Norex Petroleum Ltd. et al. v. Chubb Insurance Co. of Canada et al., (2008) 444 A.R. 88 (QB)

• Judge: Brooker, J.
• Court: Court of Queen's Bench of Alberta (Canada)
• Case Date: April 18, 2008
• Citations: (2008), 444 A.R. 88 (QB);2008 ABQB 243

Norex Petroleum Ltd. v. Chubb Ins. (2008), 444 A.R. 88 (QB)

MLB headnote and full text

Temp. Cite: [2008] A.R. TBEd. AP.167

Norex Petroleum Limited and Zao Yugraneft Corporation (plaintiffs) v. Chubb Insurance Company of Canada and Ingosstrakh Insurance Company Ltd. (defendants)

(0201 11097; 2008 ABQB 243)

Indexed As: Norex Petroleum Ltd. et al. v. Chubb Insurance Co. of Canada et al.

Alberta Court of Queen's Bench

Judicial District of Calgary

Brooker, J.

April 18, 2008.

Summary:

The defendant insurer issued a policy of insurance. The named insured under the policy included the plaintiffs. The plaintiffs sued, asserting contractual claims, seeking payment for loss of personal property, and bad faith claims, seeking punitive damages against the insurer for breaches of its duties of utmost good faith and fair dealing. The insurer applied, under rules 37, 220, 221 and 223 of the Alberta Rules of Court, to sever the plaintiffs' bad faith claims, set out in paras. 19(b) through 20 of the amended statement of claim, from their contractual claims and to stay all proceedings in relation to the bad faith claims until the contractual claims had been determined.

The Alberta Court of Queen's Bench allowed the application and severed the claims.

Practice - Topic 5204

Trials - General - Severance of issues or parties - General - The defendant insurer issued a policy of insurance - The named insured under the policy included the plaintiffs - The plaintiffs sued, asserting contractual claims, seeking payment for loss of personal property, and bad faith claims, seeking punitive damages against the insurer for breaches of its duties of utmost good faith and fair dealing - The insurer applied, under rules 37, 220, 221 and 223 of the Alberta Rules of Court, to sever the plaintiffs' bad faith claims, set out in paras. 19(b) through 20 of the amended statement of claim, from their contractual claims and to stay all proceedings in relation to the bad faith claims until the contractual claims had been determined - The Alberta Court of Queen's Bench allowed the application and severed the claims - The court followed a line of authorities originating in British Columbia (with Wonderful Ventures Ltd. v. Maylam (B.C.S.C.)) - While the insurer did not wish to waive solicitor-client or litigation privilege, a full and complete defence of the plaintiffs' bad faith claims would require the insurer's disclosure of privileged communications and documentation, disclosure which would be unnecessary to defend the plaintiffs' contractual claims - In order to make such disclosure of privileged communications and documentation, the insurer's legal counsel would likely be needed as a witness which, in turn, might require that the insurer instruct new counsel - Finally, if severance was ordered and a finding in favour of the plaintiffs on their contractual claims ensued, there would undoubtedly be an increase in the time and money expended on the litigation to the plaintiffs' prejudice - The plaintiffs' contractual and bad faith claims were not interwoven to any great extent - The significant delay in asserting their bad faith claims (four years after they issued their Statement of Claim), surely belied that contention - On the other hand, if severance was ordered and a finding in favour of the insurer on the plaintiffs' contractual claims ensued, there would be a savings in time and money realized - In the result, on balance, any prejudice to the insurer in the event of continuation of the plaintiffs' contractual and bad faith claims in one proceeding significantly outweighed any prejudice to the plaintiffs in the event of severance being ordered - See paragraph 31.

Practice - Topic 5204

Trials - General - Severance of issues or parties - General - The defendant insurer issued a policy of insurance - The named insured under the policy included the plaintiffs - The plaintiffs sued, asserting contractual claims, seeking payment for loss of personal property, and bad faith claims, seeking punitive damages against the insurer for breaches of its duties of utmost good faith and fair dealing - The insurer applied, under rules 37, 220, 221 and 223 of the Alberta Rules of Court, to sever the plaintiffs' bad faith claims, set out in paras. 19(b) through 20 of the amended statement of claim, from their contractual claims and to stay all proceedings in relation to the bad faith claims until the contractual claims had been determined - The Alberta Court of Queen's Bench allowed the application and severed the claims - The court followed a line of authorities originating in British Columbia (with Wonderful Ventures Ltd. v. Maylam (B.C.S.C.)) - However, if it was mistaken, it opined that the application of Alberta authorities concerning rules 37, 220, 221 and 223 led to the same conclusion - First, if severance of the plaintiffs' bad faith claims was ordered and a finding in favour of the insurer on the plaintiffs' contractual claims ensued, the plaintiffs' bad faith claims will be extinguished and the matter will be at an end - Second, if severance was ordered and a finding in favour of the insurer on the plaintiffs' contractual claims ensued, there would be a savings in time and money realized - Third, severance would not create an injustice - Fourth, the issues were not complex or difficult such that they were not readily severable - Fifth, if severance was ordered, there would be no delay in the trial of the plaintiffs' contractual claims and perhaps an earlier trial date might be available - Further, if severance was ordered and a finding in favour of the insurer on the plaintiffs' contractual claims ensued, no delay would occur - Moreover, if severance was not ordered, there might be delay associated with the insurer having to instruct new counsel - See paragraphs 33 to 36.

Cases Noticed:

Wonderful Ventures Ltd. v. Maylam et al., [2001] B.C.T.C. 775; 91 B.C.L.R.(3d) 319; 2001 BCSC 775, refd to. [para. 14].

Sempecos v. State Farm Fire and Casualty Co., [2001] O.T.C. 901; 17 C.P.C.(5th) 371 (Sup. Ct.), affd. (2002), 29 C.P.C.(5th) 99 (Ont. Div. Ct.), affd. [2003] O.A.C. Uned. 261; 38 C.P.C.(5th) 64 (C.A.), refd to. [para. 14].

Sovereign General Insurance Co. v. Tanar Industries Ltd. et al. (2002), 316 A.R. 212; 2002 ABQB 101, refd to. [para. 14].

Lawrence v. Insurance Corp. of British Columbia, [2001] B.C.T.C. 1530; 96 B.C.L.R.(3d) 375; 2001 BCSC 1530, refd to. [para. 18].

Read v. Insurance Corp. of British Columbia, [2002] B.C.T.C. 1607; 2002 BCSC 1607, refd to. [para. 18].

Sanders v. Clarica Life Insurance Co., [2003] B.C.T.C. 403; 30 C.P.C.(5th) 364; 2003 BCSC 403, refd to. [para. 18].

Stuart v. Manufacturers Life Insurance Co., [2004] B.C.T.C. Uned. 222; 10 C.C.L.I.(4th) 142; 2004 BCSC 501 (Master), refd to. [para. 18].

Stevens v. Sun Life Assurance Co. of Canada, [2004] B.C.T.C. 468; 9 C.C.L.I.(4th) 245; 2004 BCSC 468, refd to. [para. 18].

Kursar v. BCAA Insurance Corp. et al., [2004] B.C.T.C. Uned. 539; 17 C.C.L.I.(4th) 65; 2004 BCSC 1006, refd to. [para. 18].

Ennis v. RBC Life Insurance Co., [2007] B.C.T.C. Uned. 620; 53 C.C.L.I.(4th) 270; 2007 BCSC 1131 (Master), refd to. [para. 18].

SNC-Lavalin Engineers & Constructors Inc. v. Citadel General Assurance Co. (2003), 63 O.R.(3d) 226 (Sup. Ct. Master), refd to. [para. 19].

Osborne v. Non-Marine Underwriters, Lloyd's of London (2003), 32 C.P.C.(5th) 345 (Ont. Sup. Ct. Master), varied [2003] O.T.C. 991; 68 O.R.(3d) 770 (Sup. Ct.), refd to. [para. 19].

Plester v. Wawanesa Mutual Insurance Co. (2006), 213 O.A.C. 241; 269 D.L.R.(4th) 624 (C.A.), leave to appeal refused (2006), 363 N.R. 392; 228 O.A.C. 398 (S.C.C.), refd to. [para. 19].

Lundrigan v. Non-Marine Underwriters, Lloyd's of London (2002), 210 Nfld. & P.E.I.R. 77; 630 A.P.R. 77; 36 C.C.L.I.(3d) 263 (Nfld. T.D.), refd to. [para. 19].

Solosky v. Canada, [1980] 1 S.C.R. 821; 30 N.R. 380, refd to. [para. 28].

Goodman Estate v. Geffen, [1991] 2 S.C.R. 353; 127 N.R. 241; 125 A.R. 81; 14 W.A.C. 81, refd to. [para. 28].

Jones v. Smith, [1999] 1 S.C.R. 455; 236 N.R. 201; 120 B.C.A.C. 161; 196 W.A.C. 161, refd to. [para. 28].

R. v. McClure (D.E.), [2001] 1 S.C.R. 445; 266 N.R. 275; 142 O.A.C. 201; 2001 SCC 14, refd to. [para. 28].

Blank v. Canada (Minister of Justice), [2006] 2 S.C.R. 319; 352 N.R. 201; 2006 SCC 39, refd to. [para. 28].

Société d'énergie Foster Wheeler ltée v. Sociéte intermunicipale de gestion et d'élimination des déchets (SIGED) Inc., [2004] 1 S.C.R. 456; 318 N.R. 111; 2004 SCC 18, refd to. [para. 28].

Moseley v. Spray Lakes Sawmills (1980) Ltd. et al. (1996), 184 A.R. 101; 122 W.A.C. 101 (C.A.), refd to. [para. 29].

Whiten v. Pilot Insurance Co. et al., [2002] 1 S.C.R. 595; 283 N.R. 1; 156 O.A.C. 201; 2002 SCC 18, refd to. [para. 30].

Lim v. Home Insurance Co. (1995), 168 A.R. 308 (Q.B.), varied (1996), 43 Alta. L.R.(3d) 301 (C.A.), refd to. [para. 34].

Counsel:

Alan S. Rudakoff and Eugene J. Bodnar, for the plaintiffs;

Havelock B. Madill, Q.C., for the defendant, Chubb Insurance Co. of Canada.

This application was heard by Brooker, J., of the Alberta Court of Queen's Bench, Judicial District of Calgary, who delivered the following reasons for judgment on April 18, 2008.