CIAA/CICMA Joint Conference: Legal Patchwork

From coast to coast, the auto insurance product has undergone massive reform over the past three years, in light of intense public scrutiny spurring government reaction. More quietly, out of the spotlight, other legal reforms are also turning the fortunes of insurers, with speakers at the recent Canadian Independent Adjusters Association (CIAA)/Canadian Insurance Claims Managers Association (CICMA) Joint Conference in Toronto giving a “Cross-Canada Claims Check-up” on legal reform. Perhaps the only conclusion is that insurers must understand they face a vastly different and ever-changing legal environment in each of the provinces.

BRITISH COLUMBIA

In B.C., the courts have often viewed issues in a far different light than their other provincial counterparts, notes Richard Lindsay, of Vancouver law firm Lindsay Kenney. “Our judges are a little more experimental. Often their decisions are 360-degrees of what comes out of Ontario.”

But one aspect of the B.C. judicial system which is not unique is the seemingly endless process of reform. Efforts to reform the civil justice system were abandoned just a few years ago for “nothing more than a lack of interest”, and at the time the province’s trial lawyers took exception to several discussion points of interest to insurers, including the potential for eliminating joint and several liability, and vicarious liability, as well as the concept of non-delegable duty.

However, a more modest stab at reform is again underway, with the “Civil Justice Reform Group” putting out a green paper last fall. The paper centers on access to the courts, noting that by 2002, trials in the Vancouver court had risen from 12.9 hours on average to over 25 hours. As Lindsay notes, “when they take twice as long, they are twice as expensive.” It remains to be seen if this latest effort at reform will bear fruit.

However, Lindsay does note some recent changes of interest to insurers. The first is legislation passed which will raise the limit for small claims, with speculation putting the increase from $10,000 up to $50,000. Lindsay says models are also being looked at for “economical litigation” for claims under $100,000, with a goal of expediting dispute resolution in such cases.

ALBERTA

Beyond the massive overhaul of the auto insurance system in Alberta undertaken last October, significant reform is also taking place in the litigation environment in the form of a civil mediation pilot project begun January 1, notes Jerri Cairns, of Calgary law firm Parlee McLaws. This private mediation system being tested in Edmonton and Lethbridge has received some opposition from judges, who may see it as taking away from their workload, but also because judges claim a high rate of success through existing court mediation, Cairns explains.

Insurers must be aware that this system can “force you into mediation relatively early in the process”, she notes. And while there is some opportunity to appeal if a party does not agree to the mediation, Cairns notes that failing to attend mediation without an exemption can result in the party paying costs. The expectation is the system will be used province-wide in two years’ time.

ONTARIO

Ontario has also had its share of auto reform, as Kevin Carroll of Barrie law firm Carroll Heyd Chown notes, but one perhaps lesser discussed change came in October, 2003 when an amendment to the Insurance Act stated a vehicle owner who was an employer of the driver involved in an accident where another party is injured would be classified as a “protected defendant”. At the same time, two high-profile cases on the liability of employers in cases where an employee is involved in a crash using a company vehicle were heard late last year in Ontario’s Court of Appeal, and decisions were awaited at the time of the conference.

In the area of litigation, Carroll says insurers should be aware of the “rising cost barometer”, specifically the trend to requesting premium awards in complex, lengthy cases and where there is a risk of counsel not recovering fees, despite competent and skilled representation by counsel. He points to the recent Walker v. Ritchie case in Ontario Superior Court where $200,000 in premium was awarded on top of more than $530,000 in fees already fixed, on a $5.3 million damage award. “I would suggest that we are likely to see more requests for premium awards, not only in complicated and large personal injury cases, but also complex property loss and products liability cases,” he says.

QUEBEC

In Quebec, a new Code of Civil Procedure has been in place since January, 2003, notes Andre Rene, of Montreal law firm Lavery De Billy. Part of this was an attempt to rectify potential disadvantages faced by defendants who were required to file a “declaration of readiness” to go to trial (including all expert reports and exhibits) within 180 days of the plaintiff filing suit. “The fear was that the defendant was disadvantaged because the plaintiff could build up a case, file, and then the defendant had only six months to respond,” Rene explains. The result has been a 41% drop in civil suits since the new code was put in force, he says.

MARITIMES

The East Coast may represent its own “patchwork quilt”, specifically when it comes to the auto product, which has undergone massive reform in almost every province. Specifically, the Atlantic Harmonization Task Force on auto insurance has gone by the wayside, notes Nancy Murray, of Halifax law firm Stewart McKelvey.

For insurers, the $2,500 cap on “non-economic” or “pain and suffering” awards on auto personal injury cases in New Brunswick has been a win. When the cap came into force, Murray says, “the next day the phones stopped ringing” in terms of cases being filed. However, trial lawyers are already looking at ways of getting around the legislation, to find new grounds for going to trial on these auto injury claims, she adds.

At the same time, trial lawyers are also looking at ways to get around new definitions of “minor injury” in auto insurance legislation. In Nova Scotia, a suit was filed in early December, challenging the new legislation by claiming it discriminates against those with minor injuries by restricting their access to the courts.

In Newfoundland, auto reforms already in place may be just the beginning, says William Goodridge, of Stewart McKelvey’s St. John’s office. “It seems likely there is more to come” in terms of reform, he says, specifically with hearings underway in front of the province’s Public Utilities Board throughout February and March on various insurance issues including auto. The PUB is expected to report back to Cabinet by March 19.