Last Week’s Court Rulings from the Alberta Court of Queen’s Bench, Court of Appeal and SCC.
Brosseau Estate v Dubarry Estate, 2020 ABQB 601
Cross-Examination on Affidavit | Party adverse in interest
Barbe v Evans, 2020 ABQB 599
Medical Malpractise | Negligence | Adverse Inference
Nagy v BCAA Insurance Corporation, 2020 BCCA 270
Omission vs Misrepresentation | Home Insurance
Brosseau, Dubarry, and Matson deceased in an airplane crash. The estates of Dubarry and Brosseau claimed against the estate of Matson, alleging that Matson was responsible for the fatal crash. Brosseau’s estate sued certain insurance companies claiming that a policy issued to Brosseau and Dubarry was enforceable.
The insurers brought a summary dismissal application in regard to coverage. Matson’s estate brought a cross-application for a declaration that they were entitled to coverage under a policy issued by the Defendant Lloyd’s.
Questioning of the representative of the Dubarry estate on an affidavit was undertaken pursuant to Rule 6.7 in relation to Dubarry’s claim against Matson. An issue arose over the extent to which parts of the transcript of Dubarry’s questioning could be relied upon by the other parties to the action and in the context of their separate applications.
The Court confirmed that Rule 6.7 is the governing authority, and permits any person to cross-examine the person swearing the affidavit, provided the two are adverse in interest with respect to the application:
 Now a ‘person’ (not restricted to a party) can cross-examine the person making the affidavit. The two must be adverse in interest on the application.
 The Dubarry Estate is plainly adverse in interest to Lloyd’s and Global Aerospace in the lawsuit but not on the application.
 I have no doubt that Global Aerospace has reason to be interested in the outcome of this application but they are not a party to it.
 Lloyd’s wishes to have the Global Aerospace portion of the cross-examination, excluded from the Lloyds’ application and the Dubarry Estate cross-application. I have reviewed this portion of the transcript and it does not appear to serve any useful purpose for these applications. Certainly, Lloyd’s has no interest in using it. Global can’t use it as it is not a party to the applications. I do not see any prejudice arising from keeping it out. Indeed, it will only clutter up the record. If there was anything in this portion of the transcript that the Dubarry Estate wishes to rely on, it could easily fill in this gap by tendering affidavit evidence.
 As the new rule provides, the party or person seeking to cross-examine on an affidavit in support of an application must be adverse in interest on the application. That is, they must be on the other side of the application, or be directly affected by the outcome. If this rule is interpreted more widely, there is the risk that a cross-examination on an affidavit can be turned into a quasi-Questioning, or a first try at the witness, with impunity, and no immediate impact on the issue at hand.
The Court allowed the Dubarry transcript to be used in the context of the summary judgment applications, but excluded portions of the transcript that were not relevant to those applications.
The Plaintiff successfully proved negligence against the physician who performed a surgical procedure on him. The Plaintiff also claimed against the Hospital in which the procedure took place.
The Court found that there was no evidence irrigation water used in the procedure had been improperly heated, resulting in burning or other blockages that contributed to the Plaintiff’s urinary issues:
 The Plaintiff argued that the Hospital Defendant was negligent with respect to heated irrigation fluid used during the GLL procedure.
 Dr. Evans testified that heated water had not been used for irrigation. His position is that either room temperature or body temperature saline was used, in accordance with the manufacturer’s guidelines.
 The evidence of the Hospital Defendant through Read-ins was likewise that heated irrigation fluid had not been used during Mr. Barbe’s GLL procedure.
 Dr. Woods’ opinion was that the theory of hot water irrigation is not a credible hypothesis. He went on to indicate that there was no documentation of the superheating of the saline in the irrigation, and simply no evidence that heated solution had been used during Mr. Barbe’s procedure. Dr. Woods further testified that in order to cause long-term damage to the bladder from the irrigation fluid, the fluid would need to be very hot, and the surgeon would inevitably notice the heat of the water, as it goes through the hollow stainless steel tube in the surgeon’s hand. There is no evidence that Dr. Evans noted any concern with the temperature of the water.
 At Trial, Dr. Zorn reversed his initial opinion that heated irrigation water had burned Mr. Barbe’s bladder.
 Thus, there is no evidence that the nursing staff had improperly heated the irrigation fluid used in the GLL procedure, and thus no evidence of a breach of a standard of care on their part.
The Court also found that failed catheterization attempts did not amount to negligence:
 The Plaintiff submit that it is permissible for the Court to infer that the catheterizations were performed negligently on the basis of Dr. Evans’ and Dr. Zorn’s evidence at Trial. I decline to do so. No evidence was provided that it is a breach of the standard of care for there to be false passages in an attempt to place a catheter. While I am satisfied that the creation of false passages likely resulted in inflammation, scarring, and perhaps also contributed to infection, I am not satisfied that an inference of negligence can be made. It is evident from the documentary and oral evidence given during Trial that false passages are not uncommon, and that it is an expected and reasonable risk of catheterization. The evidence also suggested that especially large prostates make catheterization more challenging. It is impermissible to infer negligence simply from the results of treatment (Percy v Kieser; Johnston v Hader). Finally, as this Court has repeatedly declared, the standard of care is not a standard of perfection (Fournier v Wiens; Brough v Yipp; Waap).
 While it is unfortunate that Mr. Barbe suffered pain and injury due to the false passages, the evidence does not meet the standard of negligence. Simply because Mr. Barbe suffered complications and injury in the form of inflammation in his urethra is not sufficient to support a finding of liability in a medical negligence action.
Finally, the Court declined to find any adverse interest against the Hospital Defendants for not calling any evidence or witnesses:
 The Plaintiff asked the Court to make an adverse inference against the Hospital Defendant for choosing to not call any evidence. Plaintiff’s counsel submitted that drawing an adverse inference is in the Court’s discretion, and that the Court must consider:
(a) Whether there is a legitimate explanation for the failure to call the witness;
(b) Whether the witness has material evidence to provide;
(c) Whether the witness is the only person, or the best person, who can provide the evidence; and
(d) Whether the witness is within the exclusive control of the party against whom the inference is sought, and is not equally available to both parties.
 Plaintiff’s counsel also submitted that the failure of the Hospital Defendant to file a notice under Rule 8.15 of the Alberta Rules of Court, and serve same on the opposing party to advise that a particular person may not be called, may enhance the likelihood of the Court drawing an adverse inference against the Hospital Defendant.
 I agree that the Hospital Defendant’s witnesses are within its exclusive control. However, a cautious approach should be employed with a party’s decision to call or not call witnesses. Many witnesses can be dispensed with. Experienced counsel will often decide against calling an available witness because the point has been adequately covered by another witness, an honest witness has a poor demeanour, or other factors unrelated to the truth of the testimony: R v Jolivet, 2000 SCC 29 at para 28,  1 SCR 751.
 In this context, I note that at Trial, Dr. Evans’ counsel gave the following undertakings:
- That Dr. Evans would not be leading any evidence that any actions or inactions of the nurses or Hospital Defendant breached the standard of care;
- That Dr. Evans would not be leading any evidence that the Plaintiff’s injuries were caused by a breach on the part of the nurses or Hospital Defendant;
- That Dr. Evans would not be advancing any claim for contribution or indemnity against the Hospital Defendant; and
- That Dr. Evans would not lead evidence that the saline was heated over and above the manufacturer’s guidelines.
 I find that the Hospital Defendant provided a legitimate explanation for not calling any witnesses, choosing instead to rely on the read-ins from Ms. Beer. None of the experts subscribed to the theory that heated irrigation water had caused a thermal injury to Mr. Barbe’s bladder, as such, there would be no need for the Hospital Defendant to call any witnesses to refute that claim. The generic claim of negligent catheterization of Mr. Barbe lacked specificity and was not substantiated by the Plaintiff’s expert, so it did not require rebuttal by the Hospital Defendant’s witnesses. There was no material evidence for the Hospital Defendant to provide.
 While Rule 8.15 authorizes the drawing of an adverse inference, it does not require it. In Frydman v Pelletier, 2015 ABQB 289, this Court stated (at para 224);
… Although the Plaintiffs did not file a notice under rule 8.15, I do not find that this is a case to automatically draw an adverse inference. The rule does not require an automatic inference to be drawn. Further, I am not entirely clear on what the adverse inference would be. Based on all the other evidence, both lay and expert, there is enough evidence to determine whether or not the transactions were fraudulent and/or a breach of fiduciary duty.
 As in Frydman, I am not clear as to exactly what adverse inference could be drawn against the Hospital Defendant from its decision not to call any witnesses – after all, based on all the other evidence that I heard, I have determined that there had been no breach of the standard of care by it.
As such, the claim against the Hospital Defendants was dismissed.
The BC Court of Appeal overturned the decision of a trial judge ordering the Defendant insurer to pay under a home policy in regard to a fire loss.
The Plaintiffs, on their insurance application, indicated ‘No’ to the question of whether any insurer had cancelled, declined, refused or imposed special conditions on habitational insurance in the last 10 years. The Trial Judge found that that was untrue, but characterized it as an omission, rather than a misrepresentation that would void the policy, and ordered the Defendant insurer to pay under the policy.
The Court of Appeal analysed the effect of omissions on policies of insurance:
 It is not contested that the existence of previous claims, including a total fire loss, and a refusal by a previous insurer to renew the insurance, are matters that would be material to the contract.
 Similarly, as noted, it is not contested that if Mr. Nagy indeed made full disclosure via his mailed addendum and the attached Eaton & Starr letter, and if BCAA received these and yet maintained the coverage, then it could no longer be said that the initial inaccuracies were material to BCAA even if they constituted misrepresentations or omissions at the time they were made.
 What follows from whether the statement is characterized as an omission or a misrepresentation, then, comes down to this. If an applicant misrepresents circumstances material to the contract, it matters not whether that misrepresentation is innocent, negligent, or fraudulent. This is because it concerns a matter exclusively within the knowledge of the applicant that is, in the words of Statutory Condition 1, “material to be made known to the insurer in order to enable it to judge the risk to be undertaken”, and the applicant will have provided information of that nature that simply was not true.
 If the insured omits to communicate a material circumstance (an omission), however, that omission must not only be material, but also fraudulently made if it is to void the contract.
The Court of Appeal distinguished omissions from misrepresentations:
 From this, I take it that such a partial statement of the facts must generally be considered an omission. Only under particular circumstances might it amount to a misrepresentation. But whether it should be taken as such, in the context of Statutory Condition 1, is now open to question, as observed by Professor Billingsley (Billingsley at 103–105).
 As noted above, it is clear that if a positive statement is made that is untrue, then it amounts to a misrepresentation. The focus is on the understanding of the insurer, who will necessarily have been misled. That is why it matters not whether the misrepresentation was innocent or intentional. This flows from the wording of Statutory Condition 1 itself, and from the status of an insurance contract in law as one requiring the utmost good faith. It is up to the insured to make sure that what he or she represents to the insurer is correct.
 But if a true but incomplete statement is made (a “half-truth”), then, at least prima facie, it will amount to an omission within the meaning of Statutory Condition 1. To characterize such a half-truth as a misrepresentation where it is “calculated to mislead” does not advance the analysis in the context of how Statutory Condition 1 treats an omission. As Professor Billingsley noted, in relation to omissions but not misrepresentations, the statutory condition makes the insured’s intention relevant: Billingsley at 104. It thus focuses on the intention of the applicant, not the state of knowledge of the insurer, presumably because what was communicated was true, albeit incomplete. Any “omission” that was calculated to mislead would presumably satisfy the requirement of fraud, and would void the policy. Characterizing it as a misrepresentation adds nothing. If it was a true misrepresentation, in the sense of a positive statement that was untrue, then whether it was calculated to mislead is irrelevant. The statutory condition does not require any examination of intent when it comes to misrepresentation.
The Court of Appeal then determined what it would take to cure the problem, distinguishing between an omission and a misrepresentation:
 In the case of the straightforward, positive misrepresentation, as I conclude occurred here in relation to the Wawanesa policy, the only way to cure the misrepresentation is to provide the insurer with the correct information prior to the reliance on that information by the insurer: MacDougall at 125–26.
 Here, then, if BCAA received the addendum prior to issuing the policy, the misrepresentation would be of no consequence. It seems exceedingly unlikely that BCAA could have received the correct information prior to relying upon the incorrect information the respondents had provided by telephone and by electronic return of the signed policy form on March 8, which was the date the BCAA issued the policy. Mr. Nagy testified that he mailed the addendum the next day. Nevertheless, even if BCAA received the correct information after issuing the policy, if BCAA took no steps to cancel or revise the coverage, then it would follow that it did not consider the misrepresentation to be material to the risk.
 In either event, the same result would follow as that reached by the trial judge. But in the context of this case, this would require not just mailing a copy of the letter to BCAA, but also actual receipt by BCAA.
 Why is this so? Because it is BCAA’s state of knowledge that is important here, not the insured’s. Only the insured knows that the information he gave was incorrect. Here, BCAA expected, and received, an electronically delivered scanned copy of the application form signed by the respondents. BCAA neither required nor expected anything more, and proceeded to issue the policy. Only the respondents knew that the information on the application form was incomplete and incorrect, and only the respondents were aware (if Mr. Nagy’s evidence is accepted) that the correct information was “in the mail”. BCAA had no expectation of further information, and indeed, one would expect any inquiry about delivery of the addendum to come from Mr. Nagy, not from BCAA. His evidence was that it did. (See, by analogy, Professor Waddams’ analysis in relation to the communication of offers and acceptance in S.M. Waddams, The Law of Contracts, 7th ed (Toronto: Thomson Reuters, 2017) at ¶69–71.)
 But if it is a question of omission, then the focus is on fraudulent intent. Such an intention or calculation may be rebutted by evidence that the insured forwarded the complete and correct information to the insurer, even if there is no evidence that the insurer received it. This is because what is relevant is the insured’s intention, not the insurer’s state of knowledge. This was the path followed by the trial judge, and it was one open to her in relation to omissions, but not in relation to misrepresentations.
 As indicated above, appellate interference can only be justified in relation to an error of fact where the error is both palpable and overriding. In short, the error must not only be obvious, but also one that is likely to have affected the result, or which discredits it: HL v Canada (Attorney General), 2005 SCC 25 at paras 56, 69; Benhaim v St-Germain, 2016 SCC 48 at para 38.
 This error would not be overriding, in the sense of affecting or discrediting the result, if the judge had found, as Mr. Nagy maintained, that BCAA had in fact received the addendum and the Eaton & Starr letter. This is because, as I just explained, that would be sufficient either to cure the misrepresentation or rebut its materiality, as well as indicate a lack of fraudulent intent in relation to the omission. But the judge did not make that finding; having found only omissions, it was unnecessary for her to do so. What she said was this:
 According to Mr. Nagy the Addendum was sent to BCAA by mail. BCAA seems to want me to infer the Addendum not received. But even if I were to draw that inference, the evidence of the Plaintiffs and the evidence led by BCAA does not necessarily conflict. If BCAA did not receive the Addendum, it does not necessarily follow the Plaintiffs didn’t mail it; things can and do get lost in the mail: Owen v. Rocketinfo, Inc., 2008 BCCA 502 at para. 6; Saskatchewan River Bungalows Ltd. v. Maritime Life Assurance Company, 1992 ABCA 204 at para. 65. Therefore it is not possible to determine the issue of whether the Addendum was fabricated by resolving a direct conflict in the evidence.
 In the result, the judge placed the onus on BCAA to prove fraudulent intent and found that BCAA failed to meet that onus:
 I find that the clear and cogent evidence needed to establish fraud is lacking. Based on the evidence before me, I conclude that BCAA has failed to prove on a balance of probabilities the Plaintiffs fabricated the Addendum. The Addendum contained all the Alleged Non-Disclosures BCAA asserts the Plaintiffs fraudulently failed to disclose. It follows, and I find, that BCAA has failed discharge its burden to prove its defence that the Policy is void ab initio as a result of fraudulent omissions by the Plaintiffs.
 But in relation to a misrepresentation as opposed to an omission, no such burden arose. Only if the judge found that BCAA in fact received the addendum would the respondents avoid the consequences of material misrepresentation under Statutory Condition 1. As there was no such finding of receipt, the judge’s conclusion of coverage cannot stand. The error was overriding.
 That is sufficient to dispose of this appeal. It is not however, sufficient to support judgment in favour of BCAA in substitution for the order pronounced by the trial judge. This is because, having analyzed the issue as one of whether BCAA had demonstrated fraudulent intent in relation to an omission, the judge did not consider the question of receipt of the addendum and attachment in relation to a misrepresentation. In order to understand the difficulties that arise concerning the evidence about the addendum and the telephone call that allegedly confirmed its receipt, it is necessary to review the alleged errors of fact concerning the addendum and the telephone call of April 29, 2016.
Ultimately, the Court of Appeal determined that the Trial Judge made errors in both fact and law, and permitted the Defendant’s Appeal, ordering a new trial.