Economical Insurance Group v. Master Forestry Ltd., 2012 NSSC 353

SUPREME COURT OF NOVA SCOTIA Citation: Economical Insurance Group v. Master Forestry Ltd., 2012 NSSC 353 Date: 20120821 Docket: Cr. Am. 388776 Registry: Amherst Between: Economical Insurance Group c/o Plant Hope Adjusters Ltd. Plaintiff v. Master Forestry Limited Defendant LIBRARY HEADING Judge : The Honourable Justice A. David MacAdam Heard: August 21, 2012, in Amherst, Nova Scotia Final Written Submissions: July 19, 2012 Written Decision: October 11, 2012 Subject: Small Claims Court appeals, insurance, contract

interpretation, limitation of actions

Summary: The respondent insured a piece of forestry equipment under a policy issued by the appellant. The machine was destroyed in a fire while in the possession of a third party. The appellant denied the claim on the basis that the machine had been rented out and was therefore excluded under the insurance contract. The Small Claims Court adjudicator allowed the respondent's claim, holding that the machine was subject to a conditional sale agreement, not a rental agreement, and was therefore covered by the policy when it was destroyed. The adjudicator rejected a limitations defence raised by the appellant. Issue: Did the adjudicator err in his decision?

Result: The adjudicator did not err in interpreting the insurance policy and concluding that there was no material change in risk. Nor did he err in disallowing the Insurance Act limitations defence on equitable grounds under the Limitation of Actions Act. The appeal was dismissed. THIS INFORMATION SHEET DOES NOT FORM PART OF THE COURT'S DECISION. QUOTES MUST BE FROM THE DECISION, NOT THIS LIBRARY SHEET . SUPREME COURT OF NOVA SCOTIA Citation: Economical Insurance Group v. Master Forestry Ltd., 2012 NSSC 353 Date: 20120821 Docket: Cr.

Am. 388776 Registry: Amherst Between: Economical Insurance Group c/o Plant Hope Adjusters Ltd. Appellant v. Master Forestry Limited Respondent DECISION Judge: The Honourable Justice A. David MacAdam Heard: August 21, 2012, in Amherst, Nova Scotia Final Written

Submissions: July 19, 2012 Written Decision: October 11, 2012 Counsel: Lucie LaBoissonnière, for the appellant Jerry T. Langille, for the respondent By the Court : Background [ 1 ] This is an appeal from a decision of an adjudicator of the Small Claims Court. [ 2 ] The respondent company commenced this proceeding as claimant in the Small Claims Court.

The respondent claimed under an insurance policy issued by the appellant, for destruction by fire of a piece of machinery, a Caterpillar Feller Buncher. [ 3 ] According to the adjudicator, it was "clear that this machine was listed in the coverage granted by the Defendant company to the Claimant. However, at some time in 2007 the Claimant delivered possession of the machine to a Mitchell Corey in New Brunswick, with a view to having him purchase it." There was a draft conditional sales agreement, under which Mr.

Corey had made "significant monthly payments." These payments had ceased some time before the machine was destroyed, and Mike Masters, the respondent's principal, had apparently "lost touch" with Mr. Corey. He learned that the machine was destroyed by fire in early 2010, and filed a proof of loss with the appellant later that year. The appellant denied the claim. [ 4 ] The insurance policy insured "against risks of direct physical loss or damage to the Property insured" (para. 2), with an exclusion (among others) for "property insured which is rented to others" (para. 4(c)).

However, the policy included an endorsement for equipment that was rented out. The appellant defended on the basis that the Feller Buncher had been rented to a third party when it was destroyed, thus triggering an exclusion in the policy; alternatively, the appellant claimed that the machine had been sold, and the respondent therefore had no insurable interest.

The appellant also pleaded that the claim was time-barred under the one-year limitation period in the Insurance Act . [ 5 ] Despite some confusion in the pleadings, the adjudicator identified the relevant limitation provisions as Statutory Condition 14 under the Nova Scotia Insurance Act , R.S.N.S. 1989, c. 231 , as well as s. 3(2) of the Limitations of Actions Act , R.S.N.S. 1989, c-258 , which permits the court to disallow a limitations defence where it appears to be equitable. The adjudicator made the following comments about the failure to bring the claim within the limitation period: … He and Mr.

Langille were corresponding with the adjuster for the Defendant into the summer of 2010, and I see no warning given by the adjuster that the limitation defence would be invoked. I note as well that Mr. Masters was at a disadvantage in bringing a claim in a timely fashion because he had lost track of the machine at the time it was destroyed. It would clearly be prejudicial to him not to disallow the defence, while I cannot see that the Defendant would suffer any such prejudice. It was well aware that Mr.

Masters was making a claim under the policy and was in possession of all the facts it needed to assess and ultimately deny the claim. I find that it would be equitable to deny the limitation defence, … and I will therefore deal with this dispute on its merits. [ 6 ] With respect to the defence that the machine had been sold to one Mitchell Corey before it was destroyed, the appellant relied upon Statutory Conditions 2 and 4 from

Part IV of the Insurance Act . It appears that the appellant meant

Part VII, Statutory Condition 2, which provides:

2 Property of others - Unless otherwise specifically stated in the contract, the insurer is not liable for loss or damage to property owned by any person other than the insured, unless the interest of the insured therein is stated in the contract. [ 7 ] The adjudicator held that the appellant had retained ownership over the machine under the terms of a conditional sale agreement with Mr. Corey, who was in possession of the machine when it was destroyed. In his original order, the adjudicator said: I find that the Claimant and Mr.

Corey had entered into an agreement of purchase and sale and that the terms of that agreement were substantially those set out in the draft presented to the court even though no final signed version of the agreement was ever produced. The relevant provisions of the agreement are clause 3, which states that "Title to the Goods shall remain in the Seller until the Goods are fully paid for", and clause 6, which provides that risk of loss or damage rests upon the Purchaser and requires him to insure the equipment to the extent of the Seller's interest.

It therefore follows that the defence based on the premise that the equipment had been rented to Mr. Corey cannot stand. There was clearly a contract of sale, not of rental. I also conclude that the reservation of title in the seller until payment in full had been made means that the machine had never become the property of Mr. Corey. I find that the Claimant still had an insurable interest in the machine even though Mr. Corey might have had such an interest as well, and that fact is not altered by the condition in the agreement obliging him to insure it…. [ 8 ] In his

summary report the adjudicator said: … Although the draft agreement was never signed by both parties, I found that it did indeed form the basis for the physical transfer of the equipment from the Claimant to Corey. Clause 3 of that agreement states that "Title to Goods shall remain in the Seller until the Goods are fully paid for". In my opinion, this meant that the Seller retained an insurable interest in the equipment despite the requirement to insure placed on the Purchaser in clause 6.

Obviously the Purchaser had an insurable interest, and had he placed insurance on the equipment as he should have done then the Claimant's loss would have been covered. The Claimant's own insurance coverage would not have been invoked, since clearly he could not have recovered twice. Had he been provided with proof that his interest in the equipment was indeed covered by the Purchaser's insurance, the Claimant could have dropped the equipment from his policy and perhaps have reduced his premium. He did not do so. [ 9 ] This left the second defence, the claim that there had been a material change in risk.

Statutory Condition 4 as found in the

Schedule to

Part VII, provides: 4 Material change - Any change material to the risk and within the control and knowledge of the insured shall avoid the contract as to the part affected thereby, unless the change is promptly notified in writing to the insurer or its local agent; and the insurer when so notified may return the unearned portion, if any, of the premium paid and cancel the contract, or may notify the insured in writing that, if he desires the contract to continue in force, he must, within fifteen days of the receipt of the notice, pay to the insurer an additional premium; and in default of such payment the contract shall no longer be in force and the insurer shall return the unearned portion, if any, of the premium paid. [ 10 ] On this ground, the adjudicator held that to allow the prospective purchaser to take possession of the equipment did not bring about a material change in risk.

In his order, the adjudicator concluded that this defence required the contract to be "strictly construed." He continued: …While the contract of insurance does specifically exclude coverage for rented property, it does not specifically exclude property that is not in the direct possession of the insured for other reasons. I was not presented with any case authority supporting the proposition that the owner of property loses coverage when he parts with possession of the property under the provisions of a conditional sale contract because of a material change in risk.

I therefore conclude that this last defence is not persuasive and I find that the Claimant has established its case on the merits. [ 11 ] He further described his reasoning in the

summary report:

… The prospective purchaser was another legitimate forestry business. Mr. Masters, president of the Claimant company, testified that he had not used the machine since 2004 and had for some time stored it with "Atlantic Cat", which I assumed was the local caterpillar equipment dealer.

By so storing it, he had given up possession yet maintained his insurance coverage. [ 12 ] Accordingly, the adjudicator granted judgment to the respondent for $25,000.00, plus costs of $182.94. [ 13 ] I note that the defence filed with the Small Claims Court actually cited provisions of the New Brunswick Insurance Act , but the adjudicator specifically noted and considered the Nova Scotia language of Statutory Conditions 2, 4, and 14.

Nothing, in my view, turns on these errors and omissions, and the merits of this appeal will be determined on the basis of the claims and defences considered by the adjudicator. [ 14 ] The appellant relies on two grounds in support of its denial of coverage. It claims that there was a material change in risk and that the limitation period for commencing an action had expired.

The adjudicator found that in the circumstances there was no material change in the risk and also disallowed the limitations defence. [ 15 ] Relevant provisions of the Insurance Act , R.S., c. 231 (the Act), the Statutory Conditions under the Act (Statutory Conditions) and the policy of insurance (the Policy), include: (

A) Insurance is defined in s. 3(

k) of the Act: (k) "insurance" means the undertaking by one person to indemnify another person against loss or liability for loss in respect of a certain risk or peril to which the object of the insurance may be exposed, or to pay a sum of money or other thing of value upon the happening of a certain event and includes life insurance; (

B) The relevant statutory conditions under

Part VII of the Act are: Statutory Conditions 2. Property of others - Unless otherwise specifically stated in the contract, the insurer is not liable for loss or damage to property owned by any person other than the insured, unless the interest of the insured therein is stated in the contract. ... 4.

Material change - Any change material to the risk and within the control and knowledge of the insured shall avoid the contract as to the part affected thereby, unless the change is promptly notified in writing to the insurer or its local agent; and the insurer when so notified may return the unearned portion, if any, of the premium paid and cancel the contract, or may notify the insured in writing that, if he desires the contract to continue in force, he must, within fifteen days of the receipt of the notice, pay to the insurer an additional premium; and in default of such payment the contract shall no longer be in force and the insurer shall return the unearned portion, if any, of the premium paid. [emphasis added] 14.

Action - Every action or proceeding against the insurer for the recovery of any claim under or by virtue of this contract shall be absolutely barred unless commenced within one year next after the loss or damage occurs.

(C) Subsections 3(2) and (4) of the Limitations of Actions Act , R.S., c. 258, provide:

(2) Where an action is commenced without regard to a time limitation, and an order has not been made pursuant to subsection (3), the court in which it is brought, upon application, may disallow a defence based on the time limitation and allow the action to proceed if it appears to the court to be equitable having regard to the degree to which (

a) the time limitation prejudices the plaintiff or any person whom he represents; and (

b) any decision of the court under this

Section would prejudice the defendant or any person whom he represents, or any other person. ...

(4) In making a determination pursuant to subsection (2), the court shall have regard to all the circumstances of the case and in particular to (

a) the length of and the reasons for the delay on the part of the plaintiff; (

b) any information or notice given by the defendant to the plaintiff respecting the time limitation; (

c) the extent to which, having regard to the delay, the evidence adduced or likely to be adduced by the plaintiff or the defendant is or is likely to be less cogent than if the action had been brought or notice had been given within the time limitation; (

d) the conduct of the defendant after the cause of action arose, including the extent if any to which he responded to requests reasonably made by the plaintiff for information or inspection for the purpose of ascertaining facts which were or might be relevant to the plaintiff's cause of action against the defendant; (

e) the duration of any disability of the plaintiff arising after the date of the accrual of the cause of action; (

f) the extent to which the plaintiff acted promptly and reasonably once he knew whether or not the act or omission of the defendant, to which the injury was attributable, might be capable at that time of giving rise to an action for damages; (

g) the steps, if any, taken by the plaintiff to obtain medical, legal or other expert advice and the nature of any such advice he may have received. [ 16 ] The relevant provisions in the policy provide: 1. PROPERTY INSURED This rider insures the property as described on the Declaration Page, but only with respect to those items for which a Limit of Insurance is specified.

... 14. PROPERTY EXCLUDED This rider does not insure loss or damage to: .... (

c) properly insured which is rented to others; .... [17] There was also an Equipment Endorsement which provides permission for the insured to rent out equipment, or to loanequipment to other contractors as part of their regular operations. This endorsement contained terms, limitations and conditions, and alsorequired that the rental contract be in writing. Jurisdiction and Standard of Review [18] Appeals to this court are governed by s. 32(1) of the Small Claims Court Act, R.S., c. 430, as amended. It reads: 32

(1) A party to proceedings before the Court may appeal to the Supreme Court from an order or determination of an adjudicator on theground of (

a) jurisdictional error; (

b) error of law; or (

c) failure to follow the requirements of natural justice, by filing with the prothonotary of the Supreme Court a notice of appeal. [19] The standard of review is not in dispute. The appellant and respondent each note the decision of Saunders J. in McCormick v.MacDonald, 2009 NSCA 12, at para. 20: The standard of review to be applied when evaluating a lower court's decision for error, is well known. Findings of fact, or inferencesdrawn from those facts are reviewed on a standard of palpable and overriding error. Matters involving pure questions of law are subjectto a correctness standard.

Where a distinct legal issue can be isolated from a challenged question of mixed fact and law, then the standardapplied to that extricated issue will also be one of correctness. Otherwise the same palpable and overriding measure is invoked. Housenv. Nikolaisen, 2002 SCC 33 , [2002] 2 S.C.R. 235. [20] Also referenced by the appellant is McPhee v. Gwynne-Timothy, 2005 NSCA 80, at para. 33:

On questions of law the trial judge must be right. The standard of review is one of correctness. There may be questions of mixed fact andlaw. Matters of mixed fact and law are said to fall along a "spectrum of particularity." Such matters typically involve applying a legalstandard to a set of facts. Mixed questions of fact and law should be reviewed according to the palpable and overriding error standardunless the alleged error can be traced to an error of law which may be isolated from the mixed question of law and fact.

Where that resultobtains, the extricated legal principle will attract a correctness standard. Where, on the other hand, the legal principle in issue is notreadily extricable, then the issue of mixed law and fact is reviewable on the standard of palpable and overriding error. See Housen, supra,generally at para. 19-28; Campbell MacIsaac, supra, at para. 40; Davison v.

Nova Scotia Government Employees Union, [2005] N.S.J.No. 110, 2005 NSCA 51. [21] The appellant says the adjudicator erred in law in applying the Statutory Conditions, while the respondent replies that thisappeal involves questions of mixed fact and law, where the legal principles in issue are not readily extricable, and accordingly the findingof the adjudicator should be reviewed on the standard of palpable and overriding error. [22] In respect to interpreting provisions in the policy, the respondent alleges that the “contra proferentem rule” requires that anyambiguity in the meaning of the policy terms should be construed against the appellant.The respondent cites a line of cases for theproposition that "[a]s a general rule, clauses in an insurance policy providing coverage are interpreted liberally or broadly in favour of theinsured and those clauses excluding coverage are construed strictly against the insurer": Chilton v.

Co-operators General Insurance Co.(1997), (ON CA), 143 D.L.R. (4th) 647, 1997 CarswellOnt 360 (Ont. C.A.) at para. 19. The Nova Scotia Court ofAppeal cited this passage with approval in Green v. Guardian Insurance Co. of Canada (1998), 1998 NSCA 202 , 173 N.S.R.(2d) 201, at para 88. To a similar effect, in Hart (Guardian ad litem of) v. Combined Insurance Co. of America, 2005 NSSC 344,Murphy J. held that ambiguities in an insurance contract "would be resolved by application of the contra proferentem rule, and thePolicy terms construed against the Defendant, who authored the document" (para. 64).

Insurable Interest and Material Change in Risk [23] The appellant says the adjudicator erred in law by stating the monthly payments ceased in 2009, showing from the record thatthey actually ceased sometime in 2008. Counsel says the respondent acknowledged a lack of diligence, following cessation of themonthly payments. She says this was a material change in the risk and the “duty of utmost good faith” owed by an insured to its insurerrequired the respondent to notify the appellant of this.

The appellant’s submission is that the non-payment was a "red flag" that shouldhave been communicated to the appellant, which could then consider its options, which counsel suggests might have includedterminating insurance coverage. The appellant also alleges the respondent failed to take adequate steps to locate the insured equipment,and this also was a material change in the risk. [24] The respondent says that the agreement with Mr. Corey was a sale and not a rental. The equipment endorsement recognizedthat possession of the equipment could be transferred to others.

Also, having regard to the doctrine of contra proferentem, there wasnothing in the policy to prevent the sale of the insured equipment under a Conditional Sale Contract, where possession would beassumed by the purchaser, while the title remained in the respondent until all payments of the purchase price had been made.

The salewas not a material change in the circumstances, and the respondent retained an insurable interest until title passed to the purchaser. [25] The appellant identifies various situations that could be considered as reflecting material changes in risk, including nonoccupancy of a property insured as occupied; rental of a property insured as a single family dwelling; installation and use of an auxiliaryheating source; letting an unauthorized driver drive a vehicle; and change of ownership in property. [26] The circumstances here do not equate to any of these situations.

Although under the agreement possession passed to thepurchaser, title did not. It was, however, not a rental of the equipment, nor equivalent to any of the other situations listed. [27] The policy precluded rental but did not reference sales of insured property where title was to remain in the insured until fullpayment was received. As such the policy did not preclude coverage where insured property was sold under a conditional sale. Thepolicy, by the equipment rental endorsement, recognized that there could be coverage where possession of the insured equipment hadbeen transferred by the insured to others.

Also, to the extent the issue of coverage of this equipment under the policy was ambiguous,contra proferentem requires an

interpretation that, being reasonable, was favourable to the insured.

[28] As to the “lack of diligence” shown by the insured in maintaining contact with the purchaser and with his equipment, theposition of the respondent as articulated by counsel, would appear accurate. The respondent was a “poor businessman”, at least in respectto this piece of equipment, but nothing he failed to do created a material change in the risk. The adjudicator found there was no materialchange in risk.

Having regard to the circumstances, I am satisfied he neither made “an error in law” nor a “palpable and overriding error.” Limitation period [29] The appellant submits that there was no “policy or practical” reason to extend the limitation period of one year. The lossoccured on the day the equipment burned, unlike claims that are ongoing, such as disability coverage claims. There is no need to extendthe time limitation under Statutory Condition 14. [30] The respondent references the decision of Davision J. in Morris v.

Royal Bank of Canada (2007), 254 N.S.R. (2d) 134, 2007NSSC 73, at paras. 62-63 and 66: The object of the court during an application relating to limitations of actions is to find the equitable answer with respect to the issuesbefore the court. It was expressed this way by Justice Saunders in Day v. Guarantee Company of North America (2003), 2003 NSCA 13, 212 N.S.R. 177 (N.S.C.A.) at para. 44: Thus, it can be seen that in Nova Scotia a judge may allow a law suit to proceed notwithstanding a missed limitation period incircumstances where it is equitable to do so, having regard to all the circumstances ...

At para. 59 Justice Saunders said: The relief provisions of the Act are remedial in nature and ought to be construed liberally with a view to obtaining their objective. SeeMcGuire v. Fermini (1984) (NS SC), 64 N.S.R. (2d) 60 (S.C.A.D.). Limitation periods are harsh instruments. Thediscretionary provisions of the Act are intended to afford a plaintiff relief from the strict limitation period where it is equitable to do so.The provisions of the Act balances the need for achieving justice with the need to maintain clear and cogent evidence regarding theclaim. .... Section 3(2)(

a) sets forth the circumstance of "the degree to which the time limitation prejudices the plaintiff or any person whom herepresents". This received early attention from Justice Hallett in Anderson and Anderson v. Co-operative Fire and Casualty Company, (NS SC), [1983] 58 N.S.R. (2d) 163 when he stated at p. 167: The degree of prejudice to a plaintiff caused by a valid time limitation defence could not be greater as the cause of action is lost.

It is tobe noted that there is no mention in the specific matters the Court is to consider as enumerated in ss. (4) that the Court is to consider whatclaim the plaintiff may have against a third party. In may cases the claim would be, as it is here, against the plaintiffs' solicitor for failureto carry out his duty to his client to commence the action within the time period required by the relevant statute. Counsel for thedefendant urged the court to consider this in determining the respective degrees of prejudice to the plaintiffs and the defendant.

The factthat a plaintiff whose action is out of time may have a cause of action against his solicitor is a matter the court should possibly considerin assessing the degree of prejudice to the parties but it must be remembered that the plaintiff might not be successful. In my opinion, thefact that the solicitor may be potentially liable to the plaintiff should not be given much weight by the court in assessing the degree ofprejudice to the parties as required on these applications.

Counsel for the defendant posed the question whether the amendment to theStatute of Limitations was passed for the protection of lawyers. It is irrelevant that the result of granting relief pursuant to theamendment may benefit a lawyer who might otherwise be liable to his client.

What the Legislature must have meant when it authorized the court to disallow the defence if it appeared equitable to do so, havingregard to the degree to which any such decision would prejudice the defendant, was whether the defendant was prejudiced in the defenceof the action on its merits because of the failure of the plaintiff to have proceeded in time. The Legislature could not have intended thatthe court consider the fact that the defendant loses a perfectly good defence in assessing the degree of prejudice to the defendant if the

order were granted, as otherwise, it would be somewhat pointless for the Legislature to have enacted the amendment. There would bevirtually no basis upon which to weigh the degree of prejudice to the parties as if the relief is refused, the plaintiff is totally prejudiced inthe case and to allow the relief, the defendant is totally prejudiced. In

summary on this point, in determining the degree of prejudice thatwould be suffered by the defendant if a decision were made to disallow the time limitation defence, the court should not give muchweight to the fact that the defendant loses its defence. [Emphasis added by Davison J.]. The views expressed by Justice Hallett remain unchanged and I refer to Butler v.

Southam Inc. (2001), 2001 NSCA 121 , 197N.S.R. (2d) 97 (N.S.C.A.) Cromwell, J.A., noted: In my respectful view, the judge erred by failing to give significant weight to the prejudice flowing to the plaintiffs from the fact that thenotice and limitation provisions would foreclose their action. While, as noted, this is not a controlling factor, it is entitled to significantweight ... Section 3(2)(

b) sets out a further circumstance to examine in these terms the "degree to which any decision of the court under this sectionwould prejudice the defendant or any person he represents, or another person". The decision of the court which is relevant to thissubsection is if I disallow para. 16 of the defence that would preclude a limitation of actions defence for the defendant.

There was asuggestion that if the case goes forward without the limitation defence the defendant may have difficulty by reason of the delay inproceedings calling medical evidence by reason of loss of memory or death of the medical witnesses to be called. With respect, the factthe defendant would prefer to put off a decision on the limitation issue to a later time would suggest not much prejudice is anticipated.

As stated in s. 3(2) of the Limitations of Actions Act, supra, the court may disallow a defence based on time limitation if it is equitable.The Act states to examine that discretion the court must establish the degree to which the limitation prejudices the plaintiff and thatwhich any decision would prejudice the defendant. The court must consider all the circumstances of the case with particular reference toseven factors set out in s. 3(4).

Dealing with the balance of prejudices there was little evidence of any prejudice to the defendant but tothe extent it may be present it is certainly outweighed by the prejudice to the plaintiff who would lose her cause of action. [31] The notice of claim in the Small Claims Court is dated November 30, 2011. The fire loss apparently occurred on January 4,2010, and the appellant suggests, applying Statutory Condition 14, that the claim would have been “absolutely barred” on January 4,2011. However, it was not until four months later that the respondent first learned that fire had destroyed his insured equipment.

Therespondent filed a proof of loss dated July 22, 2010, which was rejected by the appellant by letter dated August 17, 2010. [32] Counsel submits that the adjudicator “mis-apprehended the evidence of the cause of the delay”, in learning of the fire loss ofhis equipment.

Also, that the adjudicator failed to consider that the respondent was “at all material times” represented by counsel.Although it is clear that the respondent was, at times, represented by counsel, it is not clear on the Record, that it was necessarily “at allmaterial times.” [33] Appellant’s counsel also notes that the latest recorded correspondence, as noted in the Record is November 2011, stating it isnot with the appellant but with an adjuster who was not acting on behalf of the appellant.

Unclear, of course, is whether in the oraltestimony at the hearing there was evidence of oral communication between the respondent or his representatives, and the appellant or itsrepresentatives. The absence of any transcript of the oral evidence means that such evidence, if there was any, is not available to thiscourt. [34] In her written submissions counsel references the decision of Carver J. in Dempsey v. Dominion of Canada General InsuranceCo., [1996] N.S.J.

No. 243, where the action relating to damage to the plaintiff’s car was commenced almost four years after theexpiration of the two year limitation period. Counsel observes the reference by Carver J. to the fact the plaintiff was represented by legalcounsel. In response, counsel for the respondent notes the length of the delay was nearly four years from the expiration of the limitationperiod while in the present instance it was less than one year. [35] In analysing the adjudicator’s consideration of the circumstances listed in s. 3(4), counsel for the respondent says:

(

a) the length of and the reasons for the delay in the part of the plaintiff;” The delay in the present case was nearly eleven months. The Adjudicator found the reasons for the delay were that (

i) Michael Masters did not know about the loss until nearly four months after it occurred; (ii) Michael Masters was not aware of the limitation period, (iii) Michael Masters continued to correspond regarding the claim in the hope that a settlement could be arrived at; and (iv) Michael Masters was preoccupied with personal issues during this time, namely the terminal illness of his wife. (

b) any information or notice given by the defendant to the plaintiff respecting the time limitation; There was no information or notice given by the Appellant to the Respondent notwithstanding the continued communication. (

c) the extent to which, having regard to the delay, the evidence adduced or likely to be adduced by the plaintiff or the defendant is or is likely to be less cogent than if the action had been brought or notice had been given with the time limitation; There is no indication that the evidence adduced by either party was less cogent than if the action had been brought within the time limitation. (

d) the conduct of the defendant after the cause of action arose, including the extent if any to which he responded to requests reasonably made by the plaintiff for information or inspection for the purpose of ascertaining facts which were or might be relevant to the plaintiff’s cause of action against the defendant; There does not appear to be any aspects of the conduct of the Appellant to fit these criteria. (

e) the duration of any disability of the plaintiff arising after the date of the accrual of the cause of action; There was no legal disability of the Respondent. (

f) the extent to which the plaintiff acted promptly and reasonably once he knew whether or not the act or omission of the defendant, to which the injury was attributable, might be capable at that time of giving rise to an action for damages; The Appellant acted promptly in notifying its insurer of the loss allowing the insurer to investigate and gather evidence in relation to the claim. The reasons for the delay in bringing the claim are noted in (

a) above. (

g) the steps, if any, taken by the plaintiff to obtain medical, legal or other expert advice and the nature of any advice he may have received; The response in (

f) above applies to this circumstance. [ 36 ] In argument, the appellant submitted as an alleged error the failure of the adjudicator to address the issue of legal representation as a consideration in determining whether to exercise his discretion under s. 3(4). In his supplementary reasons the adjudicator notes that he considered the various subsections of s. 3(4), albeit not specifically referencing subclause (9).

Although not all of the other subsections were specifically referenced, I am not persuaded that the adjudicator failed to consider all the circumstances he found relevant in exercising his discretion to disallow the limitation defence. [ 37 ] The adjudicator also weighed the prejudice to the parties in deciding whether to disallow the limitation defence. [ 38 ] The respondent in its written submission, cited the statement by Hallett J. in Anderson v. Co-operative Fire and Casualty Co., supra., at page 167, which was adopted by Davison J. in Morris v.

Royal Bank of Canada at para. 66 , that: ...the fact that the solicitor may be potentially liable to the plaintiff should not be given much weight by the court in assessing the degree of prejudice to the parties as required on these applications. [ 39 ] The adjudicator considered Mr.

Master ’ s explanation as to why he had not started his action earlier, the fact he and his counsel were corresponding with the respondent, or its representative, the lack of any warning by the respondent that it was invoking a limitation defence, the fact he had lost track of his machine at the time it was destroyed and determined that it would be clearly prejudicial not to disallow the defence while he could not see that the appellant would suffer any such prejudice. They were aware he was making a claim and were in possession of all the facts needed to assess and ultimately deny the claim.

He concluded it would be equitable to deny the limitation defence and to deal with the matter on its merits. As such, he effectively followed the direction of Saunders J. in Day v. Guarantee Co. Of North America , supra., to allow the claim to proceed, notwithstanding the missed limitation period, because in his opinion it was equitable in the circumstances to do so.

[ 40 ] I am not persuaded that in so concluding the adjudicator committed an error of law. [ 41 ] Appeal dismissed. MacAdam, J.