions that are not medically, scientifically, or logically valid.”104 The PC caucus met on May 27, 2004, to approve or reject Minister Nelson’s proposed insurance reform regulations.

MLA Rathgeber again led opposition to the cap, joined by his Edmonton caucus colleague Thomas Lukaszuk and others.

Rathgeber argued that the contrived insurance “crisis” had been exposed as a scam, that capping pain and suffering compensation was unfair and unnecessary, and that the government should merely exercise its regulatory power to bring down artificially inflated premiums on compulsory auto insurance. The proposed cap was defeated in a close vote that morning, but Mrs. Nelson requested a lunch break and another vote in the afternoon. Rathgeber replied, “Are we going to keep having periods until you win?” After lunch, PC MLAs who had been opposing the cap in the morning were reading from prepared scripts praising the proposed reforms. The afternoon vote was not close. “I got the crap kicked out of me,” said Rathgeber. “Some calls were made over the lunch hour, and I don’t know who talked to whom, but everybody folded.”105 In a letter dated July 19, 2004, Finance Minister Nelson wrote, “As I have always said, the cap only applies to minor injuries that heal relatively quickly.” After consultation with Dr. Larry Ohlhauser and others, Mrs. Nelson added, “The reasoning behind the regulation is based on medical science showing that with fast, effective treatment, about 90 per cent of people with minor injuries will recover

Effective October 1, 2004, the Minor Injury Regulation capped at $4,000 general damages compensation for certain sprains, strains, or Grade I or II whiplash associated disorders. IBC VP Jim Rivait erroneously predicted that this definition would be broad enough to cap at least 85% of those persons injured by negligent drivers in Alberta.106 The government estimated that the cap would reduce claims costs by $200 million per year, most of which would be distributed, in the form of premium reductions, to “the young drivers and the drivers who don’t have a particularly good record”, according to Rob Renner.107 Having succeeded in her crusade to cap victim compensation and reduce premiums for the young and the reckless, Patricia Nelson promptly retired from politics, declining to run in the November 2004 provincial election (an election in which the ruling PC party lost about a third of its popular vote, but still won handily). The following spring, the Klein government passed legislation granting cabinet ministers (and former cabinet ministers) immunity from any lawsuits arising out of the “reform” regulations.108 As 2004 came to a close, IBC VP Jim Rivait seemed extremely pleased with the new insurance reforms. The December 24, 2004 Edmonton Sun reported, “The changes limit soft-tissue injury payouts to $4,000 while making it easier for higherrisk drivers to get affordable coverage.

‘Many companies are (seeing more clients) and brokers will also tell you they have all kinds of new business,’ said Jim Rivait of the Insurance Bureau of Canada.

Lower rates for some higher-risk motorists and for people who couldn’t afford coverage are reasons for the boom, he said. ‘Companies are taking business they never, ever could before,’ said Rivait.”109 The insurance industry, which was reaping Fall 2022

record-high profits even before the cap was implemented, went on to enjoy even higher profit figures. On February 18, 2005, Canada’s P & C insurers announced a $4.2 billion profit for 2004, three quarters of which pre-dated the implementation of the $4,000 cap. Not only did that profit figure eclipse the alltime record high profit of $2.63 billion set in 2003, it in fact exceeded the profit totals of all of 2001 ($465 million), 2002 ($340 million) and 2003 combined. I was quoted in the Edmonton Sun the following day: “I don’t begrudge an industry turning a profit, but this is an industry that was pleading poverty and successfully begging the Klein government for legislative protection from innocent injury victims.

And now we find out insurance companies in fact were raking in record profits and laughing all the way to the bank.”110 Edmonton Sun columnist Paul Stanway (who later became Premier Ed Stelmach’s communications director) said, “I’ve given up trying to figure out how or why the free-enterprise Klein Tories got involved in setting auto insurance rates. It began as a personal crusade by former provincial treasurer Pat Nelson to get a better deal for Alberta’s young drivers (she had one at home at the time), developed into a controversial $4,000 cap on personal injury claims, and somehow morphed into a promise by the premier to bring our rates into line with those levied by public insurers in the other western provinces.”111 And Calgary Herald columnist Tom Olsen (who later became CEO of Premier Kenney’s infamous Energy “War Room”) wrote, “The whole thing started a couple of years ago when former Finance Minister Pat Nelson decided she was fed up with the crazy rates young people (like her son) were forced to pay... If Canada’s insurers continue to post exorbitant profits while denying consumers meaningful price breaks, the provincial government will have no choice but to lower premiums. And scrap the cap.”112 Profits hit $6.5 billion in 2005.113 On February 11, 2008, Statistics Canada reported that Canada’s P & C insurance industry profit in 2006 was $7.7 billion.114 Compared to the 2002 profit figure of $340 million, that represents over a 2000% increase in four years. On June 28

16, 2008, the CBA released an Economica report which proved conclusively that Alberta’s automobile insurance industry was profitable before the cap was implemented, that bodily injury claims were not spiking, and that profits from 2003 - 2006 went through the roof, averaging $368 million per year, an astronomical 25% return after tax. The CBA’s Tom Achtymichuk KC succinctly stated the obvious conclusion: “Even with no cap on damages, the auto insurance industry would still earn reasonable profits.”115 On November 3, 2008, Superintendent of Insurance Dennis Gartner released his Annual Report for 2007, showing that Alberta auto insurers enjoyed a 61.3% auto loss ratio on premiums of about $2.979 billion over claims of about $1.825 billion.116 Consider that in March 2003, insurance lobbyist Jim Rivait had described to an Alberta government Standing Policy Committee the insurance industry’s ideal “Perfect World”, where premiums collected would match claims and expenses paid, leaving investment income as pure profit. On a 25% expense ratio, Mr. Rivait explained that the auto loss ratio in an insurance industry “Perfect World” would therefore be 75%.

And, in a presentation to Alberta’s Auto Insurance Rate Board on June 17, 2009, Mr. Rivait advised the Board that in 2008, Alberta auto insurers wrote $3.2 billion in premiums and paid out $1.8 billion in claims.117 That represents an all-time low 56.25% auto loss ratio, all the more astonishing considering that throughout 11 of 12 months in 2008, Alberta auto insurers were operating under the “burden” of an unfavorable court ruling respecting the constitutional validity of the so-called “Minor” Injury Regulation. Consider that in 2008, Alberta auto insurers could have paid out an additional $600 million in claims costs (three times what the cap was supposed to save insurers on an annual basis), and they still would have achieved their 75% “Perfect World” auto loss ratio. Evidently, any notion that a compensation cap on victim pain and suffering compensation was needed to keep premiums in check in Alberta has been thoroughly discredited 29

by the insurance industry’s own statistics.

Apart from insurance companies, which reaped all-time high windfall profits, the biggest beneficiaries of Alberta’s 2004 insurance “reforms” were reckless drivers. No less an authority than lobby group/government stats provider IBC admits on its website, “bad drivers are now paying much less than they should. Good drivers, on the other hand, are paying quite a bit more than they should.”118 In its submission to the Automobile Insurance Rate Board in 2006, the Facility Association pointed out that underage drivers with two at-fault accidents in the previous three years had seen rate reductions of over 80% as a result of the regulations passed in 2004

by Finance Minister Patricia Nelson.119 Not surprisingly, traffic accident fatality rates in Alberta spiked by over 20% in the year following implementation of the “reforms”.120 On July 27, 2009, Alberta Transportation confirmed that traffic collisions in the province increased, both in absolute numbers and on a per-capita basis, each and every year from 2004 to 2008. 121 To conclude, what injuries are captured by the MIR? Is chronic pain capped?

As Minister Nelson “always said”, and despite amendments by the Notley and Kenney administrations, the minor injury cap indeed only applies to minor soft tissue injuries that heal relatively quickly.

Section 4(2) of the MIR says that “the determination as to whether an injury is a sprain, strain or WAD injury must be based on an individual assessment of the claimant in accordance with the diagnostic protocols established under the Diagnostic

and Treatment Protocols Regulation.”

Both the original and updated (effective July 1, 2014) DTPR mandate reference to the International Classification of Diseases, which recognizes chronic pain (defined by the ICD-10 as pain lasting longer than three months post-accident) as a different diagnosis than a minor sprain, strain or whiplash injury. Notably, while the earlier version of the DTPR also referred to the Scientific Monograph of the Quebec Task Force on Whiplash Associated Disorders: Redefining “Whiplash” and Its Management (which defined chronic pain as pain persisting six months post injury), the updated DTPR (O.C. 239/2014 A.R. 116/2014) quite purposefully removed reference to this 1995 QTF study. Evidently, an initially diagnosed acute traumatic sprain, strain or whiplash-associated disorder that does not resolve pain-free by three months postaccident (or certainly within six months) by definition evolves into chronic pain, a different medical condition which is more serious than and distinct from an MIR defined minor, capped injury. In short, as a matter of law, chronic pain and suffering compensation is not capped under the MIR. The Alberta Court of Appeal ruled unanimously in Morrow v. Zhang122 that chronic pain “is a more serious condition than the MIR defined injury.” The Court of Appeal in Morrow referred to the Supreme Court’s ruling in Martin v. Nova Scotia123 in which chronic pain was defined in the judgment’s opening paragraph as “pain that persists beyond the normal healing time for the underlying injury”.

Mr. Martin’s back sprain was diagnosed as having evolved into chronic pain six months later. The Supreme Court of Canada held unanimously that legislation which denies a chronic pain sufferer such as Mr. Martin benefits enjoyed by other injured claimants is an unconstitutional breach of the equality rights provisions of section 15 of the Canadian Charter of Rights and Freedoms. Leave to appeal the Morrow decision was denied by the Supreme Court in December 2009.

Therefore, and consistent with the intent of the drafters, Alberta courts are legally bound to conclude that the

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minor injury cap on pain and suffering compensation does not (and, in order to be constitutionally valid, must not) apply to soft tissue injuries that evolve into chronic pain, ie., pain that persists over three to six months post-accident despite proper therapeutic treatment under the protocols.

Thus, in Sparrowhawk v. Zapoltinsky 124, the Court confirmed that the cap does not apply to soft tissue injuries that cause the injured person serious impairment, ongoing pain or discomfort while engaging in a normal activity of daily living. The Sparrowhawk decision was not appealed, and subsequently the Alberta Court of Appeal commented favourably on the Sparrowhawk ruling in Benc v. Parker 125 . Thereafter, the learned trial judge in the cases of McLean v. Parmar 126 and Jones v.

Stepanenko127 ended any lingering doubt on the matter, correctly ruling that pain lasting longer than three to six months post-accident is by definition “chronic pain” and therefore is clearly not a minor injury under the MIR and not capped.

10. “2009 Facts Book”, Insurance Bureau of Canada, pp. 6-7.

ENDNOTES

20. “Submission to Alberta Finance on the Automobile Insurance Consultation Paper”, Insurance Bureau of Canada, January 24, 2003.

About the author: Edmonton injury lawyer Mark McCourt, founder of McCourt Law Offices and the now-defunct Accident Victims/Insurance Policyholders Advocate, was recognized in 2004 by Alberta Venture magazine as one of the province’s 50 most influential people, as a result of his leading role in opposing the Alberta government’s tort “reform” initiatives, particularly the cap on pain and suffering compensation.’

11. Mr. Rivait held this position from April 2001 until his departure from the IBC in November 2009.

12. Letter from Jim Rivait to Pat Nelson dated October 10, 2001.

13. “Recommendations of the Alberta Branch of the Canadian Bar Association Insurance Standing Committee with respect to ‘A Study of Premium Stability and Compulsory Alberta Automobile Insurance Board for the Minister of Consumer and Corporate Affairs of the Government of Alberta, September 1991’” May 28, 1992. Later as a QB Justice, Mr. Wittmann adjudged the MIR to be an unconstitutional violation of the Charter of Rights and Freedoms in Morrow v. Zhang (see note 5).

35. AUPE Labour School, March 2002.

36. Bill 21, Financial Institutions Statutes Amendment Act, 1996.

37. Interview with Brent Rathgeber on CBC radio, November 17, 2003.

38. Affidavit of Rob Renner, sworn April 12, 2006 in Morrow v. Zhang, Action #0401-17808.

39. “Anatomy of a collaboration: How the insurance industry used a compliant Alberta government to fatten its bottom line”, Edmonton Journal, March 2, 2008.

40. Environics West poll dated June 27, 2003.

41. “Government addressing consumer concerns with rising auto insurance rates”, Alberta Government News Release, July 7, 2003.

14. “Everyone Pays: Overcompensation in Alberta’s Insurance Industry”, Insurance Bureau of Canada, October 9, 2001, pp. 1 and 3.

42. “The Injured’s Rights are Down, Down Under”,

by Rick C. Gambrel, ACTLA’s Barrister magazine, December 2004, p. 28 at 30-31.

15. On February 27, 2008, the Canadian Taxpayers Federation reported that the “hidden insurance sales tax in Alberta adds $247-million to Alberta government coffers each year.”

43. “Profile”, Canadian Bar Association’s National magazine, December 2003, p. 16.

16. Supra note 13, at p. 3.

17. Ibid. at p. 4.

18. Bill 20, Justice Statutes Amendment Act, 2002.

19. “Automobile Insurance: We Want Your Feedback”, Alberta Finance, December 2002 (Deadline for submissions January 24, 2003).

21. “Media advisory”, Canadian Coalition Against Insurance Fraud, February 11, 2002.

22. “Automobile Insurance in Alberta: Challenging Times”, presented to ED & F SPC March 3, 2003 by Diane Strashok, President and CEO, Peace Hills Insurance; Don Marshall, Western Regional Claims Manager, Allstate Insurance; Ray Baril, Partner, Chomicki Baril Mah; and Jim Rivait, Vice President Prairies, NWT and Nunavut, IBC. 23. Supra note 13, at p. 1.

24. Supra note 22.

44. “Regulatory Negotiation in Automobile Insurance Reform”, by Shelley L. Miller, 2001 Risk Management and Insurance Review, Vol. 4:1, p. 54.

45. Letter from Brent Rathgeber to Rob Renner dated August 11, 2003.

46. “Insurance committee terribly biased”, by Licia Corbella, Edmonton Sun, August 22, 2003.

Ms. Corbella also quoted controversial and fictitious victims’ rights advocate Herbert Patrotage (pseudonym of Mark McCourt), who dubbed the Renner - Donahue committee “the insurance industry all-star team”, and added, “It’s like Alberta Health announcing an advisory board to combat lung cancer, comprised entirely of tobacco company lobbyists, CEOs and their lawyers”.

47. “Critics claim reform team is stacked”, by Linda Slobodian, Calgary Herald, August 25, 2003.

48. “Report I: Costing Analysis of 2004 Auto Reform”, KPMG, December 13, 2004, p. 8.

49. Ibid. at p. 19 50. “Report II: Supporting Analyses - Review of Alternatives”, KPMG, December 13, 2004, p. 5.

25. Supra note 9, at p. 6.

51. “President’s Report” in Law Matters, Volume XXVIII No. 4 October 2003.

26. “Legislative Assembly Minutes”, Alberta Hansard, March 24, 2003, p. 670.

52. “Accounting firm ‘burned’ own partner”, Edmonton Journal, July 6, 2006.

1. Automobile Insurance Premiums Regulation, Alta.

Reg 124/2004.

27. “Legislative Assembly Minutes”, Alberta Hansard, April 28, 2003, p. 1267.

53. “Auto insurance isn’t really too complicated”, IBC ad, Edmonton Sun, September 10, 2003, p. 14.

2. Automobile Accident Insurance Benefits Amendment Regulation, Alta. Reg. 121/2004.

28. “Legislative Assembly Minutes”, Alberta Hansard, April 28, 2003, p. 1268.

3. Diagnostic and Treatment Protocols Regulation, Alta. Reg.122/2004.

29. “Legislative Assembly Minutes”, Alberta Hansard, April 7, 2003 p. 832.

54. Supra, note 22. See also note 48 at p. 36: “For 2000, the overall expense ratio for the industry was 24.7% and for 2001 it was 23.8%.”

4. Minor Injury Regulation, Alta. Reg. 123/2004.

30. “Legislative Assembly Minutes”, Alberta Hansard, April 14, 2003, p. 968.

CITATIONS

5. Morrow v. Zhang, 2008 ABQB 98.

6. Morrow v. Zhang, 2009 ABCA 215.

7. Morrow v. Zhang, 2009 CanLII 71477 (SCC).

8. For a brief discussion on the Kenney government’s 2020 MIR amendment, see my article “Assessing the 2020 MIR and PJI Amendments” in ACTLA’s Summer 2021 Barrister magazine.

9. “2003 Facts Book”, Insurance Bureau of Canada, p. 5.

55. “Fraser Alert”, September 2003, by Fraser Institute Dr. Mark Mullins, p. 1.

56. Ibid. at p. 5.

31. “Legislative Assembly Minutes”, Alberta Hansard, April 28, 2003, p. 1267.

57. “Perspective” Newsletter, Insurance Bureau of Canada, December 2002, p. 4.

32. “Tories eye changes to auto insurance”, Edmonton Sun, June 7, 2003, p. 20.

58. “Ralph promised us lower insurance rates”, by Neil Waugh, Edmonton Sun, October 16, 2003, p. 11.

33. “Gov’t to probe young drivers’ premiums”, Edmonton Journal, June 11, 2003, p. A3.

59. “Minister’s bias was ‘standing joke’”, Edmonton Journal, April 13, 2005.

34. “The impoverished politics of automobile insurance reform”, by George Anderson, Canadian Insurance magazine, February 2003, p. 25.

60. “Auto Insurance Review”, presented to ED & F SPC October 15, 2003 by Medicine Hat MLA Rob Renner, p. 5.

Fall 2022

30

61. Ibid. at pp. 19 - 21.

62. “Claims cap faces uphill fight”, Edmonton Journal, October 17, 2003.

63. News Release, Alberta Transportation, September 29, 2003, p. 2.

64. “Edge Nodes: Traffic Safety Remains an Ongoing Concern”, Dr. Nigel Waters, June 2003 65. “More evidence would help PCs’ insurance claims”, Edmonton Journal, October 20, 2003, p.A14.

66. “Proposed changes to auto insurance to be reviewed further”, Alberta Government News Release, October 16, 2003.

67. “Victims first: caps on injury must be dropped”, Calgary Herald, October 26, 2003.

68. “Fictional victim helps fell Tory Goliath”, by Graham Thomson, Edmonton Journal, October 28, 2003. By the way, Rebecca (my daughter) is now 26 years old and works as an administrative assistant at McCourt Law Offices.

69. “Automobile Insurance Reform: Industry’s Proposal to the Alberta Government”, Insurance Bureau of Canada, October 29, 2003, pp. 2-3.

70. “Insurers back off injury-claim cap”, Edmonton Sun, October 30, 2003, p. 5.

71. “Insurance companies turn up heat on rate freeze”, Business Edge, November 6, 2003, p. 9.

72. “Reverse gear: Sudden end to driving need for insurance biz must-have”, Calgary Sun, October 31, 2003.

73. “Auto Rate Freeze”, Edmonton Sun, October 30, 2003.

74. “Insurers Insured Against Risk”, Brent Rathgeber, March 15, 2005 (unpublished).

75. Joint proposal of AVIPA, ACTLA, CBA (Alta.) and Fight for Right Coalition, November 2003.

76. “Alberta consumers to benefit from sweeping auto insurance reforms introduced by Alberta Government”, Alberta Government press release, November 19, 2003, p. 1.

77. Thompson’s Insurance News, November 3, 2003.

78. Letter from Dr. Guy LaVoie (sent to various media), November 27, 2003.

79. “Legislative Assembly Minutes”, Alberta Hansard, November 18, 2003, p. 1695.

80. “Legislative Assembly Minutes”, Alberta Hansard, December 1, 2003, p. 1989.

81. “Legislative Assembly Minutes”, Alberta Hansard, November 19, 2003, p. 1732.

82. Alberta Government News Release, November 24, 2003.

83. Insurance Act, Chapter I-3, RSA 2000, s. 597.

84. “Government risking destruction of industry, insurer says”, Thompson’s Insurance News, December 15, 2003, p. 5.

85. “Legislative Assembly Minutes”, Alberta Hansard, March 15, 2004, p. 460.

86. Supra note 86, s. 626.1.

87. “Insurance industry reaps record profits”, Globe and Mail, March 17, 2004, p. A2.

88. “Klein has plan for insurance profits”, Red Deer Advocate, March 17, 2004.

31

89. “Insurance profits soar”, Edmonton Sun, March 16, 2004, p. 4.

110. “Insurance $$ spark review”, Edmonton Sun, February 19, 2005.

90. “Province on top of insurance costs, Klein says”, Edmonton Journal, March 17, 2004.

111. “Auto insurance gets Savage treatment”, Paul Stanway, Edmonton Sun, June 3, 2005.

91. Alberta Automobile Insurance Board Annual Reports 2001 - 2003.

112. Column by Tom Olsen, Calgary Herald, February 19, 2005.

92. “The Daily: Consumer Price Index December 2002”, Statistics Canada, January 22, 2003.

113. “Auto insurers’ $6.5B in profits prompts calls for rate rollbacks”, Edmonton Journal, March 15, 2006.

93. “Perspective” Newsletter, Insurance Bureau of Canada, March 2004, p. 3.

94. “Actuarial Analysis for Industry-Wide Rate Adjustment: prepared for the Alberta Automobile Insurance Rate Board”, Oliver Wyman, May 31, 2007, p. 13.

95. “Alberta’s Minor Injury Regulation: Automobile Insurance Profits, Premium Rates, and Costs”, by Dr. Christopher Bruce & Jason Strauss, May 28, 2009, p. 16.

114. “The Daily: Financial and taxation statistics for enterprises, 2006”, Statistics Canada, February 11, 2008.

115. “Canadian Bar Association releases report finding auto insurance industry would be healthy without insurance cap”, CBA press release, June 16, 2008.

116. Alberta Superintendent of Insurance Annual Report: 2007, p. 7.

96. “Legislative Assembly Minutes”, Alberta Hansard, March 29, 2004, p. 722.

117. IBC Presentation to the AIRB, June 17, 2009, p. 4.

97. “Auto insurance changes blasted”, Calgary Herald, April 20, 2004.

118. www.ibc.ca/en/Car_Insurance/AB/Reforms. asp

98. “Legislative Assembly Minutes”, Alberta Hansard, April 22, 2004, p. 987.

119. Facility Association submission to the AIRB, June 15, 2006, p. 2.

99. “Legislative Assembly Minutes”, Alberta Hansard, May 4, 2004, p. 1212. Notably, Mr. Klein was done as an MLA a scant three years later, while Mr. Mason continued his career in the Alberta Legislative Assembly until 2019.

120. “Increase in traffic deaths and collisions calls for joint action,” Alberta Transportation news release, November 17, 2006.

100. “Legislative Assembly Minutes”, Alberta Hansard, May 6, 2004, p. 1291. In his book Democracy Derailed (Red Deer Press, 2007), Dr. Taft recounted how Mr. Klein followed up on his bizarre remark by indeed publicly releasing his term paper (for a course he was taking through Athabasca University), triggering public controversy over whether the paper was plagiarized, followed by simultaneous letters to the editors of major Alberta newspapers by the Presidents of the University of Alberta and University of Calgary defending the Premier and praising his “commitment to lifelong learning”. It didn’t take long for the newspapers to find out that the letters were submitted at the request of the PC government. Remarked Dr. Taft at page 19 of his aptly-named book,“This affair provided an unusually public display of how political power in Alberta now works.”

122.Supra note 6 at paragraph 85.

101. “Alberta Public Accounts Committee Minutes”, May 12, 2004, p. PA-114.

102. “Consumers’ Association Calls on Alberta Government to Return to the Drawing Board on Auto Insurance”, CAC press release, May 25, 2004.

103. Paper by Spinal Injury Foundation Drs. Michael D. Freeman and Christopher J. Centeno dated May 25, 2004, p. 1.

104. Ibid. at p. 2.

105. “Strong-arm tactics used to ram through changes”, Edmonton Journal, March 2, 2008.

106. “Accident Victims Decide Severity of their Injuries”, Edmonton Journal, November 13, 2004.

107. Statement by Rob Renner on Global TV news, June 21, 2004.

108. Bill 34, Insurance Amendment Act, 2005, s. 5.

109. “Car insurance business booming”, Edmonton Sun, December 24, 2004,p.14.

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121. “Alberta Traffic Collision Statistics 2008”, Alberta Transportation, pp. 2-3.

123. Nova Scotia (Workers’ Compensation Board) v. Martin [2003] 2 S.C.R. 504. In this case, the Court held 9-0 that legislation limiting benefits to workers suffering chronic pain violated the disability rights provisions in section 15 the Charter and could not be saved by section 1. For a more thorough discussion of the Martin case and its implications regarding the constitutional validity of Alberta’s “minor” injury cap, see Barbara Billingsley, “Legislative Reform and Equal Access to the Justice System: An Examination of Alberta’s New Minor Injury Cap in the Context of Section 15 of the Canadian Charter of Rights and Freedoms” (2005) 42 Alta. L. Rev. 711.

124. Sparrowhawk v. Zapoltinsky 2012 ABQB 34.

125. Benc v. Parker 2012 ABCA 249.

126. McLean v. Parmar 2015 ABQB 62.

127. Jones v. Stepanenko 2016 ABQB 295.

DAVID P. STARK B.Ed., LLB., FCIP Barrister, Solicitor, Mediator, Arbitrator, Conflict Resolution Trainer Member of the Canadian Academy of Distinguished Neutrals and Member of the BC Mediation Roster Society Member of the Law Society of Alberta

Contact Information

146 Wedgewood Dr SW Calgary, AB T3C 3G8 403.969.7967

starkd@shaw.ca

www.starkmediation.ca

How Forensic Economic Technology can assist

INJURY LAWYERS

By Cara L. Brown, BA (Hons.), MA President of Brown Economic Consulting

Having been asked to submit an article by ACTLA, I have continued the subject of “Law, Technology, Innovation” as written about in the Spring 2022 issue of The Barrister (released in May of 2022). To do so, I have explored the articles written in this recent issue, and then describe how the use of technology (mainly through online access) can assist injury lawyers specifically.

In a “Tale of Two Courts”, Donna Purcell discusses the digital transformation of the court system arising from the COVID pandemic. In closing this article, Ms. Purcell concludes that “the digital transformation within the justice system is here to stay.

All of us can help to make access to justice and legal services more timely and cost-effective by taking advantage of the tools available to us.” (p. 20) In “Mediating through the Pandemic”, Sandra Weber describes how mediations were successfully managed remotely during the pandemic. In doing so, Ms. Weber commented that “the technology [used in online mediations] result[ed] in a reduction of overall costs in mediation.” Ms. Weber also remarked that “A survey of members of The National Academy of Distinguished Neutrals (NADN) in June 2021 revealed that a majority of mediators intended to offer either mostly or exclusively on-line mediations for the foreseeable future.” (p. 35) In “Is it time to ban the term ‘Legal Innovation’?”, authors McKay, Ledsham and Cohen define innovation as “applying new ideas, solutions and technology to add value to clients”.

33

These authors argue that “by offering new products, services and approaches to clients in previously unforeseen ways, service providers can open up new frontiers of client demand”. (p.

36). The authors subsequently recommend that lawyers take advantage of “litigation risk mitigation tools or checklists” (p.

38).

The take-aways from these articles can be summarized as follows: (1) Innovation provides the impetus for technology that could benefit a lawyer’s practice.

(2) Technology can provide more timely services.

(3) Technology can result in cost savings to the lawyer or client (or both).

(4) Technology is here to stay, its absorption accelerated by the pandemic.

In the next section, I describe how forensic economic technology can assist an injury lawyer’s practice by easily and quickly accessing accurate economic loss projections.

CHECKLISTS & FORMS One of the most common inquiries we receive from counsel is to ask what documents the forensic economist requires to complete an economic loss assessment. The economic loss assessment can comprise any of the following heads of damage:

The Barrister

(a) Loss of income or loss of opportunity/marketability1 (b) Cost of future care2 (c) Loss of housekeeping capacity (in injury or fatality cases)3 (d) Loss of financial interdependence (loss of marriage benefit)4 (e) Loss of insurability5 (f) Loss of dependency on the decedent’s income (wrongful death cases) (g) Tax gross-up (in injury6 and fatality cases) There are some forensic economists who provide official “checklists” to lawyers which provide a roadmap of what information is needed by the economist. Brown Economic does so at www.browneconomic.com > PRODUCTS & SERVICES > Checklists and Diaries. A checklist for different types of claims are available, as is the Diary of Household Activities™ (for injury or fatality cases), which are completed by the plaintiff or survivor (the latter on behalf of the decedent). The Diary is required IF a cost of care expert has not been hired or this expert did not address loss of housekeeping capacity in his/her recommendations. Interestingly, the Alberta Court of Appeal affirmed the use of Brown Economic’s Diary of Household Activities (fatal) form in Baker v. Poucette7 to determine the survivor’s dependency on the decedent’s housekeeping activities.8 Our firm has designed two other forms which are used with some regularity by clients. The first is the Family Profile Form which we ask the family to complete when the plaintiff is a child or young adult. In such cases, forensic economists almost always use salary data by education level (instead of by occupation), for which we rely on the parents’ and siblings’ highest educational attainment. The Family Profile Form asks family members to fill out this information. It can be completed in ½ hour (or less).

The second form supplies a link between the plaintiff and the disabled Canadians who responded to Statistics Canada’s

disability surveys.9 We provide counsel with a questionnaire that contains excerpted questions from Statistics Canada’s 2012 Canadian Survey on Disability Questionnaire and the Canadian Survey on Disability – 2017 Questionnaire (which are virtually identical). Because these questionnaires contain 385 questions spanning 92 pages, the excerpted questions we reproduce pertain strictly to investigation of the severity and type of disabilities experienced by the plaintiff.10 It usually takes 15 to 20 minutes for the claimant to complete this form.

The disability severity questionnaire is provided to claimants when we use the wage deficit approach (WDA) to assess the plaintiff’s potential income loss. The WDA is used when the plaintiff’s potential loss is difficult to discern since the incident (either because industry wages have surged, or the plaintiff has persisted in maintaining his or her pre-incident job despite impediments but will be unable to continue at this level of activity), or when the argument of “loss of opportunity” or “loss of marketability” is advanced. This author has recently had an article accepted for publication by the UBC Law Review which introduces an innovative method for assessing damages when the income loss is not manifest in the past loss period or is difficult to disentangle from other events. Readers can contact the author for advance copies of this January 2023 article, entitled How the Wage Deficit Approach (WDA) can be used to Assess Economic Loss Damages based on Guidance from British Columbia case law (UBC Law Review 56:1).

ONLINE CALCULATORS FOR INJURY LAWYERS At www.browneconomic.com, our firm hosts 5 online calculators that can be of assistance to counsel in injury or fatality cases. Of these 5 calculators, 3 are free to use, and none require a user ID or password. Below, screen shots of each calculator are displayed to show what each calculator provides.

1. This claim can be aided by the provision of a vocational expert report, which is typically needed when issues such as mitigation, retraining, or whether the plaintiff is unemployable are addressed.

2. A cost of care expert report is required before the forensic economist can value the plaintiff’s potential cost of care fund. Economists cannot make recommendations as to what items (if any) the plaintiff may require because of the incident in question.

3. This head of damage may be addressed in the cost of care expert report or estimated separately by the forensic economist using a Diary of Household Activities form.

4. For more explanation of this calculation and court outcomes, see C.L. Brown (2019) “Loss of Marriage Benefit (“coupling up”) awards: a 2019 Saskatchewan court of appeal decision (Biletski) affirmed the largest award in Canada to date for this head of damage ($879,000)”, The Barrister, Winter 2019, issue #126.

5. For more explanation of how to calculate this head of damage, see Brown’s Economic Damages Newsletter, “Loss of Insurability claims (includes case law on this topic from Rick Johnston of Johnston Franklin in Nanaimo, BC)” February 2008, vol. 5, issue #2.

6. Required when the loss of income calculations are performed on an after-tax basis, as is true for all Alberta motor vehicle accident cases since 2004. Accidents arising from non-MVA origins, such as slip and falls, medical malpractice, sexual assault, wrongful confinement, and wrongful imprisonment are calculated on a before-tax basis.

7. 2017 ABCA 334. This author testified for the family in this case. For a summary of the trial and appeal decisions on this case, see Brown’s Economic Damages Newsletter, “Baker Estate v.

Poucette (2016-2017): Appeal Decision sets Principles for ‘Fairness’ in Fatality Cases” November 2017, vol. 14, issue #9.

8. In this case, Neufeld J. found that although the survivor was not awarded a claim for loss of dependency on income (because the survivor’s income was 6 times higher than the decedent’s income), he awarded a loss of dependency on housekeeping (including tax gross-up, calculated pursuant to the judgment) of $134,000. This award was calculated by this author and testified to at trial.

9. This form has been designed with reference to Statistics Canada’s 2001 and 2006 Participation and Activity Limitation Surveys (PALS) and the 2012 and 2017 Canadian Surveys on Disability (CSD).

10. The main categories of questions included in the 2017 CSD questionnaire are: disability screening questions, episodic disabilities, main condition, aids and assistive devices – hearing, aids and assistive devices – vision, aids and assistive devices - mobility and agility, aids and assistive devices - learning and developmental, aids and assistive devices – all, medication use, help received, health care services, education, educational experiences, educational background, labor market activities, labor force status, class of worker, self-employed, job tenure, industry, occupation, workplace, usual hours of work, part-time employment, permanent work, periods of unemployment, employment details, looking for work, past job attachment, classification of retirement, retirement details, unemployed details, not in the labor force details, labor market attachment, periods of employment, labor mobility, workplace training, employment modifications, labor force discrimination, general health, housebound, veterans, internet use, accessibility of government services, and sources of income. The categories of questions included in the excerpted questionnaire we provide pertain to the following categories: disability screening questions, main condition, help received, education, educational experiences, educational background, labor market activities minimal, labor force status, class of worker, self-employed, industry, occupation, workplace, usual hours of work, part-time employment, retirement details, unemployed details, not in the labor force details, labor market attachment, labor force discrimination, and sources of income.

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Non-Pecuniary Damages Calculator™ [FREE] This free, 1-screen calculator allows the user to inflate nonpecuniary damages for pain and suffering by inflation, as measured by Statistics Canada’s Consumer Price Index (CPI).

Importantly, we use a 12-month rolling average method instead of simply comparing inflation from one month in a year to the same month in another year (i.e., May 2021 versus May 2022).

This method smooths out any anomalies that can occur monthly by using average annual indexes.

This calculator is updated monthly after the release of Statistics Canada’s Consumer Price Index (CPI) on the 20th of each month.11 The calculator also shows the maximum inflated general damages ($100,000 in 1978 dollars) adjusted to May 2022 dollars ($414,055). The maximum value automatically increases each month as CPI data is released (assuming inflation has been nonzero).

In the top right-hand side, we reproduce a snapshot of this calculator with an example. All that is needed is for the user to fill in the date of incident (“Originating date/date of judgment”), the region (Canada12 is used in this example), and the amount sought for general damages (in this case, $100,000). Once the user presses “Calculate”, the calculator returns the “CPI Inflation Factor” (in this example, 1.152113) and then shows the number for general damages ($100,000) adjusted by the “CPI Inflation Factor” (=$115,207). If the user wants to tailor the inflation factors by province, this option is also available in the drop-down menu under “Region”.

Working Life/Life Expectancy Calculator™ [FREE] The next calculator enables the user to discover how many work years the claimant has left to work and left to live (both as of the current date). All that is needed to be entered is the plaintiff’s date of birth, gender, and education level. These are the key characteristics by which working life expectancy data and life expectancy data are reported.14 Adjacent to this paracgraph, a snapshot of the screen for this calculator is reproduced, inclusive of an example.

Present Value Damages Calculator™ [FREE] The 2 screens on the next page show how this free calculator functions. In the 1st screen, we show the fields to be entered by the user. This calculator has more fields to complete than the Non-Pecuniary Damages™ or Working Life/Life

Expectancy™ calculators because it calculates the present value of a plaintiff’s annual income loss, which depend on several assumptions. The 2nd screen shows the “output” arising from the “inputs” entered in the 1st screen.

The first two fields require the claimant’s date of birth and date of valuation. The latter is used as the starting point of the present value calculation and must occur after the current date in our example (July 8th). In this example, we have shown values based on a starting date of September 15, 2022.15

11. Therefore, the data in our example only shows CPI data to May 2022.

12. We use Canada in this example based on given the judgment of the Honorable Mr. Justice Dickson (as he then was) in Andrews v. Grand & Toy Alberta Ltd., [1978] 2 S.C.R. 229: “The amounts of such awards should not vary greatly from one part of the country to another. Everyone in Canada, wherever he may reside, is entitled to a more or less equal measure of compensation for similar non-pecuniary loss. Variation should be made for what a particular individual has lost in the way of amenities and enjoyment of life, and for what will function to make up for this loss, but variation should not be made merely for the province in which he happens to live.” (para. 93, emphasis in bold added) 13. The aggregate rate of inflation from September 2015 to May 2022 equals 15.21%. This means that the CPI index rose by 15.21% in almost 7 years. This reflects the low rate of inflation until 2022, as well as the recent surges in rising prices after the pandemic shutdowns ended.

14. There is one distinction: life expectancy rates are only available by gender, age, and province – not education level. This calculator uses the Canada-wide mortality tables from Statistics Canada. In the tailored assessments, we match the mortality statistics to the claimant’s province or territory of residence.

15. The implication of this starting date is that this calculator returns values for future losses only, not pre-trial losses.

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The Barrister

The next two fields ask for the plaintiff’s gender and the amount of the annual deficit assumed. In our example below, we use an annual deficit of $50,000.00.

The 1st screen below summarizes the “inputs” referred to above.

The 2nd screen below displays the “outputs” generated by the Present Value Damages Calculator. ™

The following four fields pertain to negative contingencies. The first one is the life expectancy assumption; this contingency is almost always included in economic loss assessments but there are occasions where the user may wish to exclude this contingency.16 The second one reflects “working life expectancy” contingencies, namely unemployment, non-participation (choosing not to engage in paid work), and part-time work. In all three situations, the plaintiff would not have been earning income regardless of the incident in question, so we must account for possible withdrawals from the workforce for these reasons.17 This data is tailored to the gender, age, and education level input into the calculator. Therefore, the user needs to select the highest education level attained by the claimant. Then the “ending age” must be stipulated so we know when to cease the calculation.

Usually, this coincides with the retirement age assumption, but can easily be used to present value an income stream whereby cessation coincides with the end of a contract term.

The 2nd screen demonstrates how, given the date of birth and starting date of the present value calculations, as well as the other economic assumptions, using a $50,000 annual deficit translates to a lump sum present value of $345,000 (rounded), after all contingencies and discounting are applied. The contingencies are shown each year by the “Working Life adjustment” and “Probability of Survival” columns; the present value factors are shown in the “Present Value Factor” column. This calculator also apportions the losses in the first and last years to account for partial years.

After that, the last two fields pertain to the discount rate assumed and whether a “growth” rate should be applied. In most jurisdictions in Canada, a mandated discount rate must be used.18 However, in Alberta (as well as in Newfoundland and Yukon territory), there is no mandated discount rate. This means that an assumption must be input about the predicted interest rate which the plaintiff will earn after s/he invests the balance of any award (following withdrawal of replacement compensation in each year). In our example below, we used an annual rate of 1%.19 This rate reflects an in-depth examination of historical interest rates (and what “term” should be used for the interest rates, i.e., for 90-day T-bills, 1-year bonds, 1–3-year bonds); presentday research from reputable economic agencies on the current interest rate climate; and forecasts of interest rates in Canada.

All this research is summarized in Brown’s Economic Damages Newsletter “Calculating Present Values in Civil Litigation: A Review of Past, Present & Future Interest Rates”, January 2020, vol. 17, issue #1. (This issue will be updated in January 2023, after the anticipated Bank of Canada increases to the overnight rate throughout 2022). Importantly, this assumption reflects the persistence of unusually low interest rates since 2001.

The last field is the “growth rate”. This is included if the user believes the annual deficit ($50,000 per year in our illustration) will increase over and above the rate of inflation. In the example below, we have not included a “growth rate”. If we did include a growth rate in this sample, at 2% per year, the resulting present value figure would increase by 9% overall.

16. An example where the mortality adjustment may be excluded is if the user is valuing a stream of payments that would be unaffected by the claimant’s life expectancy, such as foregone contract payments.

17. The user can also choose to exclude these negative contingencies if they would not have affected the stream of income (for instance, if the calculation is to value income continuation benefits, like the CPP disability plan or LTD benefits, which would not be contingent on any of these labour force states).

18. For a summary of mandated discount rates across Canada, see C.L. Brown, Damages: Estimating Pecuniary Loss (Toronto, Ontario: Canada Law Book, a Thomson Reuters business), 31st edition (June 2022), Table 8-2.

19. This rate is a “real” rate, which all forensic economists use in loss assessments. When coupled with the Bank of Canada’s target for inflation (2% per year), it translates to a “nominal” rate of 3%. The nominal rate is the observed interest rate published by the chartered banks and other investment companies. From a review of the historical rates shown in Table 8-1 of Damages, 3% per year is optimistic given negative “real” rates of return in the past 5 years.

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Income Damages Calculator™ [PAY-PER-USE: $380 for past loss + $380 for future loss plus unlimited runs following the initial calculation] The IDC does not require a user ID or password to utilize.

There are 3 screens to complete: client information; WITHOUTincident income profile; and WITH-incident income profile.

A PDF summary report is generated for each “run”, which is assigned a unique order ID number. For “runs” following the initial calculation, all that is needed to access the original information is the claimant’s date of birth and the order ID number.

The Income Damages Calculator™ (IDC) builds on the Present Value Damages Calculator™ such that many other aspects of the damages claim are reflected in the resulting estimates. These aspects include: •

• • • • •

• • • •

Permits the user to calculate damages in every region in Canada, except Quebec, depending on the legislation in place regarding motor vehicle accident (“MVA”) claims or if the calculation is for a slip and fall or other non-MVA reasons Allows income tax (and other statutory deductions) to be deducted, based on the current federal budget and all provincial/territorial budgets in place each year20 Includes a past loss period income loss calculation (as far back as 1983) Adds pre-judgment interest (“PJI”) to the past loss damages, depending on legislation and PJI rates in each province or territory Allows income continuation benefits (“ICBs”)21 to be deducted Automatically populates the “Real Discount Rate” field based on mandated discount rates in each province or territory; or forecasts for regions in which there is no mandated rate (like Alberta) Automatically adjusts wages since the date of incident for known wage inflation factors using Statistics Canada’s Survey of Employment, Payrolls and Hours (SEPH)22 Allows for absences from the labor force if the plaintiff did not work in the past loss period (or must retrain in the future loss period) for reasons unrelated to the incident in question Fills in the default retirement age using retirement age statistics Asks the user whether a mortality contingency should be included

In addition to the aspects identified above, the IDC supplies a wealth of economic data which can be accessed to project the

without- and with-incident salaries for the claimant, which are contrasted to identify the annual deficit (if any) which will be experienced by the claimant. The same data set is relied on to determine the default positive and negative contingencies. This is accomplished when the user elects to use the “industry-standard data” rather than “Use my own data” (both choices are available when using the IDC). The information provided by this data, which is based on Statistics Canada’s 2016 Census and other sources, includes: • •

• • •

Choosing the highest educational attainment acquired by the plaintiff Choosing the without- and with-incident wages using the National Occupational Classification (NOC), depending on the claimant’s gender, age, education level, region, and fulltime status Projecting the without- and with-incident wages by computing a “growth rate” over time Estimating the value of potential non-wage (fringe) benefits Estimating various negative working life contingencies23, based on the plaintiff’s gender, age, region, education level and NOC job title

Many forensic economists only rely on the 2016 Census data to project a plaintiff’s salary.24 The IDC draws on the very same source, but its default data is far more tailored than the publicly available Census data, because it nests 6 characteristics simultaneously to generate a salary level or contingency.25 What this means is that the wealth of data that anchors the IDC is similar to the 2016 Census data used by other forensic economists (in their written assessments).

The screen shown one the next page is the 3rd screen from the IDC, called the “WITH Incident Profile”. The 3rd screen also displays the “Client Profile” information already entered (in the 1st screen) and the “WITHOUT Incident Profile” (the 2nd screen) on the right-hand side.

In the IDC example on the next page, I have created an example which compares a 51-year-old woman from Alberta who was injured in October 2016. In opting to select the “Use industry standard data”, I have compared this fictional claimant’s WITHOUT incident profile as a university-educated “human resources manager” (NOC 0112), which is denoted on the righthand side of the screen below, to a WITH incident profile as a university-educated accounting and related clerk (NOC 1431).26 This is shown under the heading “DATA” on the top left-hand side.

20. The user can also indicate whether the claimant contributed to RRSPs (or an RPP), paid union dues (or declared other deductions), or declared uncommon tax credits (disability credit, spousal credit, northern residents’ deduction).

21. Section ‘B’ benefits, EI benefits, CPP disability payments, STD/LTD benefits.

22. The SEPH data is published by province and territory and industry sector (using industry sector NAICS codes).

23. These contingencies normally comprise an unemployment contingency, non-participation contingency (choice not to work), and the incidence of part-time work.

24. In its written assessments, Brown Economic canvasses many other salary sources along with the 2016 Census.

25. The tailored data can only be obtained by procuring (for a fee) a custom tabulation from Statistics Canada of the Census data.

26. Although a university degree would not be required for this occupation, we maintain the same education level that the claimant had attained before the incident.

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The Barrister

The IDC has populated the fields with default data for fringe benefits, negative contingencies,27 an annual growth rate (2.19% per year in the WITHOUT incident profile; 0% per year in the WITH incident profile), the real discount rate to be used (1.0% for 5 years, 2.0% thereafter), and retirement age (65). The mortality contingency is included. Tax assumptions include RRSP contributions of 8% in the WITHOUT profile versus 2% in the WITH profile (due to the claimant’s lower WITH incident income). I assume union dues would be paid annually in both profiles. (The latter assumption fits with the fringe benefits contingency for both profiles).

Housekeeping Damages Calculator™ [PAY-PER-USE: $190 per file]

In the 3rd screen shown below (the WITH incident profile), the user can also enter in the plaintiff’s employment income earned since the incident (if any); and can deduct any income continuation benefits (ICBs) received. For this example, I entered ICBs in 2016 and 2017, then assumed post-incident income from 2018 to 2022 – both of which are deducted in the past loss calculation.

Again, there is no user ID or password required to use this calculator.

In this IDC example, the total income loss for the fictional claimant equaled $1.16 million. This was comprised of a past loss of income from 2016 to 2022 of $551,000 (including PJI of $13,061 at Alberta rates), and a future loss of income of $610,000 to arrive at a total loss equal to $1.16 million. If any reader would care to see the PDF report generated by this example, please contact the author at cara.brown@browneconomic.com.

We reproduce the launching page from www.browneconomic. com to use the Housekeeping Damages Calculator™ (HDC).

The launching page describes the key aspects of this calculation which a forensic economist must be familiar with, such as the hourly replacement rates used for each region, along with “working papers” and prior issues of Brown’s Economic Damages Newsletter that discuss the methodology for valuing housekeeping loss capacity.

The “input” screen which is launched from the page below is a modified version of Brown Economic’s Diary of Household Activities™ (for injury or fatality cases). It asks the user to account for the claimant’s or decedent’s time in other activities first (sleep, paid work, personal care, fitness, leisure, spirituality, volunteering) before time is attributed to housekeeping activities.

This has the benefit of a “sanity check” because it constrains the user to a 168-hour week. If an individual is asked an open-ended question such as “How much time do you spend on housework?”, the result can lead to an overestimate of such time.

The HDC can be accessed by clicking “Launch Calculator” in the screen below.

CONCLUSION Brown Economic offers a HELP service to assist users with all 5 calculators (and other inquiries). The contact information for the HELP line is: HELP email: info@browneconomic.com HELP toll-free: 1-888-BEC-ASST [1-888-232-2778]

27. Because the negative contingencies are occupation-specific (from the 2016 Census), the annual contingencies in the WITH profile (for NOC 1431, accounting and related clerks) are higher than for the WITHOUT profile (for NOC 0112, human resources managers) given the salary paid in each job and the balance of supply and demand of employees for each job.

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How the Crash of Celsius Reveals Holes in Insurance and Consumer Protection in Crypto

By Elias Ziff, Law Student at the University of Alberta

“Regardless of how courts find the facts, the position retail investors are in speaks manifestly to Celsius’ failure to protect consumers”

In recent years, some crypto companies have asked the public to imagine a world where financial services like lending and borrowing are ‘decentralized’, allowing individuals freedom from traditional financial institutions like banks. On the other hand, detractors of these companies retort that ‘decentralized finance’, or De-Fi for short, tends to suffer from nearly all of the same issues that typical financial institutions do, perhaps made worse by the lack of regulatory oversight in the emerging crypto market.

Despite the typical divisions between crypto enthusiasts and detractors, however, the two groups have come to a momentary consensus: recently, several De-Fi platforms have not lived up to their marketing hype, and average people have been hurt because of it.

In 2022, not only have many crypto-assets seen precipitous declines in value, but big players in the crypto/De-Fi space like Celsius have filed for bankruptcy, leaving investors scrambling to recover their money and facing potentially enormous losses. This includes many ‘retail’ investors - average users without special investing credentials. Many people of modest means put trust

in companies like Celsius and are now facing the possibility of losing it all - from small savings to nest eggs for a first home.

What exactly is Celsius? For American and Canadian retail investors alike, it was an app and website that allowed you to buy and sell various crypto-assets. If you held your crypto-assets with Celsius, you could be rewarded with up to 18% interest. At a time when bank savings accounts regularly give small account holders less than 1% interest, it is easy to see why many took a chance on Celsius.

How did Celsius offer so much to retail users? To simplify, Celsius’ core business model was to offer retail investors rewards for holding crypto-assets on their platform, then invest those deposits or loan them out at modest rates. To be able to offer such attractive interest rates to retail investors, the platform needed its investments to do quite well, since its loans could not nearly cover the company’s costs by themselves. When Celsius froze withdrawals in June, it became clear that the company had failed to make this business model work.

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Celsius’ reputation is now incredibly poor - opinions generally range from those that think Celsius was a bad business to those that allege that its entire model was a Ponzi scheme, a business plan that necessitated unsustainable growth. With such a poor reputation, it is easy to forget that not long ago, Celsius appeared to many eager investors, retail and otherwise, as a respectable organization. Before the recent crypto market downturn, Celsius billed itself as a blue-chip player in the crypto space - a platform that Quebec pension fund executive Alexandre Synnett, whose fund made an early investment in the company, described before the recent downturn as “[The] world’s leading crypto lender with a strong management team that puts transparency and customer protection at the core of their operations.”

In July, the company filed for bankruptcy, revealing that it had a great deal more debt than assets. The initial filing showed a $1.2 billion deficit, but further filings in August showed an even more troubling $2.8 billion figure. As this article is being written in September, it is still not clear how this situation will resolve, but if retail investors are able to salvage some of their savings, it will be through a difficult legal struggle. A host of lawsuits has been launched on behalf of Celsius’ users and other investors, as well as some of Celsius’ former business partners. A messy ordeal of sorting out entitlements is unfolding through court filings, and to the concern of many pro-consumer commentators, many of Celsius’ core users appear to be last in line for compensation in the company’s bankruptcy proceedings.

How so? Zooming out for a moment, Celsius isn’t the only crypto company that has faced challenges this year. The Mark Cubanbacked crypto platform Voyager has also filed for Chapter 11 bankruptcy this year. The key aspect of this type of filing is that it leaves a class of investors called “general unsecured creditors’’ as last in line for compensation. These companies are arguing that users with these high-interest accounts are this kind of creditor.

Not only did many US Celsius users hold such accounts, but these accounts were the only option available to international users, meaning any Canadians using the platform are ‘unsecured creditors’ according to Celsius’ filings. Whether or not this arrangement will withstand legal scrutiny remains to be seen, but if the suit continues on this basis, it will be a challenge for retail investors.

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Part of the trouble is that Celsius is being allowed to file for Chapter 11 bankruptcy at all. This is a type of bankruptcy intended to aid companies in restructuring in order to stay in business. If Celsius were treated as if it were a securities or commodities broker, it would have had no choice but to file for Chapter 7 bankruptcy, which requires the liquidation of a company’s assets to pay its debts. However, Celsius is simply not registered as a broker-dealer. This is controversial to proconsumer commentators, who argue that crypto-assets are securities and/ or commodities, and crypto platforms should therefore be regulated as such. To that point, beginning in 2021, several states issued Celsius cease-and-desist orders stating that Celsius is indeed dealing with securities without complying with securities legislation. At the same time, other states are investigating the company, joined in August by some Canadian provincial securities regulators.

However, Celsius has at least attempted to lay the groundwork to claim users as unsecured creditors: according to Celsius’ agreement with its users, money that was deposited into its popular ‘Earn’ accounts became the property of Celsius itself, not the users. This has struck many commentators as a poor deal for users, and a complaint filed in New York civil court by a former Celsius business partner KeyFi provides an argument as to why: The complaint states that Celsius’ terms of service are an attempt to shield the company from the responsibilities of traditional banks and brokers despite their services mirroring those institutions. Among the responsibilities that Celsius did not uphold, it is argued, is the lack of insurance for depositors’ funds: the complaint alleges that Celsius did not insure its customers’ funds against any losses.

If a bank in the US becomes insolvent, depositors could recover up to $250,000 through the Federal Deposit Insurance Corporation (FDIC). There is also SIPC coverage, which offers protection if a security broker fails. However, Celsius has not sought to define itself, in its marketing or as a legal matter, as either a bank or a securities broker. To the extent that Celsius could protect its depositors with these kinds of insurance (and that extent is likely limited, because the FDIC does not cover crypto-assets, and Celsius did not register its crypto-assets as securities either), it did not. It remains unclear what steps Celsius

The Barrister

SOURCES https://www.coindesk.com/policy/2022/09/01/celsius-third-bankruptcy-hearingyields-little-in-the-way-of-customer-relief/ https://www.coindesk.com/business/2022/08/19/bankrupt-crypto-lender-celsiusnow-says-it-likely-has-enough-cash-to-last-through-end-of-year/ https://www.forbes.com/sites/haileylennon/2022/08/01/bankrupt-crypto-lendercelsius-could-leave-customers-last-in-line-to-get-paid/?sh=52714d655fde https://www.businesswire.com/news/home/20220724005039/en/CELSIUSALERT-Bragar-Eagel-Squire-P.C.-Announces-that-a-Class-Action-LawsuitHas-Been-Filed-Against-Celsius-Network-LLC-and-Other-Defendants-andEncourages-Investors-to-Contact-the-Firm https://www.reuters.com/technology/lawsuit-accuses-troubled-crypto-lendercelsius-network-fraud-2022-07-08/ https://www.outlookindia.com/business/celsius-owes-2-5-billion-worth-of-cryptoto-investors-to-run-out-of-cash-by-october-news-216945#:~:text=According%20 to%20the%20report%20filed,current%20debt%20is%20%242.8%20billion.

did take to protect its customers’ assets, but the picture given so far does not seem to reflect well on the firm.

Regardless of how courts find the facts, the position retail investors are in speaks manifestly to Celsius’ failure to protect consumers. Crypto companies often espouse that transparency and accountability can be facilitated through decentralization.

However, Celsius’ troubles show that these principles are not embodied in firms merely because they deal in De-Fi. The fact that so many Celsius users have only now come to understand the company’s terms of service attests to this notion. Celsius’ business model is becoming transparent through legal filings and is being made accountable through the legal system, not by its own designs.

Regulators in the US have now been keeping an eye on Celsius since at least 2021, but have not yet provided clarity regarding if users of the platform should be considered unsecured creditors, and furthermore, which crypto companies will have to register as securities brokers in the future. If regulators started to get ahead of these issues, it could avoid protracted litigation. As mentioned, Celsius is not the only company operating in this legal gray area.

A proactive approach could aid consumers and perhaps allow for more stability in the turbulent world of decentralized finance.

The bottom line is, regardless of how Celsius’ bankruptcy case goes, the proceedings should be a lesson: for consumers, to invest cautiously: for regulators, to be more proactive: and for crypto companies, to live up to the De-Fi ideals of transparency and accountability that they espouse. If they don’t, lawyers will be standing by, ready to fight for average people and justice.

https://www.cdic.ca/your-coverage/faqs/#:~:text=CDIC%20does%20not%20 cover%20digital,what’s%20covered%20and%20what’s%20not. https://coingeek.com/celsius-countersues-ex-manager-who-called-lender-a-ponzischeme/ https://www.bespc.com/cases/CELSIUS https://cointelegraph.com/news/tens-of-celsius-clients-ask-us-court-to-recover-225m-in-crypto https://cryptoslate.com/creditors-file-fresh-suit-against-celsius-seeking-22-5mreimbursement/ https://regmedia.co.uk/2022/07/08/celsius_lawsuit.pdf https://www.coindesk.com/policy/2022/09/01/celsius-third-bankruptcy-hearingyields-little-in-the-way-of-customer-relief/ https://cases.stretto.com/public/x191/11749/ PLEADINGS/1174908152280000000004.pdf https://blockworks.co/celsius-files-news-lawsuit/ https://www.troutman.com/insights/whose-crypto-is-it-anyway.html https://www.theguardian.com/technology/2022/jul/15/celsius-network-cryptofirm-deficit-bankruptcy-funds https://crypto.news/latest-on-celsius-ucc-to-set-up-website-and-social-mediaaccounts-to-communicate-with-account-holders/ https://twitter.com/CelsiusUcc https://cases.stretto.com/public/x191/11749/ PLEADINGS/1174909012280000000066.pdf https://coingeek.com/kentucky-piles-on-and-issues-cease-and-desist-order-vscelsius-network/ https://www.coindesk.com/policy/2022/08/09/canadian-regulators-investigatingcrypto-lender-celsius-collapse-alongside-us-report/ https://www.sipc.org/for-investors/what-sipc-protects

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Balancing Good Faith Obligations of Parties to an

INSURANCE CONTRACT

By Catherine Langlois, Andrea Manning-Kroon and Linda Jensen (Bottom Line Research) “an insurance broker acting as intermediary between the customer and the insurance company also owes certain duties, and may become liable to either the insured or the insurer, depending on the nature of the error and of the relationship between the parties”

It is a well-known principle that insurance contracts are characterized as contracts of “uberrima fides” or “utmost good faith”. The obligations imposed by this principle apply to all parties involved in the formation and performance of the contract – insureds, brokers and insurers.

heavy burden on applicants for insurance coverage to provide full disclosure to the insurance company of all information relevant to the nature and extent of the risk that the insurer is being asked to assume: […]. A fact is relevant or material if it would influence a prudent insurer in deciding whether to issue the policy or in determining the amount of the premium: […]. Whether a misrepresentation or non-disclosure is material is a matter of fact to be determined by the trier of fact … However, there is a subjective element to the test as well. The non-disclosure or misrepresentation must have induced the insurer to enter into the contract: […].

52 The duty to disclose all material facts applies even in the absence of questions from the insurer, although the absence of questions may be evidence that the insurer does not consider a fact to be material: […]. The consequence of non-disclosure or misrepresentation of a material fact by the insured is that the insurer is entitled to void the insurance contract ab initio: […] (emphasis added)

When a dispute arises over whether an insured is entitled to coverage, understanding the content of the obligations imposed on each party to the insurance relationship is critical. This article reviews authorities providing guidance about the duties borne by each of the parties, and how those duties overlap and interact, particularly in cases where there may be a fault by more than one party.

The Insured’s Duty of Disclosure Pursuant to the common law principle of utmost good faith, applicants for insurance are required to disclose all material facts within their knowledge to the insurer. A helpful discussion of the disclosure obligations borne by an insured is found in Sagl v.

Cosburn, Griffiths & Brandham Insurance Brokers Ltd, 2009 ONCA 388, 72 CCLI (4th) 193, leave to appeal refused [2009] SCCA No 303, File No 33261. There, the court wrote: 51 The starting point in the analysis … attracts no debate. The relationship between an insurer and an insured is contractual in nature. But contracts of insurance are no ordinary contracts; special rules apply. Chief among these is the doctrine of uberrima fides that holds the parties to a standard of utmost good faith in their dealings with each other. It places a 45

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Linda Jensen, LL.B., B.C.L., LL.M. PHONE: ( 403) 6 8 8 - 2 11 9 linda@bottomlineresearch.ca

RESEARCH AND COMMUNICATIONS

Similar commentary appears in Burch v. Intact Insurance Co., 2014 ABQB 306, 589 AR 303 (QB), where Greckol J outlined the applicable general principles of law pertaining to an insured’s alleged non-disclosure or misrepresentation of a material fact in the process of securing insurance: 31 The parties do not disagree as to the applicable general principles of law. Counsel for Lawrick relies on authorities providing that: • “The uberrima fides doctrine is a longstanding tenet of insurance law which holds parties to an insurance contract to a standard of utmost good faith in their dealing. It places a heavy burden on those seeking insurance coverage to make full and complete disclosure of all relevant information when applying for a policy”: […].

• An insured’s “obligation to disclose all material facts within [his] knowledge relevant to determining the nature and extent of the risk” applies “even in the absence of specific questions from the insurer”: […].

• The test for determining whether a fact is material is an objective one: would a reasonable or prudent insurer treat it as material to the risk: […].

• When an insured fails to disclose material information, by giving a false answer to a specific question, the insurer is entitled to avoid the policy: […].

Concerning the types of misrepresentation or non-disclosure that may be considered “material” or sufficient to void coverage, the Canadian Encyclopedic Digest, Insurance — Automobile, III.4 (Westlaw) summarizes the case law as follows: §61 The insured must have an insurable interest in the vehicle insured, and a misrepresentation respecting ownership of the vehicle will avoid the policy. §62 Other misrepresentations that can void an automobile insurance policy, depending on the terms of the applicable insurance legislation, include material misrepresentations as to the use of the vehicle, the principal and other operators of the vehicle, the address of the insured or the location where the vehicle will be driven, the applicant’s driving record and any previous losses, or a previous denial of insurance by another insurer. (emphasis added)

(b) the insured contravenes a term of the contract or commits a fraud, or (c) the insured wilfully makes a false statement in respect of a claim under the contract, a claim by the insured is invalid and the right of the insured to recover indemnity is forfeited. […] (emphasis added) In Abbas v. Esurance Insurance Company of Canada, 2021 ABQB 303, [2021] AJ No. 562 (QB), Johnston J confirmed that the language of s. 554 provides several distinct types of conduct that may both invalidate the contract and disentitle an insured to indemnity: 37 The word “or” in section 554(1) has significance. In Haraba v Wawanesa Co., 2017 ABQB 190 at para 8, the court stated that a claim will be invalid and the right to recover indemnity forfeited, if among other things, the applicant: a. knowingly mispresents or fails to disclose any required fact; b. contravenes a term of the contract; c. commits a fraud; or d. wilfully makes a false statement in respect of a claim under the contract. […]

44 Furthermore, section 554 provides that “a claim by the insured is invalid and the right of the insured to recover indemnity is forfeited.” The use of the word “and” is significant. The section provides that the consequence of the insured’s actions listed in (b) and (c), results in not only the invalidation of the insured’s claim but also, the forfeiture of the insured’s right to recover indemnity. (emphasis in original) Courts have indicated that as a general rule, there is no duty on a broker or insurer to investigate or unearth misrepresentations by the insured. In the leading decision of Canadian Indemnity Co v Canadian Johns-Manville Co, [1990] 2 SCR 549, [1990] SCJ No 82, the Supreme Court stated: 143 […] the law will not forgive the insured its failure to disclose material facts unless the insurer knew of such facts (and here it clearly did not) or can be presumed to know because the matter is of the type that would be notorious to the reasonably competent underwriter.

Applicants for automobile insurance are also subject to a statutory duty of disclosure. In Alberta, s. 554 of the Insurance Act, RSA 2000, c I-3 permits insurers to avoid payment where false information has been given by the insured, or there has been misrepresentation or a failure to disclose. That section reads: 554(1) If (a) an applicant for a contract (i) gives false particulars of the described automobile to be insured to the prejudice of the insurer, or (ii) knowingly misrepresents or fails to disclose in the application any fact required to be stated in the application, Fall 2022

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In Schoff v. Royal Insurance Co. of Canada, 2004 ABCA 180, 348 AR 366, relying on Canadian Indemnity the Court of Appeal indicated that an insurer may have an obligation to make additional inquiries where information already disclosed suggests a need to do so. However, the Court affirmed that this obligation is limited to “notorious facts” or information that might be obtained from public records. In Schoff, it was held that the insurer could not be reproached for failing to discover misrepresented information that was within the insured’s unique knowledge: 25 … In normal circumstances, as held by the Supreme Court of Canada in Canadian Indemnity Co. v. Canadian Johns-Manville Co., [1990] 2 SCR 549, an insurer may not have to inquire or investigate beyond the gathering of basic information. […] […]

28 In some circumstances, the insurer may be under an obligation to seek further information if the facts disclosed

reasonably alert the insurer to such a necessity. […] […]

55 In this case, Mrs. Goyan misrepresented two facts in her application form - her driving record and the number of drivers in her household. Royal investigated the public records and discovered the misrepresentation of her driving record, but did not learn of the misrepresentation of the number of drivers in her household. This was a fact, as described by Lord Mansfield, which was within Mrs. Goyan’s special and unique knowledge. This was not a notorious fact nor a fact which could be obtained by a search of public records. […] Royal would be entitled to rely on Mrs. Goyan’s representations about her household without further investigation, notwithstanding Royal knew Mrs. Goyan misrepresented her driving record. Royal, therefore, would be able to deny coverage because of the misrepresentations.” (emphasis added) On the other hand, if the insurer is aware of circumstances that should raise a red flag, but fails to make further inquiries, courts may consider that they do so at their own peril, and may refuse to allow the insurer to rely on the insured’s misrepresentation or failure to disclose. This principle was stated in Grafton Connor Property Inc. v. Murphy, 2015 NSSC 195, 51 CCLI (5th) 1; var’d on other grounds, 2017 NSCA 54, 69 CCLI (5th) 11: 143 … If the underwriter feels that the information provided by the applicant is sufficient to make a prudent underwriting decision, and there are no red flags to suggest that the information is false, the underwriter is under no obligation to take further investigatory steps, or ask additional questions to test the accuracy of that information.

144 That being said, if the underwriter knows that certain information is material to the risk and fails to make inquiries that would produce that information, it does so at its peril. […]” (emphasis added) The balancing between the obligation that lies on the insured versus the insurer was discussed by Lane J in Silva v Sizoo, [1997] OJ No 4910, 50 CCLI (2d) 293:

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97 […] the rule that insureds are bound to disclose all material facts on pain of having the policy avoided is alive and well. It is, as it always has been, subject to some exceptions.

An insured need not disclose what the insurer actually knows, nor that which is so notorious in the industry or place concerned that any competent underwriter in the field would know it. There is a duty on an insurer not to close his eyes to the obvious, to that which is tantamount to notice; and not to refrain from asking because he prefers not to know the answer to a question which stares him in the face. There may be others, I do not pretend to be exhaustive. But there is no general duty owed by an underwriter to an applicant for coverage to conduct a reasonable investigation or otherwise to act as a reasonably competent underwriter. “Plaintiff may not shift the burden of truthfulness which was upon the insured into a burden of

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distrust and additional inquiry on the part of the defendant”. (emphasis added) In a similar vein, in Sagl, cited above, the Ontario Court of Appeal held that an insurer who fails to ask questions about matters that it considers relevant to the assessment of risk cannot subsequently invoke the insured’s failure to disclose that information as a basis for refusing coverage: 59 […] while the applicant has a duty to disclose all material facts, an insurer’s conduct may be relevant to the analysis of whether a particular fact is material. An insurer’s failure to ask a question may be evidence that the particular insurer does not consider the issue to be material, even if, objectively, the information would have been regarded as relevant by a prudent insurer: […] [I]nsurance companies “run the risk of the contention that matters they do not ask questions about are not material, for, if they were, they would ask questions about them.” […]. […]

62 I agree with the trial judge that it runs contrary to the good faith obligation that the insurer owes to the insured for the insurer to agree to insure a risk, whether at the binder stage or at the time the policy is issued, when it knows or should know that there is information relevant to the risk that it does not have and that it did not even inquire into or that is incomplete, and then to raise the lack of information as a defence to a claim under the policy. (emphasis added) An example of the type of knowledge that may be held against the insurer was provided in Coronation Insurance Co v Taku Air Transport Ltd, [1991] 3 SCR 622, 85 DLR (4th) 609. The case dealt with a policy of insurance issued to a commercial airline.

In applying for the insurance, the airline was found to have misrepresented its accident record, and the number of seats in one of its planes, which later crashed. The Court held that the insurer could not escape liability based the airline’s misrepresentation of its accident record, since the airline had been its insurer at the time of the accidents, and had information about them in its own files, which it failed to check. However, the number of passenger seats on the plane was information that only the airline could have known, and the insurer was allowed to succeed on that ground. Concerning the accident record, Cory J stated: 37 I believe that in the case at bar the information available in the files of the insurers and that available to the public concerning the accident record of Taku should be considered information that an insurer would be presumed to know.

It is information that would readily become notorious to a reasonably competent underwriter working in the field of aviation. Thus the appellant insurers failed to meet the duty imposed by the Canadian Indemnity case.

38 The insurers failed to meet the relatively light and minimal duty of investigation of the accident record of the applicant for insurance that rests upon an insurer providing coverage for passengers. […] No matter what the state of the Regulations

the insurers cannot escape liability on the grounds that the insured failed to disclose its accident record. (emphasis added) As the above authorities illustrate, the circumstances in which an insurer’s own conduct may be found to supersede a misrepresentation or failure to disclose by the insured are fairly narrow, limited essentially to “notorious facts” or information that the insurer was otherwise in a position to have awareness of. Where that is the case, the insurer may be prevented from invoking the insured’s lack of disclosure as a basis to refuse coverage. However, where the insured has misrepresented information that is within his/her unique knowledge, the insurer is unlikely to have an obligation to investigate or look further.

The Insurance Broker’s Duties and Liabilities Toward the Insured When an insurance broker or agent acts as an intermediary between the customer and the insurance company, the law imposes obligations on the broker or agent to competently perform the services s/he offers. The intermediary may become liable to either the insured or the insurer, depending on the nature of the error and the nature of the intermediary’s relationship with each of the parties.

A broker assisting a client in submitting an application for insurance is typically considered to act as an agent of the insured.

As such, the broker owes a duty of care to the insured. The content of the duty was described in Fletcher v. Manitoba Public Insurance Co, [1990] 3 SCR 191, [1990] SCJ No 121: 54 In my view, Fine’s Flowers stands for the proposition that private insurance agents owe a duty to their customers to provide not only information about available coverage, but also advice about which forms of coverage they require in order to meet their needs. I note that Professor Snow has summarized the effect of Fine’s Flowers […] in the following terms […]: The implication of this case and many others like it in recent years seems clear. Consumers who place their faith in insurance agents holding themselves out as competent

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and find their faith misplaced, will frequently be able to find recourse against the agent. ... [T]he extent of the duty owed by an insurance agent, both in placing insurance and in indicating to the insured which risks are covered and which are not, as set out in this case, is a fairly stringent one for the agent. Moreover, given the general situation of the principal relying very heavily on the expertise of the agent, it does not seem to be an unreasonable burden for an insurance agent to bear. [….]

56 It is clear that within the insurance industry, as also within the courts, private insurance agents and brokers are viewed as more than mere salespeople. The Continuing Legal Education Society of British Columbia’s 1985 Seminar on Insurance Law focused on the services they provide, (at p.

6.1.03): The services of a competent agent or broker will include, in addition to advice on insurance, and the brokering or placing of insurance on behalf of the client, an active interest and involvement in loss prevention and a claims supervisory service to assist your client in the satisfactory settlement of the claims.

57 In my view, it is entirely appropriate to hold private insurance agents and brokers to a stringent duty to provide both information and advice to their customers.

They are, after all, licensed professionals who specialize in helping clients with risk assessment and in tailoring insurance policies to fit the particular needs of their customers. Their service is highly personalized, concentrating on the specific circumstances of each client. Subtle differences in the forms of coverage available are frequently difficult for the average person to understand. Agents and brokers are trained to understand these differences and to provide individualized insurance advice. It is both reasonable and appropriate to impose upon them a duty not only to convey information but also to provide counsel and advice.” (emphasis added) The decision in Miller v. Guardian Insurance Co of Canada (1995), 127 DLR (4th) 717, 175 AR 382 (QB), varied on other grounds 1997 ABCA 210, 149 DLR (4th) 375, leave to appeal refused, [1997] SCCA No 480, File No 26214, also recognized this duty. In that case, the breach of duty committed by the agent was in failing to inform the insured, who was young and inexperienced, that his policy did not include underinsured motorist protection, although he had indicated that he wanted “full insurance coverage”. Mason J followed the Fletcher decision and found that the broker’s conduct amounted to negligence: 32 In Fine’s Flowers Ltd. v. General Accident Assurance Co. of Canada (1977), 81 D.L.R. (3d) 139, the Ontario Court of Appeal, per Wilson J.A., states: But there are other cases, and in my view this is one of them, in which the client gives no such specific instructions but rather relies upon his agent to see that he is protected and, if the agent agrees to do business with him on those terms, then he cannot 49

afterwards, when an uninsured loss arises, shrug off the responsibility he has assumed. ... I do not think this is too high a standard to impose upon an agent who knows that his client is relying upon him to see that he is protected against all foreseeable, insurable risks.

This principle was affirmed by the Supreme Court of Canada in Fletcher v. Manitoba Public Insurance Co., supra, at 654, where Wilson J. writes: “In my view, Fine’s Flowers stands for the proposition that private insurance agents owe a duty to their customers to provide not only information about available coverage, but also advice about which forms of coverage they require in order to meet their needs.”

33 Kane Agencies and Catherine Main failed in this regard.

Thus, even if I had found, as the defendants encouraged me to do, that the plaintiff did not ask for “full coverage”, I cannot see that the outcome would be any different. Having found that Kane Agencies failed to acquaint Miller adequately with either of the two special endorsement coverages, I can discern little significance in the defendants’ argument that the plaintiff did not in fact request “full coverage.” Kane Agencies did not discharge its duty to Miller at law; this in itself is enough to trigger negligence on its part. (emphasis added) The decision in Grafton Connor Property Inc. v. Murphy, 2015 NSSC 195, 51 CCLI (5th) 1, varied on other grounds, 2017 NSCA 54, 69 CCLI (5th) 11 is also of some interest. In that case, which involved a fire insurance policy, LeBlanc J found that the insureds had made several misrepresentations in their application for insurance, and in the circumstances, the insurer was justified in refusing coverage. However, Leblanc J also found that the broker had been negligent in his manner of assisting and advising the insureds. The corporation’s representatives were not sophisticated clients, and collecting information for the application was complicated. Leblanc J held that the broker should have inquired about the plaintiff’s ability to compile the information and discussed the benefit of having inspections done.

As a result, the insureds and the broker were found jointly liable for the losses in a 50/50 proportion: 286 […] What duty, if any, does a broker owe an insured with respect to the accuracy of the information provided to the underwriter? […]

313 As I indicated in my findings of fact, I do not accept that either Mr. Raymond or Mr. McMullin was a sophisticated insurance client. The mere fact that a person is a professional does not mean that he or she has the knowledge or skill required to walk into a commercial building and, without assistance, collect the information required to complete a property insurance application. Indeed, the complexity of the task was apparent from Blake Miller’s own testimony.

Mr. Miller has worked in the insurance industry for close to twenty years. When asked if he had ever independently inspected a client’s property in order to verify the answers provided on an application form, Mr. Miller responded that he had not, because he personally did not have “any training in terms of property inspection or engineering.” Yet he made

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no inquiries to satisfy himself that Mr. Raymond had the necessary training or experience to collect the information for eight separate commercial properties.

314 Grafton Connor was Marsh’s largest hospitality client under the Molson Business Edge Program. In 1999, its properties were worth almost $10 million. By 2006, that number had grown closer to $20 million. I am satisfied that an insurance broker of reasonable competence, taking on a client like Grafton Connor in 1999, would have made inquiries of Mr. Raymond to satisfy himself that he was capable of completing the application forms accurately.

He would have asked if there had been inspections done on the properties in the past from which Mr. Raymond could glean the relevant information. If not, he would have discussed the benefit of inspections with the client, and the consequences of a failure to provide accurate information.

I find that Marsh’s failure to make these inquiries constituted a breach of its duty to provide appropriate counsel and advice. (emphasis added) In Duraguard Fence Ltd v. Badry, 2019 ABQB 783, 5 Alta LR (7th) 405, the broker was also found to have breached duties toward the insured in submitting the application for insurance. In that case, liability on the part of the insurer was not invoked. Mah J held that the insurance broker had breached his duty by failing to discuss insurance needs and the available insurance options with the insured, and instead simply signing the insured up for a policy providing coverage that the broker should have known was inadequate. The broker and the brokerage firm employing him were found jointly liable to the insured for the value of the under-insurance: 48 Mr. Farnell had no discussion with Mr. Champigny at any time regarding the adequacy of the $5000 limit for employee dishonesty. It seems that he did not even communicate that the limit had been reduced from $10,000 to $5000. There was certainly no discussion about it. The earliest communication of the change in the evidence is the January 11, 2006 letter (Exhibit 1, Tab 2) which attaches the summary and was sent three months after the 2005 policy was in effect. […]

50 Mr. Farnell knew that additional coverage, up to at least

$250,000, was available. He had procured such coverage on behalf of another client. […]

51 In looking at Exhibit 1, Tab 2, the Commercial Lines Application, there is a notation in Mr. Farnell’s own handwriting that Duraguard had a post pounder worth $7297.43 stolen from its yard on November 22, 2000. He therefore knew that a previous loss already exceeded the limits for the crime coverage that he had placed. Further, if he had asked the question about previous employee dishonesty, he would have been told by Mr. Champigny that an employee had forged two cheques totaling $8000, again exceeding the limit he had put in place.

52 In light of this, as an experienced broker he should have known that slavish reliance on a preset package with a $5000 crime limit was inappropriate, given the loss history. […]

97 The likely coverage amount had enhanced coverage for employee dishonesty been in place is $250,000 in aggregate, which is the average amount for a company of Duraguard’s size as stated in Mr. Gordon’s report. From that, I deduct the $5000 already paid by Peace Hills plus a further $1500 for the maximum premium that would have been paid by Duraguard for the coverage, leaving damages of $243,500.

98 In the result, Duraguard has judgment for $243,500 against Mr. Farnell and DHS jointly and severally. (emphasis added) As these authorities suggest, the obligations on the broker to ensure that the insured is properly advised and obtains appropriate insurance to meet his needs are important ones. This may be particularly the case where the insured is inexperienced and places significant reliance on the broker. Where the broker has breached these obligations, he and/or the brokerage firm may bear liability to the insured for losses arising from the failure or inadequacy of insurance coverage.

An Insurer’s Liability for the Negligence of a Broker As indicated above, a broker may also have obligations toward the insurer. In Drader v. Sebastian, 2009 SKCA 44, 72 CCLI (4th) 223, the Court described the potential for insurance brokers and agents to have simultaneous obligations toward both the insured and the insurer: 26 In describing the personal liability of an intermediary, Brown notes that the intermediary may become liable to either the insured or the insurer, depending on the nature of the error.

He states at page 3-17: Should a customer be denied a claim because an agent … has failed to transmit information properly to the insurer, s/he may be able to turn instead to the intermediary for redress. On the other hand, an insurer might find itself bound to pay a claim made by a customer it would not have insured in the first place had it known facts that were not passed on by an intermediary acting with the requisite authority. Here the insurer may seek redress from the intermediary. […]

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27 In the numerous cases listed in Brown there is a breach of the duty of care of the broker to the insured, if the broker fails to procure the appropriate insurance for the customer or fails to advise that it is unavailable. Also, the intermediary has been held liable to the insurer where the broker fails to convey information relating to changes in the risk or amended conditions to the insurer, or fails to forward information to the insurer that has been given to the broker by the customer.” (emphasis added) This excerpt from Drader appears to suggest that agents and brokers may be treated similarly for purposes of liability.

However, it should be noted that in Drader, the broker did have a written agreement of agency with the insurer.

In Adams-Eden Furniture Ltd. v. Kansa General Insurance Co. (1997), 113 Man R (2d) 142, [1997] 2 WWR 65 (CA), leave to appeal refused [1997] SCCA No 42, File No 25773, the Manitoba Court of Appeal indicated that in fact the terms “broker” and “agent” cannot be assumed to mean the same thing.

On the contrary, unless an insurance broker has entered into an agreement of agency with the insurer, the broker will not be the insurer’s agent, and will only be an agent of the customer: 19 The distinction between an insurance broker and an insurance agent is explained in Couch on Insurance, 2nd ed. (rev.) (1984), para. 25:93: An “insurance broker” is one who acts as middleman between the insured and the insurer, and who solicits insurance from the public under no employment from any special company, and who, upon securing an order, places it with a company selected by the insured, or, in the absence of such a selection, with a company selected by himself; whereas an “insurance agent” is one who represents an insurer under an employment by it. Whether a person acts as a broker or an agent is not determined by what he is called but is to be determined from what he does. In other words, his acts determine whether he is an agent or a broker. […]

21 The authorities are clear that generally the only agency relationship which exists when a party seeking insurance coverage engages an independent broker to arrange that coverage is that which arises between the broker and its client, the insured. As a result of that agency relationship, the broker, as the professional expert, owes to the insured, its principal, a duty of care: (1) to arrange the appropriate coverage according to the insured’s needs, and (2) to disclose accurately to the insurer all the information material to the risk which the broker acquires from the insured or which he may acquire independently. (emphasis added) The distinction between brokers and agents is significant in determining whether an insurer may be precluded from denying coverage where there has been an error, negligence, or fraud on the part of the broker in submitting the insurance application.

The general rule is that the insurer may be bound by the conduct 51

of the broker where the broker acted as its agent, such that the broker had the ability to bind the insurer.

The Miller decision, discussed earlier, recognized this principle.

The broker in that case was found to be the agent of the insurer by virtue of an explicit agreement between the insurer and the broker: 43 In “Actions Against Agents and Brokers” (see Claims Under Insurance Policies, Special Lectures of the Law Society of Upper Canada, 1962), R.E. Shibley classifies insurance agents into four groups (pp. 253-54). This is of some assistance in the present case, and I take the liberty of reproducing here the four categories (emphasis added): 1.General or managing agents being persons or corporations directly representing the company in the sense of a breach office of the insurer and who can issue policies, interim receipts and give oral coverage; 2.Recording agents who are independent of the company but have the power to bind the company by the issue of policies, interim receipts and even oral coverage; 3.Soliciting agents who submit applications to the insurer for acceptance or rejection but who have no power to bind the company; and 4.Brokers in the strict sense of that term being the agent of the insured alone for the purpose of procuring a policy of insurance.

44 Which of these four categories most accurately characterizes Kane’s relationship with Guardian in the case at bar? This question cannot be answered in the abstract.

Account must be taken of the particular context within which Guardian and Kane Agencies did business. […]

48 It is clear from looking at the Agreement’s provisions that when turning to Guardian as a Facility insurer, Kane Insurance is more than a broker or a soliciting agent, neither of which have the capacity to bind the company.

When Kane turns to Guardian qua Facility insurer, it can be best described as a recording agent - and independent company which, despite being an entity separate and distinguishable from the insurer, has the power to bind the company. Furthermore, Kane is authorized to collect premiums on behalf of the company, receive and transmit applications for insurance to the company; and provide the usual and customary services of an insurance agent with

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respect to all policies placed with the company. These functions and capacities speak in favour of finding Kane Agencies to be an agent of Guardian. (Emphasis added) In Miller, the broker was found to have failed to inform the insured, who was young and inexperienced, that his policy did not include underinsured motorist protection, although he had indicated that he wanted “full insurance coverage”. As a result of the agency relationship, the insurer was bound to provide indemnity to the insured, based on vicarious liability for the error of the broker.

A number of other decisions also provide examples of circumstances in which an insurer has been found liable to indemnify an insured based on vicarious liability for negligence or breach of duty by a broker.

In Burndred v. Topley and Sanders Investments Ltd., 2009 ABQB 541, 504 AR 133 (QB), Hughes J also discussed the potential vicarious liability of an insurer for the acts of an agent or broker, citing the Miller decision. In that case, the broker Topley conceded it was negligent in breaching an agreement with or duties owed to the insureds in calculating the replacement cost of their home and/or failing to provide appropriate and timely advice and services with respect to increasing their homeowner’s coverage. The insurer Peace Hills was never informed that the insureds’ home was underinsured. The broker settled the claim brought against it by the insureds and sought indemnity from the insurer. Hughes J found that the insurer was not required to indemnify Topley due to contractual language in the agency agreement between them; however, by virtue of that same agreement, the insurer would have been vicariously liable and bound to indemnify the insured: 18 Vicarious liability and indemnification between principal and agent have been addressed in the insurance context in Alberta.

19 For example, in Miller v. Guardian Insurance Co. of Canada (1995) 175 AR 382, 33 Alta. LR (3d) 280 (QB) (QB), aff’d (1997), 200 AR 332, 53 Alta. LR (3d) 338 (CA), Mason J. found the insurer to be liable for the agent’s negligence in not placing a particular form of insurance coverage and for failing to acquaint the plaintiff with that form of insurance coverage. [..].

20 Mason J. found the insurance agent and its employee had failed to discharge the duty owed to the plaintiff and the insurer was held vicariously liable for its agent’s negligence as a result of the principal-agent relationship stating at para. 55: ... Consequently, Kane’s initial negligence in not placing underinsured motorist coverage, despite Miller’s request for “full coverage”, and Kane’s subsequent negligence in not fully acquainting Miller with the Underinsured Motorist Endorsement or the Family Protection Endorsement which replaced it, became Guardian’s own negligence, for the law maintains that Qui facit per alium facit per se. Simply put, the principal Fall 2022

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Guardian is liable personally for the negligence of its agent Kane.

21 On the basis of Miller, it is clear that an insurer is vicariously liable for its agent, even if that agent acts negligently, and I find that Peace Hills would be vicariously liable for Topley in the case at bar. […]. (emphasis added) In Yorkshire Trust Co v Laurentian Pacific Insurance Co, [1987] BCJ No 4, 28 CCLI 368 (SC), which dealt with a fire insurance policy, Taylor J held that the insureds, mortgagees of the damaged property, were entitled to indemnification from the insurer, despite several omissions in the information provided to the insurer that were material to the determination of risk.

Taylor J found that the insured had not acted with any intent to misrepresent or falsely obtain coverage, and reasonably presumed the agent, who had as much knowledge of the circumstances as did the insured, would communicate the relevant information to the insurer: The defence raised under this condition rests on the contention that Mr. Gauthier fraudulently omitted to communicate to Mr. Hebden certain circumstances “material to be made known to the insurer in order to enable it to judge the risk”. […]

To establish that intent in this case it would be necessary to show that Mr. Gauthier, or those in the bank under whose instructions he acted, believed both that the insurer might not be aware of the information in question and that it was information an insurer might consider relevant to the risk.

So far as the increased “physical risk” represented by vacancies was concerned, it would have been obvious to the bank that the insurer’s agent knew at least as much about that as did the bank. […]

The existence of substantial vacancies, and of areas in the process of conversion, exposed the premises to the danger of fires started by intruders or by poor maintenance; this was particularly true of the basement area. The lack of daily business activity in these areas exposed the premises to the danger of unobserved development of fire hazards, as well as the danger of fire caused by intruders. The fact that so much of the floor space was producing no revenue, and that the former and present owners had not renewed the fire insurance, suggested a further danger -- that insolvency might result in poor maintenance and housekeeping. These indications of likelihood of insolvency were warning signs also of the existence of the so-called “moral hazard” -- a euphemism used in the fire insurance business for risk of arson, induced by a desire to defraud the insurer in order to escape financial ruin or, less commonly, a desire for “vengeance” against foreclosing creditors.

The insurance agent, being in the same complex, knew more than enough to have been alerted to these risks. (at pp 3 and 5 (QL), emphasis added) In Rex v. WFG Agency Network Inc. (cob South Calgary Agencies), 2007 ABPC 64, [2007] AJ No. 281 (Prov. Ct), the insurer was required to indemnify the insured for loss of his 53

vehicle, despite the fact that his policy did not include collision insurance. The insured was a young male with a grade 12 education who still lived with his parents. Jacobsen J found that the broker was an agent of the insurer, and had failed to make a real attempt to confirm the insured’s needs, to explain or bring to the insured’s attention the various coverages, or to ensure that the insured had sufficient understanding of the benefits and disadvantages of the different types of coverage: 93 The plaintiff was not as naive and unsophisticated in insurance matters as alleged by his counsel, nor was he as astute and well informed as argued by defendants’ counsel.

The plaintiff had need for a competent insurance agent and broker “to take an active interest and involvement in loss prevention” and “a duty not only to convey information but to also provide counsel and advice”. […]

103 Adel failed to respond to the clear indication of the plaintiff’s request for full coverage. As a result the plaintiff did not make an informed decision to not take collision coverage. The plaintiff did not ask Adel any questions about collision or comprehensive coverage. Nor did Adel identify the distinction between the positive and negative aspects and gaps of the different coverages. Throughout, the plaintiff’s basic position, which he made clear, was that he wanted coverage so that if the Jeep was damaged he would not have to be paying for something he could not drive.

104 In the circumstances, and given the relationship and the knowledge of the plaintiff, Adel did not use a reasonable degree of skill and care when he knew, or ought to have known that the plaintiff was relying upon him for protection through proper coverage. The plaintiff did not have the necessary background to effectively inform himself on automobile insurance policies. The defendants should not have regarded or placed the responsibility on the plaintiff as being capable of finalizing adequate and acceptable coverage. […]

116 Adel did not advise the plaintiff of the gaps in coverage and how to avoid this. There was “no active interest and involvement in loss prevention”. Nor was there a proper or satisfactory supervisory service to assist

MICHEL V. LAVOIE M.D., F.R.C.S. (C)

Certified Independent Medical Examiner

Orthopedic Surgeon Suite 109, 11910-111 Avenue Edmonton, AB 780-483-8311 Fax: 780-930-2121 mvlavoiemd@shawbiz.ca

The Barrister

the plaintiff in handling his claim. (emphasis added) In Venner Woodworking Ltd. v. Wawanesa Mutual Insurance Co., [1996] OJ No. 132, 33 CCLI (2d) 288 (Gen. Div.), the defendant insurer was ordered to compensate the plaintiff company for loss of a vehicle after it was destroyed in an accident while being driven by a friend of the owner of the plaintiff company. The truck was bought and insured by DV, who was the owner’s son, on the plaintiff’s behalf. At the time of obtaining the insurance, DV, who was 18 years old, instructed the defendant broker to name his father as the principal driver, even though he knew that he was going to be the truck’s principal driver.

Although the broker knew that DV would be driving the truck most of the time, he took these instructions without advising him

of the consequences of the misrepresentation. Lang J allowed the action against the broker and the insurer, finding that in accepting the instructions to name the father as the principal driver without question and in failing to warn DV about the risks of doing so, the broker fell below the standard of care: 27 In accepting the instructions to name Leighton as principal driver without question, James fell below the standard of care to be expected of a licensed insurance broker in his situation. While no expert evidence was called on the point, it is obvious to a lay person that an insured relies upon his or her broker for advice as to the specifics of insurance. James either suggested putting Leighton on the policy as the principal driver or failed to warn Dennis of the risks of doing so. James’ notes are sparse and show no evidence of concern about the issue even though he knew that Dennis would be driving the pickup truck most of the time. In the circumstances, a reasonable broker, upon receiving Mrs. Goodine’s instructions to list Leighton as the principal driver, would have at least telephoned either Dennis or Leighton to discuss the issue. If the Venners persisted in their instructions after being warned of the consequences of misleading the insurer, a reasonable broker would have refused to place the coverage. James failed to do so and in that regard was negligent in his responsibilities to the insurer, the insured and Dennis. […]

31 The misrepresentation was, or should have been known to James and, absent deceit or fraud on his part, however, Wawanesa is bound by the knowledge of its agent. In

these circumstances, Wawanesa is only entitled to recover the amount of the increased premium that would have been charged had it been aware of the increased risk, which, the evidence disclosed, Wawanesa would have accepted had it known that Dennis was the principal driver. (emphasis added) Based on these decisions, there appears to be some authority for the position that where a broker, acting as agent for the insured, fails to provide adequate assistance, advice and guidance to an insured who is inexperienced or unsophisticated, with the result that proper coverage is not obtained, both the broker and the insurer may be found liable to indemnify the insured.

On the other hand, case law also provides examples of circumstances where liability of the broker and/or insurer may be refused. These cases suggest that poor credibility of the insured may often be a significant, if not deciding, factor in the outcome.

For example, in Lal v Guardian Insurance Co of Canada, [1992] AJ No 479, 130 AR 147 (QB), Hunt J found there was misrepresentation as to the actual owner and intended driver of the vehicle, which voided coverage. Insurance had been obtained by the father in the name of the mother, who was represented as the owner of the vehicle. It was further represented that the couple’s son, who had previously owned and insured one of the vehicles under the policy and had a poor driving record, was neither an owner nor a driver. An accident that destroyed the vehicle occurred while the son was driving. Hunt J found testimony of all family members to be wanting in credibility, and held that the mother was not entitled to claim indemnity for loss of the vehicle: In light of the clear evidence that Mike Lal in fact drove both the Camaro and the Honda to work regularly, and was always a member of the household, I can come to no other conclusion than that Parma Lal deliberately misrepresented the facts in his 1987 application to Jepson, namely as to the ownership and use of the Camaro and to the number of licensed drivers in the household. He was aware of Mike’s bad driving record and the rating implications - ‘despite his assertion in testimony that he was not trying to avoid paying higher insurance costs. (at p 5 (QL), emphasis added) In addition, Hunt J rejected arguments that the insurance broker should have been put on notice or made further inquiries in light of knowledge and information that was available to him. In large part, these arguments were rejected due to a lack of evidence supporting the family’s assertions that the broker was in fact aware of the alleged contradictory information: Plaintiff’s counsel suggested that vis a vis the Honda, since certain documents (such as the Bill of Sale and the Conditional Sales Agreement) refer to Mike Lal, Jepson should have been put on notice about his existence and made inquiries. I do not agree. Jepson could not say whether he saw the Bill of Sale, and was certain Parma Lal told him the Honda was Sheila’s. The Bank of Hong Kong (lienholder under the

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Conditional Sales Agreement which was in Mike Lal’s name) subsequently called Jepson’s, according to the evidence of Graves. It was argued that this should have caused alarm bells to ring. But there is no evidence that that discussion referred to anything other than the Honda’s serial number.

It was further argued that since Guardian had previously insured the Lals, including Mike Lal, they should have known of his existence and his bad driving record. This assertion simply cannot be upheld in the face of evidence that the Lal family was aware of the insurance implications of Mike’s driving record, and, in effect, tried to hide him in their various insurance ‘applications beginning as early as 1986. By this I mean that, despite the evidence that he drove the Camaro and the Honda, he was never mentioned by the Lals thereafter, other than untrue statements about his being in B.C. […]

Insurance contracts require the utmost of good faith by all parties, not just the insurer and insurance agencies; this was plainly lacking on the part of the named insureds, Sheila Lal and Parma Lal. Specifically, as I have found, Parma Lal misrepresented the ownership and use of the Camaro as well as the number of drivers in the household in his application of November, 1987. He knowingly compounded this in October, 1988 when he gave Jepson information about the use of the Honda.

According to s. 298(1)(a)(ii), Sheila Lal’s claim is invalid and her right to recover indemnity is forfeited. (at p 5 (QL), emphasis added) Similarly, in Lau v. Insurance Corp. of British Columbia, 2012 BCSC 1226, 13 CCLI (5th) 72 (SC); affirmed 2014 BCCA 442, 69 MVR (6th) 11, Verhoeven J dismissed the plaintiff’s action for coverage and indemnity, finding that the insured father had knowingly misrepresented himself as the principal driver, when in fact it was always intended that the vehicle would be driven by his son. Verhoeven J drew this conclusion on the basis of the evidence as a whole, which he found did not support the father’s testimony: 37 This aspect of the case centers on the state of mind of Yu Jung Lau at the time he made the application for insurance.

In that context, his reliability and credibility is key: Lexis Holdings, at para. 37. The thrust of his evidence was that he made the decision to buy the car, and that it was primarily for his use, although other persons in the family, including of course Victa, would also be allowed to use it.

38 In general, however, the evidence supporting the purchase of the car for the primary use of Yu Jung Lau makes very little sense, while the evidence supporting the purchase of the car for the primary use of Victa Lau makes a great deal of sense.

39 … Yu Jung Lau was not so wealthy that he could afford to own and operate multiple vehicles just for his own use and enjoyment. He or his wife already owned four vehicles, two of which they could not afford to insure. The Subaru was the fifth vehicle added to the family stable of vehicles. He could not 55

afford to buy the Subaru. The purchase required financing on unfavourable terms. Certainly, he did not need the car. Its purchase for his own primary use could only be considered a costly and unnecessary extravagance.

40 The 2005 Subaru WRX STI was an expensive, high performance vehicle, with 300 horsepower, a very prominent spoiler on the trunk and a large air intake scoop on the hood.

This is the kind of car that would certainly appeal to a young man.

41 Yu Jung Lau’s testimony concerning his reasons for buying the car is unconvincing. … […]

66 I conclude that when Yu Jung Lau applied for the insurance coverage, he knew that he was not the intended principal operator of the vehicle, and that he knowingly misrepresented that fact by stating that he would be the principal operator of the vehicle. Accordingly, the insurance coverage is forfeited based upon s. 75(a)(ii) of the Act.” (emphasis added) Conclusion As these authorities illustrate, the doctrine of utmost good faith places a heavy burden on those seeking insurance coverage to make full and complete disclosure of all relevant information when applying for a policy. In addition, s. 554 of the Alberta Insurance Act, RSA 2000, c. I-3 provides that claims under a policy may be forfeited if an applicant for insurance gives false particulars of the described vehicle, fails to disclose material information, contravenes a term of the contract or commits a fraud.

However, an insurance broker acting as intermediary between the customer and the insurance company also owes certain duties, and may become liable to either the insured or the insurer, depending on the nature of the error and of the relationship between the parties.

Where it can be established that the broker was an agent and had the power to bind the insurer, the insurer may be prevented from denying coverage, or may be vicariously liable for negligence of the broker that results in a lack of coverage and consequently may be bound to provide such coverage as the insured ought to have had.

The Barrister

The Laugh of Medusa –

LIMITATION DEADLINES FROM AN INSURANCE LAW PERSPECTIVE

By Nitin Srivastava (Nick) BA. LL. B, LL.M. Senior Counsel (Litigation) Crash Lawyers Calendaring errors and missed limitation deadlines are a leading cause of professional negligence claims. These mistakes are expensive, time-consuming, lead to dissatisfied clients and are damaging to professional reputations.” 2 Unfortunately, limitation periods are not as simple and straightforward as they appear, as there are various qualifications and specific limitation periods which play a role in determining a limitation period.

This article is an attempt to clarify and summarize some aspects related to limitation periods particularly from an insurance law perspective.

During our practice of law, we all have experienced (hopefully only once), a feeling of jumping out of bed at night, frozen, sweating, and worrying about a limitation deadline on some file.

Did we file the claim or the appeal within the limitation period?

In the past 12 years, I have encountered two such instances of ‘being frozen to death’ as if I have gazed into the eyes of Medusa, and her laugh is making me feel paralyzed.1 As plaintiff’s counsel in personal injury matters my worst nightmare is missing a limitation deadline. This is one of the most important things which we are repeatedly warned about by our principals and colleagues right from the beginning of our practice of law. It can be a very easy mistake to make, and the consequences can be huge. One of my dear friends had a terrible experience when his client sued him for missing a deadline. It took over 3 years of litigation in a professional negligence claim to finally get it resolved with the help of Alberta Lawyers Indemnity Association (ALIA) counsel representation. The Law Society of Alberta states, “Limitations are the bane of many lawyers’ existence.

One of the foundational documents which led to the enactment of the current Limitations Act 3 in Alberta is the report from the Alberta Law Reform Institute [“ALRI Report No.55”]4. The ALRI Report No. 55 describes the purpose of the limitations stating that “The purpose of limitations law is to encourage the timely resolution of legal controversies, and in so doing to strike a proper balance between the interests of potential claimants, potential defendants and society at large.” The primary objective of limitations is to provide certainty to litigant parties and serve as balancing the rights of the plaintiff and defendant. Specifically, limitation periods prescribe how much time one has to file a civil claim in the court of law. On one hand, limitation periods preserve a plaintiff’s right to commence a civil action within a reasonable prescribed time. On the other hand, it acts as a shield protecting the right of potential defendants by providing some certainty regarding the commencement and/or expiration of the limitation period for any possible lawsuit against them. Failing to comply with the limitations period results in the plaintiff losing its right to bring the claim. Beyond the prescribed period, the claim becomes ‘statue barred’ and the defendants are entitled to a rebuttable presumption for immunity from liability with respect to the claim. The defendants would then raise the limitation defence that the plaintiff has failed to bring its’ claim in time, and hence must be struck.

The recent one was about 4 years ago wherein I had to file the transcript of the Master’s decision within a short period of time after filing a Notice of Appeal for my client and was worried if we received the transcripts in time to file it.

2 Law Society of Alberta: Limitations Software Options, online: https://www.lawsociety.ab.ca/resource-centre/key-resources/practice-management/limitations-software-options/ 3 Limitations Act, RSA 2000, c L-12, online CanLII: https://canlii.ca/t/544dn 4 Alberta Law Reform Institute: Limitations, Final Report NO55, online: https://www.alri.ualberta.ca/1989/12/limitations/ [ALRI Report No.55] 1

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Limitation periods may appear to be simple, as there is an act specifically dealing with it after all, but there is huge amount of complexity surrounding it with significant implications to both plaintiffs and defendants. One way to appreciate the complexity surrounding limitation periods is like the way “c” is pronounced differently each time it is used in “Pacific Ocean” and there is no clue to the reader as to how; it is simply assumed that you already know it.5 A. The General Rule of Limitations in Alberta

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In Alberta, the Limitations Act6 generally regulates limitations periods. Section 3 of the Limitations Act, provides a rule for general limitations :

Limitation periods 3(1) Subject to subsections (1.1) and (1.2) and sections 3.1 and 11, if a claimant does not seek a remedial order within (a) 2 years after the date on which the claimant first knew, or in the circumstances ought to have known, (i) that the injury for which the claimant seeks a remedial order had occurred, (ii) that the injury was attributable to conduct of the defendant, and (iii) that the injury, assuming liability on the part of the defendant, warrants bringing a proceeding, or (b)10 years after the claim arose, whichever period expires first, the defendant, on pleading this Act as a defence, is entitled to immunity from liability in respect of the claim.

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For our convenience we can define it as the “General Rule” wherein the plaintiff must seek a remedial order and/ or bring the action within the ‘basic limitation period’ of 2 years or within the ‘maximum limitation period’ of 10 years, whichever is earlier.

Notably, the key words for the basic limitation period of the General Rule particularly are “claimant first knew” or “in the circumstances ought to have known”. The language of “knew or ought to have known” involves principles of discoverability. The leading case on discoverability is Central Trust Co v Rafuse7 where the Supreme Court of Canada said at para 77:

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I am thus of the view that the judgment of the majority in Kamloops laid down a general rule that a cause of action arises for the purpose of a limitation period when the material facts upon which it is based have been discovered or ought to have been discovered by the plaintiff by the exercise of reasonable diligence, and that the rule should be followed and applied to the appellant’s cause of action in tort against the respondents… There is no principled reason, in my opinion, for distinguishing in this regard between an action for injury to property and an action for recovery of purely financial loss caused by professional negligence…

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Facebook, Irish Art Centre, September 21, 2020, online: https://www.facebook. com/IrishArtsCenter/posts/in-english-pacific-ocean-has-three-cs-each-pronounced-differently-there-are-no-c/3587483577950809/ (yes, call me old school as I still have Facebook) 6 Limitations Act, RSA 2000, c L-12 7 Central Trust Co v Rafuse, 1986 CanLII 29 (SCC) 5

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The Barrister

Section 3(1)(a) of the Limitations Act further requires a claimant to address three distinct aspects of its knowledge of the injury for which the claimant seeks remedial order. The Alberta Court of Appeal in Weir-Jones Technical Services Inc v Purolator Courier Ltd, [“Weir-Jones”]8 while determining an appeal from a summary dismissal of a claim as it was not brought within the limitation period, elaborated the three-part test under s 3(1)(a) of the Limitations Act and noted at paras 50, 53 through 55 and 58 as follows:

[50] … There is therefore a three part test, based on a reasonable awareness of the injury, attribution of the injury to the defendant, and a claim warranting a proceeding for a remedial order.…

[53] Since the statute provides the test for the commencement of the limitation period, the alternative starting points proposed by the appellant do not apply. Unless the alternative proposed dates happen to coincide with the test in the Limitations Act, the limitation period does not commence on (a) the date of breach, (b) the date the last services are provided under a service contract, (c) the date that economic loss emerges, (d) the date of acceptance of repudiation, or (e) the termination of the contract.

[54] In order to obtain summary dismissal of the claim based on the expiration of the limitation period, the respondents had to show from the record that the injury alleged by the appellant (arising from the alleged breaches of contract) was reasonably known, attributable to the respondents, and sufficiently serious to warrant a proceeding…

While the chambers judge proceeded on the erroneous assumption that the limitation period started to run at the time of breach, she made the necessary findings of fact as to when the appellant discovered and could reasonably have commenced the action.

[55] The chambers judge found that the breaches alleged by the appellant, the injury that resulted, and the knowledge that the injuries warranted a proceeding were known more than two years before the action was commenced. This is a finding of fact, to which deference must be extended.…The determinative issue is therefore whether there were any circumstances that would, in law, extend the commencement date of the limitation period.…

[58] Section 3(1)(a)(iii) requires knowledge of an injury warranting a proceeding “assuming liability on the part of the defendant”.

Discoverability does not require perfect knowledge or certainty that the claim will succeed: De Shazo at paras. 31-2. The record does not disclose any circumstances that would extend the commencement of the limitation period.

In short, the clock starts ticking from the date when a claimant knew or ought to have known that the injury occurred, that the injury was attributable to the conduct of defendant/ the defendant’s conduct resulted in the injury, and the injury warrants bringing a proceeding. The ALRI Report No.55 (Supra) at page 33 articulated the commencement of limitation period as follows: The discovery limitation period will begin when the claimant either discovered, or ought to have discovered, specified knowledge about his claim, and will extend for 2 years. We believe that, for the great majority of claims, this period will expire first. Because this period will

depend on a discovery rule, the problems associated with accrual rules will be tremendously reduced.…

As to the first requirement, the discovery period will commence not at the time of the event, but at the time of discovery of the injury.

Therefore, it may begin at different times for different injuries for which remedial orders are sought. It is possible that there will be separate claims based on different injuries arising from the same event.…

As to the third requirement, the discovery period will not begin until the claimant first knew that his injury was sufficiently serious to have warranted bringing a proceeding, that is, there must be relatively serious harm. This criterion will protect litigants from incurring unnecessary legal expenses, and bringing unnecessary legal action.

The discovery rule will, in effect, invite the judge to put himself in the claimant’s shoes, to consider what knowledge he had at the relevant time, and to make the cost-benefit analysis which would be reasonable for the actual claimant 9

At page 34 the ALRI Report No.55 noted that “The discovery rule incorporates a constructive knowledge test which charges the claimant with knowledge of facts which, in his circumstances, he ought to have known. This is the reasonable man standard.”10 The Supreme Court of Canada and Alberta Court of Appeal have reviewed the concept of actual or constructive knowledge on numerous occasions to clarify the mist around limitation periods.

In Grant Thornton LLP v New Brunswick,11 the Supreme Court of Canada recently noted that “a claim is discovered when a plaintiff has knowledge, actual or constructive, of the material facts upon which a plausible inference of liability on the defendant’s part can be drawn.” The jurisprudence prescribes an objective/ subjective approach for the language of “knew or ought to have known”. The Alberta Court of Appeal in Gayton v Lacasse12 held that “while the test is objective, in that it employs the “ought to have known” standard, the test is applied having regard to a claimant’s personal circumstances”.

“In Alberta, given the decision in JN v Kozens13, this test applies to all three of the criteria set out in section 3(1)(a).” From a personal injury lawyer perspective, it appears that Alberta Courts have a flexible approach when determining the limitations period and focus more on the discovery of the injury by the plaintiff rather than the discoverability of the cause of action for the injury. Clearly, the maximum limitation period of 10 years does not depend upon the discoverability principle, rather it simply starts when the claim arose.

B. Deviations from the General Rule under the Limitations Act The Limitations Act sets the General Rule for limitations deadlines to standardize the limitation law, and also provides

Weir-Jones Technical Services Inc v Purolator Courier Ltd, 2019 ABCA 49 [“Weir-Jones”] ALRI Report No.55 (Supra) P 33.

10 ALRI Report No.55 (Supra) P 34.

11 Grant Thornton LLP v New Brunswick, 2021 SCC 31 at para 42 12 Gayton v Lacasse, 2010 ABCA 123 at para 20 13 JN v Kozens, 2004 ABCA 394 wherein the Alberta Court of Appeal adopted the objective/subjective approach.

8 9

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for some exceptions to the limitation rule. A few exceptions or deviations to the General Rule provided in the Act are: i. Concealment/ Fraud: Where a defendant fraudulently hides or conceals about the fact of injury, the Act postpones the calculation of the limitation period. Section 4(1) of the Act provides deviation to the General Rule which gets suspended or not counted for the period where a defendant fraudulently hides the facts about the injury.

Concealment 4(1) The operation of the limitation period provided by section 3(1)(b) or (1.1)(b) is suspended during any period of time that the defendant fraudulently conceals the fact that the injury for which a remedial order is sought has occurred.

(2) Under this section, the claimant has the burden of proving that the operation of the limitation period provided by section 3(1)(b) or (1.1)(b) was suspended.

ii. People under Disability: Person with disability includes a represented adult as defined in the Adult Guardianship and Trusteeship Act 14 or a person in respect of whom a certificate of incapacity is in effect under the Public Trustee Act15 or an adult who is unable to make reasonable judgments in respect of matters relating to a claim.

Persons under disability 5(1) The operation of the limitation periods provided by this Act is suspended during any period of time that the claimant is a person under disability.

(2) The claimant has the burden of proving that the operation of the limitation periods provided by this Act was suspended under this section.

suspension of the limitation period on the grounds of disability following the accident. iii. Minors: Minor plaintiffs are another exception to the General Rule. Section 5 of the Act provides that the limitation period for a minor plaintiff runs from the time the minor attains the age of majority and is suspended until then. However, if the potential defendant provides a ‘notice to proceed’ in the prescribed form to the guardian of the minor or to the Public Trustee and pays the fee, then the suspension of the limitation period ceases and the limitation starts from the date of the notice to proceed to the Public Trustee or an Order of the court under section 5 of the Act. iv. Claims added to a proceeding: Section 6 of the Limitations Act provides for an addition of defendant to a proceeding and determination of limitation period for the same. The jurisprudence on this point appeared to be conflicting for a long time, until settled by the Alberta Court of Appeal in Acielo v Condominium Plan 9022497, wherein the appellate court interpreted the phrase “the time provided by law for the service of process” in section 6(4) of the Act and held, “When a claim is added, the defendant is not entitled to immunity from liability if he or she receives “within the limitation period applicable to the added claim plus the time provided by law for the service of process, sufficient knowledge of the added claim that the defendant will not be prejudiced in maintaining a defence to it on the merits.” i.e. the limitation period for a claim added to a proceeding is the 2-year basic limitation period, plus 1 year.17 v. Other exceptions: In addition to the above, claims regarding possession of real property, acquiescence or laches18, Judgment for payment of money19, limitation laws in other jurisdictions20, and actions by aboriginal people21 form part of exceptions to the General Rule. In Alberta, there is no limitation period for victims of sexual assault, battery, or domestic violence.22 C. Semantics of “C”s: An interplay between the General Rule with Insurance Act, and other specific legislations from a personal injury claims perspective:

If an adult person is under a disability (for example coma) which prevents his ability to make legal decisions, then the General Rule is suspended for the period of his/her disability.

However, the claimant has an onus to establish the disability to the court in order to qualify for the suspension of the limitation period. Notably, the court in Tchir v King16 distinguished Gayton while determining a claim for the plaintiff who claimed

In addition to the deviations to the General Rule under the Limitations Act, there are other factors in specific legislation which play their role in determination of limitation periods.

Section 2(4)(b) of the Limitations Act provides that the limitations periods in other Albertan legislation will be given effect. Below are a few examples under specific statutes that affect the General Rule from the perspective of insurance law in personal injury matters.

Adult Guardianship and Trusteeship Act, SA 2008, c A-4.2 Public Trustee Act, SA 2004, c P-44.1 16 Tchir v King, 2021 ABQB 393 17 Acielo v Condominium Plan 9022497, 2016 ABCA 251 (CanLII), <https://canlii.ca/t/gt7c 18 Limitations Act, RSA 2000, c L-12 Section 10: Acquiescence or latches 19 Limitations Act, RSA 2000, c L-12 Section 11: Judgment for Payment of Money 20 Limitations Act, RSA 2000, c L-12 Section 12: Conflict of laws 21 Limitations Act, RSA 2000, c L-12 Section 13: Actions by Aboriginal people 22 Limitations Act, RSA 2000, c L-12 Section 3.1: No limitation Period 14 15

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i. Insurance Act: Section 526 of the Insurance Act 23 provides that:

Limitation of actions 526(1) An action or proceeding against an insurer under a contract must be commenced (a) in the case of loss or damage to insured property, not later than 2 years after the date the insured knew or ought to have known that the loss or damage occurred, and (b) in any other case, not later than 2 years after the date that the cause of action against the insurer arose.

(2) This section does not apply to contracts of automobile insurance and hail insurance.

Like the basic limitation period under the Limitations Act, the Insurance Act also provides a period for 2 years to a claimant to make a claim for loss or damage from the date the insured “knew or ought to have known” about the loss or damage, rather than the date of denial. The principles of discoverability discussed above applies here. The provision also provides for two exceptions for contracts of automobile insurance and hail insurance.

For clarity, the variations to the General Rule in the Limitation Act, specifically related to plaintiffs in a bodily injury claim including persons with disabilities would have their limitation periods protected under both statues.

Application of Limitations Act 527 Section 5 of the Limitations Act applies to a limitation period established in this Act in respect of an action or proceeding on a contract as if the period were established under the Limitations Act.

In addition to the above, Section 1(g) of the Limitations Act defines ‘limitation provision’ to include a limitation period or ‘notice provision’ that has the effect of a limitation period.

The Insurance Act, provides for specific notice periods. For example:

of loss is given to the insurer, an insured runs the risk of losing its right to bring an action if notice is not given more than 60 days before the limitation period ends. In addition, Section 705 of the Insurance Act provides for “Statutory Conditions”; one such condition is the notice requirement. Subject to those statutory conditions an action for recovery of insurance money payable for the death of a person must be commenced within 2 years after the proof of claim is furnished and 6 years after the death.24 Interestingly, insurance contracts, particularly including multiperils, provide coverage for a number of different losses with statutory conditions that would apply to every peril under such contract. I am unsure if we still could find old insurance contracts that might be subject to a statutorily-prescribed oneyear limitation period. The difference between the statutory conditions and contractual conditions is that only statutory limitation periods fall within the exception under section 2(4)(b) of the Limitations Act, whereas contractual limitation periods would not fall under this exception.25 These deviations from the General Rule of limitations due to insurance contracts caused significant confusion for both insurers and for lawyers and resulted in a substantial increase in litigation over missed limitation periods. Thankfully, the Supreme Court of Canada provided direction and guidance through its cases and called upon all provinces to amend their Insurance Acts to rectify the confusion caused by different types of insurance contracts.26 Alberta now mandates that the limitation periods in the Insurance Act would apply to multiperil policies to have uniformity and clarity. Further, any contract to reduce the limitation period provided under the Limitations Act would be held invalid. To sum up, the section 7 of the Limitations Act provides that:

When action may be brought 524 No action lies for the recovery of money payable under a contract until the expiration of 60 days, or of any shorter period fixed by the contract, after proof, in accordance with the provisions of the contract, (a) of the loss, or (b) of the happening of the event on which the insurance money is to become payable.

This notice provision requires an insurer to receive the notice of loss before an insured can bring an action being commenced against it. Since the actual limitation period runs before notice Insurance Act RSA 2000, c I-3 S.526 Insurance Act, section 798: Limitation of actions 25 Limitations Act, (Supra) Section 2(4)(b): This Act does not apply where a claimant seeks.. (b) a remedial order the granting of which is subject to a limitation provision in any other enactment of the Province.

26 KP Pacific Holdings Ltd. v. Guardian Insurance Co. of Canada, [2003] 1 S.C.R. 433, 2003 SCC 25 (In this case, the insured made a claim for loss by fire under the all risk policy after one year of the loss but within one year of filing of proof of loss. The court held the claim was not statue barred). Churchland v. Gore Mutual Insurance Co., 2003 SCC 26 (CanLII), [2003] 1 SCR 445 (In this matter, the insured claimed under tehef in a multi-peril policy. Claim was filed after one year of break-in but less than one year after filing the amended proof of loss. Held that the claim was not statue barred). The Supreme Court has called upon all provinces to amend their Insurance Acts to rectify the confusion caused by disparate limitation periods in different types of insurance contracts.

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The court noted that lawyers and insurance professionals know what the words ‘limitation period’ mean in the context of an insurance claim. In this matter, the letter made no mention of the Limitations Act, was written in a context where the claim was self-described as being in its ‘preliminary stages’, and liability under the policy was specifically not acknowledged.

The court extended the limitation period and settled the matter via summary judgment.

Agreement 7(1) Subject to section 9, if an agreement expressly provides for the extension of a limitation period provided by this Act, the limitation period is altered in accordance with the agreement.

(2) An agreement that purports to provide for the reduction of a limitation period provided by this Act is not valid.

ii. Insurance Act and COVID19: As we all know that COVID19 pandemic affected the General Rule of limitation periods in the Limitations Act by temporarily suspending the computation of limitation period from March 17, 2020, to May 31, 2020, inclusively. This was done on March 30, 2020, by the issuance of the Ministerial Order M.O. 27/2020 27. The Ministerial Order paused the limitation clock for 75 days.

However, the specific limitation period under the Insurance Act i.e., 2 years from the date the insured knew or ought to have know about the injury or loss, remained unaffected and was not suspended. Based on my limited knowledge, it appears to me that the same remained unaffected primarily for the reason that the court permitted electronic filing of the documents and facilitated the filing at the counter with certain conditions. iii. Insurance Act and Fair Practices Regulations: The Alberta Fair Practices Regulation 28 under the Insurance Act, includes one of the modifying factors for the determination of limitation period. The Regulation states that an insurance company must provide written notice to the insured, indicating the name of the act or regulation that defines the limitation period. The Court in Statt v SGI Canada Insurance Services Ltd29, provided a purposive interpretation of Section 5.3 of the Regulation and held that the nature of notice mandated by the Regulation requires the insurance, within 60 days from the date the claimant notifies the insurer of the claim, to at the very least, inform the insured as to what needs to be done, by what date, and under which legislation. In this matter, a letter from the insurer (SGI Insurance) referred to a limitation period, but it was not clear as to whether it was the period to submit a proof of loss or to commence a lawsuit against the insurer.

iv. Municipal Government Act: For claims against the municipalities, the Municipal Government Act 30 provides variations and additional requirements to the General Rule and specific requirements for notice to the municipality within a short period of time. For example, if a plaintiff is injured in a slip-and-fall incident on a city sidewalk or public property due to the negligence of the city, then the plaintiff must provide a written notice to the city within 21 days of the date of injury.

Failing to notify the city in time may entitle the City / its employees to immunity from liability. v. Motor Vehicle Accident Claims Act (Fund Claims): If a plaintiff is injured by an uninsured motorist, unknown operator, or by the owner of the vehicle, then the plaintiff is required to notify the Administrator of the Motor Vehicle Accident Claim Fund (the Fund) within 90 days under the Motor Vehicle Accident Claims Act31. For an undefended action, the MVAC Act requires notice to the Administrator after noting the defendant in default. vi. SEF 44 Claims: The Motor Vehicle Accident Claims Regulation32, provides that the Fund can pay up to a maximum of $200,000, excluding costs, for all claims resulting from a single motor vehicle collision. Under SEF 44 33, a plaintiff is entitled to recover damages from his / her own insurance for damages exceeding the capped amount under the Regulation.

Section 6 of the SEF 44 Endorsement states that: Every action or proceeding against the Insurer for recovery under this endorsement shall be commenced within 12 months from the date upon which the eligible claimant or his legal representatives knew or ought to have known that the quantum of the claims with respect to an insured person exceeded the minimum limits for motor vehicle liability insurance in the jurisdiction in which the accident occurred. No action which is commenced within 2 years of the date of the accident shall be barred by this provision.

In Shaver v. Co-operators General Insurance Company 34, 2011 ABCA 367 the issue before the Court of Appeal was whether the plaintiff had commenced the action under his section 44 endorsement within the limitation period. The court noted that para. 6(c) of the endorsement was ambiguous and

MO 27/2020 https://files.constantcontact.com/3744a7b8601/78bca1d4-f437-415e-963b-24c04525b329.pdf Fair Practices Regulation, Alta Reg 128/2001 29 Statt v SGI Canada Insurance Services Ltd, 2019 ABQB 828 (CanLII) 30 Municipal Government Act, RSA 2000, c M-26 31 Motor Vehicle Accident Claims Act, RSA 2000, c M-22 32 Motor Vehicle Accident Claims Regulation, Alta Reg 189/1998 s7.

33 Alberta Government SEF No 44: Family Protection Endorsement online: https://www.alberta.ca/assets/documents/insurance-automobile-endorsement-sef-44.pdf 34 Shaver v. Co-operators General Insurance Company, 2011 ABCA 367 27 28

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that discoverability may occur when the plaintiff or its lawyer decides the quantum of damages or when such discovery may occur later when a judgment or binding settlement has been reached to ascertain the quantum of damages. The 12-month limitation under the endorsement starts from the date in which the plaintiff or his legal representative knew or ought to have known that the quantum of damages exceeded the capped amount of recovery under the Regulation.35 We all know that our Constitution is a ‘living tree’ or organic in nature, and the law evolves along with the society and so should our practice. To make sure we don’t look into the eyes of Medusa and have her ‘laugh’ at us, we must modernize our practice management skills and put in place a well constructed limitation system as part of our practice. I have realised that my old techniques of calendaring, diarizing, and other manual methods are outdated and are prone to errors. The physical diary might get misplaced, or the assistant might forget, miss a date, or get sick. So now when opening a new file, I avoid delegating limitation entry to my assistants; instead, I do it myself. In addition, employing new and updated practice management systems are very helpful as their software is designed to track limitations. An efficient limitations system not only help us by protecting the rights of our client, but also reduces the number of complaints or professional negligence claims against us. In addition to the professional negligence claims, it creates further struggles for damage control as the defendants would raise the defence of limitations. The counsel for defendants would make an application to strike the claim due to the expiry of limitation period. Notably, this has been frequently used since the Alberta courts have confirmed that a defence of limitation is available via summary judgment application.36 By applying the “living tree” approach to our practice of law and using new techniques and methods, we can best serve our clients superior quality of legal services and contribute to access to justice.

For details see Geoffrey Duckworth, The Alberta Court of Appeal Opines on the S.E.F. No. 44 Limitation: The Status Quo and the Unresolved, 2013 50-3 Alberta Law Review 717, 2013 CanLIIDocs 106, <https://canlii.ca/t/7r6>, retrieved on 2022-08-25 36 See Jackson v Canadian National Railway, 2012 ABQB 652 (CanLII), <https:// canlii.ca/t/fvrn2 In this mater, the court granted the Defendant’s Summary Dismissal Application because the Defendant had established that the Plaintiffs claims were barred by the 10-year ultimate limitation period.

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Please contact Joseph Nagy to schedule a viewing of the property or for further general inquiries.

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When Does Using Your Own Capital to Fund Disbursements Stop Making Sense?

Shortreid says. “Law firms can really advance their practices if they use our tools effectively and strategically, and it’s not one-size-fits-all. We often structure financial solutions on a bespoke basis to meet the unique needs of individual client firms.”

A CHANGING LANDSCAPE

Andrew Shortreid Bridgepoint Financial CFO Operating in the space for 17 years and counting, BridgePoint Financial has an unparalleled understanding of the economics of law firms – including the fact that traditionally, especially in the personal injury field, they fund their own disbursements. But fronting that cost isn’t the most economical solution any longer, warns chief financial officer Andrew Shortreid.

“We’re not just asking lawyers to do something different; we’re providing an opportunity to do it better. We see ourselves as in partnership with them,”

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Personal injury firms have traditionally managed disbursements through a combination of cash payment for day-today expenses and trade finance, which is typically an informal deferred payment arrangement with a service provider, most often for expert work. But that model is at odds with the current environment and is being challenged in a few ways, Shortreid notes.

First, the banks continue to take a hardline approach in underwriting personal injury primary law firms and offer limited credit availability, restricting the flexibility of partners who wish to distribute excess earnings to their professional corps and forces them to keep capital they’ve already paid taxes on within the business.

A second challenge is the changing composition of law firms themselves: those that diversify and have both contingent and non-contingent fee work can experience stress around the allocation

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of cash within the business to the different practice areas. And finally, extended claim durations put financial stress on expert firms by stretching out the timeframe between the delivery of a service and receipt for payment.

“These arrangements often start out as win-win for both parties but shift over time and become less feasible for the experts who see flat cash collections versus a rising receivable balance that consistently marches higher,” Shortreid says. “The presence of a significant deferred payment program adds operational complexity to an expert’s business that requires both staff and resources to manage. These extra costs aren’t typically visible to a law firm but are very real to the experts.”

Leveraging BridgePoint’s financial solutions – such as Expert Access, a program that enables lawyers to source qualified experts in any discipline using BridgePoint’s proprietary online Expert Search tool, with the option to defer payment for their reports until settlement with no interest for up to two years – addresses these pain points by putting BridgePoint’s money to work, leaving funds within the firm for other things like reinvesting in the business.

THE FUTURE OF PRACTICE

“Access to capital is one of the key determinants in enabling growth, and BridgePoint removes constraints and friction that stand in the way of that growth,” says Shortreid. “Our financing allows for quicker investment across a broader range of files and to make these investments without sacrificing hiring, marketing or operating expenses.”

THE FINANCIAL BRASS TACKS One of the fundamental reasons BridgePoint exists is that a growing personal injury firm is a consumer of capital and needs to make long-tailed investments to grow the business. When a lawyer takes on a client, they’re investing years of time, money, resources and overhead – and the internal cash available is finite. Lawyers have an obligation if they’re taking these files on spec to invest in them, but the capital-intensive business of a law firm can sometimes make it difficult. BridgePoint’s funding is the perfect solution to keep files moving and business growing.

Though providing capital to accelerate growth is a popular example, its use isn’t limited to that scenario. BridgePoint’s underwriting tools and processes allow them to offer significantly more credit financing to law firms than traditional financial institutions and to grant those solutions across a range of innovative lending products that’s unmatched by any

other specialist lender in the country. With financial terms that reflect the reality of how law firms operate and generate cash, BridgePoint’s solutions can assist with initial investments required for younger firms as they establish their practice, help mature law firms optimise their balance sheet, or help finance file acquisitions or practice transitions as the next generation of lawyers rise up.

“We work with law firms across the country, of all shapes and sizes, and what we offer goes beyond that one use case – we have a range of solutions, from tip to tail of their life cycle,” Shortreid says, noting Bridgepoint’s technology is also a key feature in the delivery of a frictionless experience. Over the last five years, they’ve focused on developing and improving the law firm funding portal to make firms’ investments in experts and in the hard costs of funding their files seamless. The portal gives law firms and service providers the ability to access an online marketplace where they can come together, find each other, and conduct business.

There is a large and growing cohort of the personal injury bar that recognizes themselves as both professional practitioners and businesspeople, and they are driving rapid change with respect to business process optimization. From one or two partner firms all the way up to those with several hundred employees, they’re making significant investments in the tools and training necessary to run their firms efficiently – and BridgePoint’s range of products and services are an increasingly popular option that align with this shift. BridgePoint can service any size law firm and cater to each one’s specific needs, which Shortreid calls “the beauty of BridgePoint: no limits and superior knowledge.”

“We’ve grown our expertise around the unique business model of a law firm, cultivated strong relationships with a broad set of talented experts on the portal and have an amazing team of in-house client success staff that’s dedicated to meeting the needs of our law firm clients.

We feel we’re the best-positioned partner to ensure law firms maximize the value overall of the services they provide for their clients.”

Originally Published by Canadian Lawyer Magazine

The bottom line, financially speaking, is that “internal returns generated by a growing business far exceed the interest costs on the capital we’re charging,” Shortreid says, adding “using our money enables law firms to maximize the slope and optimize the pace of their growth.”

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Book Review of

Think Again: The Power of Knowing What You Don’t Know Adam Grant, New York: Viking, 2021, 307 pages Review by Peter Trieu Partner at LT Lawyers LLP Member of ACTLA Editorial Committee

“Since successful advocacy is all about getting your decision makers to listen to you with sympathy, unpleasantness on the part of the advocate really strikes at the root of the whole thing. Not only are you stressing yourself out: at the same time you are significantly reducing your effectiveness” - Keith Evans, The Language of Advocacy 4 (1998)1 Though not written specifically for lawyers, organizational psychologist Adam Grant’s Think Again makes the compelling case that intellectual curiosity, openness, and confident humility will enhance our efficacy as advocates. Grant’s insightful recommendations to thinking and re-thinking safeguards us from promoting a “false sense of mastery” whereby our confidence vastly exceeds our competence,2 thereby reducing our effectiveness as advocates. For example, if you’ve ever met anyone whose confidence vastly exceeded their competence, you’re likely to have been unpersuaded by their opinions.

Although “intelligence is traditionally viewed as the ability to think and learn”, Grant argues that the ability to rethink and unlearn might be more important in our rapidly changing world.3 For example, have you ever adopted one strategic approach on one file only to discover that adopting the same approach on another file backfired?

During law school and my articling year, I thought that there were rules or formulas that would assist my advocacy skills—

after all, who am I to question these rules or formulas for advocacy that were promoted as tried-and-true, conventional, and deemed “best practices”?4 While there may be wisdom and insight in some of the tried-andtrue approaches to advocacy you’ve probably learned throughout your career, Rick Friedman observes that “trial lawyers must learn and understand the teachings of those who came before them before they can learn what to keep and what to discard”.5 When it comes to trial advocacy, “there are no such rules or formulas. There never have been. There never will be. The process is too complex”.6 Yet, I imagine that part of the resistance to re-thinking and re-evaluating our approaches to advocacy is due to what Grant describes as “cognitive laziness”:7 We often prefer the ease of hanging on to old views over the difficulty of grappling with new ones. Yet there are also deeper forces behind our resistance to re-thinking. Questioning

As located in Garner, Bryan: The Winning Oral Argument: Enduring Principles with Supporting Comments from the Literature, Dallas: Lawprose, 2007, p. 72.

Grant, Adam, Think Again: The Power of knowing what you don’t know, New York: Viking, 2021, p. 44-45.

3 Grant, Adam, Think Again, p. 2.

4 When I was practicing with my mentor and friend, Walter Kubitz K.C., I had a front-row seat to Walter’s humble commitment to re-thinking his approach to advocacy.

Whilst generous with his time and knowledge, he eschewed formulas, always sought continuous improvement, and his courage, preparation and creativity shone through some exceedingly difficult cases.

5 Friedman, Rick, Becoming a Trial Lawyer: A Guide for the Lifelong Advocate, (2nd edition), Portland: Trial Guides, p. 80.

6 Friedman, Rick, Becoming a Trial Lawyer, p. 77.

7 Grant, Adam, Think Again, p. 4.

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ourselves makes the world unpredictable. It requires us to admit that the facts may have changed, that what was once right may now be wrong. Reconsidering something we believe deeply can threaten our identities, making it feel as if we’re losing a part of ourselves...

When it comes to our knowledge and opinions…we tend to stick to our guns… We favor the comfort of conviction over the discomfort of doubt, and we let our beliefs get brittle long before our bones. We laugh at people who still use Windows 95, yet we still cling to opinions that we formed in 1995. We listen to views that make us feel good, instead of ideas that make us think hard.

Think Again is divided into 3 sections. Part 1 is on individual re-thinking and updating our own views, Part 2 is about interpersonal re-thinking and how we can encourage others to think again ,and Part 3 is about collective rethinking and creating communities of lifelong learners.

Grant observes the following regarding how most people think and talk when expressing their views:8 As we think and talk, we often slip into the mindsets of three different professions: preachers, prosecutors and politicians.

In each of these modes, we take on a particular identity and use a distinct set of tools. We go into preacher mode when our sacred beliefs are in jeopardy: we deliver sermons to protect and promote our ideals. We enter prosecutor mode when we recognize flaws in other people’s reasoning: we marshal arguments to prove them wrong and win our case.

We shift into politician mode when we’re seeking to win over an audience: we campaign and lobby for the approval of our constituents. The risk is that we become so wrapped up in preaching that we’re right, prosecuting others who are wrong, and politicking for support that we don’t bother to rethink our own views.

While Grant notes that there are situations where it might make sense to preach, prosecute and politick,9 he proposes that we can adopt a scientific mindset in the search for truth. Grant writes,10 Grant’s observations build upon his colleague, Phil Tetlock’s discovery in Grant, Adam, Think Again, p. 18-19.

9 Grant, Adam, Think Again, p. 27. Grant also highlights that even great scientists can morph into preachers, politicians and prosecutors, and as a result, need to think more like scientists, p. 22. As a person of faith, I don’t think that Adam Grant’s proposals of thinking like a scientist are antithetical to my faith.

10 Grant, Adam, Think Again, p. 25.

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When we’re in scientist mode, we refuse to let our ideas become ideologies. We don’t start with answers or solutions; we lead with questions and puzzles. We don’t preach from intuition; we teach from evidence. We don’t just have healthy skepticism about other people’s arguments; we dare to disagree with our own arguments.

that even having one negotiator adopt a posture of intellectual curiosity and humility improves outcomes for both parties.12 With an analysis of several research studies, Grant outlined the differences between expert negotiators and average negotiators:13 Average Negotiators “Went in going armed for battle, hardly taking note of any anticipated areas of agreement”

Skilled Negotiators “Mapped out dance steps they might be able to take with the other side, devoting more than 1/3 of their planning comments to finding common ground” Piled up more reasons to “tip “Presented fewer reasons to the scales” in their favor support their case” More likely to enter into Rarely went on offense or “defend-attack” spirals defense. Instead, expressed dismissively shooting down curiosity with questions like, their opponents’ proposals and “So you don’t see any merit in doubling down on their own this proposal at all?” positions Less questions Of every five comments the experts made, at least one ended in a question mark

Thinking like a scientist involves more than just reacting with an open mind. It means being actively open minded. It requires searching for reasons why we might be wrong—not for reasons why we must be right—and revising our views based on what we learn.

That rarely happens in the other mental modes. In preacher mode, changing our minds is a mark of moral weakness; in scientist mode, it’s a sign of intellectual integrity. In prosecutor mode, allowing ourselves to be persuaded is admitting defeat; in scientist mode, it’s a step toward the truth.

In politician mode, we flip-flop in response to carrots and sticks; in scientist mode, we shift in the face of sharper logic and stronger data.

I found Grant’s chapter entitled “Dances with Foes” germane to our line of work, especially since more cases are resolved via settlement or ADRs and fewer cases end up going to trial.

Negotiated settlements are not war—they are more like a “dance that hasn’t been choreographed, negotiated with [an opponent] who has a different set of steps in mind”.11 Grant highlights

As I reflect upon the idea that sometimes “less is more” when it comes to convincing the other side, I’m reminded of the time when I was preparing for exams in my first year of law school over 15 years ago. My Constitutional Law Professor, Rodney Brazier left me with a comment about persuasion that has stayed with me since: What you leave out of your essays and exams is just as important as what you put in. Professor Brazier’s advice mirrors a quote warning about the danger of overextending one’s position during negotiations: It often happens that lawyers who attempt to cover all of the issues in the case find themselves left with the uncomfortable feeling that they have failed to deal with any of the issues adequately.14 Grant provides vivid illustrations of how re-thinking happens— from how a Black musician persuaded white supremacists to leave the Ku Klux Klan to why an innovative entrepreneur got trapped in an overconfidence cycle. If you are open to modifying your strategic approaches to advocacy with the hopes of improvement, albeit incrementally, Think Again is a wise, entertaining and insightful read.

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Grant, Adam, Think Again, p. 25.

Grant, Adam, Think Again, p. 105-106.

13 Grant, Adam, Think Again, p. 105.

14 Hon John M. Harlan, What Part Does the Oral Argument Play in the Conduct of an Appeal?, 41 Cornell L.Q. 6, 8 (1955), as located in Garner, Bryan: The Winning Oral Argument, p. 40.

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The Alberta Weekly Law Digest

Professionally selected from the Alberta Weekly Law Digest

by Royal J. Nickerson Originally published by Thomson Reuters in the Alberta Weekly Law Digest

Dow Chemical Canada ULC v. NOVA Chemicals Corporation AWLD 04-447 Evidence --- Opinion — Experts — Expert reports — Admissibility Parties had joint venture agreement to build and operate ethylene production facility (E3) — Defendant was responsible under agreement for sourcing ethane as feedstock for E3 — Defendant stopped sharing information about ethane pool as required under agreement because plaintiff was in competition with defendant to obtain ethane for its operations in Alberta — Defendant limited plaintiff’s share of ethylene produced by E3 — Plaintiff successfully sued in conversion and breach of contract, and was awarded damages — Damages awarded covered 2001 to 2012 and provisional for further award for years 2013 to 2018 — Process that was to lead to top-up of damages hearing for the period from 2012, date evidence of operations was curtailed for purpose of experts’ calculation of damages by agreement of parties, until date of judgment, began in September 2019 — Parties had not been able to agree on scope of hearing, despite several decisions that sought to provide clarity — Plaintiff brought application for order enforcing specific exclusion of inadmissible portions of expert reports of W and R, and supplementary reports; and order enforcing limited scope of productive capability issues for damages hearing; defendant brought cross-application for order that issues raised in plaintiff’s application be determined in course of damages hearing; and, alternatively, order striking all, or portions of, plaintiff’s expert

reports — Application granted in part; cross-application granted in part — Earlier decision found that W’s method of calculation of productive capability did not correspond with court’s accepted productive capability methodologies — It was also found that R’s report was not admissible to extent that it relied on W’s rejected opinion — Those portions of first reports of W and R continued to be inadmissible as evidence at hearing — Admissibility of W’s second report, as well as report of defendant expert S, should be addressed at damages hearing — Defendant’s crossapplication to exclude reports of plaintiff’s experts was premature — Admissibility of those expert reports may be addressed at damages hearing, in conjunction with issue of whether reports complied with assessment principles approved in reasons for judgment — Parties could call lay witnesses at hearing subject to constraints that met threshold requirement of relevance — Damages hearing did not open door to consideration of contractual defences to liability.

Dow Chemical Canada ULC v. NOVA Chemicals Corporation 2021 ABQB 974, 2021 CarswellAlta 3102, [2022] A.W.L.D. 447, 340 A.C.W.S. (3d) 183

Jegou v. Canadian Natural Resources Ltd AWLD 04-458 Labour and employment law --- Employment law — Ter mination and dismissal — Practice and procedure — Costs — Offers to settle Employer operated oilsands facility and employee was hired as paramedic — Employee was dismissed after six years of employment — Employer maintained it had just cause for dismissal on ground that employee failed to act according to standards of his profession and employer’s requirements for paramedical employees — Employee brought action for damages for wrongful dismissal — Action dismissed — Parties made submissions regarding costs — Employer entitled to costs on Schedule C, column 3, doubled for formal offer to settle, amounting to $94,700 plus disbursements of $5,311.47 — Employer was wholly successful, and reasonable actions of employee and offer to settle did not alter presumption — Case did not involve novel point of law and action was not complex — Amount claimed was not large — Very early, informal settlement offer could not be determined exactly and was not considered for costs — Parties were far from equal in their resources — Costs based on 40 to 50 percent of employer’s legal fees would be excessive.

Jegou v. Canadian Natural Resources Ltd 2021 ABQB 943, 2021 CarswellAlta 2994, [2022] A.W.L.D. 458, [2022] A.W.L.D. 733, 340 A.C.W.S. (3d) 17

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Christofi v. Kahane Law Office AWLD 04-494 Professions and occupations --- Lawyers — Relationship with others — Relationship with opposite party — Miscellaneous Individual and corporate plaintiffs sued customer for unpaid invoices under contract and customer defended and counterclaimed against individual plaintiff for damages — Claim was dismissed and counterclaim allowed — Plaintiff brought claim against both customer and law firm that had acted for her which was summarily dismissed — Plaintiff sought to appeal dismissal of that claim — Plaintiff filed claim for damages against customer and law firm — Law firm brought motion to strike statement of claim — Motion granted and claim dismissed — Claim was struck under R. 3.68(2)(b) as disclosing no cause of action — Lawyers did not generally owe duty of care to opposing clients — Lawyers were bound by Code of Professional Conduct of Law Society of Alberta which regulates lawyers in interests of public — That did not create stand-alone duty of care from lawyer to opposing client and did not impose obligation on counsel for opposing party to agree after-the-fact that their client should not have been successful — Plaintiff’s affidavit repeated his complaints and this was both vexatious, improper pleading and clear attempt to relitigate issue already decided which was legal abuse of process.

Christofi v. Kahane Law Office 2021 ABQB 608, 2021 CarswellAlta 1871, [2021] A.W.L.D. 3131, 334 A.C.W.S. (3d) 649

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Jacobsen v. Wawanesa Mutual Insurance Company AWLD 06-595 Insurance --- Actions on policies — Practice and procedure — On appeal Dispute concerned water damage to plaintiff homeowner’s home and action originated from alleged property loss claim — Homeowner retained roofing company to repair damage and defendant insurer issued cheque to pay for repairs, and after that, homeowner alleged deficiencies in repair work and sought further compensation from insurer, which was denied — Master’s decision refused insurer’s request to dismiss action for inordinate delay (Master’s order) — Master’s order was signed by Master in October 2020 and Master’s order was not returned to Court for filing until November 2020, and on that same day, counsel for insurer informed counsel for plaintiffs of their intention to appeal — Insurer appealed — Appeal allowed — Appeal of Master’s order was not barred by time limits in Alberta Rules of Court — Notice of Appeal was served more than two months after Master issued Master’s order, which was significant delay, however, during months of October to December 2020, efficiency of court’s filing process was significantly compromised by COVID-19 pandemic — Plaintiffs were notified of intention to appeal even before Master’s order was served and were served with formal Notice to Appeal at same time they were served with actual order.

Jacobsen v. Wawanesa Mutual Insurance Company 2021 ABQB 938, 2021 CarswellAlta 2995, [2022] A.W.L.D. 574, [2022] A.W.L.D. 595, 18 C.C.L.I. (6th) 267, 340 A.C.W.S. (3d) 20

R v. Royal AWLD 06-597 Judges and courts --- Contempt of court — Punishment for contempt — Remedies available to court — Fine or costs Defendant lawyer violated court order with contemptuous behaviour — Despite being given opportunities to reconsider such behaviour, defendant continued contemptuous activity — His defiance interfered with proper administration of justice, and Fall 2022

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caused three-day criminal trial not to proceed and be adjourned for fourth time — Defendant was found in contempt — At beginning of penalty phase, he purged his contempt with sincere apology — Defendant was ordered to pay fine — Defendant was distinguished member of criminal bar, and his conduct was out of character — He was also impacted by serious health issues, and effect Covid-19 had on his practice — When applying penalty principles, general deterrence was major factor in deciding appropriate penalty — Financial penalty had effect of deterring not only on defendant but also others from disobeying any order of court, and was firm, just and measured response to ensure rule of law would be obeyed and upheld — Since defendant purged his contempt and showed sincere regret, this reduced amount of fine payable when considering specific deterrence.

R v. Royal 2021 ABPC 311, 2021 CarswellAlta 3092, [2022] A.W.L.D. 596, [2022] A.W.L.D. 597, 177 W.C.B. (2d) 147

term of contract — Employer appealed — Appeal dismissed — Parties’ intentions could be ascertained without resorting to characterizing employment agreement or resorting to presumption of employment for indefinite duration — When employee was offered one of reduced number of employment roles and was advised that length of assignment was four years, she had reason to believe that she would not be terminated for four years — Objective observer might reasonably believe that that was employer’s intention as well — Length of assignment referred to in emailed offer was expressly defined as four years — Trial judge’s interpretation of contract was clearly focused on what parties intended when contract was formed — Evidence existed to rebut presumption of indefinite employment — Trial judge did not err in consideration of parties’ prior contractual dealings, which included fixed-term contracts — Trial judge was alive to proper interpretive principles as gleaned from case law, considered parties’ subjective understandings, and then opined on reasonableness of their respective understandings in order to determine their objective intent at time they entered into their agreement — There was no error in that analysis.

Rice v. Shell Global Solutions Canada Inc 2021 ABCA 408, 2021 CarswellAlta 3147, [2022] 2 W.W.R. 16, [2022] A.W.L.D. 288, [2022] A.W.L.D. 598, [2022] A.W.L.D. 599, 2022 C.L.L.C. 210-021, 339 A.C.W.S. (3d) 343, 34 Alta. L.R. (7th) 1, 464 D.L.R. (4th) 358, 75 C.C.E.L. (4th) 163

Mallon v. Norman Wells (Town) et al AWLD 06-663 Torts --- Defamation — Defences — Absolute privilege — Judicial proceedings — Extent of privilege — Statements in pleadings

Rice v. Shell Global Solutions Canada Inc AWLD 06-598 Labour and employment law --- Employment law — Interpretation of employment contract — General principles Employee had worked for employer in various capacities for 8.5 years prior to her termination without cause — Initially, employee was term employee and term employment was converted to regular full-time — While she was regular, fulltime employee, her position was terminated due to down-sizing, but employee competed successfully for one of reduced roles offered by employer — Employee’s offer of employment for this position, sent via email, included term indicating “Your Assignment Length will be 4 years” and contained no termination provision — Employer terminated employee without notice and provided 15-month notice period — Employee was successful in summary action against employer for damages for wrongful dismissal, obtaining damages equivalent to remuneration she would have received had she remained employed to end of 71

Plaintiff was former employee of defendant town — Employee served in administrative officer role until town was placed under administration and employee’s contract expired — Defendant who succeeded employee as interim officer, suspected irregularities in employee’s business activities — Report was commissioned, suggesting that these irregularities had taken place — Based on report, town brought action against employee, former mayor and corporate defendant for fraud — Town moved for injunctive relief in this action, which was initially granted before being set aside — Employee claimed statements made about her in court proceedings were defamatory — Employee claimed these statements were publicized when documents were made available at town office — Employee brought action in defamation against defendants, including new mayor and new permanent administrative officer — Defendants claimed their statements were protected, by absolute and qualified privilege — Defendants claimed that no reasonable cause of action had been raised by employee — Defendants moved for summary judgment in defamation action — Defendants also moved for alternative relief, of having portions of statement of claim struck — Motion

The Barrister

for summary judgment granted; action dismissed — Statements made by permanent officer in affidavit were fully protected by absolute privilege — Officer’s actions in publicizing statements, did not exceed limits of privilege.

period did not begin to run until society had actual knowledge of their deaths in October 2018, and action was commenced in time — Limitations Act did not offer defence to society’s claim, and did not prevent limited administrator from fulfilling his duties to distribute lands to society in accordance with terms of will.

Mallon v. Norman Wells (Town) et al 2021 NWTSC 37, 2021 CarswellNWT 65, [2022] A.W.L.D. 576, [2022]

Halstead v. Selock

A.W.L.D. 663, [2022] A.W.L.D. 664, [2022] A.W.L.D. 665, 24 M.P.L.R. (6th) 96,

2021 ABQB 1026, 2021 CarswellAlta 3320, [2022] A.W.L.D. 806, 340 A.C.W.S.

340 A.C.W.S. (3d) 115, 80 C.C.L.T. (4th) 117

(3d) 381, 35 Alta. L.R. (7th) 315

Halstead v. Selock AWLD 08-806 Civil practice and procedure --- Limitation of actions — Estates — Claim against estate — For recovery of legacy Lands consisting of apartment building were legally and beneficially owned by testator until his death in 1968 — Testator’s will made specific bequest that upon death of his daughter B and granddaughter S, lands would be transferred to respondent society — S died in 1999, and B died in 2009, but society was not advised by any representative of B’s estate that she had died — As at death of B, administration of testator’s estate had not been concluded, and respondent L, B’s son, assumed control over lands — In 2019 society brought action alleging breach of trust, breach of fiduciary duties, knowing receipt and negligence — Limited administrator of lands applied for advice and direction with respect to whether he may transfer legal title to lands to society — Application granted — Will clearly required that, on death of survivor of B and S, lands would be transferred to society, and limited administrator had no discretion — On death of B, her executor L became executor of testator’s estate by devolution of executorship — L became fiduciary in relation to lands and owed duty to report to beneficiaries, including society — L had further fiduciary duty to comply with wishes of testator and to deal with lands in manner directed in will — Earliest limitation period could commence was on date of death of B in 2009 — Society did not actually discover that both S and B had died until October 2018 — Record clearly acknowledged that society took no steps to determine whether B and S had died — In most cases defendant had no obligation to contact plaintiff to disclose facts that might give rise to claim, but situation was different in relation to executor who held property in trust for those who had been granted specific bequests in will as executor owed fiduciary obligations to beneficiary — Fiduciary duties owed by L as executor were ongoing, and he was not entitled to remain silent and wait for limitation period to expire — L had positive duty to report to beneficiary and to transfer title, and he did not discharge those duties — Society was entitled to expect that executor would fulfil his fiduciary duties — Publication of obituary announcing death of B, which referred to earlier death of S, did not satisfy executor’s obligations — In circumstances of case, despite having taken no active steps, society ought not to have known of deaths of B and S, limitation

Perfect v. The Source (Grande Prairie) AWLD 08830 Human rights --- Duty to accommodate — Duty of complainant Complainant was individual with disability, which she alleged prevented her from wearing face mask and respondent store’s health policy required customers to wear face mask in store due to Covid-19 pandemic — Complainant attended respondent store without wearing face mask and manager of store asked her about lack of mask and asked her to show proof of exemption, which complainant refused to provide on grounds of privacy — Complainant alleged that she was asked to leave store and that her rights were infringed as she was not permitted to complete her sale — Complainant filed complaint alleging that respondent discriminated against her in area of good, services, and accommodation on ground of mental disability contrary to s.

4 of Alberta Human Rights Act — Complainant requested review of director’s decision dismissing complaint — Request denied — Information supported that respondent instituted policy for valid and legitimate purpose of health and safety concerns and was introduced in good faith during unusual and remarkable event of worldwide pandemic — Respondent had outlined possible accommodations in form of curb side pickup and online ordering to allow complainant to complete her purchase and maintain access to respondent’s service — Complainant was not denied respondent’s service as result of disability but she was offered

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service in another accommodating manner — Complainant was unwilling to participate in accommodation process and also did not advice why those accommodations were not reasonable or would not be acceptable — Complainant had duty to cooperate in accommodation process and respondent asked complainant to leave store due to her noncompliance with its mask policy.

term — Defendant terminated agreement prior to expiry of stipulated term — Plaintiff brought action seeking damages for breach of contract — Action allowed — Defendant H had worked as salesman for plaintiff, and he was then hired by defendant — Evidence did not establish that defendant induced H to breach employment contract with plaintiff — There was no evidence that defendant intended to and did cause H to breach his contract.

Perfect v. The Source (Grande Prairie) 2022 AHRC 17, 2022 CarswellAlta 381, [2022] A.W.L.D. 830

Cor-Ex Vacuum Services Inc v. Associated Aggregates Inc 2021 ABQB 995, 2021 CarswellAlta 3237, [2022] 3 W.W.R. 105, [2022]

Robertson LLP v. Pasco AWLD 08-863

A.W.L.D. 809, [2022] A.W.L.D. 812, [2022] A.W.L.D. 813, [2022] A.W.L.D. 814, [2022] A.W.L.D. 835, [2022] A.W.L.D. 874, 340 A.C.W.S. (3d) 179, 34 Alta. L.R.

Professions and occupations --- Lawyers — Lawyer’s or solicitor’s lien — Priorities — Miscellaneous

(7th) 270

Solicitor’s firm was victim of fraud perpetrated by defendant in real estate transaction, leaving it with $250,681.11 shortfall — Firm obtained solicitor’s charge against property — Property had two mortgages registered against it prior to registration of charging order — Firm commenced foreclosure action and property was sold — Priority dispute arose between firm and mortgagees over proceeds of sale — Judge held that mortgages took priority over solicitor’s charge — Firm appealed decision — Appeal dismissed — Firm appeared twice before court concerning charging order and did not raise issue of priority — By failing to disclose existence of prior encumbrances over which it was intending on claiming priority, firm denied judge relevant information which was needed to fully appreciate effect of charging order — That was potentially unfair circumstance for which charging order might be denied — Whether lawyer’s charge overrode statutory priority schemes appeared to depend on facts, circumstances, and equities of case.

King County (a Washington Municipal Corp.) v.

Gelhaus AWLD 10-991 Evidence --- Taking evidence before trial — Letters rogatory in civil matters Complaint was filed by Washington municipal corporation of King County (KC) in State of Washington for King County’s Superior Court (WC) — KC alleged that defective polypropylene water pipes were installed at King County Correctional Facility (KCCF) which later caused financial damage to KC — KC wished to examine, under oath, two witnesses located in Alberta who were subjects of Letters of Request (LOR) — Municipal

Robertson LLP v. Pasco 2021 ABQB 988, 2021 CarswellAlta 3360, [2022] A.W.L.D. 863, 15 P.P.S.A.C. (4th) 37, 340 A.C.W.S. (3d) 354, 40 Alta. L.R. (7th) 199, 77 C.P.C. (8th) 384

Cor-Ex Vacuum Services Inc v. Associated Aggregates Inc AWLD 08-874 Torts --- Interference with contractual relations and inducing breach of contract — Elements — Intention to cause loss Plaintiff was provided trucking services in oilfield industry, and it was involved in trucking large volumes of water to fracking sites — Plaintiff obtained water to truck to fracking sites from various locations, and it also obtained water through temporary diversion licences (TDLs) — Main defendant was gravel supplier who owned number of gravel pits, and runoff water collected in pits and had to be pumped out so gravel could be accessed — Parties entered into agreement which provided that defendant would sell water exclusively to plaintiff from all gravel pits for $2.50 per cubic meter, and agreement was later revised to extend 73

The Barrister

corporation made application for Court of Queen’s Bench of Alberta (ABQB) to enforce two LOR issued by WC — Application granted — ABQB ought to consider relevance and breadth of scope of LOR — If evidence sought was generally relevant, Court of Queen’s Bench ought not enter detailed analysis on whether evidence sought would or would not be ultimately useful in Washington Action — WC better placed than Court of Queen’s Bench to make ultimate decision regarding relevancy (and potentially prejudicial effect) of testimony of proposed Alberta witnesses, on issue of defendant company’s potential liability under Washington legislation — Decision on whether evidence was relevant and/or prejudicial should be argument conducted before WC based on defendant’s testimony, rather than argument to be considered by Court of Queen’s Bench judge prior to witnesses actually testifying — Evidence was generally relevant sufficient to allow LORs to proceed — It would be unfair to KC to only permit testimony from defendant company employees and not two named witnesses on situation regarding Canadian leaks — There was no public policy reason to deny right of foreign court to seek testimony from residents of Alberta — LOR would not have placed undue burden on witnesses.

King County (a Washington Municipal Corp.) v. Gelhaus 2022 ABQB 2, 2022 CarswellAlta 4, [2022] A.W.L.D. 991, 341 A.C.W.S. (3d)

of proof to establish prima facie case of discrimination about both his return to work and his employment termination — Complainant established that respondent’s failure to return him to work that he could functionally perform was prima facie discrimination and that was adverse impact because respondent prevented complainant from engaging in meaningful employment when he was capable of doing so, and affected his pay and leave entitlements — Worker had disability in nature of gastrointestinal disorder that required medication and lifestyle management, which interfered with his functional abilities and complainant’s disability was factor in not returning him to work because respondent refused to put him back to work although he was capable of working different shift rotation but — After respondent refused to return complainant to work, complainant applied for long term disability leave and respondent terminated complainant’s employment while he was on long term disability leave — Although respondent likely laid off several employees for legitimate business purposes as part of larger staffing reduction, complainant’s disability was factor in decision to include him in those layoffs — Complainant’s request for accommodation and refusal to work shift work were due to his physical disability, and those were at least factor in decision to include him in respondent’s layoffs — Deviating from shift change plan to accommodate complainant would not have caused undue hardship to respondent.

363, 40 Alta. L.R. (7th) 413 Woods v. North American Construction Group Inc. 2022 AHRC 26, 2022 CarswellAlta 538, [2022] A.W.L.D. 1008, 2022 C.L.L.C. 230-027

Steele v. Craig AWLD 10-1043 Real property --- Interests in real property — Co-ownership — Termination of co-tenancy — Partition — Court-ordered partition and sale

Woods v. North American Construction Group Inc. AWLD 10-1008 Human rights --- Duty to accommodate — Undue hardship Complainant, who worked for respondent as maintenance supervisor at large oil sands site, went off work for surgery and was away for more than two months — Complaint related to what happened when he returned to work, including refused accommodation request and his eventual employment termination — Complainant filed complaint alleging that respondent discriminated against him in area of employment on ground of physical disability contrary to s. 7 of Alberta Human Rights Act — Complaint allowed — Complainant met his burden

Plaintiff had owned interest in quarter section of rural land as joint tenant since 1997, first with parents, then with parents and wife and, following parents’ deaths, with wife alone — When plaintiff and wife divorced in 2015, land was transferred to plaintiff and defendants, plaintiff’s daughter and her spouse, as joint tenants — Defendants later moved their business and then their family onto land — Although plaintiff later claimed transfer had been made only so that he would qualify for mortgage to buy wife’s interest, defendants claimed transfer had been intended to convey real interest to them in exchange for which they had assumed financial risk, made significant contributions to farm operations and maintenance, and undertaken significant renovations to residence — When relations between parties deteriorated, plaintiff brought application to sever joint tenancy and for declaration defendants held their interest in land and assets in trust for him or, alternatively, for order for sale with right of first refusal — Defendants brought cross-application

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appealed master’s refusal to set aside order — Appeal allowed — Defendants’ application to set aside order was properly brought — Master was not functus officio once order was filed — Order ought to have been set aside once master determined it had been granted without notice to defendants — Order was neither urgent nor extraordinary and should not have been granted ex parte — Filing of defendants’ application froze action — Plaintiff should not have been permitted to take further action until application had been heard.

Darby v. Citifinancial

to sever joint tenancy and for order for sale with distribution of two-thirds of net proceeds to them — Applications were directed to be heard in summary trial — Order accordingly — Although plaintiff had eventually resiled from position defendants had no beneficial interest in land, his resistance in doing so raised question whether he had tailored his evidence — Although daughter was credible, her evidence was somewhat weakened by desire to advocate for position — Whether daughter and spouse had become involved in order to help plaintiff, or to preserve potential inheritance, parties had intended joint tenancy on title to be true representation of agreement — Their subsequent conduct corroborated that intention — Each joint tenant was entitled to one-third interest — There was no evidence of deprivation or unjust enrichment justifying unequal shares — Land should be appraised and plaintiff be given opportunity to purchase defendants’ interests — If that did not occur within reasonable time, property should be sold with net proceeds distributed accordingly — In absence of any statutory provision for partition and sale of assets such as farm equipment and livestock, best solution might be for parties to agree to have those assets follow land.

Steele v. Craig 2021 ABQB 825, 2021 CarswellAlta 2820, [2022] A.W.L.D. 1043, 341 A.C.W.S. (3d) 90

Darby v. Citifinancial AWLD 20-1738 Civil practice and procedure --- Judgments and orders — Setting aside — Miscellaneous Master granted order directing defendants to provide answers to undertakings and updated affidavit — Defendants unsuccessfully applied to have order set aside — Defendants submitted that order should not have been granted ex parte — Defendants claimed they filed delay application prior to order — Defendants argued previous application should have been adjudicated prior to order — Plaintiff claimed there was no basis to set aside order — Plaintiff submitted that master became functus officio upon filing order — Plaintiff submitted freezing of action was only for purpose of determining time-period to be reviewed — Defendants 75

2022 ABQB 9, 2022 CarswellAlta 6, [2022] A.W.L.D. 1738, 343 A.C.W.S. (3d) 32, 79 C.P.C. (8th) 418

Karadeniz v. Intact Insurance Company AWLD 201788 Insurance --- Automobile insurance — Extent of risk — Dangerous operation of vehicle — Effect of conviction After physical altercation with plaintiff Y at restaurant, defendant sped vehicle towards Y and friends as they walked through restaurant parking lot, possibly striking Y — Defendant reversed vehicle and drove through parking lot again, striking plaintiffs K and C before leaving scene — Plaintiffs commenced action claiming B was negligent in operation of vehicle — Defendant pleaded guilty to dangerous driving causing bodily harm and failing to remain at scene of collision — Plaintiffs’ insurers alleged collision was not intentional and defendant’s insurer was liable up to limit of his policy while defendant’s insurer claimed collision was intentional and coverage was therefore limited — Parties brought application by way of special chambers for determination of circumstances surrounding motor vehicle collision — Issue of defendant’s intention was to be determined at trial as only way to determine defendant’s intention and nature of his actions was through oral evidence given to incomplete and contentious record — Only allegations guilty plea proved were that defendant operated vehicle in dangerous manner and caused bodily harm to plaintiffs and that he did not remain at scene — Everything else remained unproven, including cause of injuries and defendant’s intention — Until evidence was tested, defendant’s intention could not be known, and court could not determine whether his actions were to be considered as one continuous action or two separate acts — Possible absence of important witness for trial or possible limited memory of witness at trial were not factors to be considered at this stage of proceedings.

Karadeniz v. Intact Insurance Company 2022 ABQB 201, 2022 CarswellAlta 680, [2022] A.W.L.D. 1788, 2022 A.C.W.S. 435, 22 C.C.L.I. (6th) 50, 89 M.V.R. (7th) 234

The Barrister

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Legare v. Acme (Village) AWLD 20-1800

Virk v. Law Society of Alberta AWLD 20-1845

Municipal law --- Municipal liability — Negligence — Flooding from sewage system

Professions and occupations --- Lawyers — Relationship with others — Duty as officer of court

Plaintiffs owned home in defendant village, and they experienced extensive damage to their residence as result of greywater and black sludge sewage infiltrating throughout their home — Owners alleged that village owed them statutory and common law duty of care with respect to operation, maintenance and repair of sewer system which serviced their residence — Owners claimed that village knew or ought to have known of state of disrepair of sewer system that serviced their residence, and that they breached duty of care by failing to repair and maintain it — Owners brought negligence action against village seeking damages for depreciation in value of home arising from stigma related to incident — Action allowed — Village was negligent in discharge of its statutory duty of care set out in s. 532 of Municipal Government Act — Owners proved, on balance of probabilities, that they suffered loss or damage unique to them and which was not suffered by any other potential claimant, residents of village, who could have been affected by state of repairs of sewer lines; village knew or ought to have known of state of disrepair; village failed to take steps to prevent disrepair from arising; and owners gave immediate notice to village of occurrence — Village had not established it was immune from liability because core policy decision was at issue — No specific evidence was tendered about how decision was made by village on matters at issue here — No objective criteria were presented to inform court that decision weighed competing interests that required making value judgments, and therefore did not engage separation of powers to avoid court substituting its own value judgment — Owners established, on balance of probabilities, that decisions affecting sanitary sewer line incident in village were operational in nature and were definitely not policy decisions — Implementation of inspection, maintenance and repair of sanitary sewer lines in village were under control and direction of public works foreman.

19 citations of misconduct were made against lawyer arising from seven different complaints — Lawyer acknowledged his guilt on six of citations, Hearing Committee of Law Society found him guilty of nine other citations and remaining four were dismissed — Lawyer appealed findings of guilt on six of citations — Majority of Appeal Panel allowed appeal on one citation but otherwise dismissed appeal — Lawyer appealed finding of guilt on citations 1 and 15, and appealed sanction of disbarment — Appeal dismissed — Citation 1 was that lawyer, by continuing to represent client despite lawyer’s previous relationship with claimant, placed himself in conflict of interest and citation 15 was that lawyer failed to be candid with Court — All agreed that intentionally making inaccurate statement, or legal equivalent of being willfully blind to accuracy of statement, would suffice — Further, if lawyer made inaccurate statement to court when indifferent to statement’s accuracy or inaccuracy, that would meet test — There was positive duty on lawyer to turn his or her mind to accuracy of statements that were being made — Where all factors were considered, it could not be said that finding of guilt on citation 15 reflected any reviewable error.

Legare v. Acme (Village)

Plaintiff engaged defendants, architect firm R Ltd. and mechanical engineering firm V Co., to design and install heating system in assisted and independent senior living facility — During first winter, heating system failed, and repairs were made by V Co. under warranty, but heating system failed again during following winter and V Co. recommended increasing size of boilers — Plaintiff brought action for damages based on defendants’ failure to design and provide adequate heating system for facility — Defendant R Ltd. brought motion for summary judgment based on expiry of limitation period — Motion dismissed — Two-year limitation period was based on discoverability of injury attributable to conduct of defendant that warranted bringing legal proceedings, with plaintiff required to act with due diligence — During first winter, plaintiff

2022 ABPC 54, 2022 CarswellAlta 695, [2022] A.W.L.D. 1800, [2022] A.W.L.D. 1852, [2022] A.W.L.D. 1853, [2022] A.W.L.D. 1855, [2022] A.W.L.D. 1856, 2022 A.C.W.S. 452, 82 C.C.L.T. (4th) 136

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Virk v. Law Society of Alberta 2022 ABCA 2, 2022 CarswellAlta 13, [2022] A.W.L.D. 1843, [2022] A.W.L.D. 1844, [2022] A.W.L.D. 1845, 343 A.C.W.S. (3d) 103, 40 Alta. L.R. (7th) 34, 79 C.P.C. (8th) 10

Points West Living Red Deer Inc v. Rockliff Pierzchajlo Kroman Architects Ltd AWLD 40-3901 Civil practice and procedure --- Limitation of actions — Actions in tort — Statutory limitation periods — When statute commences to run — Miscellaneous

The Barrister

knew it had suffered injury caused by heating system that was arguably attributable to parties that had designed, manufactured, installed, and operated system, including defendants — It was reasonable for plaintiff to rely upon parties who were making significant efforts to correct heating problem and to conclude it was premature to commence proceedings until defendants recommended upgrading system — Application of this test achieves proper balance between not allowing cause of action to linger and not requiring lawsuits to be commenced prematurely.

ACTLA Sustaining Members The Alberta Civil Trial Lawyers Association wishes to acknowledge the following members who have shown their support through becoming Sustaining Members of the Association

Points West Living Red Deer Inc v. Rockliff Pierzchajlo Kroman Architects Ltd 2021 ABQB 589, 2021 CarswellAlta 1784, [2021] A.W.L.D. 3901, 30 Alta. L.R. (7th) 285, 335 A.C.W.S. (3d) 627

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66 | IMA Solutions 1 - 855 - 848 - 0122 www.imasolutions.ca

18 | Clae Willis 1-877 CARE PLAN clae@bellnet.ca

67 | Marney Lutz Mediation 403 - 612 - 7214 www. marneylutzmediation.com

32 | Stark Mediation 780 - 540 - 5160 www.brownlawgroup.ca

67 | David Kitchen Mediation 403 - 612 - 7214 www. davidkitchenmediation.com

39 | Donna Purcell KC Law 1 - 833 - 377 - 2529 www.dpqclaw.com

70 | Thomson Reuters 1 - 800 - 387 - 5164 www.store.thomsonreuters.ca

43 | NYRC 780 - 229 - 5200 www.nyrc.ca

73 | MDD Forensic Accountants 780 - 497-0109 www.mdd.com

44 | Grover Law Firm 403 - 253 - 1029 www.groverlawfirm.com

76 | Integra 403 - 621 - 1179 erica@integraconnects.com

45 | Bottom Line Research 403 - 688 - 2119 www.bottomlineresearch.ca

78 | Peter Cline 403 - 254 - 3864 pcline@mcleod-law.com

47 | Assessmed 780 - 328 - 6476 refer@assessmed.com

80 | Assiff Law 587 - 524 - 3000 www.assifflaw.com

53 | Michel V. Lavoie 780 - 483 - 8311 mvlavoiemd@shawbiz.ca

BC | Brown Law Group 780 - 540 - 5160 www.brownlawgroup.ca

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79

The Barrister

Fall 2022

80

Family Law at its Best.

Collaborative Divorce, Mediation, Litigation, Child’s Counsel

FAMILY & DIVORCE LAW Suite 612, Centre 104, 5241 Calgary Trail NW Edmonton, AB T6H 5G8 Ph: (780) 540-5160

BrownLawGroup.ca

Tracy C. Brown Jonathan Song Ashley Cox Rachelle Robin Judith Acevedo Ese P. Ogelebor Languages Spoken Spanish, Portuguese, French, Mandarin Chinese Proud Members of ACTLA, CBA, AFCC, ACFP(E), AFMS, ADRIA, LEAF & Advocates Society