Polowin Real Estate v. Dominion of Can., (2005) 199 O.A.C. 266 (CA)

• Court: Court of Appeal (Ontario)
• Case Date: June 15, 2005
• Jurisdiction: Ontario
• Citations: (2005), 199 O.A.C. 266 (CA)

Polowin Real Estate v. Dominion of Can. (2005), 199 O.A.C. 266 (CA)

MLB headnote and full text

Temp. Cite: [2005] O.A.C. TBEd. JN.045

David Polowin Real Estate Ltd. (plaintiff/respondent) v. The Dominion of Canada General Insurance Co. (defendant/appellant)

(C40447; C40488)

Sandy Big Canoe (plaintiff/respondent) v. The Economical Insurance Group (defendant/appellant)

(C40501)

Laurier Duclos (plaintiff/respondent) v. Wawanesa Mutual Insurance Co. (defendant/appellant)

(C40490)

Sharon Farquhar (plaintiff/respondent) v. Liberty Mutual Insurance Company (defendant/appellant)

(C40911)

Boyd Johnston (plaintiff/respondent) v. Federation Insurance Co. of Canada (defendant/appellant)

(C40910)

Renaldo Matthews (plaintiff/respondent) v. Belair Insurance Company Inc. (defendant/appellant)

(C40487)

A. Gordon Shaw (plaintiff/respondent) v. Zurich Canada Insurance (defendant/appellant)

(C40475)

Robert Woods (plaintiff/respondent) v. ING Halifax Insurance Company (defendant/appellant)

(C40489)

Indexed As: Polowin (David) Real Estate Ltd. v. Dominion of Canada General Insurance Co.

Ontario Court of Appeal

Laskin, Simmons, Cronk and  Armstrong, JJ.A. and Then, J.(ad hoc)

June 15, 2005.

Summary:

Standard Ontario automobile policies issued to the plaintiffs provided that the insurer would pay for any damage to the insured's car less any applicable deductible. Each insured's car was damaged beyond repair. Each insurer paid its insured the actual cash value of the car less the policy deductible and took title to the salvage. The plaintiffs sued their insurers, alleging a breach of statutory condition 6(7) in Reg. 777/93 under the Insurance Act and conversion. Statutory condition 6(7), which was included in every Ontario automobile policy, stipulated that "if the insurer ... pays the actual cash value of the automobile, the salvage, if any, shall vest in the insurer". The following issue arose: where a car was damaged beyond repair and the insurer elected to take title to the salvage, was the insurer entitled to reduce its payment to its insured by the amount of the deductible in the policy? In 2001, the Ontario Court of Appeal had answered that question in the negative in McNaughton Automotive Ltd. v. Co-operators General Insurance Co. The defendant insurers moved to dismiss the actions, arguing that McNaughton was wrongly decided and should be overruled.

The Ontario Superior Court dismissed the motions. The insurers appealed.

The Ontario Court of Appeal allowed the appeals and dismissed the plaintiffs' actions. The court overruled McNaughton and held that under statutory condition 6(7), an insurer could take title to the salvage upon paying its insured the actual cash value less the policy deductible.

Editor's Note: In 2003, the statutory conditions were amended to expressly authorize an insurer, in total loss cases, to both take title to the salvage and apply a deductible. However, the amendment was not made retroactive.

Courts - Topic 17

Stare decisis - Authority of judicial decisions - Scope of stare decisis - The Ontario Court of Appeal held that while there was authority for the proposition that stare decisis did not apply to the interpretation of the provisions of a contract, that proposition had no application to the interpretation of the statutory conditions which formed part of every Ontario automobile insurance policy - Those policies were, in reality, "statutory contracts" - See paragraph 110.

Courts - Topic 17.1

Stare decisis - Authority of judicial decisions - "Special circumstances" exception to stare decisis - At issue in several appeals was whether statutory condition 6(7) in Reg. 777/93 under the Insurance Act permitted an insurer to take title to the salvage on paying its insured the actual cash value less the policy deductible - That question had been answered in the negative in 2001 in McNaughton Automotive Ltd. v. Co-operators General Insurance Co. (Ont. C.A.) - The appellant insurers argued that McNaughton was wrongly decided and should be overruled - The insurers sought to invoke a "special circumstances" exception to the application of stare decisis - One branch of their argument relied on cases which held that a court retained discretion to refuse to apply issue estoppel where to do so would work an injustice - The Ontario Court of Appeal held that the jurisprudence on issue estoppel had no bearing on the appeals - None of the appellants or the respondents had participated in McNaughton or in any other case dealing with the interpretation of statutory condition 6(7) - See paragraphs 114 to 115.

Courts - Topic 17.1

Stare decisis - Authority of judicial decisions - "Special circumstances" exception to stare decisis - At issue in several appeals was whether statutory condition 6(7) in Reg. 777/93 under the Insurance Act permitted an insurer to take title to the salvage on paying its insured the actual cash value less the policy deductible - That question had been answered in the negative in 2001 in McNaughton Automotive Ltd. v. Co-operators General Insurance Co. (Ont. C.A.) - The appellant insurers argued that McNaughton was wrongly decided and should be overruled - The insurers sought to invoke a "special circumstances" exception to the application of stare decisis - One branch of their argument relied on the fact that McNaughton was decided in a lawsuit between a single insured and a single insurer, while the present litigation involved numerous insureds and insurers - The Ontario Court of Appeal rejected the argument - The court stated that such differences could exist in any instance of successive litigation and they could not constitute a special circumstance precluding the application of stare decisis - See paragraph 116.

Courts - Topic 75

Stare decisis - Authority of judicial decisions - Prior decisions of same court - General principles - The Ontario Court of Appeal stated that while departure was the exception, it would overrule one of its previous decisions in an appropriate case - The court stated that instead of focusing on phrases such as "manifestly wrong", it preferred the approach adopted in R. v. White (R.G.) (Ont. C.A.), which called on the court to weigh the advantages and disadvantages of correcting the error in a previous decision - The court stated that "This approach focuses on the nature of the error, and the effect and future impact of either correcting it or maintaining it. In doing so, this approach not only takes into account the effect and impact on the parties and future litigants but also on the integrity and administration of our justice system" - See paragraphs 126 to 127.

Courts - Topic 78

Stare decisis - Authority of judicial decisions - Prior decisions of same court - "Per incuriam" exception - At issue in several appeals was whether statutory condition 6(7) in Reg. 777/93 under the Insurance Act permitted an insurer to take title to the salvage on paying its insured the actual cash value less the policy deductible - That question had been answered in the negative in 2001 in McNaughton Automotive Ltd. v. Co-operators General Insurance Co. (Ont. C.A.) - The appellant insurers argued that McNaughton was wrongly decided and should be overruled - They relied on the per incuriam exception to stare decisis, submitting that the McNaughton panel did not advert to s. 261 of the Insurance Act (the provision expressly authorizing deductibles), or to the legislative evolution of s. 234, and that it did not have the benefit of the record of the legislative history filed on the appeals - The Ontario Court of Appeal held that the per incuriam exception did not apply - It was not fair to assume that the McNaughton panel did not consider s. 261 simply because it was not cited in the court's reasons - Second, the legislative evolution of s. 234 was available for the McNaughton panel's consideration - Third, the application of stare decisis or the per incuriam exception should not ordinarily turn on the evidentiary record filed by counsel - See paragraphs 111 to 113.

Courts - Topic 83

Stare decisis - Authority of judicial decisions - Prior decisions of same court - Court of Appeal - At issue in several appeals was whether statutory condition 6(7) in Reg. 777/93 under the Insurance Act permitted an insurer to take title to the salvage on paying its insured the actual cash value less the policy deductible - That question had been answered in the negative in 2001 in McNaughton Automotive Ltd. v. Co-operators General Insurance Co. (Ont. C.A.) - The Ontario Court of Appeal held that McNaughton was wrongly decided and should be overruled - The court stated that perhaps the most important consideration which favoured overruling McNaughton was that the reasoning in McNaughton had been questioned by two courts in other jurisdictions, which had reached opposite results from McNaughton - The court stated that "In many contexts, a later decision of another provincial appellate court, much less of a superior court, would not justify our court in departing from its own previous authority ... But in the automobile insurance context, I think that a strong case can be made for consistency of interpretation among provincial appellate courts" - See paragraphs 130 to 137.

Courts - Topic 83

Stare decisis - Authority of judicial decisions - Prior decisions of same court - Court of Appeal - At issue in several appeals was whether statutory condition 6(7) in Reg. 777/93 under the Insurance Act permitted an insurer to take title to the salvage on paying its insured the actual cash value less the policy deductible - That question had been answered in the negative in 2001 in McNaughton Automotive Ltd. v. Co-operators General Insurance Co. (Ont. C.A.) - The Ontario Court of Appeal held that McNaughton was wrongly decided and should be overruled - One consideration which favoured overruling McNaughton was that the McNaughton case and the present appeals raised the broader question of the interpretation of statutory conditions in a standard automobile insurance policy - That broader question was likely to recur in the future, in a wide variety of contexts, and it would be unfortunate if future courts interpreting one of the statutory conditions, were encumbered by the panel's erroneous interpretation in McNaughton - See paragraph 138.

Courts - Topic 83

Stare decisis - Authority of judicial decisions - Prior decisions of same court - Court of Appeal - At issue in several appeals was whether statutory condition 6(7) in Reg. 777/93 under the Insurance Act permitted an insurer to take title to the salvage on paying its insured the actual cash value less the policy deductible - That question had been answered in the negative in 2001 in McNaughton Automotive Ltd. v. Co-operators General Insurance Co. (Ont. C.A.) - The Ontario Court of Appeal held that McNaughton was wrongly decided and should be overruled - One consideration which favoured overruling McNaughton was that although stare decisis generally promoted the value of certainty, that value had limited application on the question at stake in the appeals - Insureds had not governed their conduct on the basis of McNaughton - Their purchase of car insurance had not been affected by whether or not the insurer applied a deductible in total loss cases - See paragraph 139.

Courts - Topic 83

Stare decisis - Authority of judicial decisions - Prior decisions of same court - Court of Appeal - At issue in several appeals was whether statutory condition 6(7) in Reg. 777/93 under the Insurance Act permitted an insurer to take title to the salvage on paying its insured the actual cash value less the policy deductible - That question had been answered in the negative in 2001 in McNaughton Automotive Ltd. v. Co-operators General Insurance Co. (Ont. C.A.) - The Ontario Court of Appeal held that McNaughton was wrongly decided and should be overruled - The court stated that the case for overruling was more compelling because McNaughton was of relatively recent vintage - It was not a decision that had stood for many years, nor a decision that had been reaffirmed by the court in later cases - See paragraph 140.

Courts - Topic 83

Stare decisis - Authority of judicial decisions - Prior decisions of same court - Court of Appeal - At issue in several appeals was whether statutory condition 6(7) in Reg. 777/93 under the Insurance Act permitted an insurer to take title to the salvage on paying its insured the actual cash value less the policy deductible - That question had been answered in the negative in 2001 in McNaughton Automotive Ltd. v. Co-operators General Insurance Co. (Ont. C.A.) - The Ontario Court of Appeal held that McNaughton was wrongly decided and should be overruled - One consideration which favoured overruling McNaughton was that the present panel of the court, unlike the McNaughton panel, had the benefit of the legislative history respecting 1993 amendments to the legislation - That legislative history put the purpose and effect of the 1993 legislative changes in a better context - As context was critical in statutory interpretation, the availability of that legislative record was a factor supporting the overruling of McNaughton - See paragraph 141.

Courts - Topic 83

Stare decisis - Authority of judicial decisions - Prior decisions of same court - Court of Appeal - At issue in several appeals was whether statutory condition 6(7) in Reg. 777/93 under the Insurance Act permitted an insurer to take title to the salvage on paying its insured the actual cash value less the policy deductible - That question had been answered in the negative in 2001 in McNaughton Automotive Ltd. v. Co-operators General Insurance Co. (Ont. C.A.) - The Ontario Court of Appeal held that McNaughton was wrongly decided and should be overruled - One consideration which favoured overruling McNaughton was that numerous class certification motions were pending and a substantial amount of money was potentially at stake in the litigation - Although the amount in issue should not ordinarily be a decisive consideration, it remained a relevant consideration - See paragraph 142.

Courts - Topic 83

Stare decisis - Authority of judicial decisions - Prior decisions of same court - Court of Appeal - At issue in several appeals was whether statutory condition 6(7) in Reg. 777/93 under the Insurance Act permitted an insurer to take title to the salvage on paying its insured the actual cash value less the policy deductible - That question had been answered in the negative in 2001 in McNaughton Automotive Ltd. v. Co-operators General Insurance Co. (Ont. C.A.) - The Ontario Court of Appeal held that McNaughton was wrongly decided and should be overturned - The court stated that it did not think that it should be less willing to depart from its own decisions because the Supreme Court of Canada could correct errors made by a provincial appellate court - For people in Ontario, the Court of Appeal for Ontario was the final court in the vast majority of cases - The Supreme Court granted leave rarely and it had denied leave to appeal in McNaughton - If the court dismissed the present appeals because of stare decisis, it was not obvious that the appellants would obtain leave to appeal to the Supreme Court - See paragraph 143.

Estoppel - Topic 386

Estoppel by record (res judicata) - Res judicata as a bar to subsequent proceedings - Issues decided in prior proceedings - [See first Courts - Topic 17.1 ].

Insurance - Topic 1857

The insurance contract - Interpretation of contract - Statutory terms - [See Courts - Topic 17 ].

Insurance - Topic 3003

Payment of insurance proceeds - General principles - Deductible clauses - [See Insurance - Topic 5229 ].

Insurance - Topic 5229

Automobile insurance - Compulsory government schemes - Rights and duties of insurer - Re salvage - Statutory condition 6(7) in Reg. 777/93 under the Insurance Act stipulated that "if the insurer pays ... the actual cash value of the automobile, the salvage, if any, shall vest in the insurer" - At issue was whether, in a total loss case, the insurer could take title to the salvage and also reduce its payment to the insured by the amount of the deductible in the policy - That question had been answered in the negative in 2001 in McNaughton Automotive Ltd. v. Co-operators General Insurance Co. (Ont. C.A.) - The Ontario Court of Appeal held that McNaughton was wrongly decided and should be overruled - The court concluded that under statutory condition 6(7), an insurer could take title to the salvage on paying its insured the actual cash value less the policy deductible - See paragraphs 53 to 106.

Statutes - Topic 2614

Interpretation - Interpretation of words and phrases - Interpretation by context (incl. "modern rule") - Legislative context - [See Statutes - Topic 2616 ].

Statutes - Topic 2616

Interpretation - Interpretation of words and phrases - Interpretation by context (incl. "modern rule") - Economic or commercial context - Statutory condition 6(7) in Reg. 777/93 under the Insurance Act stipulated that "if the insurer pays ... the actual cash value of the automobile, the salvage, if any, shall vest in the insurer" - At issue was whether statutory condition 6(7) precluded an insurer from taking the salvage and also applying a deductible in total loss cases - The Ontario Court of Appeal applied the "modern approach" to the interpretation of statutory condition 6(7) - The court stated that statutory condition 6(7) had to be interpreted in its total context, which included its basic purpose, its mandatory inclusion in the standard Ontario automobile policy, the wording of the policy, and the important role of deductibles in the automobile insurance regime - The court further stated that it should take into account all relevant and admissible indicators of legislative meaning and then adopt an interpretation that complied with the legislative text, promoted the legislative purpose, and produced a reasonable and sensible meaning - See paragraphs 60 to 63.

Cases Noticed:

McNaughton Automotive Ltd. v. Co-operators General Insurance Co. (2001), 151 O.A.C. 252; 54 O.R.(3d) 704 (C.A.), overruled [para. 2].

Murphy v. Welsh (1991), 50 O.A.C. 246; 3 O.R.(3d) 182 (C.A.), refd to. [para. 17].

Trent University Faculty Association v. Trent University (1997), 102 O.A.C. 346; 35 O.R.(3d) 375 (C.A.), refd to. [para. 17].

Mueller v. Western Union Insurance Co., [1974] 5 W.W.R. 530 (Alta. Dist. Ct.), refd to. [para. 45].

Hanna v. Waterloo Mutual Insurance Co., [1964] O.J. No. 359 (H.C.), refd to. [para. 55].

Rizzo and Rizzo Shoes Ltd. (Bankrupt), Re, [1998] 1 S.C.R. 27; 221 N.R. 241; 106 O.A.C. 1; 154 D.L.R.(4th) 193, refd to. [para. 60].

Bell ExpressVu Limited Partnership v. Rex et al., [2002] 2 S.C.R. 559; 287 N.R. 248; 166 B.C.A.C. 1; 271 W.A.C. 1, refd to. [para. 60].

Bapoo v. Co-operators General Insurance Co. (1997), 36 O.R.(3d) 616 (C.A.), refd to. [para. 63].

Estabrooks Pontiac Buick Ltd., Re; Fisherman's Wharf Ltd., Re (1982), 44 N.B.R.(2d) 201; 116 A.P.R. 201; 144 D.L.R.(3d) 21 (C.A.), refd to. [para. 63].

Brissette v. Westbury Life Insurance Co., [1992] 3 S.C.R. 87; 142 N.R. 104; 58 O.A.C. 10, refd to. [para. 74].

Reid Crowther & Partners Ltd. v. Simcoe & Erie General Insurance Co., [1993] 1 S.C.R. 252; 147 N.R. 44; 83 Man.R.(2d) 81; 36 W.A.C. 81, refd to. [para. 79].

Chilton v. Co-Operators General Insurance Co. (1997), 97 O.A.C. 369; 32 O.R.(3d) 161 (C.A.), refd to. [para. 79].

Affiliated FM Insurance Co. v. Quintette Coal Ltd. (1998), 102 B.C.A.C. 286; 166 W.A.C. 286; 156 D.L.R.(4th) 307 (C.A.), refd to. [para. 82].

Sage Oilfield Services Ltd. v. Pearl Assurance Co. (1973), 40 D.L.R.(3d) 296 (Sask. C.A.), refd to. [para. 82].

Pauli et al. v. ACE INA Insurance Co. et al., [2003] 6 W.W.R. 51; 334 A.R. 104; 2003 ABQB 107, affd., [2004] 10 W.W.R. 623; 346 A.R. 263; 320 W.A.C. 263; 2004 ABCA 84, consd. [para. 86].

D.R. Fraser & Co. v. Minister of National Revenue, [1949] A.C. 24, refd to. [para. 95].

R. v. American News Co., [1957] O.R. 145 (C.A.), refd to. [para. 95].

Smith v. Co-operators General Insurance Co., [2002] 2 S.C.R. 129; 286 N.R. 178; 158 O.A.C. 1, refd to. [para. 105].

Pedlar v. Road Block Gold Mines of India Ltd., [1905] 2 Ch. 427, refd to. [para. 110].

Ashville Investments Ltd. v. Elmer Contractors Ltd., [1989] 1 Q.B. 488 (C.A.), refd to. [para. 110].

July v. Neal and Home Insurance Co. (1986), 17 O.A.C. 390; 57 O.R.(2d) 129 (C.A.), refd to. [para. 110].

Al's Steak House and Tavern Inc. et al. v. Deloitte & Touche et al. (1997), 102 O.A.C. 144; 13 C.P.C.(4th) 90 (C.A.), refd to. [para. 111].

Metro Toronto v. L.J. McGuinness & Co., [1960] O.R. 267 (C.A.), refd to. [para. 111].

Morelle Ltd. v. Wakeling, [1955] 1 All E.R. 708, refd to. [para. 111].

R. v. Bell (1977), 15 O.R.(2d) 425 (C.A.), revd., [1979] 2 S.C.R. 212; 26 N.R. 457, refd to. [para. 113].

R. v. 517653 Ontario Ltd. (1985), 10 O.A.C. 120; 35 M.V.R. 161 (C.A.), refd to. [para. 113].

Minott v. O'Shanter Development Co. (1999), 117 O.A.C. 1; 42 O.R.(3d) 321 (C.A.), refd to. [para. 115].

Ostime v. Australian Mutual Provident Society, [1960] A.C. 459, refd to. [para. 118].

Di Santo v. Pennsylvania (1927), 273 U.S. 267, refd to. [para. 118].

Farrell v. Alexander, [1976] 1 All E.R. 129, refd to. [para. 119].

R. v. Bernard, [1988] 2 S.C.R. 833; 90 N.R. 321; 32 O.A.C. 161, refd to. [para. 123].

R. v. Chaulk and Morrissette, [1990] 3 S.C.R. 1303; 119 N.R. 161; 69 Man.R.(2d) 161, refd to. [para. 123].

R. v. Salituro, [1991] 3 S.C.R. 654; 131 N.R. 161; 50 O.A.C. 125; 68 C.C.C.(3d) 289, refd to. [para. 123].

R. v. Jenkins (E.) et al. (1996), 90 O.A.C. 263; 29 O.R.(3d) 30 (C.A.), leave to appeal refused (1997), 210 N.R. 320; 100 O.A.C. 399 (S.C.C.), refd to. [para. 126].

R. v. Santeramo (1976), 32 C.C.C.(2d) 35 (Ont. C.A.), refd to. [para. 126].

R. v. White (R.G.) and Côté (Y.) (1996), 91 O.A.C. 321; 29 O.R.(3d) 577 (C.A.), refd to. [para. 127].

Doyon v. Insurance Corp. of British Columbia, [2004] B.C.T.C. 565; 239 D.L.R.(4th) 749 (S.C.), consd. [para. 131].

R. v. Wolf, [1975] 2 S.C.R. 107; 2 N.R. 415, refd to. [para. 136].

Delta Acceptance Corp. v. Redman, [1966] 2 O.R. 37 (C.A.), refd to. [para. 140].

Thomson v. Workers' Compensation Appeals Tribunal (N.S.) et al. (2002), 205 N.S.R.(2d) 55; 643 A.P.R. 55; 223 D.L.R.(4th) 193; 2002 NSCA 58, refd to. [para. 141].

Cox, Re; McDougall and Cox v. Mahone Bay School Board (1979), 33 N.S.R.(2d) 435; 57 A.P.R. 435; 101 D.L.R.(3d) 87 (C.A.), refd to. [para. 95].

Statutes Noticed:

Insurance Act Regulations (Ont.), Statutory Conditions, Reg. 777/93, stat. cond. 6(7) [para. 1].

Statutory Conditions - see Insurance Act Regulations (Ont.).

Authors and Works Noticed:

Cardozo, Benjamin N., The Nature of the Judicial Process (1960), pp. 149 [para. 120]; 151 [para. 139].

Driedger, Elmer A., Construction of Statutes (2nd Ed. 1983), p. 87 [para. 60].

Ivamy, Edward Richard Hardy, General Principles of Insurance Law (6th Ed. 1993), p. 502 [para. 92].

Megarry, Robert E., A Second Miscellany-at-Law (1973), p. 134 [para. 122].

Sullivan, Ruth, Sullivan and Driedger on the Construction of Statutes (4th Ed. 2002), p. 1-3 [para. 63].

Counsel:

John A. Campion, Paul J. Martin and Annie M.K. Finn, for the appellants, The Dominion of Canada General Insurance Co.;

Paul J. Martin and Annie M.K. Finn, for the appellants, ING Halifax Insurance Company, Wawanesa Mutual Insurance Company and Belair Insurance Company Inc.;

Earl A. Cherniak, Q.C., Alan L.W. D'Silva and Bradley M. Davis, for the appellants, The Economical Insurance Group;

Alan L.W. D'Silva and Bradley M. Davis, for the appellants, Federation Insurance Company of Canada and Liberty Mutual Insurance Company;

Howard B. Borlack and Lisa La Horey, for the appellant, Zurich Canada Insurance;

M. Paul Downs, Michael L. McGowan and Gabrielle Pop-Lazic, for the respondents, David Polowin Real Estate Ltd., Sandy Big Canoe, Laurier Duclos, Sharon Farquhar, Boyd Johnston, A. Gordon Shaw and Robert Woods;

Kirk M. Baert, Celeste Poltak and Douglas Lennox, for the respondent, Renaldo Matthews.

This appeal was heard on September 20-22, 2004, before Laskin, Simmons, Cronk and Armstrong, JJ.A., and Then, J.(ad hoc), of the Ontario Court of Appeal. The following judgment of the Court of Appeal was delivered by Laskin, J.A., and was released on June 15, 2005.