Plester v. Wawanesa Mutual Insurance Co., (2006) 213 O.A.C. 241 (CA)

• Judge: Cronk, Armstrong and Lang, JJ.A.
• Court: Court of Appeal (Ontario)
• Case Date: November 21, 2005
• Jurisdiction: Ontario
• Citations: (2006), 213 O.A.C. 241 (CA)

Plester v. Wawanesa Mutual (2006), 213 O.A.C. 241 (CA)

MLB headnote and full text

Temp. Cite: [2006] O.A.C. TBEd. JN.018

Terry Plester and Cecile Plester (plaintiffs/respondents/cross-appellants) v. Wawanesa Mutual Insurance Company (defendant/appellant/cross-respondent)

Randy Plester as Estate Trustee of the Estate of Norman Plester and The Oak House Importing Company (plaintiffs/respondents) v. Wawanesa Mutual Insurance Company (defendant/appellant)

(C39680; C39679)

Indexed As: Plester v. Wawanesa Mutual Insurance Co.

Ontario Court of Appeal

Cronk, Armstrong and Lang, JJ.A.

May 31, 2006.

Summary:

The insured sued the insurer for damages for wrongful denial of a fire insurance claim. One insured died. His action was continued by his estate.

The Ontario Superior Court, sitting with a jury, allowed the action. The surviving insured were awarded total damages of $1,000,673.83, which included aggravated and punitive damages of $525,000. The estate was awarded total damages of $131,900 which included punitive damages of $100,000. The insurer appealed in respect of both liability and damages. The surviving insured cross-appealed against the cost award.

The Ontario Court of Appeal dismissed the appeal except in respect of aggravated damages. The cross-appeal was dismissed except in respect of one disbursement for an expert witness whose qualification as an expert in building contracting and estimating had apparently been overlooked by the trial judge (see paragraphs 112 to 119).

Damage Awards - Topic 2021.2

Exemplary or punitive damages - Insurers - The insured sued the insurer for damages for wrongful denial of a fire insurance claim - The insurer alleged arson against the insured - A jury found the insurer liable and in bad faith and awarded damages of $1,000,673.83, which included punitive damages of $350,000 - The Ontario Court of Appeal upheld the punitive damage award - The court agreed with the jury that the insurer did not produce strong credible evidence that could have proved that the insured started the fire - The court also held that the jury was entitled to take into account the fact that the insurer retained a forensic accountant the day before it sent its denial letter to the insured, before any conclusions were made respecting the insured's motives - The court held that while the award was fairly high, it passed the test of not being so exorbitant or so grossly out of proportion as to shock the court's conscience and sense of justice - See paragraphs 86 to 103.

Damage Awards - Topic 2021.2

Exemplary or punitive damages - Insurers - [See Damages - Topic 1324.1 ].

Damage Awards - Topic 2412

Aggravated damages - Insurers - The insured sued the insurer for damages for wrongful denial of a fire insurance claim - The insurer alleged arson against the insured - A jury found the insurer liable and awarded damages of $1,000,673.83, which included aggravated damages of $175,000 - The Ontario Court of Appeal reduced the aggravated damage award to $50,000 - While there was a case to go to the jury on aggravated damages based upon the allegation of arson and the ultimate finding of bad faith by the jury, the award of $175,000 was grossly excessive - This was particularly so, given the trial judge's caution that "it would be unwise ... to award anything more than a modest amount ... because there is simply no evidence on which you can base a sizable award" - See paragraphs 62 to 66.

Damages - Topic 63

General principles - Considerations in assessing damages - Tortfeasor's ability to pay - The insured sued the insurer for damages for wrongful denial of a fire insurance claim - In his opening address to the jury, counsel for the insurer described the insurer as a Canadian company, a mutual company, with no big corporate directors taking big rates of pay out of the company, etc. - In response, the insured presented evidence of the financial status of the insured - The Ontario Court of Appeal ruled that the financial status evidence should not have been admitted - See paragraphs 45 to 48.

Damages - Topic 915

Aggravation - In contract - Aggravated damages - Against insurer - [See Damage Awards - Topic 2412 ].

Damages - Topic 1305.1

Exemplary or punitive damages - Insurance claim denial - The Ontario Court of Appeal held that the trial judge in an action by the insured for damages for wrongful denial of a fire insurance claim should have instructed the jury that an offer of settlement made in pre-action negotiations was a without prejudice communication, and should be disregarded by them as a factor in considering whether to make an award of punitive damages against the insurer - See paragraphs 35 to 40.

Damages - Topic 1305.1

Exemplary or punitive damages - Insurance claim denial - [See first Damage Awards - Topic 2021.2 and Damages - Topic 1324.1 ].

Damages - Topic 1324.1

Exemplary or punitive damages - Trustee Act claims - The insured sued the insurer for damages for wrongful denial of a fire insurance claim - One insured died - His action was continued by his estate - The deceased's claim included a claim for punitive damages - The insurer alleged arson against the insured - The trial judge left the punitive damage claim to the jury - The jury found that the insurer breached its duty of good faith to the deceased - The insurer acted arbitrarily, ignored a recommendation of the adjuster to settle a straightforward claim and labeled the deceased an arsonist - The jury awarded the estate $100,000 - The insurer appealed, arguing that punitive damages were non-compensatory in nature and were not recoverable by the estate under s. 38 of the Trustee Act (Ont.) - The Ontario Court of Appeal rejected the argument - Section 38 permitted an award of punitive damages to the estate - The court upheld the award - See paragraphs 67 to 82.

Evidence - Topic 4847

Witnesses - Examination - Impeaching character - Evidence of good character - The insured sued the insurer for damages for wrongful denial of a fire insurance claim - The insurer alleged arson against the insured - The insured presented evidence of good character - The trial judge admitted it - The Ontario Court of Appel held that the trial judge did not err - Once the insurer alleged arson against the insured, it was permissible for them to respond with the kind of evidence that would be available to them in a criminal court - See paragraphs 41 to 44.

Insurance - Topic 5871

Fire insurance - Payment of insurance proceeds - General - [See Practice - Topic 5182 ].

Practice - Topic 5182

Juries and jury trials - Verdicts - Setting aside jury verdict - The insured sued the insurer for damages for wrongful denial of a fire insurance claim - The insurer alleged arson against the insured - A jury found the insurer liable and awarded damages, including aggravated and punitive damages - The Ontario Court of Appeal upheld the verdict - It could not be said of the jury's verdict "that no jury reviewing the evidence as a whole and acting judicially could have reached it" - While there was evidence from the Fire Marshall and the insurer's expert that the fire was incendiary, there was also evidence from the insured's experts to the contrary - Two of the insurer's own advisors testified that there was no evidence of financial motive to set the fire - There was also much evidence led by counsel for the insured that contradicted the evidence of financial motive - Against the insurer's position that the insured had the opportunity to set the fire, there was the sworn evidence of the insured from the witness box that they had not started the fire - There was an abundance of evidence to support the jury's verdict on liability - See paragraphs 54 to 61.

Practice - Topic 5204

Trials - General - Severance of issues or parties - General - [See Practice - Topic 8809 ].

Practice - Topic 7408

Costs - Solicitor and client costs - General principles - Solicitor and client costs as damages or punishment - The trial judge declined to award substantial indemnity costs because the defendant had already been punished by a punitive damage award - The Ontario Court of Appeal upheld the decision, holding as follows: "Although Orkin [The Law of Costs] suggests that the better view is that the two issues of punitive damages and solicitor-and-client costs (now substantial indemnity costs) are legally distinct, I would not interfere in this case. With respect, it seems to me that there are cases where the fact of an award of punitive damages will militate against an award of substantial indemnity costs. This appears to be such a case" - See paragraphs 106 to 109.

Practice - Topic 8809

Appeals - General principles - Duty of appellate court respecting conduct of trial - The insured sued the insurer for damages for wrongful denial of a fire insurance claim - The claim included a claim for punitive damages - The insurer moved for mistrial on grounds that included the trial judge's refusal to bifurcate the trial in respect of liability and punitive damages - The trial judge dismissed the motion, stating that he knew of no authority that required bifurcation of a trial in which punitive damages were claimed - The Ontario Court of Appeal agreed and upheld the trial judge's discretionary decision - See paragraphs 49 to 53.

Cases Noticed:

Deep v. Wood (1983), 143 D.L.R.(3d) 246 (Ont. C.A.), refd to. [para. 41].

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, consd. [para. 47].

Sanders v. Clarica Life Insurance Co., [2003] B.C.T.C. 403; 30 C.P.C.(5th) 364 2003 BCSC 403, refd to. [para. 52].

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.52].

Read v. Insurance Corp. of British Columbia, [2002] B.C.T.C. 1607; 2002 BCSC 1607, refd to. [para. 52].

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. 52].

Deshane et al. v. Deere & Co. (1993), 65 O.A.C. 275; 15 O.R.(3d) 225 (C.A.), consd. [para. 56].

Barker v. Zurich Insurance Co. (2001), 140 O.A.C. 358 (C.A.), refd to. [para. 57].

Cameron v. Excelsior Life Insurance Co., [1981] 1 S.C.R. 138; 35 N.R. 213; 44 N.S.R.(2d) 91; 83 A.P.R. 91, consd. [para. 57].

Hill v. Church of Scientology of Toronto and Manning, [1995] 2 S.C.R. 1130; 184 N.R. 1; 84 O.A.C. 1; 126 D.L.R.(4th) 129, consd. [para. 62].

Allan Estate v. Co-operators Life Insurance Co. et al. (1999), 117 B.C.A.C. 237; 191 W.A.C. 237; 62 B.C.L.R.(3d) 329 (C.A.), consd. [para. 70].

McFarlane v. Safadi et al. (2004), 185 O.A.C. 388; 70 O.R.(3d) 599 (C.A.), refd to. [para. 84].

702535 Ontario Inc. et al. v. Non-Marine Underwriters, Lloyd's, London et al. (2000), 130 O.A.C. 373; 184 D.L.R.(4th) 687 (C.A.), refd to. [para. 92].

Walker and Walker Brothers Quarries Ltd. v. CFTO Ltd. et al. (1987), 19 O.A.C. 10; 59 O.R.(2d) 104 (C.A.), consd. [para. 101].

Landolfi v. Fargione (2006), 209 O.A.C. 89 (C.A.), refd to. [para. 104].

Statutes Noticed:

Trustee Act, R.S.O. 1990, c. T-23, sect. 38(1) [para. 67].

Authors and Works Noticed:

Ontario, Law Reform Commission, Report on Exemplary Damages (1991), pp. 59, 60 [para. 79, footnote 1].

Orkin, Mark M., The Law of Costs (2005 Looseleaf Supp.), s. 219.1.2 [para. 108].

Sopinka, John, Lederman, Sidney N., and Bryant, Alan W., The Law of Evidence in Canada (2nd Ed. 1999), p. 810 [para. 38].

Waddams, Stephen M., The Law of Damages (2005 Looseleaf Ed.), para. 11.440 [para. 80].

Counsel:

Hans J.B.A. Dickie, Q.C., for the appellant and cross-respondent;

Alfred M. Kwinter, Q.C., for the respondents and cross-appellants, Terry and Cecile Plester;

Andrew C. Murray, for the respondents, Randy Plester as Estate Trustee of The Estate of Norman Plester and The Oak House Importing Company.

This appeal was heard on November 21, 2005, by Cronk, Armstrong and Lang, JJ.A., of the Ontario Court of Appeal. The decision of the Court of Appeal was delivered by Armstrong, J.A., and released on May 31, 2005.