Last Week’s Court Rulings from the Alberta Court of Queen’s Bench, Court of Appeal and SCC.
Edited by Steven Graham
Nebozuk v Northbridge General Insurance Company, 2022 ABQB 212
Limitation Period | SEF 44
Condo Corp No. 1023525 v Carlisle, 2022 ABQB 209
Negligence | Duty of Care | Third Party Tortfeasor | Arson
Nebozuk v Northbridge General Insurance Company, 2022 ABQB 212
The Plaintiff commenced a tort action arising out of a motor vehicle accident on July 31, 1998. Two subsequent amendments were made to the Statement of Claim, filed September 9, 2003 and November 10, 2009. The underlying tort action was settled and a discontinuance of that claim was filed October 31, 2017. Following the settlement of the tort claim, the Plaintiff commenced an action against his own insurer pursuant to the SEF 44 endorsement, on December 20, 2018.
The conflict before the Master was whether the SEF 44 endorsement, which provided an action needed to be commenced within 12 months from the date the claimant or his legal representative knew or ought to know the quantum of the claim of the insured exceeded the minimum limits for motor vehicle liability insurance, was void for contravening section 7 of the Limitations Act, which states:
[6] It is the Plaintiff’s position that the SEF 44 Limitation Provision is void as contravening subsection 7(2) of the Limitations Act. Section 7, in its entirety states:
7(1) Subject to section 9, if an agreement expressly provides for the extension of a limitation period provided by this Act, the limitation period is altered in accordance with the agreement.
(2) An agreement that purports to provide for the reduction of a limitation period provided by this Act is not valid.
The Plaintiff argued that the SEF 44 action was commenced within two years of when he knew or ought to have known the cause of action arose, which satisfies section 3 of the Limitations Act. The Defendant sought to rely on the limitation contained in the SEF 44, and applied to summarily dismiss the Plaintiff’s claim.
The Court first considered when the limitation period commenced, looking as between the September 9, 2003, November 10, 2009, and October 31, 2017 dates.
In support of the Plaintiff’s application to amend the claim in the underlying action, the Plaintiff detailed damages which it claimed were in excess of the statutory minimum of coverage. Additionally, the brief noted that the Defendants in the tort action were contesting the quantum and causation of the Plaintiff’s damages.
The Master considered the Court of Appeal decision from Shaver v Co-Operators:
[15] In Shaver v Co-operators General Insurance Company, 2011 ABCA 367 (“Shaver”) the issue before the Court was whether the plaintiff had commenced the action under his section 44 endorsement within the limitation period. As in this case, the Court had to first determine as to when the limitation period commenced. Justice Côté stated (at paragraph 18):
[18] Indeed, discoverability may come still later. The above description assumes that a plaintiff and his or her lawyer have to make their own decision about the worth of the claims of the plaintiff and of the other persons injured in the accident. That may well be wrong; the time under cl 6(c) may start to run only when a judgment or binding settlement legally fixes the amount of those claims. A trial judge held that that was usually the rule, in Shoemaker v Wawanesa Mut Ins Co (1993) 1993 CanLII 7048 (AB QB), 9 Alta LR (3d) 214, 223-24 (paras 23-29). The Court of Appeal dismissed an appeal from that, saying that the trial judge’s interpretation was “compelling”: (1994) 1994 ABCA 87 (CanLII), 155 AR 2 (CA). (But the Court of Appeal did not positively decide the point.) That interpretation is also supported by the brief decision of the Court of Appeal in Mellon v Gore Mut Ins Co, 1995 ABCA 340, 174 AR 200 (para 4).
The Master reviewed the reasons in the Shoemaker decision cited by the Court of Appeal, in which the Court of Appeal agreed with the trial judge that there is some ambiguity in section 6(c) of the SEF 44 and that such ambiguity should be read to favor the insured. The Court in Shoemaker did not determine that there was never a case in which the limitation under s.6 of the SEF 44 could run before final judgment or settlement. Considering the above, the Master in this case was unable to find that the limitation period for the SEF 44 action commenced earlier than the date the underlying Tort Action was discontinued, and as such the limitation date commenced on October 31, 2017.
The Court then considered whether the limitation period was one or two years. The Plaintiff’s argument was that despite the SEF 44 wording providing for a one year limitation period, it is not valid because it contradicts the two year limitation period set out by the Limitations Act.
In the Shaver decision, the Master noted that the Plaintiff’s claim against the SEF 44 insurer was commenced more than 10 years after the accident, but within months of the MVAC Fund apportioning its limits to the claimants. The Court of Appeal in Shaver determined that the limitation period in the SEF 44 endorsement was permitted, but that interpreting it in the context of the Limitations Act required consideration of the last possible date the Plaintiff could sue:
[26] After considering the particular wording of subsections 7(1) and (2) and how the subsections might be interpreted he stated (at paragraph 36):
[36] The only way that I can see to reconcile all this is to interpret s 7(1), (2) the way that a plaintiff or a practising lawyer would. What is the last day that the Act allows the plaintiff to sue? Does the contract choose a date earlier or later than that? If earlier, that contract is invalid; if later, that is valid.
The Master followed the Court of Appeal’s reasoning, determining that the last possible date the Plaintiff could have commenced the SEF 44 action was October 31, 2019:
[27] In this case, I follow Justice Côté’s direction. The last day that the Limitations Act allows the Plaintiff to commence the Section 44 Action is October 31, 2019. As the limitation period in SEF 44 Limitation provision sets an earlier date than that (by one year), the SEF Limitation Provision is not valid, in this particular instance.
Accordingly, the Defendant’s summary dismissal application was dismissed.
Condo Corp No. 1023525 v Carlisle, 2022 ABQB 209
This matter concerned the arson committed by unknown third party to the Defendant’s property, and whether the Defendant could be liable in negligence for the spread of the fire and damage to the Plaintiff’s neighboring building. The Plaintiff argued that it was within the reasonable contemplation of the Defendant that arson could take place, and that the precautions taken by the Defendant were insufficient to address that risk.
The Court considered the security systems implemented by the Defendant, including fencing around the entire construction site with two gates, locked at night, as well as a video surveillance system containing several motion-sensing cameras on various areas of the site, with a third party company hired to monitor the footage. The evidence at trial was that the fencing was taken seriously by the Defendant, and any failure to lock the gates by employees or contractors was grounds for discipline. The last video footage (before the building containing the on-site server was burned up) showed work activity around 11:00pm, with no further notes before the system went down at 2:05am.
The Plaintiffs called an expert witness who opined that both the fencing and cameras were inadequate. However, after considering all the available evidence, the Trial Judge found some of the expert’s opinions either lacking or inconsistent with industry practice in Alberta. The Trial Judge stated that despite the availability of purportedly better IP-cameras with infrared technology that were not installed on site, the expert failed to consider some of the limitations of such cameras that may have made installing them not feasible. Ultimately, the Trial Judge found no evidence that the surveillance system was not working on the morning in question, and insufficient evidence as to whether one of the gates was open.
The critical question before the Trial Judge was the foreseeability of arson. The Plaintiff’s argument was that the risk of arson and the need to guard against it was set out clearly in the Defendant’s OH&S manual, and in addition, there were previous issues with non-compliant trades who were careless with perimeter security. All of this, combined with the fact that there were large propane tanks on site and the building was at the wood frame stage of construction, the Plaintiff argued were sufficient to give rise to the Defendant’s awareness of the risk of arson, such that it was reasonably foreseeable.
Citing the Court of Appeal decision from Okanagan Exteriors, the Trial Judge set out the factors pointing to arson risk:
[58] The Court of Appeal in Okanagan Exteriors at para 10, agreeing with the trial judge on the question of foreseeability, listed the factors identified by the trial judge as pointing to the likelihood and magnitude of arson risk:
- The presence of trespassers and transients on the site including children after hours.
- The complete openness of the uncompleted building to such trespassers.
- The lack of adequate lighting to discourage trespassers.
- The lack of adequate signage to discourage trespassers or vandals.
- The lack of fencing.
- The presence of transients, drinkers, and partygoers in the field to the north.
- The presence of wood board ends in the structure. There was clean-up done on the project, but some board ends were left for later blocking and could serve to start a fire.
- The lack of any full time or part-time security on the site.
- The presence on the other side of the firewall of the completed and largely occupied portion of the building increased the risk of catastrophic damage if fire occurred.
- The new portion of the building was at a particularly vulnerable stage. Earlier there was not the quantity of framing in place but later the wall and cladding would have slowed the spread of a fire.
While some factors, such as a lack of lighting, lack of on-site security, and the building stage of construction were present in this case, the others were not. The Court accepted the Defendant’s experience with these types of projects and found that they acted in an acceptable manner. No unusual dangers were found to create a fire hazard risk on the site in question. The wood frame construction and presence of propane tanks were common to construction sites and not inherently dangerous.
Citing further from Okanagan Exteriors:
[66] The Court of Appeal in Okanagan Exteriors says at para 18:
My reading of the authorities leads me to conclude that in this class of case it has to be brought home to a defendant that there is a real risk that harm may occur as a result of the unauthorized activity of a third party. This is a test that is perhaps somewhat more rigorous than the usual test of foreseeability in cases of negligence …
The Defendant’s evidence was that prior to the fire, no instances of arson or break in at the site in question (or any other sites operated by the Defendant) had been reported. The Trial Judge also found that the mention of arson in the Defendant’s OH&S manual created no enhanced foreseeability – arson was an abstract risk and in the absence of any indications of trespassers, transients, or other breaches of the security perimeter, it remained as such.
The Trial Judge ultimately concluded that the arson at the Defendant’s site was not foreseeable, and as such the test for establishing a duty of care was not satisfied.
Even if foreseeability had been established, the Trial Judge went on to consider whether a duty of care can be imposed in regard to the criminal or tortious actions of third parties. The Trial Judge relied on the Fullowka decision of the Northwest Territories Court of Appeal and found it binding upon Alberta, considering that three of their appellate justices were also members of the Alberta Court of Appeal. In that case, during a mine strike, an employee planted a bomb in the mine which killed a number of workers. The Court determined that for the owner of the mine (the ancillary tortfeasor) to be responsible for the tort of the bomb-planter (the immediate tortfeasor), there must either be a special relationship between the ancillary tortfeasor and the Plaintiff, or some element of control over the immediate tortfeasor, and that liability in such cases is exceptional rather than commonplace.
Relying on this authority, the Trial Judge concluded there was no special relationship between the Plaintiff and Defendant, and that the Defendant had no control over the unknown arsonist. On these findings, the Plaintiff’s claim would be dismissed.
As a result of the Court’s findings on foreseeability and the absence of any duty of care, the action was dismissed.