Wilson v. Saskatchewan Government Insurance, 2012 SKCA 106

• Judge: Vancise, Ottenbreit and Caldwell, JJ.A.
• Court: Court of Appeal (Saskatchewan)
• Case Date: October 11, 2011
• Jurisdiction: Saskatchewan
• Citations: 2012 SKCA 106;(2012), 405 Sask.R. 8 (CA)

Wilson v. SGI (2012), 405 Sask.R. 8 (CA);

    563 W.A.C. 8

MLB headnote and full text

Temp. Cite: [2012] Sask.R. TBEd. NO.037

Saskatchewan Government Insurance, as the Administrator under the Automobile Accident Insurance Act (defendant/appellant) v. Teresa Wilson (plaintiff/respondent)

(1967; 2012 SKCA 106)

Indexed As: Wilson v. Saskatchewan Government Insurance

Saskatchewan Court of Appeal

Vancise, Ottenbreit and Caldwell, JJ.A.

November 13, 2012.

Summary:

The plaintiff insured was injured in two motor vehicle accidents. She received benefits, including rehabilitative benefits, from the defendant insurer. The insurer gave the insured notice that it was terminating her benefits. The insured sued the insurer, appealing the termination decision and claiming aggravated damages for mental distress. The insurer eventually withdrew its decision to terminate benefits. The insured amended her claim to also seek damages for breach of insurer's duty to act in good faith and for indemnification of her legal fees and disbursements.

The Saskatchewan Court of Queen's Bench, in a decision reported at 358 Sask.R. 60, allowed the action in part. The court dismissed the mental distress claim but awarded punitive damages of $15,333.26. The court awarded the insured solicitor and client costs for part of the trial and party and party costs (double Column 4) for the rest of the action (less the indemnification of legal fees awarded as part of the punitive damages award). The insurer appealed.

The Saskatchewan Court of Appeal allowed the appeal in part. The trial judge erred in awarding punitive damages as the insured had not pled such damages. That award was set aside. However, the court converted the trial judge's award of $7,833.26 in punitive damages to an award of damages respecting the breach of the duty of good faith (insured's cost of mitigation of insurer's breach). It upheld the awards of solicitor-and-client costs and party-and-party costs.

Damage Awards - Topic 2030.6

Exemplary or punitive damages - Breach of duty of good faith - The plaintiff insured was injured in two motor vehicle accidents - She received benefits, including rehabilitative benefits, from the defendant insurer - The insurer gave the insured notice that it was terminating her benefits - The insured sued the insurer seeking, inter alia, damages for breach of insurer's duty to act in good faith - The insurer eventually withdrew its decision to terminate benefits - The trial judge allowed the claim - The insurer was not fair, objective or even-handed in the investigation and evaluation of the claim - It terminated the benefits and left it to the insured to present evidence to the contrary, in the face of conflicting evidence, the overwhelming majority of which supported maintaining benefits - The breach of good faith was conduct deserving of punishment and met the test for an award of punitive damages - The court awarded $7,500 in damages plus $7,833.26 as indemnification of the insured's lawyer's costs and disbursements to May 15, 2007 - The Saskatchewan Court of Appeal allowed the insurer's appeal in part - The court declined to interfere with the trial judge's overall conclusion that the insurer breached its duty of good faith and its duty to act fairly towards the insured - The trial judge erred in awarding punitive damages as the insured had not pled such damages - However, the court remedied the trial judge's error by converting the trial judge's award of $7,833.26 in punitive damages to an award of damages respecting the breach of the duty of good faith representing the insured's cost of mitigation of the insurer's breach - Litigation was the sole means of mitigation available - The insured's mitigation expenses were her legal fees and the disbursements she incurred in the course of litigation - See paragraphs 34 to 59.

Damages - Topic 1305

Exemplary or punitive damages - Breach of contract - [See Damage Awards - Topic 2030.6 ].

Insurance - Topic 730

Insurers - Duties - Duty of good faith - An insurer questioned whether a breach of the duty of good faith, although an independently actionable wrong, could arise in the absence of damages flowing from a breach of an express term of the underlying contract of insurance - The Saskatchewan Court of Appeal stated that, while the breach of the duty of good faith typically walked hand-in-hand with a denial of benefits or other breach under the express terms of a contract of insurance, a breach of the implied duty of good faith did give rise to a separate cause of action - The actionable nature of a wrong was not dependent upon the occurrence of loss or damage - That Party A suffered no loss or damage from Party B's breach of a contract did not abrogate the fact that Party B breached the contract - At the very least, such circumstances gave rise to the possibility of an award of "nominal damages" to Party A to recognize Party B's breach - See paragraphs 8 to 13.

Insurance - Topic 730

Insurers - Duties - Duty of good faith - [See Damage Awards - Topic 2030.6 ].

Practice - Topic 7454

Costs - Solicitor and client costs - Entitlement to - Improper, irresponsible or unconscionable conduct - The plaintiff insured was injured in two motor vehicle accidents - She received benefits, including rehabilitative benefits, from the defendant insurer - The insurer gave the insured notice that it was terminating her benefits - The insured successfully sued the insurer for, inter alia, damages for breach of insurer's duty to act in good faith - The claim proceeded under the Simplified Procedure - The insurer refused to provide affidavits from two insurer employees who had relevant information - It invited the insured to do so - However, the insurer had instructed the employees not to provide any information to the insured's counsel - The insured was forced to bring an application forcing the employees to testify - The trial judge found that the insurer attempted to obstruct and impede that evidence being presented to the court - It attempted to take advantage of the Simplified Procedure to effect that result and obstruct the insured's access to the evidence and ability to present the evidence - That litigation conduct warranted an award of solicitor/client costs for the days of trial and for all attendances by the insured's counsel, in relation to these two witnesses - The Saskatchewan Court of Appeal upheld the award - See paragraphs 60 to 63.

Practice - Topic 8342

Costs - Appeals - Cases where costs of appeal refused - Conduct - The plaintiff insured was injured in two motor vehicle accidents - She received benefits, including rehabilitative benefits, from the defendant insurer - The insurer gave the insured notice that it was terminating her benefits - The insured sued the insurer seeking, inter alia, damages for breach of insurer's duty to act in good faith - The insurer eventually withdrew its decision to terminate benefits - The trial judge allowed the claim and awarded the insured damages, including punitive damages - The insurer's appeal was allowed in part - The trial judge erred in awarding punitive damages as the insured had not pled such damages - However, the appeal court remedied the trial judge's error by converting the trial judge's award of $7,833.26 in punitive damages to an award of damages respecting the breach of the duty of good faith representing the insured's cost of mitigation of the insurer's breach - At issue was the costs of the appeal - The Saskatchewan Court of Appeal stated that the insurer had met with some success on appeal and would, thereby, typically be entitled to a favourable (or neutral) costs award - However, the insured was undoubtedly without fault and she "accessed the justice system solely to mitigate the unreservedly botched handling of her insurance claim" by the insurer - Therefore, this appeal fell into that small class of exceptional cases where the unsuccessful party deserved to have her costs paid by the successful party - The insurer was ordered to pay the insured's costs in the appeal (Column 4) - See paragraphs 65 to 67.

Cases Noticed:

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. 3].

Fidler v. Sun Life Assurance Co. of Canada, [2006] 2 S.C.R. 3; 350 N.R. 40; 227 B.C.A.C. 39; 374 W.A.C. 39; 2006 SCC 30, refd to. [para. 3].

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. 3].

Bay Bulls Sea Products Ltd. et al. v. Insurance Corp. of Newfoundland Ltd. et al. (2006), 260 Nfld. & P.E.I.R. 173; 786 A.P.R. 173; 2006 NLCA 56, refd to. [para. 3, footnote 1].

Kogan v. Chubb Insurance Co. of Canada et al., [2001] O.T.C. Uned. 424; 27 C.C.L.I.(3d) 16 (Sup. Ct.), refd to. [para. 3, footnote 1].

McDonald v. Insurance Corp. of British Columbia, [2012] B.C.T.C. Uned. 283; 2012 BCSC 283, refd to. [para. 3, footnote 1].

Ferme Gérald Laplante & Fils ltée v. Grenville Patron Mutual Fire Insurance Co. (2002), 164 O.A.C. 1; 217 D.L.R.(4th) 34 (C.A.), refd to. [para. 9].

Andreychuk v. RBC Life Insurance Co., [2008] B.C.T.C. Uned. A97; 2008 BCSC 286, affd. (2008), 265 B.C.A.C. 86; 446 W.A.C. 86; 2008 BCCA 492, refd to. [para. 10, footnote 3].

Forestex Management Corp. et al. v. Lloyd's Underwriters et al., [2004] F.T.R. Uned. 749; 2004 FC 1303, refd to. [para. 10, footnote 3].

Wonderful Ventures Ltd. v. Maylam et al., [2001] B.C.T.C. 775; 2001 BCSC 775, refd to. [para. 10, footnote 3].

Lawrence v. Insurance Corp. of British Columbia, [2001] B.C.T.C. 1530; 2001 BCSC 1530, refd to. [para. 10, footnote 3].

Stevens v. Sun Life Assurance Co. of Canada, [2004] B.C.T.C. 468; 2004 BCSC 468, refd to. [para. 10, footnote 3].

Norex Petroleum Ltd. et al. v. Chubb Insurance Co. of Canada et al. (2008), 444 A.R. 88; 2008 ABQB 243, refd to. [para. 10, footnote 3].

Sovereign General Insurance Co. v. Tanar Industries Ltd. et al. (2002), 316 A.R. 212; 2002 ABQB 101, refd to. [para. 10, footnote 3].

Nayyar v. Manufacturers Life Insurance Co. et al., [2010] B.C.T.C. Uned. 1588; 2010 BCSC 1588, refd to. [para. 10, footnote 3].

Hill v. Kilbrei (2005), 195 Man.R.(2d) 76; 351 W.A.C. 76; 2005 MBCA 81, refd to. [para. 13, footnote 4].

Metis National Council Secretariat Inc. et al. v. Dumont (2008), 236 Man.R.(2d) 17; 448 W.A.C. 17; 2008 MBCA 142, refd to. [para. 13, footnote 4].

Mediana (Owners of Steamship) v. Comet (Owners of Lightship), [1900] A.C. 113 (H.L.), refd to. [para. 13, footnote 4].

Marsh v. Royal Bank of Canada (1922), 63 D.L.R. 659 (Sask. C.A.), refd to. [para. 13, footnote 4].

Place Concorde East Limited Partnership et al. v. Shelter Corp. of Canada Ltd. et al. (2006), 211 O.A.C. 141; 270 D.L.R.(4th) 181 (C.A.), refd to. [para. 13, footnote 4].

Housen v. Nikolaisen et al., [2002] 2 S.C.R. 235; 286 N.R. 1; 219 Sask.R. 1; 272 W.A.C. 1; 2002 SCC 33, refd to. [para. 16].

Pritchard v. Human Rights Commission (Ont.) et al., [2004] 1 S.C.R. 809; 319 N.R. 322; 187 O.A.C. 1; 2004 SCC 31, refd to. [para. 32, footnote 5].

Lauscher v. Berryere (Bankrupt) et al. (1999), 177 Sask.R. 219; 199 W.A.C. 219; 172 D.L.R.(4th) 439 (C.A.), refd to. [para. 42].

Hill v. Church of Scientology of Toronto and Manning, [1995] 2 S.C.R. 1130; 184 N.R. 1; 84 O.A.C. 1, refd to. [para. 45].

Hadley v. Baxendale (1854), 9 Exch. 341; 156 E.R. 145, refd to. [para. 51].

Green v. Constellation Assurance Co., [1993] O.J. No. 1445 (Gen. Div.), refd to. [para. 53].

Baud Corp., N.V. v. Brook, [1979] 1 S.C.R. 633; 23 N.R. 181; 12 A.R. 271, refd to. [para. 57].

Asamera Oil Corp. Ltd. v. Sea Oil & General Corp. and Baud Corp. - see Baud Corp., N.V. v. Brook.

Farish v. National Trust Co. (1974), 54 D.L.R.(3d) 426 (B.C.S.C.), refd to. [para. 58].

Benson v. Benson (1994), 120 Sask.R. 17; 68 W.A.C. 17 (C.A.), refd to. [para. 60].

Siemens et al. v. Bawolin et al., [2002] 11 W.W.R. 246; 219 Sask.R. 282; 272 W.A.C. 282; 2002 SKCA 84, refd to. [para. 61].

Authors and Works Noticed:

Hilliker, Gordon G., Insurance Bad Faith (2004), generally [para. 20], p. 6 [para. 52].

Pitch, Harvin D., and Snyder, Ronald M., Damages for Breach of Contract (2nd Ed. 1989) (Looseleaf), para. 8-15 [para. 58].

Waddams, Stephen M., The Law of Damages (2011) (Looseleaf), c. 10, generally [para. 13].

Counsel:

Robert W. Leurer, Q.C., and Laura Mazenc, for the appellant;

Kenneth W. Noble, Q.C., for the respondent.

This appeal was heard on October 11, 2011, before Vancise, Ottenbreit and Caldwell, JJ.A., of the Saskatchewan Court of Appeal. The decision of the court was delivered by Caldwell, J.A., on November 13, 2012.