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Monday Morning Case Bites for December 3, 2018

Last Week’s Court Rulings from the Alberta Court of Queen’s Bench, Court of Appeal and SCC.

Edited by Amanda Kostek & Christie Dewar

Williams v. Richard, 2018 ONCA 889
Social Host Liability l Variety of Factual Permutations l Host’s knowledge plus “something more”

Moss v Sun Life Assurance Company of Canada, 2018 ABQB 953
Life Insurance l Misrepresentations l Void

797549 Alberta Ltd o/a Skyline Travel Centre v John Gilliatt and Lynn Gilliatt and Alberta Motor Association Insurance Company, 2018 ABPC 262
Insurance Act Dispute Resolution Process l Repair Cost

Williams v. Richard, 2018 ONCA 889

This was an unsuccessful summary dismissal application. The Ontario Court of Appeal concluded, that while Childs remains the leading case, a variety of “factual permutations” could give rise to a positive duty of care of social hosts. In this case, the parties were colleagues and friends who regularly got together to drink after work. On the evening in question the deceased Plaintiff drank 15 cans of beer over a 3 hour period at the home of the mother of Jake Richards, the alleged social host. The deceased Plaintiff then loaded his children into a car and drove. He was killed in a serious collision and his children suffered injuries.

Jake Richards knew the deceased Plaintiff was going to drive with his children in the car, and threatened to call police, but did nothing further:

[9] Mr. Richard became aware of Mr. Williams’ intention to drive the babysitter home in his personal vehicle and was aware that Mr. Williams would have his children in the car when he did so. The men had a pact that if either of them were going to drive while intoxicated and children were involved, the other would call the police. According to Mr. Richard, he threatened to call the police but he did not believe that Mr. Williams took that threat seriously. There is some evidence he received an assurance from Mr. Williams that he would not drive the babysitter home.

[10] It is far from clear whether Mr. Richard was satisfied with Mr. Williams’ assurance. His evidence regarding whether he believed that Mr. Williams was going to drive the babysitter was internally inconsistent. There was also inconsistent evidence regarding what Mr. Richard told his mother. Mr. Richard testified that he advised his mother that Mr. Williams was going to drive the babysitter home with the children in the car. Ms. Richard testified that she understood from the conversation with her son that Mr. Williams would not be driving the babysitter home.

[11] Beyond threatening to call the police, Mr. Richard did nothing further to stop Mr. Williams from driving while drunk. He did not call Mr. Williams’ wife or the babysitter to alert them to the situation. He did not ask his mother, who was not drinking, to drive the babysitter home. He did not walk to Mr. Williams’ home to see if his personal vehicle was in the driveway. It is also clear that Ms. Richard took no steps to prevent Mr. Williams from driving.

Jake Richards later called police from a payphone to alert them to a drunk driver:

[12] According to Mr. Richard, approximately ten minutes after Mr. Williams left, he accompanied his mother to a variety store in Otterville to buy cigarettes. He did so in part because he was worried that Mr. Williams might have driven the babysitter home. Mr. Richard admitted to being concerned about the situation before he left with his mother. His mother’s evidence was that they did not leave the house to go to the store until approximately a half hour after Mr. Williams left.

[13] While driving to the Otterville store, Mr. Richard noted that Mr. Williams’ personal vehicle was not in his driveway. He went in the store and found that it did not have his mother’s brand of cigarettes. Upon leaving the store, Mr. Richard called the police from a payphone outside the store to alert them about a drunk driver. He and his mother then travelled to another store in Norwich to buy cigarettes.

[14] On the way back from Norwich, Mr. Richard and his mother came upon the scene of Mr. Williams’ accident. He had driven into the rear of a stationary tractor towing a trailer. Mr. Williams was ejected from the vehicle and died as a result of his injuries.

The Court noted that whether there is a duty of care in a social host setting depends on the host’s knowledge of his guest’s intoxication and whether the guest is going to engage in “potentially dangerous activity that subsequently causes harm,” and whether there is “something more” to create a positive duty to act:

[24] The post-Childs jurisprudence on social host liability, discussed below, demonstrates that there is no clear formula for determining whether a duty of care is owed by social hosts to third parties or guests. Rather, the determination of whether such a duty of care exists usually hinges on fact specific determinations pertaining to two main issues. The first issue is the host’s knowledge of a guest’s intoxication or future plans to engage in a potentially dangerous activity that subsequently causes harm. This is a foreseeability analysis. The second determination asks if “something more” is present on the facts of the case to create a positive duty to act. The “something more” could be facts that suggests the host was inviting the guest to an inherently risky environment or facts that suggest a paternalistic relationship exists between the parties. This is a proximity analysis.

The Court will consider other factors related to the proximity of the parties:

[27] Much of the post-Childs jurisprudence regarding proximity has engaged in a factually specific evaluation of whether “something more” is present to suggest that a positive duty to act may exist. While there is no definitive list, the case law has looked at a variety of factors to determine what could qualify as “something more” that would make a social gathering an inherent and obvious risk, including: whether alcohol was served at the party or whether guests were invited to bring their own alcohol, the size and type of the party, and whether other risky behaviour was occurring at the party, such as underage drinking or drug use: see generally Childs, Sidhu, Wardak, Lutter, Sabourin, Kim, Allen v. Radej, 2014 ABQB 171 (CanLII), Oyagi v. Grossman, 2007 CanLII 9234 (ON SC), 2007 CanLII 9234 (Ont. Sup. Ct); Wenzel v. Desanti, 2011 ABCA 226 (CanLII), 510 A.R. 327, leave to appeal to S.C.C. refused, [2011] S.C.C.A. No. 437.

[28] There are many different factual permutations of what could transform a social gathering into an invitation to an inherent and obvious risk. It is helpful to think of these situations as being situated along a spectrum. At one end of the spectrum is Childs, which was a “bring your own alcohol” party where the hosts provided minimal alcohol. Similarly, private parties of a reasonable size are usually viewed by the courts as not inherently risky: see Robinson v. Lewis, 2015 ABQB 385 (CanLII), at paras. 72-77. Likewise, an invitation to a co-worker’s home to have dinner and after-work drinks outside is not inherently dangerous or risky: see Allen, at para. 78. Moving further down the spectrum, a young adult throwing a “wild” Halloween party and providing alcohol for around 40 people, some of whom are using illegal drugs, may implicate a host in the creation of an inherent risk: see Kim, at paras. 9-10, 25. On the far end of the spectrum, a teenager throwing a house party at which over 100 people attend, most of whom are underage drinkers, while their parents are out of town, likely implicates the host in the creation of an inherent risk: Oyagi, at paras. 6-7, and 12.

The Court declined to dismiss the claim summarily, and directed that liability be determined at Trial for the following reasons:

[34] The next issue is the question of proximity as it applies to Mr. Richard. I am not satisfied that the motion judge’s analogy between the facts at hand and the facts of Childs is apt. The motion judge did not advert to or consider the obvious factual differences between the cases. This was not a large social gathering, rather it was two men drinking heavily in a garage. There was a developed pattern of this behaviour, enough so that the men had a pact as to what to do in the event one of them drove children while under the influence. Alcohol was provided or served, to a certain extent, as the garage refrigerator the men were accessing had 30 to 40 cans of beer in it. These facts distinguish the case at bar from Childs. Moreover, nowhere in her analysis did the motion judge consider the statement in Childs, at para. 44, that “it might be argued that a host who continues to serve alcohol to a visibly inebriated person knowing that he or she will be driving home has become implicated in the creation or enhancement of a risk sufficient to give rise to a prima facie duty of care to third parties”.

[37] With respect to the issue of proximity and Ms. Richard, the unique circumstances of this case, including her awareness of the general pact between Mr. Richard and Mr. Williams, Mr. Williams’ habitual heavy drinking on her property, and her knowledge of his alcohol consumption and intention to drive on that evening, could potentially implicate Ms. Richard in the creation or control of an obvious and inherent risk. There was conflicting evidence on these issues and I find that there is a genuine issue requiring a trial to determine the question of proximity as it relates to Ms. Richard.

Moss v Sun Life Assurance Company of Canada, 2018 ABQB 953

In this case, the Court granted the Plaintiff’s application for summary trial, and reached a decision in the Plaintiff’s favour. In 1994 Dr. Moss obtained a $600,000 life insurance policy from the Defendant’s predecessor. In 2009 he applied for a replacement policy, which was subsequently issued. 6 months later he died. The Defendant voided the policy alleging misrepresentations to medical questions in the 2009 replacement policy application.

The Court concluded that if the insurer was entitled to void the 2009 policy, then it must void the entire 2009 policy. The implication of this decision was that the 1994 policy was still in force. None of the misrepresentations in the 2009 policy effected the 1994 policy:

[6] On the summary trial itself, I find that if the 2009 Policy were voided, the 1994 Policy would be revived, because the contract entered into between Dr. Moss and Sun Life in May 2009 was for both issuance of the 2009 Policy and cancellation of the 1994 Policy. If Sun Life is entitled to void the 2009 Policy, it must rescind the entire May 2009 contract, including the cancellation of the 1994 Policy. Any misrepresentations made by Dr. Moss in the 2009 application have no effect on his beneficiaries’ entitlement under the 1994 Policy, so Dr. Moss’s children and his adult interdependent partner are entitled to the $600,000 benefit.

797549 Alberta Ltd o/a Skyline Travel Centre v John Gilliatt and Lynn Gilliatt and Alberta Motor Association Insurance Company, 2018 ABPC 262

This was an unsuccessful summary dismissal application by an insurer. The Plaintiff, Skyline, brought a claim for repair costs against the Defendants, John and Lynn Gilliatt. The Defendants assert that the repairs took place pursuant to the express or implied authority given to them by a representative of the Insurer, and that they are not bound by the subsequent umpire’s hearing. A Third Party Claim was issued against the insurer for repair costs in an amount greater than was determined by the umpire. The Applicant insurer sought to have the Third Party Claim issued against it struck as disclosing no cause of action because the umpire’s decision under section 519 of the Insurance Act provided a Dispute Resolution Process to resolve disputes between an Insured and an Insurer.

The Court concluded that the umpires decision was a complete answer to the Third Party Claim:

[14] It appears to this Court that the umpire’s decision, which is limited only to the issue of valuation of the insured’s loss is, in the absence of fraud, procedural irregularity or other circumstances or principle which taints its effect as between the insured and insurer, a complete answer to the third party claim. The s519 process was designed for the expeditious resolution of questions of quantification as between an insured and insurer. That it is intended to be final and binding is consistent with the legislative purpose under s519. (See: O’Brien v Non-Marine Underwriters Lloyd’s, London, 1991 CanLII 5980 (AB QB), 1991 CANLII 5980 (Alta QB)).

However, the Court was permitted to look at the underlying facts to determine if the umpire’s decision was a bar to the third party claim.

[15] If it were simply a matter of what the insured is entitled to receive by valuation from the insurer without consideration of any other factors, then to allow the third party proceedings to continue, would be to allow proceedings to continue that had no real prospect of success and therefore should be struck. However, one must look at the pleadings in their entirety and when doing so and considering the underlying context of the claim before the Court, it is this Court’s conclusion that the pleadings raise the issue of whether the AMA is entitled to rely upon the umpire’s decision as a bar to the third party claim if the Gilliatt’s position was altered or impacted to their detriment by relying upon the words or conduct of the AMA.

The Court concluded that the real issue was not the valuation of the claim, but whether the Insurer was estopped from relying on the umpire’s valuation:

[16] Although the legislation intended that the umpire’s decision be final as between the parties on the issue of valuation of the loss payable by the insurer to the insured, for issue estoppel to apply the same question has to be decided in both proceedings; (Angle v Minister of National Revenue (1974), 1974 CanLII 168 (SCC), 47 DLR (3d) 544, SCC). It is arguable that the same question is not being decided in the case before this Court. The question is not valuation but whether AMA is estopped from relying on the umpire’s decision concerning valuation. That issue was not decided by the umpire. Indeed the umpire would have had no jurisdiction to decide that issue. On that basis, issue estoppel does not apply to the case before the Court insofar as the question of whether AMA can rely on the umpire’s decision as an answer to the third party proceedings.

In the alternative, the Court concluded that it had the discretion to determine if issue estoppel applied:

[17] Further, in the alternative, if this Court is wrong and the issue for decision is the same, that is valuation and the ingredients of issue estoppel are prima facie made out, then the Court turns to the second aspect of the question of the application of the issue estoppel principle as established in Danyluk v Ainsworth Technologies Inc, 2001 SCC 44 (CanLII), [2001] SCJ No 46, (Danyluk) which makes it clear that when dealing with issue estoppel based on a previous decision of a tribunal or administrative officer the court may still determine as a matter of discretion whether issue estoppel ought to be applied in the individual circumstances of the case. The objective of the Court is to ensure that the question of issue estoppel promotes the orderly administration of justice but not at the cost of real injustice in the particular case; (Danyluk at para 67).

The Court concluded it would be unfair to dismiss the Third Party Claim for the following reasons:

[18] Administrative decisions such as the umpire’s decision in this case, even if conducted fairly and properly having regard to its purpose, may create unfairness if used to preclude the subsequent claim before the courts. In other words, is it fair to use the results of the administrative process to stop the civil claim in this case? In my view, it is not, for the following reasons:

1. The administrative process was invoked by AMA after the insured item was already repaired at a specific cost to the insured;

2. The insured was required to follow the process, he had no ability to opt out of the same; and

3. The process could not address the issue of whether the insured’s position had been prejudiced before the administrative proceedings by the actions and/or words of the insurer, AMA.

As a result, the Application was dismissed with costs.