Last Week’s Court Rulings from the Alberta Court of Queen’s Bench, Court of Appeal and SCC.
Funk v Wawanesa Mutual Insurance Company, 2019 CanLII 18820 (SCC), Funk v Wawanesa Mutual Insurance Company, 2018 ABCA 200
SEF 44 | Coverage | Physical Contact of Vehicles
DD v Wong Estate, 2019 ABQB 171
Medical Malpractice | Obstetrician | Negligence | Standard of Care | Failure to Warn
The Supreme Court declined to hear an appeal of Funk v Wawanesa. As a result, the 2018 decision from the Alberta Court of Appeal remains the final word. The issue was whether the Plaintiff could recover on an SEF 44 claim where the insured swerved right to avoid a head on collision and rolled his vehicle. The SEF 44 denied coverage because the policy required physical contact between two vehicles:
 The SEF No. 44 Endorsement provides coverage when the policyholder is involved in an accident with an “inadequately insured motorist”, which includes an “unidentified automobile”. The issue arises because the appellant argues that the policy requires “physical evidence indicating the involvement of an unidentified automobile”, and “physical contact of such automobile with the automobile of which the insured person is an occupant”. Since there was admittedly no physical contact between the respondent’s vehicle and the unidentified approaching vehicle, the appellant argues that there is no coverage under the Endorsement.
The ABCA concluded that there was no ambiguity in the policy:
 In summary, the chambers judge was correct in concluding that the respondent is not entitled to coverage for his reported accident based on the plain wording of the SEF No. 44 Endorsement. There is no ambiguity in the policy wording, and even if there was the only reasonable resolution of that ambiguity supports the interpretation of the chambers judge.
The ABCA confirmed that the Plaintiff could not rely on section 545 of the Insurance Act on the following basis:
 The chambers judge did not err in concluding that the respondent could not take advantage of s. 545(1) of the Insurance Act, because that section did not apply to automobile insurance on the date of the accident. Even though subsequent amendments to the Insurance Act have extended the scope of the provisions respecting unreasonable terms in policies, those amendments cannot be applied retroactively. It takes specific language to indicate that a statutory amendment is to apply retroactively: Interpretation Act, RSA 2000, c. I-8, s. 4–5. That is particularly the case with respect to insurance policies, which must be interpreted and applied in accordance with the law that exists at the time the policy is in effect. Both insurers and insureds must know with some certainty what coverage they have purchased or extended, and it would disrupt the vested rights of one or the other if amendments to the Insurance Act were applied retroactively.
However, the ABCA concluded that the Chambers Judge was wrong in concluding the endorsement was against public policy:
 The chambers judge concluded, however, that the Endorsement was unreasonable and contrary to public policy. As noted, the reasoning was that “. . . the insured who avoids physical contact has no coverage under the endorsement, but the insured who takes no evasive action and physically contacts the unidentified vehicle has coverage”. This merely describes the scope of the coverage. Coverage is only extended under the SEF No. 44 Endorsement if damage is caused by an unidentified vehicle, the driver of that vehicle was negligent, and there is physical contact between the two vehicles.
 It was, in any event, unreasonable to characterize the wording of the SEF No. 44 Endorsement as “requiring the respondent to commit a tort”. The Endorsement provides for insurance coverage if certain defined risks emerge, and excludes coverage if those risks do not emerge. The Endorsement does not require the respondent to do anything, much less commit a tort. If an unidentified motorist had negligently made contact with his vehicle, the respondent would have been entitled to indemnity for his damages, but the respondent was not entitled to indemnity for damages for any uncovered risks.
Similarly, relief from forfeiture was also not available:
 “Relief from forfeiture” is also not engaged on these facts. Suffering a loss from a risk that is not covered by the policy is not a “failure to perform a covenant” justifying relief from forfeiture: Kozel v Personal Insurance Co., 2014 ONCA 130 (CanLII) at paras. 33-4, 119 OR (3d) 55; Styles v Alberta Investment Management Corp., 2017 ABCA 1 (CanLII) at paras. 69-71, 44 Alta LR (6th) 214. For example, if the owner purchases house insurance that covers damage to the house, but not damage caused by flooding, the owner is not entitled to indemnification if damage is in fact caused by flooding. The owner has not breached any covenant in the policy, because there is no covenant that he will not permit any damage by flooding. He has simply suffered a loss that was not insured against. In this appeal the respondent purchased insurance that was triggered by physical contact with another vehicle. When damage resulted from a different kind of accident, he simply had no coverage, but he was never in breach of the policy. Coverage could not be extended to the respondent through “relief from forfeiture” under the Judicature Act.
 Further, there is very little room for finding that a provision of an automobile insurance policy issued in Alberta is “unjust or unreasonable” or contrary to public policy. The terms of automobile insurance policies are highly regulated. The rates charged for basic or additional coverage are controlled by the Automobile Insurance Rate Board under s. 602 of the Insurance Act. Mandatory statutory conditions are prescribed by s. 556. Section 551(1) prevents the use of any form of policy or endorsement not approved by the Superintendent of Insurance. Section 551(3) enables the Superintendent to reject any provision in a policy that is “wholly or partly inappropriate to the requirements of a contract”. The Superintendent has approved the form of the SEF No. 44 Endorsement and published it as required by s. 551(1): (1999), 95 Alberta Gazette, Part 1, No. 8, p. 855. Given that the Superintendent has approved the requirement in the SEF No. 44 Endorsement that there be physical contact between the insured vehicle and the unidentified vehicle, and corroborating evidence, there is little if any room for holding those provisions to be unreasonable or unenforceable.
The Majority decided that coverage was not available on the following basis:
 The approach of stepping around the terms of an insurance policy on the basis of “unjust or unreasonable” terms, “public policy”, or “relief from forfeiture” runs the risk of throwing any semblance of certainty out the window. While these concepts are recognized in law, they must be applied with caution with respect to standard form, statutorily mandated insurance policies. There is the danger that the wording of insurance policies would become meaningless. Insurance policies would come down to providing the kind of coverage that some future court found to be “fair”, even though the insured never contracted for that coverage, and the insurer never priced the risk accordingly. As it was put in Progressive Homes at para. 23: “Courts should avoid interpretations that would give rise to an unrealistic result or that would not have been in the contemplation of the parties at the time the policy was concluded.” Given that the definition specifically requires “physical contact” it could not have been in the reasonable contemplation of either party that physical contact was not required.
This was a successful medical malpractice claim against two obstetricians for a catastrophic brain injury to a baby shortly before she was born. The child suffered a hypoxic-ischemic event prior to the birth, due to a velamentous cord insertion which was vulnerable to kinking, compression or damage. The baby was small in size, and there was polyhydramnois, which is an excess of amniotic fluid, and the combination of these two could create hazards during birth. The velamentous cord insertion could have explained the small size of the baby. The mother was a teenager and had a previous baby that was growth restricted, and admitted to smoking and drinking in the pregnancy in the first three months, before she knew she was pregnant. The mother also frequently missed her appointments.
The issue was whether the treating and delivering doctors were negligent and whether they failed to advise of risks or alternative delivery procedures. The Court concluded that the doctor should have reviewed the mother’s prior pregnancy records, which were available in the same office, as one growth restricted baby raised the possibility of subsequent growth restricted babies. The mother in this pregnancy was measuring small, and had poor maternal weight gain, and had some weight loss. At one point the mother reported the baby hadn’t moved for a few days. A intrauterine growth restriction was not confirmed, but was also not ruled out. The doctor did take some steps, such an ordering a non-stress test, and an ultrasound. However, the doctor went on vacation and the doctor watching his cases failed to order any follow up and assumed the treating doctor would review the ultrasound upon his return, which he did not.
The Court concluded that the treating doctor failed to meet his standard of care by ordering an ultrasound, and never reading the report:
 The Defendants responded that Dr. Phiri had other patients and it would not be reasonable for Dr. Phiri to be obligated to review what occurred in his absence for every patient. I agree. Dr. Phiri had an obligation to review only test results he had ordered that concerned whether a child was at risk of being born with severe injuries. Whatever may or may not have been Dr. Phiri’s obligations respecting other patients, he had an obligation to check the results of the tests he ordered for DD and her suspected IUGR baby. He failed to discharge this obligation.
Ultimately the Court noted that further tests should have been ordered:
 Given the risks of IUGR, which had not been excluded, and the “ominous” combination of suspicion of small size and polyhydramnios (drawing on the subtitle of the Sickler et al. article relied on in Bloosesky), the standard of care demanded action and did not countenance doing nothing. The standard of care did not demand onerous commitments of time and resources, but readily available monitoring options. The Court of Appeal’s decision in McCann v Hyndman, 2004 ABCA 191 (CanLII) at paras 5 and 6 is apt:
5 …. to do nothing (whether by having scans or any other type of follow-up), in our view, and the view of the trial judge, was fraught with obvious danger.
6 …. Where the defendant foresees a danger of a certain type, and where it is obvious that if that danger should materialize it would be very harmful, and where any precautions against it would be cheap, it is easy to find negligence.
 Further monitoring options included additional non-stress tests (biophysical tests) to assess LL’s wellbeing; and ultrasound and biometric tests to measure her size and growth after the February ultrasound: see DFWA at para 57; RCOG Guideline at p. 2, section 4. None of these tests posed risks to DD or LL. I accept Dr. Doersam’s opinion in his September Report that “ordinary caution dictated the use of whatever surveillance tools were available … until IUGR was excluded or confirmed by serial ultrasounds:” at pp. 5-6. And not only IUGR but polyhydramnios had to be monitored, with a view to ensuring that LL was not left too long in an unsupportive environment.
 None of these tests were done.
 Given that ultrasounds should be scheduled at least two weeks apart, after February 10 there was still time for an additional ultrasound test in the week of February 24. A test on that date with results following the next would still have left about 10 days before March 8. The ACOG Guidelines stated at p. 5 that “[i]dentification of IUGR is improved … through two sets of examinations generally 2-4 weeks apart;” and at p. 6 that “[s]erial ultrasonograms to determine the rate of growth should be obtained approximately every 2-4 weeks. Measurements with shorter intervals … may overlap with measurement errors.” This ultrasound test should have been done.
 Further, what should have happened is that one of the physicians should have advised DD of the risks attending her pregnancy and should have advised her of proposals for monitoring LL and for delivery, particularly for induced delivery at the earliest reasonable opportunity. If LL were exposed to intrauterine risks, common sense dictated removing LL from that environment as soon as it was safe to do so. The external environment would be better for her than continuing in the uterine environment.
Another issue was the mother’s failure to attend a follow up appointment in her later weeks of pregnancy. Normally the doctor’s office would call to follow up. This did not occur. The Court concluded that the failure to follow up and re-schedule the appointment breached the standard of care. Further, the risks should have been outlined for the Plaintiff along with the option for early delivery.
Ultimately the Court concluded that the doctor failed to meet his standard of care:
 Dr. Phiri failed to meet the standard of care of the reasonable obstetrician and gynecologist in all of the circumstances by
- failing to gather important and easily accessible information concerning DD’s prior pregnancy
- failing to confirm whether or not DD continued smoking during the pregnancy
- failing to ask DD whether she used marijuana during the pregnancy
- failing to order the February ultrasound within the time that it should have been ordered
- failing to delegate DD’s care to Dr. Wong properly
- failing to review the February ultrasound report.
The Court concluded that the failure to meet this standard resulted in the Plaintiff’s injuries on the following basis:
 What Dr. Phiri and Dr. Wong did know or should have known was that there were grounds for a reasonable suspicion that LL was IUGR. While not unequivocally confirmed, IUGR was not excluded by the February ultrasound.
 What Dr. Phiri and Dr. Wong did know or should have known was that small size that was not merely genetic or constitutional had, as a potential cause, placental complications. That is, intrauterine conditions or connections or both were not providing the full or proper amount of oxygen and nutrition to the fetus, as Dr. Doersam testified: GBDT at 52.8-13; 68.6-9. In Discovery, Dr. Phiri acknowledged late-onset IUGR as IUGR showing itself in the third trimester; the following exchange occurred (PRI at 86.6-8):
Q Basically, that’s a problem with the placenta or the mother properly nourishing the baby, I take it?
A Combination of all.
 That is, an explanation for LL’s reasonably suspected pre-birth condition, a reasonable and not-far-fetched risk, was that she was suffering from velamentous cord insertion. That condition, that malformation, fell precisely within the scope of what a reasonable obstetrician and gynecologist could have predicted to have been the cause of LL’s suspected small size. There was no basis for excluding this condition as a potential cause of LL’s suspected small size.
 But a feature of velamentous cord insertion is that the cord is apt to be disrupted. It is vulnerable to kinking, compression, or damage: JDT at 55.7-16; GBDT at 68.13-16. But kinking, compression, or damage would lead to decreased blood flow to the baby and to decreased transmission of oxygen. That is, kinking, compression, or damage would lead to a hypoxic ischemic event.
 The very type of reasonably predictable event associated with velamentous cord insertion, that was in turn a reasonably predictable correlate of growth restriction, was what occurred.
Ultimately the risk was foreseeable on the following basis:
 I find that velamentous cord insertion, the condition that supported the hypoxic-ischemic event, was a foreseeable condition suffered by LL and that it was reasonably foreseeable that LL’s umbilical cord would be kinked or compressed causing injury to LL.
 Given the reasonable suspicion that LL was growth-restricted, LL should have been delivered earlier than March 8; had Dr. Phiri and Dr. Wong met the standard of care and had they disclosed the required information about risks and options for delivery, LL would have been born well before March 7. Her injuries would have been avoided. The injuries that awaited LL on March 8 were reasonably foreseeable consequences of growth-restriction.
As a result, liability was established.