Shaver v. Co-Operators General Insurance Company, 2011 ABQB 188

Court of Queen ’ s Bench of Alberta Citation: Shaver v. Co-Operators General Insurance Company, 2011 ABQB 188 Date: 20110321 Docket: 1003 12889 Registry: Edmonton Between: Lloyd William Shaver Plaintiff/Respondent - and - The Co-Operators General Insurance Company Defendant/Applicant _______________________________________________________ Memorandum of Decision of the Honourable Madam Justice J.B. Veit _______________________________________________________

Summary [ 1 ] The Co-operators applies, pursuant to the provisions of Rule 7.3, for

summary judgment dismissing the within action on the basis that it was commenced beyond the 10 year “ultimate” limitation set out at s. 3(1)(

b) of the Limitations Act. Mr. Shaver was injured on July 14, 2000 in a three vehicle motor vehicle accident with one other identified driver. Mr. Shaver issued a statement of claim in April 2002 suing the Administrator of the Motor Vehicle Accident Claims Act, Allison Marie Jevne and Four Seasons Bottled Water

(1995) Inc. and John Doe 1 and John Doe 2. Eventually, the Motor Vehicle Accident Claims Fund consented to a partial judgment in Mr. Shaver’s favour in the amount of $100,000.00, plus costs and disbursement; the partial judgment was entered on January 19, 2010. This claim was issued on July 29, 2010. In this action, Mr.

Shaver’s claim is based on the SEF 44 endorsement found in the defendant’s policy which states, “ Every action . . . against the insurer . . under this endorsement shall be commenced [within 2 years] from the date upon which the eligible claimant . . . knew or ought to have known that the quantum of the claims with respect to an insured person exceeded the minimum limits for motor vehicle liability insurance in the jurisdiction in which the accident occurred.” The Co-operators submits that Mr. Shaver’s claim was commenced more than 10 years after the claim against it arose; Mr.

Shaver submits that his claim against The Co-operators arose only on January 19, 2010.

[2] The Co-operators’ application for

summary judgment is denied: “given the ambiguity [of the SEF 44 clause], theinterpretation most favourable to the insured is that the limitation runs from the final judgment or settlement”: Wawanesa MutualInsurance Co., at para. 8. The Court of Appeal’s strong obiter applies here: Mr. Shaver’s action against The Co-operators arose inJanuary, 2010. His claim against his own insurer was therefore brought within time. Cases and authority cited [3] By the Applicant: Alberta Rules of Court, Rule 7.3 (former Rule 159); De Shazo v. Nations Energy Co., 2005 ABCA 241;Yellowbird v.

Samson Cree Nation No. 444, 2006 ABQB 434; Yellowbird v. Samson Cree Nation No. 444, 2008 ABCA 270; Limitations Act, R.S.A. 200 C.l-12; Bugg v. Beau Canada Exploration Ltd., 2006 ABCA 201; Shoemaker v. Wawanesa MutualInsurance Co., 1993 A.J. No. 289 (AB) Affd 1994 A.J. 126 (CA); Somersall v. Friedmann, 2002 SCC 59; Bowes v. Edmonton (City),2007 ABCA 347. [4] By the Respondent: Wawanesa Mutual Insurance Co. v. Shoemaker 1994 AJ. 126; Bichel v. McCoy 1993 A.J. 32;Stuffco v. Stuffco 2006 ABCA 317 , 2006 A.J. No. 1346; Zeitoun v. Economical Insurance Group 2007 O.J.

No. 473. [5] By the court: McCook v Subramaniam (ON SC), [2008] O.J. No. 4583 (M.); Francis (Litigationguardian of) v Smith (ON SC), [2002] O.J. No. 2328 (Sup. Ct. J.); Caruso v Guarantee Co. of North America (ON CA), [1996] O.J. No. 4072 (C.A.) Appendix A: Alberta Law Reform Institute, Limitations, Report No. 55, December 1989, Extract relating to the ultimate periodcommencement rule 1. Background [6] In addition to the facts set out in the

Summary, above, the following should also be noted: - Allison Marie Jevne also brought an action for injuries she suffered in the same accident in which Mr. Shaver was injured. Eventually, there was an order of the court scheduling the trial of both actions; there was a further order which severed the liabilityportion of the action from the assessment of damage. The liability portion was scheduled for trial in this court on December 13, 14 and15, 2006; - before the trial was to take place, the Motor Vehicle Accident Claims Fund accepted liability for the accident itself and Mr.Shaver discontinued his action against Allison Marie Jevne and Four Seasons Bottled Water

(1995) Inc.; - the damages portion of Mr. Shaver’s claim was originally scheduled for trial in November, 2007, but was adjourned prior to thetrial date; - Mr. Shaver was advised that Ms. Jevne had settled her action with the Fund in August, 2008 for the sum of approximately$100,000.00, plus costs; her injuries were considered to be serious; - in May, 2009, the lawyer for the Fund took a leave of absence. In the absence of further communication from the Fund, Mr.Shaver filed a notice of motion, returnable December 1, 2009, to enter the matter for trial of the assessment of damages;

- up to that point, the Fund took the position that Mr. Shaver’s claim did not exceed the remaining $100,000.00 available from the Fund; - Mr. Shaver’s claim is for a broken foot which segued into a pain syndrome in the foot making it difficult for him to walk. His main claim is for loss of income available from occupation in the oilfield as opposed to the occupation he has held since the date of the accident.

If he is successful in the loss of income portion of his claim, then his total damages may exceed the remaining $100,000.00 remaining in the fund; - in January 2010, the Fund advised that it was prepared to consent to a partial judgment for the remaining monies in the Fund. That judgment was taken out on January 19, 2010. [ 7 ] The ultimate limitation period is set out in the Act as follows: Limitation periods 3(1) Subject to

section 11, if a claimant does not seek a remedial order within . . . (b) 10 years after the claim arose, whichever period expires first, the defendant, on pleading this Act as a defence, is entitled to immunity from liability in respect of the claim. . . .

(3) For the purposes of subsection (1)(b), (

a) a claim or any number of claims based on any number of breaches of duty, resulting from a continuing course of conduct or a series of related acts or omissions, arises when the conduct terminates or the last act or omission occurs; (

b) a claim based on a breach of a duty arises when the conduct, act or omission occurs; (

c) a claim based on a demand obligation arises when a default in performance occurs after a demand for performance is made; (

d) a claim in respect of a proceeding under the Fatal Accidents Act arises when the conduct that causes the death, on which the claim is based, occurs; (

e) a claim for contribution arises when the claimant for contribution is made a defendant in respect of, or incurs a liability through the settlement of, a claim seeking to impose a liability on which the claim for contribution can be based, whichever first occurs;

(

f) a claim for a remedial order for the recovery of possession of real property arises when the claimant is dispossessed of the real property. . . .

(5) Under this section, . . . (

b) the defendant has the burden of proving that a remedial order was not sought within the limitation period provided by subsection (1)(b). 2. The Co-operators has not proved that Mr. Shaver’s action was brought outside the ultimate limitation period [ 8 ] The Co-operators has not proved that Mr. Shaver’s action was brought outside the “ultimate” limitation period. [ 9 ] The Co-operators strongly rely on the Supreme Court of Canada’ decision in Somersall . With respect, that decision does not assist them.

The reason that decision does not help them is that the Supreme Court made its comments about the obligation to indemnify in an entirely different context from the context which applies here. In Somersall , the issue was whether a plaintiff - Somersall - (in Mr. Shaver’s position) who had made an agreement with a defendant in the Fund’s position that Somersall would not pursue the defendant beyond its policy limits, then precluded Somersall from suing its own insurer on the SEF 44 claim.

It is in that limited context that the Supreme Court said, “The insurer becomes obliged to make the payment the moment the claim of the insured against the tortfeasor comes into being, that is, at the time of the accident”. The focus on this application is not when The Co-operators’ liability came into being, but when Mr. Shaver had to make his claim against them. It is important, for many reasons including the need to ensure the security of funding for claims that may be made against them, for insurance companies to know what their liabilities are.

But that does not answer the question about when one of their insured must sue them in order to stay within a limitation period. As to the latter question, the issue of when Mr. Shaver’s insurer’s became liable on its policy is, simply, irrelevant. [ 10 ] It might be argued that the intention of the Legislators in passing s. 3(1)(

b) of the Limitations Act was to prevent actions such as that of Mr. Shaver’s from going forward: see, ALRI’s Report on Limitations which was presumably the basis for Alberta’s legislation. [ 11 ] In my view, a more pertinent answer to the issue that arises in this case was given by our Court of Appeal in Wawanesa Mutual Insurance Co.

Although that case was dealing specifically with the 2 year limitation rather than the ultimate limitation, the reasoning process is the same: an insured’s claim against his own insurer arises not at the time of the accident, but when he knows, or should have known, that the tortfeasor’s coverage will be inadequate to cover the insured’s damages. In the circumstances here, the parties agree that the date on which Mr. Shaver knew that the tortfeasor’s coverage would not be sufficient was January 19, 2010. On that basis, Mr.

Shaver’s claim was brought within the required time. [ 12 ] I note that many other courts have followed the lead of our Court of Appeal in concluding that an insured’s claim against his own insurer only arises when the insured comes to know that the tortfeasor’s insurance will not cover the insured’s damages: McCook , Francis (Litigation guardian of) , Caruso . 3. Costs [ 13 ] If the parties are not agreed on costs, I may be spoken to within 30 days of the release of this decision.

Heard on the 16 th day of March, 2011. Dated at the City of Edmonton, Alberta this 18 th day of March, 2011. J.B. Veit J.C.Q.B.A. Appearances: Damien Sheperd, Chatwin LLP for The Co-operators General Insurance Company Peter Purdon, Purdon Caskenette for Mr. Shaver

Appendix A Clause 3(3)(e) - Contributions 55. The ultimate period commencement rule . Cl. 3(3)(

e) provides that the ultimate period for a claim for contribution begins when the claimant for contribution was made a defendant under, or incurred a liability through the settlement of, a claim seeking to impose a liability upon which the claim for contribution could be based.

56. The existing law . The reasons for and the operation of this proposal can be best discussed in terms of an example. Al was injured in an automobile accident, and the tortious conduct of three persons, Peter, Lyndon and Richard, contributed equally to cause the injury. Al could obtain a judgment for his full damages against anyone or all of these tort- feasors. However, under the common law rule, if anyone of them, say Peter, satisfied the judgment, he could not require either of the others to reimburse him for, or contribute, their fair one-third share of the damages.

The Alberta Tort- Feasors Act , RS.A. 1980, c. T-6, gives any tort-feasor who has been held liable for the damages a right to recover contribution from any other tort-feasor who has been or could be held liable for the same damages. However, the Tort-Feasors Act does not expressly state when a claim for contribution accrues. 57. Discussion . When the ultimate period for a claim for contribution should begin raises a complex and difficult issue.

Anyone of three different times could have been selected: (1) when the injured claimant's claim accrued against a given tort-feasor; (2) when liability upon which a claim for contribution is based is imposed on a claimant for contribution; or (3) when the claimant for contribution

was made a defendant under a claim seeking to impose a liability upon which the claim for contribution could be based. 58. When the injured claimant's claim accrued against a given tort-feasor . This is the earliest possible commencement time for the ultimate period. In the preceding example, assume the following facts.

The accident occurred on January 1, 1965; Al's claims against Peter, Lyndon and Richard accrued at that time; Al discovered the requisite facts required by the discovery rule as to Peter roughly 14 years later, and Al could not reasonably have discovered them sooner; Al brought a claim against Peter in late December 1979; Peter was completely surprised by the claim; Peter hired a lawyer and factual investigations were begun; in July 1980 Peter discovered that Lyndon's conduct contributed to Al's injury; and at that time Lyndon remained unaware that either Al or Peter had any claim against him.

Peter would like to join Lyndon to the proceeding previously commenced by Al, and to bring a claim for contribution against Lyndon. But to what avail? If the ultimate period against Peter's contribution claim against Lyndon began when Al's claim against Peter accrued, 15 and 1/2 years would have passed and Lyndon would be entitled to assert his immunity from liability under Peter's claim.

59. This option would be unduly harsh on a claimant for contribution if the original tort claim were brought near the end of the ultimate period applicable to that claim.

Section 5 on claims added to a proceeding previously commenced contains a provision under which Lyndon would lose his limitations defence against Peter's claim if Lyndon obtained certain specified knowledge of Peter's claim during the limitation period applicable to that claim. As the assumed facts state that Lyndon was unaware that either Al or Peter had a claim against him, Lyndon would not lose his limitations defence. 61. When liability upon which a claim for contribution is based is imposed on a claimant for contribution . This is the latest possible commencement time for the ultimate period.

Continuing the preceding example, assume that Al's claim against Peter, which was brought in December 1979, went to trial in July 1982; that a judgment imposing liability upon Peter was granted; and that Peter's liability became final under an appellate decision given in July 1983. The ultimate period on Peter's claim for contribution against Lyndon would begin in July 1983, when liability to Al was finally imposed on Peter.

A strong argument can be made, based on sound legal theory, that a claim for contribution cannot accrue until the liability upon which it is based has been imposed, and that the limitation period

applicable to the claim should begin then. How could Lyndon have a duty to contribute to the satisfaction of Peter's liability before any liability has been imposed on Peter in favor of Al? Clause 3(1)(

c) of the Tort-Feasors Act supports this argument, for it says (

c) any tort-feasor liable in respect of that damage may recover contribution from any other tort- feasor who is or would, if sued, have been liable in respect of the same damage... In short, Peter has a right to contribution only if he is liable to Al, but if that condition is met, Lyndon will have a duty to contribute merely because he would be liable to Al if sued. Nevertheless, under this option the ultimate period applicable to Peter's claim for contribution against Lyndon would not even begin until July 1983, 3 and 1/2 years after Al brought the original claim against Peter in December 1979. 62.

This option would unnecessarily extend the operation of the ultimate period. 63. When the claimant for contribution was made a defendant under a claim seeking to impose a liability upon which the claim for contribution could be based. Relative to options (1) and (2), this is an intermediate commencement time for the ultimate period, and it is the option

selected in the Act. Under this option the ultimate period on Peter's claim for contribution against Lyndon would begin in December 1979, when Al brought his claim against Peter. The theoretical defect inherent in this solution was discussed in the preceding paragraph; the limitation period applicable to Peter's claim for contribution from Lyndon will begin before Peter's claim accrued, for unless and until Peter is liable to Al, Peter will have no right to contribution from Lyndon. However, paragraph (

a) as to negligence claims tolerates the same theoretical impurity, for the ultimate period applicable to a negligence claim can begin before the damage has occurred and hence before that claim accrued. Nevertheless, as a practical matter, once Peter becomes a defendant under any claim he will begin to investigate the facts, and if it is a tort claim he will have a strong incentive to learn whether or not there are any other tort-feasors who would in the future have a duty to contribute and hence to reduce his ultimate economic loss.

In short, option (3) gives a claimant for contribution ample time to take steps to find other persons to share the potential liability. 64. This option is the fairest and most practical compromise. 65. There are frequently a string of defendants in a tort situation. In the example under consideration, assume that

Peter was the negligent driver whose car struck Al's car; that Lyndon was a repair garage which was negligent in repairing the brakes on Peter's car before the accident; that Richard was the manufacturer of defective parts which Lyndon installed in Peter's car in connection with the repair job; and that Peter brought a claim for contribution against Lyndon in December 1980. It is Lyndon, rather than Al or Peter, who is most likely to discover that Richard's conduct contributed to Al's injury.

Under the third option the ultimate period applicable to Lyndon's claim for contribution against Richard would begin when Lyndon was made a defendant under Peter's claim for contribution in December 1980, and would not expire until 15 years later. As a matter of practical reality this problem is more a matter of sound than fury.

When any tort-feasor is made a defendant in a civil proceeding which originated with a tort claim, it is in his interest to make all reasonable efforts to discover all other tort-feasors liable for the damages, to join them to the proceeding, and to bring claims for contribution as soon as possible. Consequently, if a claimant for contribution does not bring a timely claim for contribution, it is most probable that the 2-year discovery period will strike the claim long before the expiration of the ultimate period. 66. Cl. 3(3)(

e) also covers the situation when a claimant for contribution incurred

a liability through the settlement of a claim. Of course there is no right of contribution unless it is created by the Tort-Feasors Act , and no right is presently created in this situation. Nevertheless, most modem statutes on this subject do create a right of ⋅ contribution based on a settlement, and it is reasonable to assume that Alberta will adopt this change at some time. When it does, an applicable limitation provision will be available, and in the meantime the provision will do no harm.