Academic Subject Home
See Hero wins insurance fight and A deserving 'hero' in Windsor Star.

Court File No. 97 - GD - 41600








Plaintiffs' counsel
Kenneth W. Golish,
Barrister and Solicitor
380 Ouellette Ave Suite 302
Windsor, Ont. N9A 6X5
Telephone: 519-252-7867
Fax: 519-252-8652

Dated: September 11, 2001

Plaintiffs' Trial Memorandum

I. Nature of the Case

1.  This case arises out of an accident on 9th day of February 1996. The insured vehicle was used to push another individual and vehicle off a railroad track. But for this action, the oncoming train would have likely killed the operator of the other vehicle and certainly would have destroyed that vehicle. The insured vehicle then became stuck on the track and the operator abandoned the vehicle which the locomotive then struck. The insurer then denied liability to the third parties Via Rail and CN Rail based on the Good Samaritan theory, but assessed the accident as an at-fault accident with its own insured, later refusing to renew at least one driver and not paying damages to the vehicle owner under s. 263 of the Insurance Act. The plaintiffs claim the following:

a.  A declaration that a certain motor vehicle accident occurring on or about the 9th day of February 1996 and more particularly described herein was not the fault in any degree of the plaintiff, Scott Anderson.

b.  Damages as follows:
i.  Direct damages for the loss of the vehicle and loss of the use of the vehicle;

ii.  General damages for bad faith and for assessing the accident as an at-fault accident and that arise from the plaintiffs having to change their automobile insurer and the consequent aggravation and distress;

iii.  Legal expenses incurred in the plaintiff counsel negotiating an agreement from the facility insurer to adjust the premiums of Scott Anderson if this court finds he was not at fault. The plaintiff Scott Anderson is not claiming indemnity for increased premiums as he expects to get those premiums back;

iv.  Punitive damages

v.   Interest and costs.

II. Plaintiffs' Theory of the Case and Factual Contentions

The Facts as of the Commencement of this Action

2.  Susan Anderson and Charles Anderson had a policy of automobile insurance with Zurich. Their son, Scott Anderson was an occasional driver. On February 9, 1996, on Concession Road 2, in the Township of Rochester, Scott Anderson was operating an insured vehicle owned by Susan Anderson. He was about to cross the CN railroad tracks. With a train locomotive visible and approaching, he encountered another motor vehicle stalled or stopped on the tracks with the operator (other operator) not responding to efforts to alert him about the danger of the situation. Scott Anderson then used the insured vehicle to push the other off the track. The insured vehicle itself became stalled on the track and then, to avoid certain personal injury or death, Scott Anderson abandoned the insured vehicle. The locomotive hit the insured vehicle destroying it and its contents.

3.  The occasioned damage to the insured vehicle was entirely the fault of the other operator because the other operator negligently or otherwise put himself in imminent peril. By putting himself in peril, he created a duty of care to anyone who attempted to rescue him.

4.  But for s. 263 of the Insurance Act, as a matter of common law only, the other driver would be responsible to the owner of the insured vehicle for damage to it.

Evidence At Trial

5.  Evidence at trial consisted of a document brief jointly submitted by the parties (Exhibit 1) and the testimony of the plaintiffs Susan Anderson and Scott Anderson. The document brief, jointly submitted, but prepared by the defence, contained all the documents and only the documents from each party's affidavit of documents. No one testified on behalf of Zurich and the court is entitled to draw an adverse inference accordingly. Evidence also consisted of the file of the solicitor hired by Zurich to defend an action brought by Via Rail. (Exhibit 2) That solicitor's file contains documents which should have been disclosed to the plaintiff, but were not. The court may draw an adverse inference that still other documents have not been disclosed.

Defendant's Position and Conduct Following the Accident

6.  The defendant was forthwith notified of the circumstances of the accident and the defendant investigated. The investigation included a determination that the vehicle operated by the other operator was insured under a contract evidenced by a motor vehicle liability policy.

7.  Susan Anderson has no claim for damage against the owner or operator of the other motor vehicle under of s. 263 of the Insurance Act. The accident arose directly or indirectly from the use or operation in Ontario of one or more other automobiles and both vehicles were insured.

8.  Under of s. 263 of the Insurance Act, Susan Anderson's only claim for damages to her vehicle is under her own policy of insurance and not against the other driver.

9.  Until the plaintiffs sought legal counsel a year after the incident, the plaintiffs were never aware that Susan Anderson had a claim or even a potential claim under s. 263 of the Insurance Act. The defendant never attempted to inform Susan Anderson of the claim. The defendant, through its representatives, in fact purported to give all plaintiffs legal advice that was not accurate for the sole purpose of avoiding liability under the Insurance Act.

10.  Without any basis in law or fact, the defendant informed the plaintiffs that the accident of February 9, 1996 was an at-fault accident chargeable to Scott Anderson. Because of that at-fault ruling and because the plaintiffs had objected to the ruling, when the policy came up for renewal in July 1996, the defendant notified Charles and Susan Anderson under s. 236 of the Insurance Act that the defendant would no longer insure them. Since the last renewal of the policy on July 7, 1995, no material change in circumstances occurred to justify Scott Anderson's removal from the policy.

11.  The defendant's representative wrote as follows:

We at Zurich Canada do appreciate the heroic efforts of your son and do applaud his effort to save a fellow human being, but as I have stated in the past, the Automobile Insurance Act specifically states that a driver must have complete control of the vehicle at all times. In this situation, even though Scott knew what he was doing when he attempted to push the other vehicle off the railroad tracks, the effect of his car stalling on a set of tracks where the railroad lights were operating, clearly shows he did not have full control of his vehicle at the time the accident occurred and was thus at fault in the collision claim.

12.  Obtaining insurance for himself through a "facility insurer" was necessary for Scott Anderson. Standard insurance was not available to him because of the defendant's ruling. Facility insurance is available for higher-risk drivers as a cooperative venture involving several insurance companies pooling resources and risks. With some considerable effort, the other plaintiffs were also required to make alternative insurance arrangements. Had the defendant not decided against Scott Anderson, Scott Anderson could have continued to obtain standard insurance and the other plaintiffs would have continued their coverage with the defendant.

13.  In obtaining facility insurance, his new insurer required Scott Anderson to pay a much higher premium.

The Facts Arising after of the Commencement of this Action

14.  Shortly after the accident CN Railroad and Via Rail claimed damages against Susan Anderson, Scott Anderson and the driver of the other vehicle for more than $22,000 and $11,000 respectively. In response these claims, Zurich denied liability for the Andersons based on the "Good Samaritan" principle. CN actually brought proceedings which Zurich settled on behalf of the Andersons, without admission of liability and upon payment of $5,000 only, inclusive of interests and costs. Had the Andersons been liable in full, Zurich would have had to pay much more than that in damages, interest and costs. For some inexplicable reason, CN settled with both parties for a total of only $15,500.

15.  Zurich did not advise the plaintiffs about the matter being settled. To their knowledge, Via Rail received nothing from Zurich on their claim. Zurich produced no evidence in that regard and therefore the inference can be drawn that Zurich was completely successful in any Via Rail claim.

Plaintiffs' General and Other Damages

16.  For three years after the accident, Scott Anderson payed a higher premium. However, the facility insurance association, through whom he has insurance, agreed to reassess his rating and premium in the event the defendant reverses its position or this court declares the accident of February 9, 1996 was not an at-fault event.

17.  To obtain that agreement from the facility insurance association, Scott Anderson has incurred or will incur certain legal expenses.

18.  The plaintiff Susan Anderson is entitled to damages for the loss of the insured vehicle and its contents and for the loss of use of the vehicle.

19.  The plaintiffs are entitled to damages because of the time and trouble occasioned in having to obtain alternative insurance arrangements after the cancellation of their policy

Reasons Why Defendant Should Pay Exemplary Damages

20.  The plaintiffs are entitled to punitive or exemplary damages against the defendant because the defendant, through its agents and employees, has deliberately or recklessly misled the plaintiffs about their legal rights, has refused to cooperate in any way in the settlement of this claim and has sought to take advantage of its superior bargaining position and therefore for those reasons and others has not acted in good faith.


21.   The plaintiffs are entitled to damages under s. 263 of the insurance Act for those damages they would have otherwise been entitled to claim at common law against the other driver. That claim at common law is based on the theory that an individual who creates a peril, must pay for the damages that flow from the creation of the peril. In any event, Zurich, having set up the Good Samaritan defence in another proceeding, is should be estopped from arguing a contrary position in this one.

22.  The plaintiffs' claim arises first under s. 263 of the Insurance Act. This section applies provided:

(a)  an automobile or its contents, or both, suffers damage arising directly or indirectly from the use or operation in Ontario of one or more other automobiles;

(b)  the automobile that suffers the damage or in respect of which the contents suffer damage is insured under a contract evidenced by a motor vehicle liability policy . . .

(c)  at least one other automobile involved in the accident is insured under a contract evidenced by a motor vehicle liability policy issued by an insurer . . .

23.  The section goes on to state that the fault determination rules apply and the insured can only claim under his or her own policy of insurance and not against the other driver. It then provides that:

(4)   An insured may bring an action against the insurer if the insured is not satisfied that the degree of fault established under the fault determination rules accurately reflects the actual degree of fault or the insured is not satisfied with a proposed settlement and the matters in issue shall be determined in accordance with the ordinary rules of law

24.  The fault determination rules do not provide a rule for this particularly case. Ordinary rules of law apply.

25.  Zurich is also guilty of bad faith and for misrepresentation and these are separate causes of action out of which damages also flow. Zurich acted in bad faith because in assessing fault, it contrived reasons which had no basis in law or fact. No one verified that "the Automobile Insurance Act specifically states that a driver must have complete control of the vehicle at all times." Zurich simply contrived this theory to avoid having to pay any claim under s, 263 and to avoid insuring the plaintiffs. An insurance company should be under an obligation to notify insured persons of possible claims under s. 263. Even if no such obligation exists, where an insurer purports to advise claimants as to matters of law, and advises them incorrectly, the insurer is liable for misrepresentation and bad faith.

26.  Zurich also acted in bad faith because it received a legal opinion from its solicitor, Timothy Jacques, in December, 1996 in which he gives an unequivocal view that Scott Anderson's actions were justifiable and for that reason Zurich was not liable for the accident. This opinion was only disclosed in Exhibit 2. The opinion must be read as an admission of the defendant itself, not merely as a third party statement. The facts relied upon in the opinion were borne out at trial. That the defendant then failed to rely upon the opinion is evidence of bad faith in its dealings with the plaintiffs.


Damages (Generally):

27.  The plaintiffs claim damages. Under the simplified rules, each plaintiff may claim up to $25,000, but the claims must be in their own right.

Rule 76.02 (8) Except for a joint claim, where there is more than one plaintiff, the simplified procedure shall be used if each plaintiff's claim, considered separately, meets the requirements of subrule.

a.  In this instance, Susan Anderson has her own claim respecting damages under s. 263 as well as general damages, damages for bad faith and pecuniary damages. The plaintiffs are content to consider the claim of Charles Anderson as being joint with Susan Anderson.

b.  Scott Anderson's claim is separate in that he is seeking a declaration regarding the degree of fault in the accident as well as his own claim for general damages, damages for bad faith and pecuniary damages.

Damages s. 263:

28.   The agreed damages are for $3,000 as the value of the car. The plaintiffs are also entitled to damages for the loss of the contents. These damages are subject to proof at trial. Section 263 also provides that a party is entitled to damages for the loss of use of the vehicle. Although the plaintiffs did not purchase another vehicle until two months later and did not rent a substitute vehicle, there is no requirement that the plaintiffs must be out-of-pocket to recover under this head of damages. The amount should be at the discretion of the presiding judge.

a. The defendant's while agreeing to the towing charges of $390.55 actually claim that these are not covered under s. 263 as "damages to the automobile." Of course when necessary to do so, if a vehicle is to be repaired or scrapped, it must be towed to the place where it is to repaired or left for salvage. To suggest towing charges are not covered is without merit.

Aggravated and General Damages

29.  The defendant made an insurance determination that Scott Anderson was at fault in the accident. The plaintiffs maintain that this decision was in error and from that error flowed certain consequences to the plaintiffs that cannot be compensated for under s. 263 damages or by the making of the declaration the accident regarding the proper fault determination that should have been made. Because the fault determination added two points to three points he had accumulated for insurance purposes, he could no longer be insured by the defendant.

a.  For a number of reasons, including those, all the plaintiffs had to make other alternative insurance arrangements. This is a matter of general damages and the amount should be at the discretion of the presiding judge. The right to claim these damages, it is respectfully submitted, flows from the insurance making the wrong decision, apart from the issue of bad faith.

b.  Aggravated damages are an appropriate form of damages and these arise based on the claim that the defendant acted in bad faith. These damages, unlike punitive damages, which are meant to punish a defendant, are intended to compensate a plaintiff for certain intangibles such as aggravated and hurt feelings. See Hill v. Church of Scientology of Toronto [1995] 2 S.C.R. 1130.

The Right to Claim Under s. 263 of the Insurance Act

30.  The Fault Determination Rules have their origin as a private industry arrangement that preceded Ontario's no-fault regime. The rules were developed in part based on judicial precedents for fault determinations. While insurance companies were bound by the rules, individuals were not. This system continues today.

31.  The Fault Determination Rules do not provide a scenario for this circumstance, but even if they did, an insured is not bound by those rules and may bring an action and claim a lesser degree of fault. In this, it is important to note that only the insurance company is bound by the rules. It therefore cannot attempt to establish fault, even when justified in doing so, if the fact situation comes under a particular rule.

32.  Regarding s. 263 The defendant has taken an absurd position in its pleading and in this action generally. On the one hand it says the damage to the vehicle was caused by a collision with a train. See paragraph 5 of the statement of defence. It says therefore, s. 263 does not apply. It then wishes to use the fault determination rules anyway.

33.  In this instance, the defendant could have waited the final outcome of the litigation with CN and VIA and proposed settling the s. 263 claim based on the outcome of that case and created its own rule. By analogy, the defendant at minimum should be bound by the outcome of that other litigation. Thus, it is respectfully submitted that, even if the court would otherwise find that the plaintiff driver was 100% at fault, the defendant should be bound by the degree of fault based on the amount it paid in the other litigation.

The Duty to Disclose

34.  Does an insurer have an obligation to advise an insured of a s. 263 claim? The plaintiffs submit that it does, the same way it has a duty to disclose any other contract right. Policies of insurance are special types of contracts in which the insured may not be aware of basic entitlements. As a contract of insurance is not an agreement freely negotiated between parties, the various promises made by the insurer, namely the policy coverages, are meaningless unless the insured knows about them. Just as the right to counsel in criminal matters is meaningless unless the accused is informed of the right, the same principle should apply here. For that reason, there should be an obligation to inform an insured of the right in appropriate circumstances.

35.  As the right to claim damages under s. 263 is statutory, not contractual, it is reasonable to conclude that the reason the Ministry of Finance approved the contract in the form was to make the obligation to inform under s. 263 the same as it should be under any other coverage provision.

36.  The obligation to inform may be considered analogous to a lawyer's obligation to alert a client of a potential negligence claim. Even if no such obligation exists, in this instance, when the defendant purported to advise the plaintiffs of the applicable provisions, the defendant was under an obligation to advise the plaintiff correctly.

The Rescuer Doctrine

37.  Although, there is a simple rule applicable in all instances, the rescuer doctrine involves many considerations that depend on the particular fact pattern. The general rule is that a rescuer is entitled to be compensated as long as he or she acts reasonably considering all the circumstances. The applicable doctrine cannot be applied or should not be applied in any particular case without considering the risk of danger created by the original negligent party and the consequences of rescuer's actions. Thus where the consequences of the rescuer's action are out of proportion to the original risk of danger, the actions of the rescuer are deserving of scrutiny. However, in the instance case, even if this court finds the plaintiff's conduct was not reasonable in all the circumstances, the court would still be justified in finding that the other driver is the individual entirely at fault.

38.  The court may wish to consider the contribution provisions, of the Negligence Act between the two drivers, although not pleaded by either party. The court may have the legal authority to do so apply the act and apportion fault. However, it appears that those provisions do not lend themselves appropriately to the rescuer doctrine and for that reason should not be used. The case law in the area appears to support this proposition: Only one party is at fault, not both.

39.  In the end, it was the plaintiff vehicle that was destroyed, not the vehicle of the other driver. The damages claimed by CN and Via Rail would have probably been approximately the same whichever vehicle was left on the track. Thus Scott Anderson sacrificed his 1981 vehicle, if not for the life of the driver, but his 1986 vehicle. Could the other driver be heard to complain? See Horsely et al. v. MacLaren et al. (1969), 2 O.R. 144 (C.A.) where the court confirmed the reasoning in East Suffolk Rivers Catchment Board v. Kent et al. (1941 A.C. 74.) that:

....where a person gratuitously and without any duty to do so undertakes to confer a benefit upon or go to the aid of another, he incurs no liability unless what he does worsens the condition of that other.

The Right of the Defendant to take contrary positions in different proceedings

40.  Lawyers, as advocates, are encouraged to be flexible in their thinking. Thus, it is reasonable to expect that sometimes a lawyer will argue one way on one case and another, for a different client, Although lawyers are trained to believe that it is perfectly reasonable to take contrary positions, that should not be a general principle of law. Exceptions apply, but the exceptions have a valid basis in policy and practice. For instance, a party is entitled to plead inconsistently in the alternative. This is perfectly acceptable because a party in a proceeding may not precisely know upon what claim or defence he or she should rely. Likewise, a party is entitled to settle a case without admission of liability, but the policy basis for that is to encourage settlement.

41.  In this case, it is or should be contrary to public policy for a party to take one position in one proceeding that contradicts that taken in another. A contrary view encourages protracted litigation and does not encourage fair settlements. This is the theory behind the doctrine of res judicata and issue estoppel. Thus if issue estoppel is not applicable in this, an analogous rule should be.

Limitation Period s. 263

42.  The current direct compensation provisions are slightly different from those in effect in 1996. They now provide a deductable. The provisions of Part VI for automobile insurance provide a number of statutory provisions regarding such policies. For instance, different provisions say such must provide specific coverage. S. 263 is unique in that the right to bring proceedings against an insurer are not contractual, but statutory. Considering the way other portions of the statute are worded, the legislature could have provided the same remedy by way of contractual provision. The different form of language used must have been deliberate to allow the insured to sue his own insurer as though he or she were a third party. It is likely that legislature intended the insured to have a remedy without the constraints of formal proof of loss, etc.

43.  The standard policy in effect in this case happens to contain provisions relating to direct compensation. See section 6. As the policy is implemented by approval of the Ministry of Finance, its effect is still subordinate to the act. Therefore, as the act clearly makes direct compensation a statutory right, the portions of the policy that make it a contractual right are contrary to the statute to the extent, if any, that they are inconsistent. Any limitation period would thus be contrary to the act. In any event, the concordance in the policy itself makes it clear that the limitation period only applies to section 5, not section 6.

44.   Section 234(2) provides:

(2)  No variation or omission of or addition to a statutory condition is binding on the insured.

By implication, this provision allows the statutory conditions to be varied by an insurer if the variation is more favourable to the insured. The concordance does and therefore the limitation period argument is without merit.

Punitive Damages

45.  Punitive damages may be awarded in situations where the defendant's misconduct is so malicious, oppressive and high-handed that it offends the court's sense of decency. Hill v. Church of Scientology of Toronto [1995] 2 S.C.R. 1130 In this instance, the defendants cannot rely on a reasonable mistake of fact or on having a legitimate factual or legal basis for disputing a claim. It must offend the court's sense of decency and fairness for the defendant to fabricated a legal argument without justification or excuse. If the defendant had taken a position that Scott Anderson was 100% at fault for the accident and taken that position with third parties, then the plaintiffs would only be entitled to damages under s. 263 according to whatever fault determination

46.  Since Whitten, it is clear that the denial of an insurance claim, itself, may be a basis for bad faith claim and therefore punitive damages. Where compensatory damages are already high, the need for there to be deterrent effect is lower. However, it is especially in the case where damages are lower, that it is necessary to set a higher award for such damages. Punitive damages are not intended to compensate the plaintiff, but to punish the defendant: Cory J. discussed these general principles in Hill v. Church of Scientology of Toronto, [1995] 2 S.C.R. 1130 at 1208:

Punitive damages may be awarded in situations where the defendant's misconduct is so malicious, oppressive and high-handed that it offends the court's sense of decency. Punitive damages bear no relation to what the plaintiff should receive by way of compensation. Their aim is not to compensate the plaintiff, but rather to punish the defendant. It is the means by which the jury or judge expresses its outrage at the egregious conduct of the defendant. They are in the nature of a fine which is meant to act as a deterrent to the defendant and to others from acting in this manner. It is important to emphasize that punitive damages should only be awarded in those circumstances where the combined award of general and aggravated damages would be insufficient to achieve the goal of punishment and deterrence.

47.  Defence counsel has suggested that the bad faith claim is based on the refusal to renew. The plaintiffs do not make the assertion that the refusal to renew by itself is bad faith. The refusal to renew is a basis for ordinary damages where the refusal was made on an error in its fault determination. However, the bad faith claim, in respect of all the plaintiffs, is based on the manner in which Zurich made their fault determination. The bad faith claim in respect of the plaintiff, Susan Anderson is also on the failure to advise her of right to claim damages against the insurer. If Zurich did not do so at the outset, it could be excused based on a legitimate concern as to the outcome of the CN and Via Rail claims. However, in that regard, the plaintiffs were entitled to a determination of the fault issue within a reasonable time regardless of how long it would take to settle the railway matters. That was done when Timothy Jacques gave his opinion in December, 1996.

48.  Bad faith involves a dishonest and unfair dealing with a party. Contriving a denial of liability based on a fabricated statutory provision constitutes bad faith. Attempting to avail oneself of one position with one party and a contrary one with another is also an unfair dealing.

Costs on the Higher Scale

49.  Where an award of punitive damages is made, it appears appropriate to award costs on the higher scale. In the event, the court sees fit not to award punitive damages, the plaintiff submits that those costs should be awarded in any event, from the outset, just as long as the plaintiff recovers and any offer to settle is greater than the court award. In this instance, costs are justified accordingly because the defendant has sought to take unreasonable positions regarding law and damages in every step of this proceeding. The defendant has:

a.  Unreasonably argued the limitation period;

b.  Suggested that the refusal to insure was based on the entire driving record and therefore was irrelevant;

c.  Claimed s. 263 doesn't apply because there was a collision with the train, but at the same time made ridiculous analogies using the Fault Determination Rules;

d.  Knowingly argued against the application of the rescuer doctrine when that doctrine clearly applied. See December, 1996 opinion and the statement of defence.

e.  Refused to disclose documents that is should have disclosed.

All of which is respectfully submitted.

Name, address and telephone number of plaintiffs' solicitor.

Kenneth W. Golish, Barrister and Solicitor
380 Ouellette Ave Suite 302
Windsor, Ont. N9A 6X5
Telephone: 519-252-7867
Fax: 519-252-8652

Note: The trial in this proceeding took place at Windsor in September, 2001 before Justice Carl Zalev.  Further argument was heard in October and reasons for judgment were given on October 25, 2001, declaring the accident not the fault of Scott Anderson.  However, Justive Zalev did not include an award of damages.  The plaintiffs' lawyer asked him, in a formal motion, to amend his award and he did so on January 7, 2002 by awarding damages of $4,000 under s. 263 plus interest and costs of the motion.   On January 9, 2002, he released reasons for awarding costs to the plaintiffs in the action.