K-W OIAA October 2015 Bulletin

Photo Credit – Ryan Potts

OCTOBER 2015

Hello! Wow, September has flown by and fall is in the air, if you ask me that’s ok because that means pumpkin spice lattes are back in season. On Thursday September 24, 2015, we held one of our biggest events of the year, the annual tradeshow. We were lucky to welcome Catherine Groot, Toronto OIAA president to the event and hope that she had a wonderful time. The tradeshow was a huge success, with 53 vendor and over 258 dinner

attendees. A great big thank you goes out to the executive that helped pull this event off. Many thanks to Relectronics for putting on the slideshow during dinner. This year was the first year that we had registrations mostly online and we are hoping to continue this trend with future events. Thanks to our wonderful vendors for your continued support, we hope this event was a great event for you as well. To our adjuster members, our events are put on for you and we strive to make it all that you need and more, we hope that it met your expectations. We welcome any feedback for the event and you can provide this to [email protected] Our organization is not only about networking and education but we are also an organization that believes in benevolence and charity. For the 2014- 2015 year, Laura Potts chose the Humane Society as the recipient of our benevolence. We presented a cheque to the Kitchener – Waterloo Humane Society in the amount of $5067.50 for the funds raised at the Annual Golf Tournament in June. We ran elections at the Tradeshow for a Social Director position. Thank you to the two social Members who ran for the position; Monika Bolesjzo and Ashleigh Leon. The competition was fierce but we couldn’t keep both of you. We welcome Monika to the executive team and can’t wait to see what she brings to the table for 2015-2017. We say farewell and best wishes to Ashleigh and we are immensely grateful for all she has done on the executive since her term began in 2013, many thanks to you Ashleigh. Congratulations to the 50/50 winner that took home a prize of $242.00 and also to all others who took home some fantastic prizes from the tradeshow. I look forward to seeing many of you at the next event October 29, 2015 when we will be learning about Property Subrogation. The Executive committee and I are always available if you have questions or concerns about our organization, you can reach us at: [email protected] or contact myself at [email protected] Sincerely,

Jennifer Brown Economical Insurance K-W OIAA President

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Jennifer Brown Ryan Potts President Vice-President Economical Insurance ClaimsPro - Kitchener 519-570-8500 x 43375 519-501-2478 Email: [email protected] Email: [email protected]

Laura Potts Mark Potts Past-President Treasurer Aviva Insurance ClaimsPro - Kitchener 519-883-7579 226-750-0087 Email: [email protected] Email: [email protected] Carrie Keogh Stephen Tucker MA, CIP, CRM Secretary Toronto Representative Economical Insurance Economical Insurance Email: [email protected] 519-570-8500 X43281 Email: [email protected]

Gillian Reain, BA Leeann Darke Director Director Economical Insurance The Co-Operators 519-570-8500 X43283 519-618-1230 Email: [email protected] Email: [email protected]

Monika Bolejszo Stephanie Storer Social Director Social Director Samis + Company Xpera Investigations 1-844-SAMISKW ext 110 519-884-6352 X233 Email: [email protected] Email: [email protected]

Cyndy Craig Daniel Strigberger Out of Town Liaison Web Director Arch Insurance Canada Ltd Samis & Company 647-293-5436 416-365-0000 x127 Email: [email protected] Email: [email protected] Manish Patel Bulletin Director Larrek Investigations 519-576-3010 Email: [email protected]

If you have any questions, concerns or comments, please do not hesitate to contact

any of the above committee members.

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President’s Message Page 1 2015-2016 K-W OIAA Executive Page 2 Schedule of Events Page 4 Social Chit Chat Page 5 Toronto Delegate Report Page 6 Clark Wilson – The Pollution Exclusion -

Focus on Causation Pages 10-11 Meet Your Executive Pages 15-16 Samis + Company: Contractual Loss Shifting

Constraining an Insurer’s Right of Subrogation Pages 21-22 Miller Thomson: Leveraging Favourable Settlements Pages 26-29 The Co-operators – Cambridge Claims Annual Charity Event Pages 31-32 2015 K-W OIAA Trade Show Pics Pages 35-39 Advertisers’ Index Page 36

This Month’s Cover

Abraham Erb Grist Mill Waterloo's first settler Abraham Erb built the original grist mill in 1816 on Beaver Creek (now known as Laurel Creek). The grist mill was an important economical and social centre for the region and helped encourage settlement that eventually grew into the Waterloo we know today. The original grist mill was demolished in 1927, but a replica was built in 1998 on Silver Lake in Waterloo Park. The replica features a timber frame constructed using local materials including 300 year old hand hewn oak, elm, cherry and pine beams as well as a 12 foot water wheel. – Courtesy Ryan Potts

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October 29, 2015 - Property Subrogation- Dan Strigberger & Leeann Darke November 26, 2015 - Chili Cook Off: Manish Patel & Cyndy Craig December – No scheduled events

January 28, 2016 – Property Round table discussion- Laura Potts & Mark Potts

February 25, 2016 – Accident Benefits Dispute Provisions- Ashleigh Leon, Carrie Keogh & Gillian Reain

March 31, 2016 – Desktop Investigation Strategies- Stephen Tucker & Stephanie Storer

April 28, 2016 - Election & Fun Night: Ashleigh Leon & Cyndy Craig

May 26, 2016 – Accident Benefits/Bodily Injury Accounting Topic: Carrie Keogh & Gillian Reain.

June 23, 2016 - Golf Tournament- Ariss Valley Golf & Country Club: Jen Brown & Ryan Potts *All events occur at Golfs Steakhouse: 598 Lancaster St W, Kitchener, ON N2K 1M3, unless otherwise noted.

**Please note that topics are subject to change**

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October 2015

I’d like to extend a big thank you to everyone who came out to the Trade Show last month. I’m sure most of us now have enough pens and post-it notes to last us until next year’s trade show! October is National Cyber Security Awareness Month. We live in a “smart” world where people are connected which means businesses and individuals are exposed to greater threats. There is a need to enhance existing security plans to prevent or mitigate risk. Eleven of the top 15 breaches of all time occurred in 2014. For example, in 2014 Sony Pictures Entertainment Classic’s emails were hacked in response to the movie The Interview which shed a negative light on North Korea. In response, The Interview was pulled from theatres and released to video on demand (and based on the two hours I wasted on this movie, perhaps not all hacks are bad…). Businesses need to secure themselves as one breach can cause significant negative financial and reputational consequences. Just some food for thought: • In PriceWaterhouseCoopers’ Global State of Information Security Survey 2015, the number of detected cyber incidents soared to a total of 42.8 million in 2014, a 48% leap over 2013 • There is light at the end of the tunnel: North American detected security incidents have increased, but the financial losses arising from breaches have decreased, suggesting that North American business have become more adept to responding to crises. More and more insurers are responding to cyber risk and offer products, which according to Marsh, has become a $2 billion dollar industry. Based on our increasingly smart world and the number of breaches, it appears that cyber liability and cyber insurance will continue to grow. So stayed tuned and stay vigilant! We would love to hear from you with any of your education meeting ideas: [email protected] or [email protected] Have a great October! I look forward to seeing everyone at our monthly meeting on October 29, 2015. Monika Bolejszo 2015-2016 KW-OIAA Social Director Samis + Company

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The September Kick-Off and Anniversary celebration took place at the Stock Exchange Downtown on September 9. The event was extremely well attended and the unique venue stole the show. Looking ahead the November event is a joint seminar sponsored by the OIAA and CICMA. The very timely topic is Insurance Exposures in the Sharing Economy. The panel will consist of:

Insurance Brokers Association of Ontario – Greg Kruk, RIB, CIP, B.Com; Insurance Bureau of Canada – Ryan Stein, CIP, Director of Policy; Uber, Curtis Scott, J.D., Insurance Counsel; and, Marc D. Isaacs, LL.B., LL.M., Isaacs & Co. Barristers and Solicitors. Here is the entire list of Toronto OIAA events for the remainder of the year so you can mark your calendars accordingly: October 14, 2015 Past President Night - Westin Bristol Place Airport, Toronto, ON November 11, 2015 November Seminar – Insurance Exposures in the Sharing Economy – Airport Marriot, Toronto, ON December 9, 2015 Christmas Party - CN Tower, Toronto, ON As always details and registration are available at www.oiaa.com and you can stay tuned to OIAA events by following @PresidentOIAA on twitter or on Facebook. Regards, Stephen Tucker Kitchener Waterloo OIAA Chapter, Toronto Delegate

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The Pollution Exclusion – Focus On Causation By Samantha Ip, with assistance by Daniel Paperny In its recent ruling in Precision Plating Ltd v Axa Pacific Insurance Co. ("Precision Plating"), the BC Court of Appeal considered when a pollution exclusion in a Commercial General Liability ("CGL") policy would operate to release an insurer from its duty to defend its insured in a third party lawsuit. In the past, such cases typically addressed whether the loss was "sudden and accidental" or whether the released substance fell within the definition of "pollutant". Precision Plating was focused instead on the concept of causation in the context of exclusion clauses.

Background Facts

The insured company ("Precision") operated an electroplating business in a multi-tenanted commercial building in Surrey, BC. In April 2011, a fire broke out at Precision's premises (the "Fire"), triggering a sprinkler system. The water from the sprinkler caused vats of chemicals to overflow. The overflowing chemicals escaped Precision's premises and damaged the premises of the neighboring businesses within the building.

The owners of four neighboring businesses (the "Claimants") sued Precision, alleging property damage caused by the chemicals that had leaked during the Fire (the "Lawsuits").

Precision applied to the courts seeking a judicial declaration that its insurer ("AXA") was obligated to defend Precision in the Lawsuits under a CGL insurance policy issued by AXA to Precision (the "Policy"). AXA argued that a pollution exclusion clause eliminated any coverage.

At trial, the BC Supreme Court ruled that the damage to the Claimant's property was caused by the Fire (not pollutants) and AXA was thus obligated to defend Precision in the Lawsuits as the pollution exclusion did not operate to exclude coverage. AXA appealed.

The Pollution Exclusion Clause

The relevant provisions of the Policy issued by AXA read as follows:

Coverage: To pay on behalf of the Insured all sums … that the Insured shall become obligated to pay by reason of liability imposed by law upon the Insured … for compensatory damages because of:

(a) bodily injury sustained by any person or persons;

(b) personal injury;

(c) property damage due to an accident or occurrence.

… subject to the limits of liability, exclusions … in the Policy.

Exclusions: Coverage provided by this Policy does not apply to …:

(b)(i) Bodily Injury, Personal Injury or Property Damage caused by … or arising out of the … discharge, emission, dispersal, seepage, leakage, migration, release or escape … of Pollutants:

(1) at or from any premises, site or location owned, rented or occupied at any time by an Insured

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The pollution exclusion wording in this decision is fairly typical of what has been termed the "absolute pollution exclusion" which insurers developed in the 1980s in an attempt to further restrict coverage for ever growing environmental claims.

Focus of Analysis – Causation Of Alleged Liability

The claim in question clearly fell within the grant of coverage. The issue at hand was whether the exclusion pollution applied to relieve AXA of its duty to defend. AXA refused to defend Precision in the Lawsuits, claiming that Precision's alleged liability to the Claimants arose because of the discharge or escape of 'pollutants', and that the pollution exclusion applied in these circumstances and coverage was thus excluded under the Policy.

Precision argued that it had purchased the Policy from AXA to cover itself specifically for damages caused by fire, and that any liability which Precision may owe to the Claimants actually arose because of the Fire (covered by the Policy), which subsequently caused the chemicals to escape. Precision's focus was on the immediate cause of the damage, i.e., the Fire.

The Court's Ruling

The Court of Appeal ruled that in interpreting the pollution exclusion, what matters is the true cause of the insured's liability, as opposed to the cause of the damage or potential damage from the event. The Court of Appeal also found that where the insured's alleged liability was caused by an excluded (or uncovered) loss, the insurer is not under a duty to defend, even if the liability was concurrently caused by an event that would be covered by the subject policy.

The Court of Appeal ruled in favor of AXA, finding that the pollution exclusion operated to exclude coverage in the circumstances because Precision's liability, as alleged by the Claimants, arose due to the escape of pollutants.

The Court ruled that the Policy (and CGL policies in general for that matter) provided coverage for the insured's liability or potential liability to another party, and not necessarily coverage for damage or potential damage. Reading the coverage and exclusion provisions in the Policy, it was clear to the Court that the Policy was meant to cover Precision's liability, not damages. The Court of Appeal stated that "it is not the true cause of the damage that is relevant, but the true cause of [Precision's] liability" that is relevant in determining whether the Policy provides coverage or an exclusion clause applies. This was a crucial distinction in Precision Plating because the Court ruled that, while the damage in this case may have been caused by the Fire, Precision's liability to the Claimants arose specifically because of the escape of 'pollutants' from Precision's property.

In addition, the Court held that when applying an exclusion clause contained within an insurance policy, coverage was to be excluded under the Policy where the damage or liability arose from an excluded event, regardless of whether the excluded event was the sole or concurrent cause. This meant that, even if the release of pollutants was a concurrent cause (along with the Fire) of Precision's liability, coverage would be excluded by operation of the pollution exclusion. The Court held that so long as the liability was "caused by, resulting from, contributed by, or aggravated by" an excluded event, then coverage was excluded under the Policy.

The Court concluded that the pleadings of the Claimants specifically alleged liability for the release of pollutants, and that this type of liability was explicitly excluded by Pollution Exclusion. Thus, AXA was not under a duty to defend or indemnify Precision for its losses.

Implications

The Court of Appeal's ruling in Precision Plating is of importance to both insurers and insureds when entering into and enforcing CGL policies which have exclusion clauses. By concluding that CGLs provide coverage for an insured's liability (rather than for damages), the Court in Precision Plating placed an emphasis on the "true cause" of the alleged liability of the insured in determining whether coverage is provided or excluded under a policy. It is the cause of the insured's liability to third parties which determines whether coverage is provided under a CGL, not the cause of the damage.

While many courts have adopted a more restrictive approach to the interpretation of exclusion clauses, the Court of Appeal in Precision Plating adopted a broad approach to interpreting and applying exclusion clauses incorporated in insurance policies. This Court ruled that, if the damage or liability is caused by both a covered event and an excluded event concurrently, coverage is still excluded under the Policy. This aspect of the ruling is especially advantageous for insurers seeking to rely on the application of exclusion clauses in order to avoid their duty to indemnify or defend its insured. Where an event contemplated in an exclusion clause, such as the release of pollutants, is even a concurrent, aggravating or contributing cause (among other causes which may be covered) of the liability or damage, the exclusion clause will operate to exclude coverage under the Policy.

If you have any questions about this case or other insurance law matters, please contact Samantha Ip (604.643.3172 or email [email protected]) or the editor, Glen Boswall (604.643.3125 or [email protected]), or any other member of the Clark Wilson’s Insurance Group. Thank you to Daniel Paperny for his assistance with this article.

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Laura Potts is the Chapter’s Past President for 2015-2016. She has been a member if the KW OIAA since 2011. Laura started adjusting in high school attending fire losses on the weekends holding the end of the measuring tape for her father and learning by hands on experience. Laura attended University of Windsor and Conestoga College. After completing her education she moved to Turks and Caicos in the Caribbean to work for Club Med as the Recreation Director. After a tropical storm destroyed the club, she took the hint and returned to Waterloo to become an adjuster in 2008. Laura has worked her way from a telephone adjuster to a field adjuster at an independent adjusting company and Direct Writer. Laura knew she wanted to specialize in property claims and is a Senior Property Field Adjuster at Aviva Canada. Laura is also certified as a Water Damage Restoration Technician WRT. Laura has always been passionate about swimming and traveling. Now she enjoys going down south as often as possible. In her spare time Laura can be found walking her Pomeranian puppy Ciroc, swimming, shopping, listening to music and spending time with friends and family.

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Ryan Potts is the Vice President and will be the President for the Provincial Conference in May 2017. Ryan worked through high school as a swimming instructor, aerobics instructor and lifeguard and was always the most requested for private individual instructions. Ryan has followed in his sister's and father's footsteps to become an adjuster. He attended Conestoga College to obtain his degree in The Business of

Insurance. Ryan has moved up through the ranks starting in an insurance after-hours call centre while attending school, to a telephone adjuster, to independent road adjuster, and is an All Lines Adjuster with ClaimsPro in Kitchener, where he services his client's claims from Kitchener and surrounding areas to Lake Huron. Ryan is a certified Xactimate user. He was also Crawford and Company's employee of the year in 2013. Ryan enjoys playing hockey in the insurance league and is also an avid snowboarder and golfer. Recent Claims:

Dairy Farm Total Loss Tractor/Trailer Total Loss .

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Contractual Loss Shifting: Constraining an Insurer’s Right of Subrogation

Neil Colville-Reeves | 1.416.365.0000 ext. 117

[email protected] Case law dealing with shifting the risk of loss through contract continues to evolve and impact subrogation rights of insurers. The impact of 3rd party contracts on an insurer’s right of subrogation is not new. It occurs in a number of different contexts including landlord-tenant agreements, construction contracts, and other commercial agreements. Recent cases have expanded the circumstances where insurers subrogation rights are constrained through contracts and agreements entered into

between an insured and a third party. Exculpatory clauses were an early contractual mechanism that impacted subrogation rights. These clauses relieved one party from liability for damage in certain circumstances. For instance, a tenant may provide the usual repairing covenants, ‘except for reasonable wear and tear and damage by fire, lightning and tempest’. In the case of damage by fire resulting from the tenant’s negligence, this sort of provision will not relieve a tenant from liability. To relieve a tenant from liability, the exculpatory clause would have to stipulate that the tenant is relieved from liability even if the loss arises from their own negligence. Without that stipulation, it is presumed that the exculpatory clause would not apply, As contracts became more sophisticated, new provisions were incorporated into agreements that further constrained subrogation rights. The Supreme Court of Canada’s trilogy expanded the range of circumstances that could limit or negate an insurer’s subrogation rights. In Surpass Agnew v. Cummer, there was no covenant for the tenant to repair. In addition, the landlord covenanted to obtain building insurance for loss resulting from fire and the provision in the lease requiring the tenant to obtain property damage insurance was crossed out. When a fire broke out as a result of the tenant’s negligence, the landlord’s insurer paid the claim and brought a subrogated action. Relying on the principles in cases involving exculpatory clauses, the insurer argued that the benefit of insurance was not intended to extend to circumstances where the loss resulted from the tenants negligence. The Supreme Court disagreed, finding that the subrogation rights relating to the building damage was extinguished by virtue of the lease provisions noting that the contract documents suggested that the landlord was to bear the risk of loss by fire.

A similar fact situation was considered by the Supreme Court in T Eaton v. Smith. The contractual provisions were similar to those in Surpass except that there was a clause that required the tenant to repair except for reasonable wear and tear and damage by fire, lightning and tempest’. The court noted that the law was clear that this sort of provision did not insulate a tenant from liability where the damage resulted from its own negligence. However, the court concluded that the insurance obtained by the landlord must necessarily be for the benefit of the tenant. If not, they reasoned, why would the requirement to obtain insurance be a ‘covenant’ of the landlord?

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The third case in the trilogy, Pyrotech Products Ltd. v. Ross Southward Tire Ltd involved a lease which required the tenant to contribute to the landlord’s insurance premiums. When the landlord’s building sustained damage by fire resulting from the tenant’s negligence, the court ruled that the landlord’s insurer was precluded from bringing a subrogated claim against the tenant as the insurance taken out by the landlord was intended to benefit the tenant.

The trilogy compels one to ask the question: as between the contracting parties, who was intended to bear the risk of loss. It is worth noting that in each of these circumstances, the party receiving the protection; i.e. the tenant, was a party contracting with the insured landlord.

When examining subrogation in the context of commercial leasing arrangements, the nub of the issue is to ask whether the contract(s) between the parties, the insurance contract and any ancillary documentation articulates an intention regarding who is going to assume the risk of loss and in what circumstance.

Extending Subrogation Bars to 3rd Parties

A number of recent cases have further extended the benefit of subrogation bars to non-contracting parties.

In Harlon v. Lang, a lease agreement required a tenant to purchase all risks insurance and to have the landlord added as an additional insured. In addition, the policy was to include a waiver of subrogation clause as against the ‘landlord or those for whom the landlord is in law responsible’. When the tenant sustained losses as a result of a roof leak caused by one of the landlords contractors, the tenant’s insurer brought a subrogated action against the roofer. The roofer brought a summary judgment motion before a Master who granted summary judgment. The decision was appealed and the court determined that the landlord was ‘in law responsible’ for the roofer. Therefore based on the terms of the lease the roofer was protected by the waiver of subrogation clause.

This decision provided little in the way of analysis as to how the court determined that the contracting parties (landlord and tenant) determined that the risk of loss would be borne by the tenant in this instance.

The Court of Appeal for Ontario’s ruling in Williams v. Sonoma v. Oxford also addressed the application of subrogation bars to non-contracting parties. In Williams the landlord, Oxford Properties were undertaking renovations to Yorkdale Shopping Plaza. A utility room in the building, used by one of the contractors for its office and storage, was left unlocked. A vandal entered the room and discharged a fire hose resulting in large scale water damage to the premises of Williams Sonoma.

The lease was in evidence at trial and the provisions were examined. Section 8.3 of the lease provided that the tenant was to maintain insurance covering water damage to the leased premises. The lease also provided that the tenant waived all claims against the landlord and those for whom the landlord was in law responsible with respect to occurrences insured against or required to be insured against. Therefore the risk of loss as between the tenant and the landlord and those for whom the landlord was in law responsible was clearly allocated to the tenant in that circumstance.

That still left the question of whether the contractor whose negligence caused the loss was an entity for whom the landlord was in law responsible. The court found the answer in the following paragraph:

8.4 To the extent not released under section 8.3, each party shall indemnify and save harmless the other from all liabilities, damages, losses or expenses growing out of:

…

2. …any loss, cost or expense arising from or occasioned by the act, default, or negligence of the indemnifying party, its officers, servants, employees, contractors, customers or licensees.

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Arguably this reasoning is circular. Section 8.3 insulates the landlord and those for whom the landlord is in law responsible from liability for losses that the tenant is insured or required to be insured against. Section 8.4 carves out circumstances where the landlord or others are compelled to indemnify the tenant. However, the obligation to indemnify set out in section 8.4 is negated by invoking the provisions of section 8.3.

The Court of Appeal for Ontario addressed a similar issue in Sanofi Pasteur Limited v. UPS. In Sanofi, the plaintiff stored vaccines in a temperature controlled storage warehouse operated by UPS. The cooling system failed and the vaccines were rendered unsaleable. The plaintiff sued UPS and other defendants (those responsible for the design, manufacture, maintenance of the cooling system that failed and others) for damages for breach of contract and negligence.

The plaintiff and UPS had entered into a Masters Service Agreement which required the plaintiff to maintain “all-risk property… insurance for the Goods and the personal property of [the appellant] … in an amount not less than the full replacement cost thereof, whether such Goods or property are in [UPS’s] facilities or in transit and shall include [UPS] as an additional insured.”

Another provision of the MSA – s. 10.1 – required UPS to maintain commercial general liability insurance, “including … warehouseman’s liability and contractual liability covering [UPS’s] obligations hereunder for bodily injury and property damage”. Finally, a clause in the Service Schedule provided that UPS was liable for damage to the vaccines as result of its negligence, to a maximum of $100,000. The Court concluded that pursuant to the Insurance Covenant the appellant assumed all risk of damage to the vaccines, except for up to $100,000 caused solely due to the defendants’ negligent acts or omissions. The court also held that the various third parties who were not parties to the contract were third part beneficiaries to the contract between Sanofi and UPS based on the conclusion that the parties must have intended that the third parties enjoy the benefit of the contract protections and the activities performed by the third parties were the activities that came within the scope of the contract, in this case working in furtherance of maintaining a cooled warehouse. The court held that:

The fact that the Insurance Covenant specifies that insurance is to be maintained in an amount “not less than the full replacement cost thereof” also indicates that the parties intended all persons who were involved in the very activities contemplated by the Agreement and whose negligence is alleged to have caused the fortuitous loss to have the benefit of the Insurance Covenant.

It is evident that subrogation bars may in some circumstances apply to a 3rd party that is not a party to the underlying contract. Under the Supreme Court of Canada trilogy, the parties obtaining the benefit of a waiver of subrogation were parties to the underlying contract with the insured. The Harlon v. Lang and Williams-Sonoma v. Oxford extend this benefit to third parties who are not parties to the contract although the underlying onctract contemplates an extension of the benefit to those parties for him the contracting party is in law responsible. Arguably the Sanofi v. UPS case extends this concept further although this decision is fact driven base don the very particular nature of the agreement between Sanofi and UPS. As in all cases involving the shifting of risk, close attention should be paid to the underlying contracts that are in issue in determining whether subrogation rights are impacted.

Neil Colville-Reeves is a lawyer at Samis + Company specializing in subrogation, accident benefits and tort.

www.samislaw.com

Toronto | Waterloo

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Leveraging Favourable Settlements

It is a well-known reality of our industry that very few personal injury claims make it to trial. However, my personal experience has been that when you prepare a file as if you are going to trial, you can obtain better leverage in your negotiations. With that in mind, here are some common areas that seem to lag behind in terms of file work-up, but that have an effect on settlement leverage.

A Picture is Worth A Thousand Words

Most people understand that jurors can be swayed by photographs and other demonstrative evidence, and plaintiff lawyers have lead the way in using this to their client’s advantage. However, there are some areas where defendants can take advantage of this tactic too. For example, a picture showing very little damage can be a compelling piece of the puzzle, which can play upon a jury’s skepticism of “whiplash” type complaints. In terms of leverage, while no one can guarantee what a jury will do, the general consensus is that jurors can be swayed by a lack of damage, particularly under two circumstances: a) When contrasted with large income loss reports and large future care cost reports tendered by the plaintiff; and b) When used as a building block for other evidence/arguments that will be discussed below.

However, relying on police photographs and/or garage shop photographs are not enough. Quite often, the pictures are grainy, they are in black and white (and the colour ones were not preserved), and/or they hone in on too small an area. Having a claims handler take appropriate, high quality photographs of the damage (or lack thereof) is a great investment.

Internet Research

When we think about internet research, usually the first words that usually come to mind are Facebook, twitter and Instagram – in the context of researching the activities of a claimant. However, the Internet can also be helpful when it comes to reviewing and building a case on liability and causation.

For example, research on the plaintiff’s car may assist arguments about causation in soft tissue/chronic pain cases – that the accident could not have caused the damages. Earlier, I discussed photographs of the vehicles

Authored by:

Nawaz Tahir Partner, London 519.931.3537

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involved in the accident, and how those photographs can be a foundational piece of evidence to build on. And this is one of those building blocks.

For example, I recently had a case involving a plaintiff who hit my client when my client turned left in front of her, causing a fair bit of damage. While the pictures of the damage were not by themselves indicative of a low impact collision, we decided to proceed with a full investigation on liability and the forces involved in the collision. The plaintiff was driving a Honda, and some online research we did confirmed that the model she was driving employed Honda’s energy absorbing technology, resulting in most of the forces involved in the collision being absorbed into a “crumple zone” in the car, and not the “occupant zone” Diagrams such as the one below, right from Honda’s own website, were used in the mediation brief to help obtain leverage with respect to our view of the case – that the forces involved were not sufficient to cause the damages claimed.

www.honda.ca

Note that appropriate steps have to be taken to ensure that this evidence can be tendered at trial – either through a witness, a document, or an admission by the plaintiff.

The second source of assistance in this regard are industry publications. Again, having an appropriate process to ensure that the evidence is admissible at trial is important, however, step one is mining for the data. For example, the US Insurance Institute for Highway Safety publishes data about the safety of virtually any car available. If you go to http://www.iihs.org/iihs/topics/insurance-loss-information, then you can see the insurance loss information for many vehicles. The Institute also publishes its crash test data, including rear end crash data. By reviewing this website and mining this data, you may find that the claimant’s car performs quite well in reducing the possibility of whiplash type injuries.

Another source of information is www.autoblog.com. This website aggregates safety information into one summary, shown below for an Infiniti G35:

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While the website data alone is not “evidence” per se, it allows you to start to leverage certain aspects of the case during settlement negotiations. In the case of the Infiniti, the safety information suggests the chance of someone suffering whiplash is low due to their active head restraint system. The combination of a lack of any visible damage (or little damage), in conjunction with safety features, may persuade a juror that the accident was not capable of causing the injuries and damages asserted and this may be enough leverage to effect a reasonable settlement. At the very least, it may give you the foundation necessary to invest money in hiring an appropriate expert.

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Spending vs. Investing

I pause here to go on a bit of a tangent. You will have noticed that throughout this article, I have used the word “invest” instead of “spend” when talking about file work up. This was deliberate. In too many cases, we are concerned about expenses – legal expenses and disbursements, while overlooking the bigger picture – the claim payout. Let me give you one example.

Late last fall, I successfully argued a summary judgment motion in a slip and fall case. At the discovery, I was able to obtain admissions from the plaintiff that he slipped and fell on a patch of ice that was only one square foot in area, but he did not recall the condition of the rest of the parking lot. He was a business owner as well, and yet refused to produce his own records as to whether or not he did any maintenance on his lot on the date of the loss. So, with those admissions in hand, we did two things to work up the file in response. First, we had someone go and measure the entire parking lot – it was 3800 square feet. That allowed me to make arguments based on the premise that occupiers are not insurers – that even if we accepted that the plaintiff was right, his best evidence was the presence of ice on 1/3800 of land area, and if 1/3800th was not a standard of perfection, what would be? Secondly, we retained a forensic climatologist to review the weather records and other data and opine on whether or not the conditions leading up to, and on the date of loss, were conducive to ice formation. He found that they were not. Secondly, he was asked to review the weather forecasts and determine if they had anything in them to alert a “reasonably prudent” person to take precautions for icy conditions. He found that there was nothing. So, to make a short story long -, we had to spend money on these tasks. However, when the decision came out, it was clear that the judge was in tune with both elements – the geography and the weather, and summary judgment was granted in favour of the insured. Claim dismissed, with costs. To paraphrase a familiar investing slogan, you have to spend money to save money.

That is not to say that money should be thrown at just any kind of work up. Staying with the investment theme, good investors do their homework. And in the case of claims, that homework is finding the nugget of information that opens a door for you, and taking all steps to make sure that door is opened as big as can be, and remains open as long as needed.

Conclusion

My goal from day one of receiving a file is to find what I call the “hook” of each case – most, if not all, cases have this. Sometimes they are more difficult to find, and in a few cases, it just doesn’t exist. However, once found, the hook(s) is where resources should be focussed on as a primary means to leveraging a favourable settlement.

Nawaz Tahir is a partner in Miller Thomson’s London office. His practice focuses on first party and third party defence claims as well as subrogated claims. He speaks regularly to the industry and his peers on issues pertaining to claims handling and litigation, including the use of technology in claims handling, and strategies and tactics. He is a former adjunct professor at Western University where he taught Civil Procedure.

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Thank you to everyone who was able to come out and support The Co-operators - Cambridge Claims Office for our annual Charity Event.

You know it’s a successful BBQ, when you sell out of hamburgers!! All of the silent auction items were sold and everyone is happy with their purchases!! If you were here, you saw how loaded down the bake sale tables were – Thanks to the staff for providing all of the delicious items!! We ran out of 50/50 tickets, not once, not twice, but three times!!! We raised a crazy amount of $588 for 50/50! We’ve done an initial total, and there are only a few IOU’s out there. Between the BBQ, 50/50, Bake Sale and Silent Auction, we were able to raise an AMAZING $15,491.60!!! This number will go a little higher once the final IOU’s are in, and the recycling funds are in. Again, thank you so much for your support – this event would not be the success it is without you.

We hope to see you again next year!! The Co-op Cambridge Claims Team

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