Walsh v. Nicholls,

• Jurisdiction: New Brunswick
• Judge: Drapeau, C.J.N.B., Deschênes and Robertson, JJ.A.
• Neutral Citation: 2004 NBCA 59
• Citation: (2004), 273 N.B.R.(2d) 203 (CA),2004 NBCA 59,273 NBR (2d) 203,241 DLR (4th) 643,14 CCLI (4th) 6,25 CCLT (3d) 33,[2004] NBJ No 281 (QL),717 APR 203,[2004] N.B.J. No 281 (QL),273 NBR(2d) 203,(2004), 273 NBR(2d) 203 (CA),241 D.L.R. (4th) 643,273 N.B.R.(2d) 203,717 A.P.R. 203
• Date: 22 July 2004
• Court: Court of Appeal (New Brunswick)

Walsh v. Nicholls (2004), 273 N.B.R.(2d) 203 (CA);

    273 R.N.-B.(2e) 203; 717 A.P.R. 203

MLB headnote and full text

[French language version follows English language version]

[La version française vient à la suite de la version anglaise]

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Temp. Cite: [2004] N.B.R.(2d) TBEd. JL.032

Patrick Walsh (plaintiff/appellant) v. Donna Nicholls and CGU Insurance Company of Canada, a body corporate (defendants/respondents)

(116/03/CA; 2004 NBCA 59)

Indexed As: Walsh v. Nicholls et al.

New Brunswick Court of Appeal

Drapeau, C.J.N.B., Deschênes and Robertson, JJ.A.

July 22, 2004.

Summary:

The vehicle operated by the plaintiff was rear-ended. The plaintiff was injured. The plaintiff received no-fault benefits under Section B of the insurance policy that cov­ered the vehicle he operated. The benefits were terminated. Believing that this ter­mination was wrongful, the plaintiff sued the insurer and the adjuster for breach of the insurance policy and for bad faith. The plaintiff claimed against both: (a) medical and rehabilitation benefits under the policy; (b) a declaration that he was entitled to loss of income, medical and rehabilitation bene­fits under the policy; (c) punitive and exem­plary damages; and (d) such further and other relief as the court deemed fit. The defendants applied for summary judgment to dismiss the action against the adjuster on the ground that the action against her had "no merit" within the meaning of rule 22.01(3).

The New Brunswick Court of Queen's Bench, Trial Division, allowed the motion. The plaintiff appealed. At the hearing of the appeal, the plaintiff conceded that his claim against the adjuster for a declaration of entitlement to continuing benefits under the policy was properly dismissed.

The New Brunswick Court of Appeal allowed the appeal for the rest. The court ordered that the issue of breach of the policy be severed from all other issues in the state­ment of claim and that it be tried first. The court denied the plaintiff his costs in first instance but allowed them in appeal.

Barristers and Solicitors - Topic 892

Duty to court - Presentation of evidence - Duty respecting affidavit evidence of coun­sel - [See Practice - Topic 7021 ].

Insurance - Topic 730

Insurers - Duties - Duty of good faith - [See first Practice - Topic 5708.1 ].

Practice - Topic 303

Parties - General - Rights of - The plaintiff sued an insurance adjuster alleging that he was wrongfully denied no-fault Section B benefits under an automobile insurance policy because the adjuster acted in bad faith in handling his claim - The plaintiff also sued the corporate insurer for the wrongful denial - A motions judge issued a summary judgment dismissing the claim against the adjuster - The New Brunswick Court of Appeal quashed this decision saying that several procedural by-products of the adjuster's removal as a party-defen­dant could greatly hamper the plaintiff's ability to successfully prosecute his action against the insurer in that: (a) the adjuster would not be required to swear her own affidavit of documents; (b) a corporation had an "untrammelled right" to choose which of its officers, directors or employ­ees would swear an affidavit of documents on its behalf; (c) the adjuster need not submit to oral examination for discovery; (d) the insurer need not produce the ad­juster as its representative at discovery; and (e) the plaintiff would not be entitled to call the adjuster as a witness and cross-examine her - See paragraph 39.

Practice - Topic 1462

Pleadings - Statement of claim - General - Requirement of stating basis for claim - The plaintiff's statement of claim was "far from limpid" in its identification of the tort imputed to the defendant insurance adjuster (intentional procurement of breach of contract by the insurer) and the compensa­tion claimed - Also, the plaintiff's explicit damage claims failed to include non-pe­cuniary general and aggravated damages even though the tort-related losses alleged could justify such damages - The statement of claim did say, however, that the plain­tiff was claiming such further and other relief as the court deemed just - The New Brunswick Court of Appeal, in allowing an appeal from summary dismissal of the plaintiff's action, stated that justice would be poorly served if the court were to allow deficient draftsmanship to deprive the plaintiff of his day in court - The court ruled that the statement of claim, generous­ly interpreted, featured allegations that, if proven, could establish the tort invoked - Also, the phrase "such further and other relief as deemed just" should be read as including a claim for non-pecuniary gen­eral and aggravated damages, a claim which could not be said would fail at trial - See paragraphs 59 to 69, 76 to 78.

Practice - Topic 5708.1

Judgments and orders - Summary judg­ments - Bar to application - Merit to claim - The plaintiff sued an insurance adjuster alleging that he was wrongfully denied no-fault Section B benefits under an automo­bile insurance policy because the adjuster acted in bad faith in handling his claim - A motions judge issued a summary judgment dismissing the claim as having no merit - The motions judge agreed that if breach of the duty of good faith was a tort, it arose out of the contract between the insured and the insurer, and was not a tort for which an employee of the insurer could be sued - The New Brunswick Court of Appeal quashed this decision - The court ruled that lack of privity with the insured might not be a sound basis for insulating adjusters against tort liability for their bad faith and unfair dealing - Justice could be achieved, without extending the tort of bad faith and unfair dealing to adjusters, through the tort of intentional procurement of breach of contract.

Practice - Topic 5708.1

Judgments and orders - Summary judg­ments - Bar to application - Merit to claim - [See Practice - Topic 1462 ].

Practice - Topic 7021

Costs - Party and party costs - Entitlement to party and party costs - Successful party - Exceptions - Conduct (incl. counsel) - The New Brunswick Court of Appeal denied the successful appellant his costs in first instance because of his reliance on affidavit evidence by his counsel that pertained to controversial matters of fact, a practice that the Bar knew full well was discouraged by the courts - The plaintiff was allowed his costs on appeal where the affidavit was expunged from the evidence - See paragraphs 81 to 83, 93 and 94.

Torts - Topic 5208

Interference with economic relations - Contracts - Inducing or procuring breach of contract - [See first Practice - Topic 5708.1 ].

Cases Noticed:

Burke v. Buss, [2002] O.J. No. 2938 (Sup. Ct.), refd to. [para. 1].

Whiten v. Pilot Insurance Co. et al., [2002] 1 S.C.R. 595; 283 N.R. 1; 156 O.A.C. 201, refd to. [para. 2].

Norris v. Lloyd's of London (1998), 205 N.B.R.(2d) 29; 523 A.P.R. 29 (C.A.), refd to. [para. 2].

Cayouette et al. v. Co-operators General Insurance Co. (2000), 227 N.B.R.(2d) 283; 583 A.P.R. 283 (C.A.), refd to. [para. 2].

Quinn v. Leathem, [1901] A.C. 495, consd. [para. 5].

Dubé v. Dionne et al. (1998), 201 N.B.R.(2d) 387; 514 A.P.R. 387 (C.A.), refd to. [para. 7].

Cannon v. Lange et al. (1998), 203 N.B.R.(2d) 121; 518 A.P.R. 121 (C.A.), refd to. [para. 7].

Shareline Systems Ltd. v. New Brunswick et al. (2001), 235 N.B.R.(2d) 162; 607 A.P.R. 162 (C.A.), refd to. [para. 7].

Caissie v. Sénéchal Estate et al., [2001] N.B.R.(2d) Uned. 24 (C.A.), refd to. [para. 7].

Caissie v. Sénéchal Estate et al. (2001), 237 N.B.R.(2d) 232; 612 A.P.R. 232 (C.A.), refd to. [para. 7].

Calumet International Inc. v. Maliseet Nation et al., [2004] N.B.R.(2d) Uned. 44; 2004 NBQB 149, refd to. [para. 28].

Gibson v. Parkes District Hospital et al. (1991), 26 N.S.W.L.R. 9, refd to. [para. 44].

Comunale v. Traders & General Insurance Co. (1958), 50 Cal.2d 654; 328 P.2d 198, refd to. [para. 44].

Crisci v. Security Insurance Co. (1967), 66 Cal.2d 425; 426 P.2d 173, refd to. [para. 44].

Gruenberg v. Aetna Insurance Co. (1973), 9 Cal.3d 566; 510 P.2d 1032, refd to. [para. 44].

Spiers v. Zurich Insurance Co. et al., [1999] O.T.C. 11; 45 O.R.(3d) 726 (Sup. Ct.), leave to appeal refused [1999] O.T.C. 12 (Sup. Ct.), refd to. [para. 46].

Noble v. Riddell et al., [2003] O.T.C. 696 (Sup. Ct.), refd to. [para. 46].

Farrer v. State Farm Mutual Automobile Insurance Co., [2000] N.B.J. No. 458 (C.A.), refd to. [para. 53].

Wallace v. United Grain Growers Ltd., [1997] 3 S.C.R. 701; 219 N.R. 161; 123 Man.R.(2d) 1; 159 W.A.C. 1, refd to. [para. 57].

Lumley v. Gye (1853), 118 E.R. 749, refd to. [para. 63].

Said v. Butt, [1920] 3 K.B. 497, refd to. [para. 66].

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. 71].

Crawford et al. v. Agricultural Develop­ment Board (N.B.) et al. (1997), 192 N.B.R.(2d) 68; 489 A.P.R. 68 (C.A.), refd to. [para. 72].

Ryan et al. v. Dubois et al., [1951] 1 D.L.R. 349 (Ont. H.C.), refd to. [para. 82].

New Brunswick Milk Dealers Association v. Milk Marketing Board (N.B.) (1984), 56 N.B.R.(2d) 413; 146 A.P.R. 413 (T.D.), refd to. [para. 82].

New Brunswick (Board of Management) v. Connors (1986), 74 N.B.R.(2d) 367; 187 A.P.R. 367 (T.D.), refd to. [para. 82].

Savoie v. Savoie (1989), 101 N.B.R.(2d) 431; 254 A.P.R. 431 (Q.B. Fam. Div.), refd to. [para. 82].

Léger et al. v. Belliveau et al. (1990), 107 N.B.R.(2d) 383; 267 A.P.R. 383 (T.D.), refd to. [para. 82].

Lloyd's of London v. National Bank of Canada et al. (1991), 115 N.B.R.(2d) 241; 291 A.P.R. 241 (T.D.), refd to. [para. 82].

Savard Inc. v. Stone Container (Canada) Inc. et al. (1997), 192 N.B.R.(2d) 347; 489 A.P.R. 347 (C.A.), refd to. [para. 82].

Gershman v. Vegetable Producers' Market­ing Board (Man.) (1976), 69 D.L.R.(3d) 114 (Man. C.A.), refd to. [para. 84].

Sylvan Lake Golf & Tennis Club Ltd. v. Performance Industries Ltd. and O'Con­nor (No. 2), [2002] 1 S.C.R. 678; 283 N.R. 233; 299 A.R. 201; 266 W.A.C. 201, refd to. [para. 84].

Dunphy's Poultry Farm Ltd. v. Merrithew, [2004] N.B.R.(2d) Uned. 47 (C.A.), refd to. [para. 93].

Statutes Noticed:

Insurance Act, R.S.N.B. 1973, c. I-12, sect. 369.2 [paras. 48, 54].

Rules of Court (N.B.), rule 22.01(3) [para. 24].

Authors and Works Noticed:

American Jurisprudence, Interference (2nd Ed.), vol. 45, p. 291 [para. 65].

Buller, Rudy V., Insurers' Discovery Obli­gations in the Context of a Bad Faith Claim (2003), 27:1 Adv. Q. 48, generally [para. 86].

Burns, Peter, Tort Injury to Economic Interests: Some Facets of Legal Response (1980), 58 Can. Bar Rev. 103, pp. 112, 113 [para. 43].

Cohen, M., Reconstructing Breach of the Implied Covenant of Good Faith and Fair Dealing as a Tort (1985), 73:4 Cal. L. Rev. 1291, generally [para. 44].

Debenham, David, Coming Armed With Spiers: Insuring Good Faith Processing of Policy Claims in the Post-Whiten Age (2003), 27:1 Adv. Q. 5, pp. 12, 13 [para. 43]; 14, 15 [para. 39]; 25 [para. 47]; 28 to 32 [para. 68]; 33 to 47 [para. 57]; 38 [para. 42].

Dobbs, Dan B., The Law of Torts (2001), vol. 2, pp. 1288 to 1290 [paras. 43, 45].

Fleming, John G., The Law of Torts (9th Ed. 1998), pp. 756, 757 [para. 64]; 764 [para. 66].

Fridman, Gerald Henry Louis, The Law of Torts in Canada (2nd Ed. 2002), pp. 794 [para. 65]; 804 [paras. 65, 66, 84]; 804 to 807 [para. 66].

Harpwood, Vivienne, Principles of Tort Law (4th Ed. 2000), pp. 13 to 15 [para. 36].

Heydon, J.D., Economic Torts (2nd Ed. 1978), p. 29 [para. 43].

Klar, Lewis N., Tort Law (3rd Ed. 2003), p. 612 [para. 58].

Law Society of New Brunswick, Code of Professional Conduct (2004), c. 8, Com­mentaries 8, 10 [para. 56].

Markesinis, B.S., and Deakin, S.F., Tort Law (4th Ed. 1999), p. 471 [para. 43].

Osborne, Philip H., The Law of Torts (2nd Ed. 2003), p. 300 [para. 65].

Rainaldi, Linda A., Remedies in Tort (1987 Looseleaf Ed.) (2004 Update, Release 2), c. 8, paras. 3 [para. 63]; 9 [para. 65]; 14 [para. 58]; 31 [para. 74].

Shernoff, W.M., Gage, S.M., and Levine, H.R., Insurance Bad Faith Litigation (2000), pp. 2-11 et seq. [para. 47]; paras. 2.02 [para. 44]; 2.02[2] [para. 43]; 5.01 [para. 44];

Smith, Beverley G., Professional Conduct for Lawyers and Judges (2nd Ed. 2002), c. 7, p. 6 [para. 56].

Sopinka, John, Lederman, Sidney N., and Bryant, Alan W., The Law of Evidence in Canada (2nd Ed. 1999), p. 47 [para. 83].

Spurgeon, Andrew, Post-Whiten v. Pilot, in Bad Faith (2002), pp. 9, fn. 19 [para. 48]; 24 to 29 [para. 46].

Waddams, Stephen M., The Law of Dam­ages (Rev. 2nd Ed. 1991) (2003 Loose­leaf Update), pp. 11-2 to 11-19 [para. 84].

Winograd, Andrea Brownstone, Inducing Breach of Contract in Rainaldi, Linda A., Remedies in Tort (1987 Looseleaf Ed.) (2004 Update, Release 2), c. 8, paras. 3 [para. 63]; 9 [para. 65]; 14 [para. 58]; 31 [para. 74].

Counsel:

Joseph E. Cantini, for the appellant;

Lucie Richard and Glen S. Gallant, for the respondents.

This appeal was heard on March 16, 2004, by Drapeau, C.J.N.B., Deschênes and Rob­ertson, JJ.A., of the New Brunswick Court of Appeal.

The following decision of the Court of Appeal was delivered in both official lan­guages on July 22, 2004, by Drapeau, C.J.N.B.