Harsch v Saskatchewan Government Insurance, 2021 SKCA 159

Court of Appeal for Saskatchewan Docket: CACV3743 Citation: Harsch v Saskatchewan Government Insurance , 2021 SKCA 159 Date: 2021-12-02 Between: Jennifer Harsch Appellant (Plaintiff) And Saskatchewan Government Insurance and Rachel Bernuy Respondents (Defendants) Before: Ryan-Froslie, Schwann and Kalmakoff JJ.A. Disposition: Appeal allowed Written reasons by: The Honourable Mr. Justice Kalmakoff In concurrence: The Honourable Madam Justice Ryan-Froslie The Honourable Madam Justice Schwann On appeal from: QBG 1035 of 2019, Regina Appeal heard: October 14, 2021 Counsel: Eric Miller for the Appellant Don J.

Harmon for the Respondents Kalmakoff J.A. I. INTRODUCTION [ 1 ] Jennifer Harsch appeals a decision of a Court of Queen’s Bench judge that struck her claim against Rachel Bernuy on the basis that it disclosed no reasonable cause of action ( Harsch v Saskatchewan Government Insurance and Bernuy (16 November 2020) Regina, QBG 1035 of 2019 (Sask QB) [ Decision ]). The foundation for the Decision was the Chambers judge’s determination that Ms. Harsch had failed to plead facts that would disentitle Ms.

Bernuy, in her individual capacity, from relying on the good faith immunity provision in s. 86.1 of The Automobile Accident Insurance Act , RSS 1978, c A-35 [ AAIA ]. [ 2 ] For the reasons that follow, I would allow the appeal. II. BACKGROUND [ 3 ] Ms. Harsch suffered injuries in a car accident on September 6, 2012. At the time, she held an insurance policy with SGI. She made a claim for No-Fault Benefits under the AAIA . SGI accepted that Ms. Harsch had been injured in the accident and, as such, she was entitled to benefits. Ms.

Bernuy was employed by SGI as a personal injury representative and was responsible, in that role, for the handling of Ms. Harsch’s insurance claim. [ 4 ] SGI paid No-Fault Benefits to Ms. Harsch in accordance with the AAIA from March 30, 2015, until it determined that she was no longer entitled to receive them. By way of a decision letter dated March 18, 2019, SGI advised Ms. Harsch that her benefits were being terminated. That letter was written by Ms. Bernuy. [ 5 ] After SGI terminated payment of Ms. Harsch’s benefits, she commenced an action by filing a statement of claim in the Court of Queen’s Bench.

In it, she named SGI and Ms. Bernuy as defendants. Ms. Harsch alleged that both SGI and Ms. Bernuy had failed to act in good faith and, on that basis, she sought damages, including punitive damages, against Ms. Bernuy personally. The portions of the claim specific to Ms. Bernuy read as follows: 3. The Defendant, Rachel Bernuy, (hereinafter referred to as the "Defendant Bernuy"), is a Personal Injury Representative employed by Saskatchewan Government Insurance and at all material times was responsible for the decisions relating to the Plaintiff. … 11.

That the Plaintiff says that Rachel Bernuy, as an employee and representative of Saskatchewan Government Insurance, failed to act in good faith in her handling of the claim of the Plaintiff Harsch, [the particulars] of which are as follows: (

a) she failed to reasonably investigate and evaluate the Plaintiff’s claim; (

b) relied on a psychologist to render an opinion as to employability and medical matters both of which were beyond the scope of his expertise; (

c) germinated ( sic ) her benefits without making any inquiries as to her current status either from the insured or her health care providers; (

d) terminated the insured benefits without regard to the insurer's obligation to establish the claimant's ability to be employed and or entitlement to other No-Fault Benefits; (

e) terminating all the insured's No-Fault Benefits without assessments by fair and impartial assessors or at all;

(

f) terminated all the insured's benefits on the basis of a letter which did not provide an opinion as to the insured ( sic ) ability to perform her employment; (g} failure to comply with

section 171 of the Automobile Accident Insurance Act ; (

h) failure to comply with

section 165 of the Automobile Accident Insurance Act as of the issuance of this claim; and, (

i) such other particulars as may become known prior to trial. 12. The Plaintiff/Appellant says the Defendants SGI and Bernuy have failed to its ( sic ) duty of utmost good faith for which she claims punitive damages, [ 6 ] SGI and Ms. Bernuy filed a joint statement of defence. In it, Ms. Bernuy denied that she was personally liable to Ms. Harsch because she had acted in good faith and in accordance with the AAIA and associated regulations in the handling of Ms. Harsch’s insurance claim. As such, she said, she was entitled to the protection of the immunity provision in s. 86.1 of the AAIA . Ms.

Bernuy also asserted that naming her as a personal defendant in an action against SGI was immaterial and redundant. [ 7 ] Eventually, SGI and Ms. Bernuy brought an application under Rule 7-9 of The Queen’s Bench Rules to strike Ms. Harsch’s claim against Ms. Bernuy on three bases: (

i) that it disclosed no reasonable cause of action (Rule 7-9(2)(a)); (ii) that it was scandalous, frivolous, or vexatious (7-9(2)(b)); and (iii) that it was immaterial, redundant, or unnecessarily lengthy (7-9(2)(c)). The foundation for the application was their assertion that Ms. Bernuy had acted entirely within the parameters of her employment in handling Ms. Harsch’s insurance claim, and that the statement of claim did not plead any facts that alleged otherwise. As such, SGI and Ms.

Bernuy took the position that, while a claim for breach of good faith could proceed against SGI, the “good faith” immunity provisions of the AAIA provided a complete defence to the claim, as pleaded, against Ms. Bernuy individually. The Chambers judge granted the application and struck the portions of the claim that purported to advance a cause of action against Ms. Bernuy personally . [ 8 ] In the Decision , the Chambers judge began by correctly observing that, in assessing whether the statement of claim disclosed a reasonable cause of action against Ms.

Bernuy, she was entitled to consider only the pleadings themselves and not any affidavit evidence filed in support of, or in opposition to, the application. She then framed the issue to be determined by focusing on s. 86.1 of the AAIA . In that respect, she wrote: [8] There is no dispute that s. 86.1 of the AAIA provides immunity to an employee, acting pursuant to the authority of the AAIA for any "loss or damage suffered by any person by reason of anything in good faith done…", The question is whether the statement of claim pleads acts done by Bernuy in bad faith.

More precisely, it is necessary to determine whether there are sufficient facts set out in the statement of claim which support the allegation that

an act or omission, on the part of Bernuy in her individual capacity, occurred in the absence of good faith. [ 9 ] The Chambers judge went on to state that, “absent culpable conduct”, simple assertions that Ms. Bernuy had done or failed to do something that fell within the scope of her authority or responsibilities as a personal injury representative for SGI were not sufficient to establish a pleading of bad faith (at para 9).

Citing Saskatchewan Beach (Resort Village) v Collins , 2012 SKQB 40 (reversed for other reasons in Saskatchewan Beach (Resort Village) v Collins , 2013 SKCA 12 , 409 Sask R 57) [ Collins ]; Hanbidge v Saskatchewan , 2006 SKCA 33 , 275 Sask R 314; and Finney v Barreau du Québec , 2004 SCC 36 , [2004] 2 SCR 17 [ Finney ], she also observed that, in order to properly raise a claim of bad faith, a plaintiff must plead facts that allege the defendant acted with malice or an intention to harm the plaintiff or, at the very least, acted with such recklessness or serious carelessness that the absence of good faith can be presumed (at paras 10–11).

The Chambers judge found that Ms. Harsch’s statement of claim was deficient in that respect, saying: [12] There is no allegation that Bernuy acted maliciously. There is also no assertion that Bernuy acted outside the scope of her authority or that she was not doing what her employer required her to do. Although she does not plead it, Harsch’s position is that the conduct of Bernuy demonstrates a “fundamental breakdown of the orderly exercise of authority” to such an extent that the absence of good faith can be inferred. [13] I disagree.

In my view, there are no facts pled that would rise to an assertion that Bernuy, acting within the scope of her employment, acted in a manner markedly inconsistent with her legislative authority or that there was recklessness amounting to a fundamental breakdown of the orderly exercise of authority. When considering an alleged tortfeasor’s conduct that falls short of establishing an intention to cause harm, there is a spectrum of civil culpability. Put another way, there are degrees of culpability with inadvertence at one end of the spectrum and gross negligence on the other.

In my view, the Supreme Court in Finney did not intend for all conduct in this spectrum to be culpable in tort. [14] I am unable to find that Harsch has pled facts that give rise to a cause of action against Bernuy for such recklessness that it constitutes bad faith. Whether SGI’s guidelines, practices or policies constitute the level of recklessness that was contemplated in Finney will be a matter for the trial judge. [15] Given my conclusion, Bernuy is entitled to cloak herself with the protection afforded by s. 86.1 of the AAIA .

In the result, the application to strike her as a defendant in this action is granted on the basis that it discloses no reasonable cause of action against Bernuy. [ 10 ] Having reached that conclusion, the Chambers judge found it unnecessary to analyze whether the claim could also be struck under Rules 7-9(2)(

b) or (c). III. THE GROUNDS OF APPEAL [ 11 ] Ms. Harsch was granted leave to appeal against the Decision on three questions:

(1) Did the Chambers judge fail to apply the correct test to determine the applicability of the immunity provisions of s. 86.1 of The

Automobile Accident Insurance Act?

(2) Did the Chambers judge err in her determination that the plaintiff must plead (and prove) malice, bad intent or a form of culpability inan action for lack of good faith in an action between an insured, and a personal injury representative employed by SaskatchewanGovernment Insurance, a First-Party Insurer?

(3) Did the Chambers judge err by failing to apply an obligation of utmost good faith to the relationship between a personal injuryrepresentative employed by Saskatchewan Government Insurance, a First-Party Insurer, and an insured? [12] As set out in the Decision, the Chambers judge determined that the claim as pled against Ms. Bernuy would not be sufficient todefeat the good faith immunity clause in s. 86.1 of the AAIA. That

section reads, in relevant part, as follows: 86.1 No action lies or shall be instituted against any … employee or agent of the insurer, … where the person is acting pursuant to theauthority of this Act or the regulations, for any loss or damage suffered by any person by reason of anything in good faith done, caused orpermitted or authorized to be done, attempted to be done or omitted to be done, by any one or more of them pursuant to or in the exerciseor supposed exercise of any power conferred by this Act or the regulations or in the carrying out or supposed carrying out of any dutyimposed by this Act or the regulations, including providing advice or instruction to an individual concerning the available options withrespect to insurance coverage pursuant to this Act. [13] The crux of Ms.

Harsch’s argument is that her claim alleged that Ms. Bernuy had failed to act in good faith in the investigationand handling of her insurance claim and, if that were taken to be true — as it must for the purpose of an application to strike under Rule 7-9(2)(a) — then Ms. Bernuy could not be entitled to the protection of s. 86.1. Ms. Harsch contends that her statement of claim containedsufficient particulars of Ms. Bernuy’s failure to act in good faith. [14] Ms.

Harsch also argues that the Chambers judge erred by failing to approach the question of whether the pleadings disclosed areasonable cause of action against Ms. Bernuy personally from the understanding that SGI is a first party insurer and, as such, both it andits employees have a legal obligation of “utmost good faith” when dealing with insured parties.

A breach of the duty of utmost good faith,she says, can be established without proving or pleading mala fides and, as such, the Chambers judge erred by holding that a claim mustspecifically plead malice, intention to cause harm, or even recklessness or serious carelessness, in order to defeat the good faith immunityclause in s. 86.1. Moreover, she contends, the Chambers judge erred by failing to recognize that individual employees of first-partyinsurers, like Ms.

Bernuy, owe to injured persons the same duty of utmost good faith as their employers, and that such employees canproperly be held personally liable for breaches of that duty. IV. ANALYSIS A. The governing legal principles [15] Before specifically addressing Ms. Harsch’s arguments, it is useful to review the general legal principles that bear upon thequestions raised by her grounds of appeal. 1.

Standard of review [16] This Court has repeatedly held that the correctness standard of review applies when considering whether a Chambers judgemade a reversible error in striking a pleading as disclosing no reasonable cause of action (see, for example: Filson v Canada, 2015 SKCA80 at para 22, 388 DLR (4th) 6; Reisinger v J.C.

Akin Architect Ltd., 2017 SKCA 11 at para 27, [2017] 8 WWR 532 [Reisinger]; Canada(Attorney General) v Merchant Law Group LLP, 2017 SKCA 62 at para 17, [2017] 10 WWR 664 [Merchant]; Harpold v Saskatchewan(Corrections and Policing), 2020 SKCA 98 at para 21 [Harpold]; and Taheri v Buhr, 2021 SKCA 9 at para 23, 456 DLR (4th) 306[Taheri]). 2. Striking pleadings under Rule 7-9(2)(a) [17] The legal principles that govern applications to strike pleadings on the basis that they fail to disclose a reasonable cause ofaction are well-known.

In Merchant, Ryan-Froslie J.A. summarized them in this way: [18] Chief Justice McLachlin, writing for the Supreme Court of Canada, in R v Imperial Tobacco Canada Ltd., 2011 SCC 42, [2011] 3SCR 45 set out the principles governing such applications: (

a) it is incumbent on a plaintiff to clearly plead the facts upon which it relies in making its claim (para 22); (

b) such applications proceed on the basis that the facts pled are true, “unless they are manifestly incapable of being proven” (paras 22 and23); (

c) a claim will only be struck if it is plain and obvious it discloses no reasonable cause of action, that is, it has no reasonable prospect ofsuccess (para 17); and (d) “[t]he law is not static and unchanging”, thus, the approach taken in applications to strike “must be generous and err on the side ofpermitting a novel but arguable claim to proceed” (para 21). See also Sagon v Royal Bank of Canada (1992), (SK CA), 105 Sask R 133 (CA) at para 16 [Sagon]; and Filson vCanada (Attorney General), 2015 SKCA 80 at para 19, 388 DLR (4th) 66 [Filson]. [19] In deciding an application to strike a claim on the basis it discloses no reasonable cause of action, a judge is limited to considering

only the statement of claim, any document referred to therein, and any response to a request for particulars (Sagon at para 16; Filson atpara 20). A judge is not permitted to consider affidavit or other extraneous evidence. [18] The requirement to accept the pleaded facts as true when considering an application to strike means that the plaintiff’s claim isto be evaluated in its best light. The task for a reviewing judge in an application under Rule 7-9(2)(

a) is to determine, by considering thewhole of the statement of claim, whether sufficient facts have been pleaded to establish the essential legal elements of a cause of action(Harpold at para 26; Reisinger at para 20). [19] It is also important to bear in mind two other things. First, in the context of an application under Rule 7-9(2)(a), the question iswhether the statement of claim pleads sufficient facts to establish a cause of action known at law; the plaintiff does not have to plead factsto negate defences the defendant may have to that cause of action.

Second, the refusal of a court to strike a claim does not mean that aplaintiff will succeed at trial. It simply means that the claim may proceed to trial, where the plaintiff will have to prove the claim in theusual way (Taheri at para 22). 3.

The essential elements of a claim of failing to act in good faith [20] As a first-party insurer under the scheme created by the AAIA, SGI “is constrained by the obligation of good faith and fairdealing common to all insurers”, which means that “SGI is required to deal with claims fairly, both with respect to the manner in which itinvestigates and assesses them, and with respect to its decisions as to whether or not to pay benefits” (Saskatchewan GovernmentInsurance v Schira, 2020 SKCA 88 at para 39, [2020] 11 WWR 204 [Schira]); see also Wilson v Saskatchewan Government Insurance,2012 SKCA 106 at para 3, 405 Sask R 8 [Wilson]).

Where an insurer breaches the duty of good faith, that gives rise to a separate cause ofaction that is (

i) distinct from the cause of action founded in the express terms of an insurance policy, and (ii) not restricted by the limitsprovided in the policy (Whiten v Pilot Insurance Co., 2002 SCC 18 at para 79, [2002] 1 SCR 595; Wilson at para 9; see also: FermeGérald Laplante et Fils Ltée. v Grenville Patron Mutual Fire Insurance Co. (2002), (ON CA), 61 OR (3d) 481 at504-505 (CA)). [21]

Section 171 of the AAIA sets out what Richards C.J.S. described in Schira as a “statutory version of the duty of good faith”applicable to SGI (at para 39). That

section reads as follows: 171 The insurer shall advise and assist every claimant and shall endeavour to ensure that every claimant is informed of and receives thebenefits to which the claimant is entitled. [22] In Fidler v Sun Life Insurance Company of Canada, 2006 SCC 30 at para 63, [2006] 2 SCR 3 [Fidler], the Supreme Court ofCanada adopted the description of an insurer’s duty of good faith set forth in 702535 Ontario Inc. v Lloyd’s London, Non-MarineUnderwriters (2000), (ON CA), 184 DLR (4th) 687 (Ont CA) at para 29 [Lloyd’s of London], where O’Connor J.A.wrote: [29] The duty of good faith also requires an insurer to deal with its insured’s claim fairly.

The duty to act fairly applies both to themanner in which the insurer investigates and assesses the claim and to the decision whether or not to pay the claim. In making a decisionwhether to refuse payment of a claim from its insured, an insurer must assess the merits of the claim in a balanced and reasonable manner.It must not deny coverage or delay payment in order to take advantage of the insured’s economic vulnerability or to gain bargainingleverage in negotiating a settlement. A decision by an insurer to refuse payment should be based on a reasonable

interpretation of itsobligations under the policy. This duty of fairness, however, does not require that an insurer necessarily be correct in making a decision todispute its obligation to pay a claim. Mere denial of a claim that ultimately succeeds is not, in itself,

an act of bad faith. [23] A breach of the duty of good faith is not established simply because an insurer is found to have breached the contract ofinsurance, or because it has denied a claim that is later found to be legitimate.

A finding of bad faith requires more, as Denis Boivinexplains in Insurance Law, Second Edition (Toronto: Irwin Law, 2015) at 387–388 [Boivin]: …[A] finding of bad faith requires either of the following: (1) evidence that the insurer was reckless or grossly negligent in processing theclaim, or (2) evidence that the insurer was motivated by something other than a desire to pursue its legitimate economic and contractualinterests.

In Lloyd’s of London, O’Connor JA gave a classic example of what constitutes an improper consideration, saying that the insurer“must not deny coverage or delay payment in order to take advantage of the insured’s economic vulnerability or to gain bargainingleverage in negotiating a settlement. Stated more bluntly, insurers cannot use their strategic advantage in order to “starve [the insured] intoa cheap settlement [or] submission. Instead, their decisions “should be based on a reasonable

interpretation of [their] obligations under thepolicy”. Caselaw offers many examples of conduct constituting bad faith on the part of a first-party insurer.

In his book, Insurance Bad Faith,Gordon Hilliker provides the following list: (1) unwarranted allegations of misrepresentation or non-disclosure in a policy application; (2)failure to reasonably investigate and evaluate a claim; (3) unduly delaying the investigation and evaluation of a claim; (4) failure toreasonably assist in claim preparation or to advise of policy rights; (5) bias in the selection and use of experts; (6) harassing, intimidating,intrusive, or deceptive practices; (7) placing unwarranted conditions on payment of benefits … These manifestations of bad faith mayoccur alone or in combination, and each case will turn on its own facts. (citations omitted, emphasis added) [24] For a first-party insurer like SGI, the scope of the duty of good faith must take into account the statutory nature of theautomobile insurance system in which it operates, as explained by Madisun Browne in “ICBC’s Duty of Utmost Good Faith in First PartyVehicle Insurance Claims”, within Roderick S.W.

Winsor’s Good Faith in Canadian Insurance Law (Toronto: Thomson Reuters, 2019) atPF-9 and PF-10 [Browne]): … [T]he precise standard for the duty of utmost good faith and fair dealing is context-dependent. The context will be comprised of thegoverning law for the particular insurance regime and the facts of the claim. The legal infrastructure of the duty of good faith is a functionof (1) the purposes of the species of vehicle insurance, (2) the general provisions of the Insurance (Vehicle) Act and the specific

provisions of the Regulation regarding that type of insurance, (3) cases interpreting the legislation and regulation, and (4) cases on thenature and scope of insurers' duty of utmost good faith. …Complementing the legal infrastructure, the factual context that informs the standard of utmost good faith will include: • the facts of the accident, • the conduct of the insured throughout the claims process, • the conduct of the insurer throughout the claims process, including the duration of misconduct, the involvement of a manager or othersand any evidence of intentional misconduct, • the nature of the insured's interests at stake, including the magnitude of the claim, • the nature and extent of the injury, • the impact of the injury on the claimant's health, family, life, work, financial circumstances, and • any particular personal attributes that amplify or reduce the impact of either the injury or the mishandling of the claim.

Facts in these categories, at least, and the list of laws noted above all inform the standard of utmost good faith to which no-fault publicinsurers are held. Neither “good faith” nor “bad faith” require proof of any manner of intent and neither refers to the moral content of

an act. In an actionagainst [the insurer] for breach of its duty of utmost good faith in respect of a first party claim, a plaintiff need not prove any negligent,malicious or other improper intent of the insurer. Rather, breach of the duty of utmost good faith is proven by evidence of the insurer'shandling of the claim with reference to an objective standard of reasonableness.

At the same time, any evidence of [the insurer]’s malice,negligence, or dishonest conduct could be probative of a breach of the duty and could also be relevant to the quantification of damages.Further evidence of the goal of the intentional conduct will be relevant especially when that goal exceeds the legislated role andresponsibilities of the insurer.

Where insurance claims are handled and even appropriated in ways that advance [the insurer]’s extra-legal,corporate agenda, this may be further evidence of breach of utmost good faith. (emphasis added) [25] As Boivin and Browne both observe, it is not necessary to establish malice or intent on the part of the insurer to make out aclaim of bad faith.

At the end of the day, as the Supreme Court of Canada stated in Fidler, the question to be answered is “whether thedenial [of benefits] was the result of the overwhelmingly inadequate handling of the claim, or the introduction of improper considerationsinto the claims process” (at para 71). In the context of a first-party insurer operating a statutory no-fault insurance plan, the insurer has aduty to act honestly and with reasonable diligence, and to maintain neutrality at every step of the process.

This means it is the insurer’sobligation to assess all of the evidence pertinent to the insured’s claim reasonably, objectively and fairly, bearing in mind that no-faultclaimants are entitled to coverage unless the insurer has sufficient information to undermine the claim (Browne at PF-47). [26] In order to properly assert failure to act in good faith as a cause of action, a claim must plead material facts that engage thequestion of bad faith (see, for example, Collins; Deren v SaskPower and Saskatchewan Watershed Authority, 2015 SKQB 366 at para 149,affirmed 2017 SKCA 104 [Deren]; and Chilly’s Water and Septic Inc. v Saskatchewan, 2018 SKQB 254 at paras 37–39).

In determiningwhether a claim has done so in a fashion sufficient to survive an application to strike, a judge must bear in mind that, while the law ofgood faith can be described as well-developed, the scope of the duty of good faith is not fully settled in Canadian law. As such, courts mustexercise caution in dismissing such claims at the stage of an application to strike (see: Kang v Sun Life Assurance Company of Canada,2013 ONCA 118 at paras 38–39, 303 OAC 64; and Folland v Ontario (2003), (ON CA), 64 OR (3d) 89 (CA) at para11, leave to appeal to SCC refused, [2003] 2 SCR 4 (xi)). 4.

Pleading a claim against an individual adjuster [27] The duty of good faith between an insurer and an insured is contractual in nature, as it is an implied term of any insurancecontract that the insurer will act in good faith in handling an insured party’s claim. However, no direct contractual relationship existsbetween an insured person and an intermediary — such as a personal injury representative — employed by the insurer.

If such anemployee is to be subject to personal liability for the handling of an insurance claim, it must be on the basis of the law of tort. [28] While employers are generally vicariously liable for the tortious actions of their employees while acting within the scope oftheir employment, a plaintiff has the right to sue another person for an actionable wrong, regardless of whether that person was workingfor someone else at the time the actionable wrong occurred (London Drugs Ltd. v Kuehne & Nagel International Ltd., (SCC), [1992] 3 SCR 299).

To put that another way, there is no general rule in Canada that an employee acting in the course of theiremployment duties cannot be sued personally for breaching a duty of care that is owed to a customer (Sataur v Starbucks Coffee CanadaInc., 2017 ONCA 1017, 140 OR (3d) 307). [29] In order to establish the personal liability of an employee for something done in the course of their employment, one of twocriteria must be met: (

i) the actions of the employee must themselves be tortious; or (ii) the actions of the employee must exhibit a separateidentity or interest from that of the corporation or employer so as to make the act or conduct complained of their own (Lobo v CarletonUniversity, 2012 ONCA 498 at para 6, 265 CRR (2d) 1; citing Montreal Trust Co. of Canada v Scotia McLeod Inc. (1995), (ON CA), 26 OR (3d) 481 (CA)). [30] While there have been decisions to the contrary, there is considerable support in the jurisprudence for the proposition thatindividual insurance adjusters (or personal injury representatives) may, in certain circumstances, owe a duty of care to insureds, the breachof which can give rise to individual liability in tort (see, for example: Pilat v Federation Insurance Co. of Canada, 2003 SKQB 320;Wigmore v Canadian Surety Company, (SK KB), [1994] 9 WWR 521 (Sask QB); Abbasi v Portage La Prairie Mutual

Insurance Co., 2003 ABQB 760 at paras 30–31, [2004] 3 WWR 665; Standen’s Ltd. v Commercial Union Assurance Co. of Canada Ltd.(1997), (AB KB), 52 Alta LR (3d) 6 at paras 6–8 (QB); and Spiers v Zurich Life Insurance Co. (1999), (ON SC), 45 OR (3d) 726 at para 26 (Sup Ct)).

As such, it is at least arguable that an action in tort, for breach of the duty of goodfaith, may be brought against an insurance adjuster for their role in the handling of an insurance claim, as long as it is properly pleaded(see, for example: Kogan v Chubb Insurance, [2001] OJ No 1697 (Ont Sup Ct) (QL); Frank v Kalokina, 2014 BCSC 1866; Walsh vNicholls, 2004 NBCA 59 at paras 70–73, 241 DLR (4th) 643; Plante v Industrial Alliance Life Insurance Co. (2003), (ON SC), 66 OR (3d) 74 at para 39 (Sup Ct); and Burns v RBC Life Insurance Company, 2020 ONCA 347, 151 OR (3d) 209 [Burns]). [31] As with other types of employees, when an insurance adjuster is sued, individually, for their own acts, the material facts givingrise to personal liability must be specifically pleaded (Burns at para 15; see also: Tran v University of Western Ontario, 2015 ONCA 295at para 17; and Rofe v Kay Aviation b.v., 2001 PESCAD 7 at paras 19–25, 202 DLR (4th) 683).

That is to say, the pleadings must addressspecifically the cause of action asserted against the personal defendant and why they are being sued separately from the employer(Immocreek Corp. v Pretiosa Enterprises Ltd. (2000), (ON CA), 186 DLR (4th) 36 at para 35 (Ont CA)). 5. The effect of good faith immunity clauses [32] As set out above, s. 86.1 of the AAIA provides employees of SGI, like Ms.

Bernuy, with immunity from civil liability for“anything in good faith done, caused or permitted or authorized to be done, attempted to be done or omitted to be done … pursuant to or inthe exercise or supposed exercise of any power conferred by … or in the carrying out or supposed carrying out of any duty imposed by”the AAIA or its regulations. [33] Good faith immunity clauses of this sort have typically been interpreted as meaning that, where a defendant is sued individuallyfor acts committed within the scope of their employment, liability will not attach on the basis of mere negligence (see, for example,Mokelky v Animal Protection Services of Saskatchewan Inc., 2019 SKQB 80 at paras 101–102).

In Deren, a case that involved an actionagainst a public body protected by a good-faith immunity clause, Elson J. explained that, in order to overcome such a clause, a plaintiffmust prove that: [157] …the defendant’s tortious conduct arose from one or more of the following circumstances: (

a) an intention to do harm; (

b) a lack of a bona fide a belief in facts that, if true, would stand as justification for the defendants’ behaviour; (

c) dishonesty of intention; (

d) knowledge of circumstances which ought to put the defendant with that knowledge on inquiry; (

e) behaviour that is so markedly inconsistent with the relevant legislative context that a court cannot reasonably conclude that it wasdemonstrated in good faith. [34] As noted above, this Court affirmed Elson J.’s decision in Deren, and took no issue with his characterization of the standard ofproof needed to overcome a statutory good faith immunity clause. [35] In Finney, the plaintiff brought an action against the Barreau du Quebec, the body in charge of overseeing the conduct ofmembers of the legal profession in that province.

She sought damages for the Barreau’s alleged mishandling of the investigation andadjudication of complaints she had made against a practicing lawyer. The Barreau was protected by a good faith immunity clause in theProfessional Code, RSQ, c C-26, which reads as follows: 193.

The syndics, assistant syndics, corresponding syndics, the investigators and experts of a professional inspection committee, themembers of the Office, of a Bureau, of a committee on discipline, of a professional inspection committee or of a committee of inquiryestablished by a Bureau, and the members of a tribunal hearing an appeal from a decision by a committee on discipline or by a Bureau,shall not be prosecuted for acts done in good faith in the performance of their duties. [36] The plaintiff was unsuccessful at trial, as the trial judge determined that the good faith immunity clause could only beovercome by proof of intentional wrongdoing on the part of the Barreau.

The Court of Appeal of Quebec allowed the plaintiff’s appeal. Itheld that the Barreau had failed to perform the duties delegated to it by the Professional Code to achieve the codified objective ofprotection of the public and, by so doing, had failed to exercise its jurisdiction. As a result, the Barreau could not rely on the good faithimmunity clause in s. 193. [37] The Barreau appealed to the Supreme Court of Canada. The Supreme Court dismissed the appeal, finding that the conduct ofthe Barreau, when considered in its entirety, amounted to fault for which it could not claim good faith immunity.

The Court found that theBarreau’s conduct demonstrated a near complete absence of diligence which, in the circumstances, amounted to a fault consisting of grosscarelessness and serious negligence, that was properly characterized as bad faith. Justice Lebel, writing for the Court, soundly rejected thenotion that bad faith is limited to intentional fault, saying “the concept of bad faith can and must be given a broader meaning thatencompasses serious carelessness or recklessness” (at para 39).

He went on to state: [40] An immunity provision such as the one set out in s. 193 of the Professional Code is intended to give professional orders the scopeto act and the latitude and discretion that they need in order to perform their duties. In the case of duties relating to the management ofdisciplinary cases, it would be contrary to the fundamental objective of protecting the public set out in s. 23 of the Professional Code ifthis immunity were interpreted as requiring evidence of malice or intent to harm in order to rebut the presumption of good faith.

Gross orserious carelessness is incompatible with good faith. It may therefore be concluded that, in the case of the exercise of these casemanagement powers, the requirement that the performance or failure to perform

an act have been committed in bad faith is not a bar to anaction in damages against a professional order that is subject to the Professional Code…

[ 38 ] Of course, Finney and Deren are cases about proof and not about the sufficiency of pleadings. [ 39 ] When considering the effect of a statutory good faith immunity clause in an application to strike a statement of claim under Rule 7-9(2)(a), it is important to bear in mind that the immunity afforded by statutory provisions like s. 86.1 is “simply a defence and, at that, hinges on a factual finding of good faith” ( Harpold at para 65 ).

Where a defendant applies to strike a plaintiff’s claim under Rule 7- 9(2)(a), the question for determination is whether the statement of claim discloses a reasonable cause of action. The analysis of that question must remain rooted in a consideration of the sufficiency of the plaintiff’s pleadings, and not in the defences that may exist to the plaintiff’s claim.

To state that another way, the fact that a defence has been pleaded does not determine whether the statement of claim discloses a reasonable cause of action. [ 40 ] Where the claim is that the defendant has breached a duty of good faith, as long as the plaintiff has pleaded facts alleging conduct on the part of the defendant that is intentionally harmful, reckless, seriously careless or a substantial departure from the defendant’s legislated mandate, such that an inference of bad faith can be drawn, the claim should not be struck under Rule 7-9(2)(

a) simply because the defendant has pleaded the existence of a statutory good faith immunity clause. B. Applying the legal principles to the grounds of appeal [ 41 ] As mentioned earlier, leave to appeal in this matter was granted on three questions. However, in this

section of the analysis, I will deal with all three questions together because, collectively, and in light of how the parties presented their arguments, they all concern the central issue of whether the Chambers judge erred by concluding that Ms. Harsch had not pleaded sufficient material facts to assert a cause of action against Ms. Bernuy individually, in the context of an application to strike under Rule 7-9(2)(a). [ 42 ] As a starting point, Ms.

Harsch contends that the Chambers judge erred by determining that a plaintiff is required to plead malice, intentionally harmful conduct or “another form of culpability” in order to properly assert a claim of lack of good faith. I do not read the Decision in that way.

While the Chambers judge observed that “[b]ad faith certainly includes malice or conduct intended to harm”, she also recognized that, in some cases, “recklessness or serious carelessness” will suffice, and that “there are degrees of culpability with inadvertence at one end of the spectrum and gross negligence on the other”, not all of which will be culpable ( Decision at paras 11 and 13, citing Finney ). This is, in my view, an accurate statement of the law. [ 43 ] However, as I will explain, the Chambers judge erred by concluding that the potential applicability of s. 86.1 of the AAIA meant that Ms.

Harsch’s claim failed to disclose a reasonable cause of action against Ms. Bernuy individually. [ 44 ] The statement of claim alleged that Ms. Bernuy had failed to act in good faith in her handling of Ms. Harsch’s insurance claim. The lack of good faith was particularized to include (

a) allegations of failing to reasonably investigate the claim; (

b) relying on improper evidence to deny benefits; (

c) terminating benefits without gathering relevant evidence; (

d) terminating benefits without properly considering SGI’s obligations under the governing legislation; (

e) terminating benefits without using fair and impartial assessments; and (

f) failing to comply with statutory duties to assist Ms. Harsch to access all the information and benefits to which she was entitled. [ 45 ] If all those facts are taken to be true, they may cumulatively be seen as pleading that the termination of Ms. Harsch’s benefits was the result of the overwhelmingly inadequate handling of her claim or the introduction of improper considerations into the claims process by Ms. Bernuy. This alleged conduct could also properly be seen as amounting to recklessness or serious carelessness in the handling of Ms. Harsch’s claim. In short, I find Ms.

Harsch had pleaded material facts sufficient to engage the question of bad faith. [ 46 ] In my view, Ms. Harsch also pleaded material facts sufficient to ground a cause of action against Ms. Bernuy personally. In that respect, the cause of action that Ms. Harsch set out to plead as against SGI alleged a breach of its duty of good faith. She asserted that Ms. Bernuy, as a personal injury representative for SGI, owed and breached a similar duty. Paragraph 11 of the statement of claim sets out the manner in which Ms. Harsch alleged that Ms. Bernuy had breached that duty.

On that basis, the statement of claim pleaded a cause of action, in tort, against Ms. Bernuy individually. As the jurisprudence referred to earlier in these reasons indicates, the nature and scope of the duty of care owed to an insured person by an employee of a statutory first-party insurer is not settled, meaning it cannot be said that it is plain and obvious that the claim will fail and, as such, the claim against Ms.

Bernuy ought not to have been struck on that basis. [ 47 ] Moving next to consider the effect of the good faith immunity clause in s. 86.1 of the AAIA , as I have previously discussed, a plaintiff is not required to negate a defence in their pleading. A good faith immunity clause, as noted in Harpold , is a defence, the availability of which requires a finding of fact about the conduct of the defendant. An application to strike under Rule 7-9(2)(

a) is not the place for such findings of fact to be made. [ 48 ] That being the case, the Chambers judge erred by concluding that Ms. Bernuy was “entitled to cloak herself with the protection afforded by s. 86.1 of the AAIA ” ( Decision at para 15) and, thus, erred by striking Ms. Harsch’s claim under Rule 7-9(2)(a). [ 49 ] In saying this, I am making no comment on the strength of Ms. Harsch’s claim. Ms. Bernuy may well be able to successfully raise the statutory good faith immunity defence at trial, or it may be determined that she did not owe to Ms. Harsch the duty of care she is alleged to have breached.

However, those are open questions and, as such, the Chambers judge should not have struck the claim under Rule 7-9(2)(a). V. CONCLUSION [ 50 ] For the foregoing reasons, I would allow the appeal, set aside the Chambers judge’s decision, and dismiss the application to strike the statement of claim under Rule 7-9(2)(a). I would also set aside the order of costs made by the Chambers judge and remit the matter to the Court of Queen’s Bench for determination as to whether the statement of claim ought to be struck under Rules 7-9(2)(

b) or (c). [ 51 ] Ms. Harsch is entitled to the costs of the appeal and the costs of the application for leave to appeal, in the usual way.

“Kalmakoff J.A.” Kalmakoff J.A. I concur. “Ryan-Froslie J.A.” Ryan-Froslie J.A. I concur. “Schwann J.A.” Schwann J.A.