All-Up Consulting Enterprises Inc. et al. v. Dalrymple et al., 2013 NSSC 46

• Judge: LeBlanc, J.
• Court: Supreme Court of Nova Scotia (Canada)
• Case Date: March 21, 2011
• Jurisdiction: Nova Scotia
• Citations: 2013 NSSC 46;(2013), 327 N.S.R.(2d) 41 (SC)

All-Up Consulting Ent. v. Dalrymple (2013), 327 N.S.R.(2d) 41 (SC);

    1036 A.P.R. 41

MLB headnote and full text

Temp. Cite: [2013] N.S.R.(2d) TBEd. FE.028

All-Up Consulting Enterprises Incorporated, Helico Air Services Limited and Peter Skinner (plaintiffs) v. Russell Dalrymple and Royal SunAlliance Insurance Company of Canada (defendants)

(Pic. No. 188801; 2013 NSSC 46)

Indexed As: All-Up Consulting Enterprises Inc. et al. v. Dalrymple et al.

Nova Scotia Supreme Court

LeBlanc, J.

February 7, 2013.

Summary:

In 1999, the plaintiffs' parked helicopter was damaged when struck by the defendant farmer's hay wagon. The plaintiffs were left with no functioning helicopter to service upcoming spraying and charter contracts. The defendant's insurer conceded liability for repairs, the cost of a replacement helicopter to service contracts and business losses and chose to negotiate a settlement directly with the plaintiffs, without requiring the plaintiffs to first claim against their own insurer, with the defendant's insurer sitting back and waiting for the subrogated claim. The plaintiffs repeatedly conveyed the urgency of settling the claim quickly, as they lacked the finances to repair or hire a replacement helicopter without insurance monies. The plaintiffs complained of untimely delays in settling the claim in spite of repeated assurances that settlement was forthcoming. No settlement was obtained and the plaintiffs' business failed. The plaintiffs sued for breach of contract and negligence.

The Nova Scotia Supreme Court held that the defendant was negligent in damaging the helicopter. The defendant's insurer, liable for that portion of the claim relating to the defendant's negligence, was also solely liable for additional consequential economic loss suffered by the plaintiffs as a result of the insurer's negligent misrepresentations in how it dealt with the plaintiffs in attempting to negotiate a settlement of the claim. The court awarded $238,499.82 damages for direct damage to the helicopter and $937,118 damages for economic loss (lost profits) suffered by the plaintiffs. The court rejected claims for aggravated and/or punitive damages against the insurer. The plaintiffs were entitled to prejudgment interest of 4% per year up until the date of judgment.

Damage Awards - Topic 766

Torts - Fraud and misrepresentation - Negligent misrepresentation - The plaintiffs' helicopter was negligently damaged by the defendant - The defendant's insurer (RSA) conceded the defendant's liability and dealt directly with the plaintiffs to settle their claim for repair costs, obtaining a replacement helicopter to service upcoming contracts and businesses losses - RSA represented that they would expediently settle all claims, so the plaintiffs chose not to first claim for property damage from their own insurer, with their insurer then presenting its subrogated claim to RSA - RSA was aware that the plaintiffs' business survival depended upon receiving the insurance monies to repair the helicopter to service its contracts and obtain new spraying and charter contracts - RSA had agreed to pay the cost of a replacement helicopter, but did not do so - The insurer was liable for negligent misrepresentation - A special relationship existed between the plaintiffs and RSA, RSA's representations were negligent, the representations were reasonably relied on by the plaintiffs to their detriment, and the plaintiffs suffered damages (i.e., the effective demise of their business) - The Nova Scotia Supreme Court awarded $238,499.82 damages for direct damage to the helicopter and $937,118 damages for economic loss (lost profits) suffered by the plaintiffs - The court rejected claims for aggravated and/or punitive damages against the insurer - The court stated that "RSA's negligent conduct was characterized by incompetence, inattention and sloppiness, as opposed more than by actual malice. As blameworthy as RSA's handing of this matter was, it was nevertheless fundamentally characterized by negligence rather than by intent" - The plaintiffs were entitled to prejudgment interest of 4% per year up until the date of judgment.

Damages - Topic 905

Aggravation - General - Aggravated damages - Claim for - [See Damage Awards - Topic 766 ].

Damages - Topic 1301.5

Exemplary or punitive damages - Deceit or misrepresentation - [See Damage Awards - Topic 766 ].

Fraud and Misrepresentation - Topic 2508

Misrepresentation - General principles - Negligent misrepresentation - The Nova Scotia Supreme Court held that the elements of negligent misrepresentation were: "(1) a duty of care based on a 'special relationship'; (2) the representation must be 'untrue, inaccurate or misleading'; (3) the representor acted negligently in making the misrepresentation; (4) the representee relied, in a reasonable manner, on the negligent misrepresentation; and (5) the reliance was 'detrimental to the representee in the sense that damages resulted'" - See paragraph 133.

Fraud and Misrepresentation - Topic 2508

Misrepresentation - General principles - Negligent misrepresentation - The plaintiffs' helicopter was negligently damaged by the defendant - The defendant's insurer (RSA) conceded the defendant's liability and dealt directly with the plaintiffs to settle their claim for repair costs, obtaining a replacement helicopter to service upcoming contracts and businesses losses - RSA represented that they would expediently settle all claims, so the plaintiffs chose not to first claim for property damage from their own insurer, with their insurer then presenting its subrogated claim to RSA - RSA was aware that the plaintiffs' business survival depended upon receiving the insurance monies to repair the helicopter to service its contracts and obtain new spraying and charter contracts - RSA had agreed to pay the cost of a replacement helicopter, but did not do so - The Nova Scotia Supreme Court found the insurer liable for negligent misrepresentation - A special relationship existed between the plaintiffs and RSA, RSA's representations were negligent, the representations were reasonably relied on by the plaintiffs to their detriment, and the plaintiffs suffered damages (i.e., the effective demise of their business) - See paragraphs 134 to 145.

Insurance - Topic 730

Insurers - Duties - Duty of good faith - The plaintiffs' property was negligently damaged by the defendant's negligence - The plaintiff chose not to seek partial recovery of its claim from its own insurer, who would then pursue a subrogated claim against the defendant's insurer (RSA), because RSA undertook to deal directly with the plaintiffs to expeditiously and comprehensively settle the entire claim - RSA was guilty of negligent misrepresentation in negotiating settlement, and a settlement was never reached - The plaintiffs claimed that RSA breached an insurer's duty of good faith - The Nova Scotia Supreme Court held that "there was no formal relationship of insurer and insured in this case that would trigger the automatic application of the doctrine of uberrima fides, or utmost good faith, the breach of which may give rise to bad faith punitive damages. ... While RSA's representations created a special relationship for negligence purposes, I am not satisfied that it follows from this that there was a relationship of utmost good faith" - See paragraphs 146 to 148.

Insurance - Topic 750

Insurers - Negligence - Duty of care - To interested third parties - The plaintiffs' helicopter was negligently damaged by the defendant - The defendant's insurer (RSA) conceded the defendant's liability and dealt directly with the plaintiffs to settle their claim for repair costs, obtaining a replacement helicopter to service upcoming contracts and businesses losses - RSA represented that they would expediently settle all claims, so the plaintiffs chose not to first claim for property damage from their own insurer, with their insurer then presenting its subrogated claim to RSA - RSA was aware that the plaintiffs' business survival depended upon receiving the insurance monies to repair the helicopter to service its contracts - RSA had agreed to pay the cost of a replacement helicopter, but did not do so - The plaintiffs sued in negligence - RSA argued that it owed no duty of care to a third party claimant claiming against its insured (i.e., duty of care limited to its own insured) - The Nova Scotia Supreme Court held that "in the narrow circumstances where a tortfeasor's insurer volunteers to negotiate a settlement directly, in an expedited manner, with knowledge of the plaintiffs' financial emergency, and with knowledge that the plaintiffs were setting aside a claim with their own insurer, I am satisfied that a duty of care can be found. This duty arises from voluntary actions and representations made by RSA's officials, including specific commitments made ... There was no obligation on RSA to take any of these steps; it was entirely voluntary, RSA could simply have directed [the plaintiffs] to claim through it own insurer, and await a subrogated claim. ... Having made such commitments, RSA placed itself in a position distinct from a third-party insurer dealing with a claimant in a conventionally adversarial situation." - The court held that the standard of care was "that of an ordinary, reasonable, and prudent insurer dealing with a third party who, to the insurer's actual knowledge, is in urgent need of settlement and proceeds and has been led by the insurer to expect a non-adversarial and non-negligent negotiation of the claim. By that standard, the evidence satisfies me that RSA was negligent in dealing with the plaintiffs." - Particularly, RSA's acts and omissions resulted from a general attitude of carelessness and inattention, which led to damages for the plaintiffs - See paragraphs 112 to 132.

Interest - Topic 5149

Interest as damages (prejudgment interest) - Torts - Misrepresentation - [See Damage Awards - Topic 766 ].

Torts - Topic 46.1

Negligence - Standard of care - Particular persons and relationships - Insurers - [See Insurance - Topic 750 ].

Torts - Topic 81

Negligence - Duty of care - Requirement that duty be owed to plaintiff - [See Insurance - Topic 750 ].

Torts - Topic 7280

Joint and concurrent tortfeasors - Consequences of joint liability - Joint and several liability - General - The defendant negligently damaged the plaintiffs' helicopter, making him liable for physical damage to the helicopter, rental expenses, diminution of value and direct economic loss resulting from the collision - The defendant's insurer (RSA) was liable for those damages under the insurance policy - However, RSA was also found liable in negligence for its actions in failing to settle the claim, which resulted in further consequential economic loss to the plaintiffs - The plaintiffs claimed that the defendant and RSA were jointly and severally liable for all damages - The Nova Scotia Supreme Court rejected the claim - The defendant was not jointly and severally liable for those economic loss damages attributable to RSA's negligence in not settling the claim - See paragraphs 149 to 152.

Cases Noticed:

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Donoghue v. Stevenson, [1932] A.C. 562 (H.L.), refd to. [para. 106].

Canadian National Railway Co. et al. v. Norsk Pacific Steamship Co. and Tug Jervis Crown et al., [1992] 1 S.C.R. 1021; 137 N.R. 241, refd to. [para. 107].

Hercules Managements Ltd. et al. v. Ernst & Young et al., [1997] 2 S.C.R. 165; 211 N.R. 352; 115 Man.R.(2d) 241; 139 W.A.C. 241, refd to. [para. 107].

Davis v. Radcliffe, [1990] 2 All E.R. 536 (P.C.), refd to. [para. 108].

Sutherland Shire Council v. Heyman (1985), 60 A.L.R. 1, refd to. [para. 108].

Warner v. Balsdon et al. (2008), 237 O.A.C. 317; 91 O.R.(3d) 124 (Div. Ct.), dist. [para. 113].

1013952 Ontario Inc. (c.o.b. Silverado Restaurant and Nightclub) v. Sakinofsky, 2009 CanLII 55317 (Ont. Sup. Ct.), dist. [para. 114].

D.M. et al. v. Alberta Lawyers Insurance Association (2006), 398 A.R. 315; 2006 ABQB 598, dist. [para. 115].

Racco v. General Accident Assurance (1992), 9 C.C.L.I.(2d) 208 (Ont. Gen. Div.), dist. [para. 115].

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Authors and Works Noticed:

Burns, Peter T., and Blom, Joost, Economic Interests in Canadian Tort Law (2009), p. 409 [para. 202].

Fridman, Gerald Henry Louis, The Law of Agency (7th Ed. 1996), pp. 304, 319, 329 [para. 151].

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McGregor on Damages (16th Ed. 1997), p. 326 [para. 216].

Pitch, Harvin A., and Snyder, Ronald M., Damages for Breach of Contract (2nd Ed.) (Looseleaf), c. 7, § 2(a), p. 7-5 [para. 208].

Rainaldi, Linda A., Remedies in Tort (2012), vol. 2, 16.IV, § 36 [para. 195]; 36.1, 36.2 [para. 198]; 36.3 [para. 201].

Waddams, S.M., The Law of Damages (looseleaf), § 5.920 [para. 201]; 13.30 [para. 196]; 15.140 [para. 216]; 15.330, 15.360, 15.390 [para. 215].

Counsel:

Bruce T. MacIntosh, Q.C., and Donn L. Fraser, for the plaintiffs;

Murray J. Ritch, Q.C., Matthew G. Williams and Lisa Richards, for the defendants.

This action was heard between March 21, 2011, and February 17, 2012, at Pictou and Halifax, N.S., before LeBlanc, J., of the Nova Scotia Supreme Court, who delivered the following judgment on February 7, 2013.