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Monday Morning Case Bites for May 31, 2021

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

Edited by Tony Slemko Q.C. & Steven Graham

Barata v Intact Insurance Company 2021 ABQB 419
Duty of Utmost Good Faith | Punitive Damages | Investigation | Police

The Plaintiff held a policy of automobile insurance issued by the Defendant, Intact. Following a collision between the Plaintiff’s vehicle and a pedestrian, the Plaintiff reported the collision to the Defendant, her insurer, and advised an investigating employee of the Defendant that she was the driver of the vehicle at the time of the collision. The Defendant provided this information to the police, and criminal charges were laid against the Plaintiff as a result of the collision (though the Plaintiff was tried and acquitted).  The Plaintiff commenced this action against the Defendant seeking damages for breach of duty of utmost good faith in providing the Plaintiff’s confidential information to the Police.

The Court was first asked to consider whether the Defendant breached any duties owed to the Plaintiff in disclosing details from their investigation to the Police. The Court first identified the various duties owed by an insurer. In regard to a duty of confidentiality, the Court rejected the Plaintiff’s assertion that her obligation to provide all details of a collision to her insurer in accordance with statutory condition 3 gave rise to a reciprocal obligation of the insurer to keep those details confidential. The Court noted:

[11]           I find that there is no duty on an automobile insurer to keep confidential the information an insured provides pursuant to her obligations to provide all available particulars of an accident under statutory condition 3.  However, as set out in the next section of these reasons, an insurer remains bound by its duty of utmost good faith to its insured in investigating a claim, which limits what the insurer may do with information provided by its insured.

The Court affirmed that an insurer has a duty of utmost good faith in investigating a claim, and cited the well-established Supreme Court of Canada decision Bhasin v Hrynew (2014 SCC 71) for the principle that the duty is reciprocal. The Court determined that the duty of utmost good faith encompasses what the insurer does with the information obtained in its investigation:

[14]           Relying on those authorities, I find that an insurer has a duty to investigate an insured’s claim in utmost good faith, which includes what it does with the information it obtains during that investigation, and that it breaches that duty if it acts without reasonable justification.

[15]           In many cases following a serious car accident, both the police and one or more insurers investigate, but those investigations have different purposes and there are separate legal regimes regarding what each may do in the course of their investigations, and what information an insured driver or owner is required to disclose to the police, on the one hand, and her insurer on the other.

The Court also confirmed that statements given by an insured to their insurer are not admissible in criminal proceedings, though an insurer may provide some or all of an insured’s statement to police if reasonably justified:

[16]           Statements given by an owner to her insurer under compulsion are not admissible against her in a criminal trial and they are not admissible as the basis for reasonable and probable grounds in support of a search warrant: R v Porter 2014 ABQB 359 affd 2015 ABCA 279.

[17]           Shelley, J. in the trial decision in Porter at para 110 identifies the harm which would flow if automobile insurers routinely disclosed their insured’s compelled statements to police:

If the insurer were at liberty to routinely provide such statements to the police, they would essentially be operating as agents for the police, collecting information relevant to and for use in the criminal investigation.  That would put the insured and insurer in an adversarial relationship.

[18]           There may be cases where an insurer would be reasonably justified in disclosing some or all of its insured’s compelled statement to the police, particularly if it is for the purpose of seeking information to assist the insurer’s investigation of an accident.  Whether it is reasonable will depend on the facts in each case.  A purely gratuitous disclosure to police, which does nothing to further the insurer’s investigation, would not be reasonably justified, and therefore would be a breach of the insured’s duty of utmost good faith to the insured.

The Court then considered whether or not the Defendant had breached its duty of utmost good faith to the Plaintiff. The Court determined that the Defendant’s provision of information from its investigation to the police served no role in advancing the insurer’s investigation, but instead was a gratuitous provision of information that constituted a breach of the duty of good faith:

[24]           I find that Mr. Ross’s disclosure of the information he had obtained from Ms. Barata was not intended by him to further his investigation of the accident and it in fact did nothing to further the insurance investigation.  Mr. Ross was trying to help the police with their investigation, and nothing more.  The disclosure was purely gratuitous and consequently is not reasonably justifiable as part of an insurance investigation.  It was a breach of the duty of utmost good faith which both Mr. Ross and Intact owed to Ms. Barata.

The second issue considered by the Court was whether the Defendant was authorized under the Personal Information Protection Act (PIPA) to provide the Plaintiff’s personal information to the police. The Defendant relied on section 20 which states:

20        An organization may disclose personal information about an individual without the consent of the individual but only if one or more of the following are applicable:

(f)        the disclosure of the information is to a public body or a law enforcement agency in Canada to assist in an investigation

(i)         undertaken with a view to a law enforcement proceeding, or

(ii)        from which a law enforcement proceeding is likely to result;

(m)      the disclosure of the information is reasonable for the purposes of an investigation or legal proceeding.

The Court noted that the PIPA defines “reasonable” as:

[35]           The Act defines what is reasonable:

2         Where in this Act anything or any matter:

(a)        is described, characterized or referred to as reasonable or unreasonable, or

(b)        is required or directed to be carried out or otherwise dealt with reasonably or in a reasonable manner, the standard to be applied under this Act in determining whether the thing or matter is reasonable or unreasonable, or has been carried out or otherwise dealt with reasonably or in a reasonable manner, is what a reasonable person would consider appropriate in the circumstances.

The Court agreed with the Plaintiff’s submission that because her compelled statement is inadmissible against her, it was unreasonable for the Defendant to provide it to the police. As the Defendant did not provide the statement to the police to advance its own investigation, the Court determined the disclosure was not reasonable.

The Court then considered whether the Plaintiff suffered any harm or damages as a result of the disclosure. The Court ultimately concluded that the disclosure did not cause or contribute to the criminal charges and prosecution of the Plaintiff:

[44]           On the evidence before me, Ms. Barata has not proven, on a balance of probabilities, that either the charge against her or the prosecution of that charge resulted from Intact’s disclosure to the RCMP.  On the contrary, I find that Intact’s disclosure did not cause, or even contribute to, the charge and the prosecution, because more than four months passed between the disclosure on August 31, 2017 and the charge on January 10, 2018, and because in the meantime, Mr. Barata had told the RCMP directly that Ms. Barata was driving at the time of the accident.

The Plaintiff argued that she should be awarded punitive damages in respect of the breach of duty of utmost good faith. The Court rejected the Plaintiff’s assertion that the following circumstances supported an award of punitive damages:

[55]           Ms. Barata also cites the following circumstances as relevant to whether punitive damages are warranted:

  • Mr. Ross’ attempt to provide his complete file to the RCMP, which was rebuffed in September 2017. Later, in March 2018 the RCMP obtained his file pursuant to the production order.
  • Mr. Ross’ failure to record in his notes all of his interactions with the RCMP.
  • Mr. Ross’ concern that Ms. Barata would commit a criminal offence by misleading the police.
  • Mr. Ross’ desire to assist the police investigation.
  • Mr. Ross’ view that dishonesty by Ms. Barata would be a factor in denying her claims.
  • Mr. Ross’ belief that he was allowed to disclose information if he believed it was fraudulent.
  • Mr. Ross’ concession in questioning that his phrasing of a question to Ms. Barata during his interview of her could have been better.

[56]           None of those things is significant in assessing whether punitive damages are warranted.  They are all minor and inconsequential.  None is evidence of bad faith.

Ultimately the Court determined that the Plaintiff had not established the high-handed or malicious conduct necessary for the Court to consider an award of punitive damages, and that the Defendant’s investigator’s desire to assist the police in investigating a fatal motor vehicle accident was understandable. While the Court did find the Defendant to have breached their duty of utmost good faith, it was not reprehensible conduct and caused no harm to the Plaintiff. As such, no damages of any kind were awarded to the Plaintiff.