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September 30, 2009

Facebook in Litigation - 2

This is part two of Tara Pollitt's article on Facebook in Ontario litigation.

The Murphy case was followed in Leduc v. Roman,[1] an appeal of a Master’s decision. Justice Brown held that a party who maintains a private Facebook account stands in no different position than one who maintains a publicly accessible profile and to permit a party to hide behind privacy controls on a website designed to share social information is to deprive the other party of material relevant to ensuring a fair trial. In Leduc the defendant had obtained an initial order requiring the plaintiff to preserve the website prior to the balance of the motion being heard. This approach is useful to prevent information from being changed or deleted before the motion can be heard.

Facebook was used recently in a trial decision out of Newfoundland called Terry v. Mullowney.[2] The plaintiff was cross-examined at trial using printouts from his publicly accessible Facebook account. The Court explicitly noted that the material from Facebook showed the plaintiff had a full and active social life and without that evidence he would have been left with a very different view of the plaintiff’s social life. The information was a critical factor in reducing the claim from approximately $1.3 million to $40,000.

[1] [2009] O.J. No. 681 (S.C.J.).
[2] 2009 NLTD 56 (Canlii).

September 22, 2009

Court of Appeal: Injured Insureds Do Not Need to Sue Insured Joint Tortfeasors to Claim Uninsured Motorist Coverage

In a somewhat surprising decision, the Court of Appeal for Ontario has held that an insured motorist does not have to sue insured joint tortfeasors in order to collect on the uninsured coverage in her own automobile insurance policy. Also the insurer does not appear to have a right of subrogation against the joint tortfeasors but only against the uninsured motorist.

This decision is properly understood as providing reasonable coverage for an insured from her insurer. It is a first party claim, not third party claim. The insured purchased coverage for this very type of situation from her insurer. The insurer picked a bad set of facts in this case and should have waited for a better case to pursue this issue - namely, where the joint tortfeasor was at least 25% liable. In this instance it is not even certain that the joint tortfeasor was 1% liable.

The decision is Loftus v. Security National, 2009 ONCA 618 (decision released Aug 21, 2009). Click here for a copy of the decision.

The plaintiff was injured after being hit by an uninsured motorist. The uninsured motorist was being chased by the police when he entered an intersection, lost control and struck the plaintiff.
The plaintiff sued the uninsured motorist and her own insurer, Security National, under the uninsured coverage of her policy. The uninsured motorist did not defend.

At first instance, on a Rule 22 motion, MacDougall J. found that Security National was liable to pay the plaintiff under the uninsured provisions of the policy, even though she had not commenced an action against the police/joint tortfeasors and even if the police/joint tortfeasors are assumed to be negligent.

The Court of Appeal for Ontario reviewed the relevant wording of the Uninsured Automobile Coverage Schedule ("the Schedule") contained in R.R.O. 1990, Reg. 676:

2. (1) The insurer shall not be liable to make any payment,

(b) where a person insured under the contract is entitled to recover money under any valid policy of insurance other than money payable on death, except for the difference between such entitlement and the relevant minimum limits determined under clause (a);

(c) where the person insured under the contract is entitled to recover money under the third party liability section of a motor vehicle liability policy;

The Court of Appeal then held that the key phrase herein is "entitled to recover money". The question then is whether the plaintiff is "entitled to recover money". If yes, then she cannot recover under the uninsured provisions of her own policy.

The Court of Appeal answered the question by finding that the phrase "entitled to recover" as it appears in ss. 2(1)(b) and (c) of the Schedule means entitled to recover "in fact" as opposed to entitled to recover "in law" and that an "injured insured is entitled to recover in fact only where a potential joint tortfeasor’s insurer admits liability to pay or where the injured insured obtains judgment against the insured joint tortfeasor."

The Court of Appeal went on to say that:

"We see no indication in the language of s. 265 of the Insurance Act or of the Schedule that it was the intention of the legislature to require victims of uninsured drivers to engage in potentially speculative and costly litigation against potential joint tortfeasors who may be insured rather than relying on the coverage paid for in their own policies of insurance."

The Court of Appeal also rejected submissions by Security National that this finding would result in double recovery by the insured. The Court of Appeal held that "recovery under the uninsured coverage is an alternative" and that obtaining judgment against her own insurer signifies an election not to subsequently pursue a claim against the joint tortfeasors.

The Courts in this instance simply did not want to find liability against the police for what was clearly the fault of the uninsured motorist and nor did the Courts want to punish the insured for refusing to pursue litigation against the police. The insured purchased auto insurance from the insurer for this very situation.

September 18, 2009

Facebook in Litigation - 1

CNN recently reported that Facebook now is nearly as large as the population of the United States. There are about 307 million people living the U.S. and Facebook now says it has 300 million users.

Not surprisingly Facebook has now been used in litigation in Ontario. Here is an article by my colleague Tara Pollitt in which plaintiffs have had their credibility checked against their own Facebook webpages.

THE USE OF FACEBOOK IN LITIGATION by Tara Pollitt

Facebook, a social networking website, allows users to share content with other users such as photographs, videos, and by posting messages. A variety of privacy settings are possible, ranging from making one’s site completely open to everyone to restricting access to one’s “friends” – people who are chosen by the user and are permitted to view the user’s information and share their own information. Facebook has quickly become a resource in investigating claims and courts have overwhelmingly approved of its content as being relevant to issues in litigation.

The first reported decision regarding the use of Facebook at trial is Kourtesis v. Jouris[1]. The plaintiff testified that she had little social life post-accident. Photographs the defendant obtained from her publicly accessible Facebook account showed otherwise. In contrast to the evidence the plaintiff and her brother gave about a family trip to Greece where she sat at a cafĂ© rather than participating in a festival, photographs from Facebook showed her celebrating on her brother’s shoulders. In the trial decision, Justice Browne referred to these photographs in concluding that the plaintiff had an active social life that was not diminished by her injuries. He dismissed the plaintiff’s claim for general damages.

The first reported motion regarding Facebook is Murphy v. Perger.[2] The defendant gained access to a publicly accessible site called the “Jill Murphy Fan Club” and discovered that there was also a private site created by the plaintiff’s sister but over which the plaintiff had control. She had granted access to her webpage to 366 “friends”. Justice Rady allowed the defendant’s motion to obtain production of material on the site, including photographs, holding that the information on the site was relevant as a useful means of assessing the plaintiff’s damages. She rejected the submission that the motion was merely a fishing expedition. She also rejected the argument that the information was a violation of the plaintiff’s right to privacy; the plaintiff could not have had a serious expectation of privacy given that 366 people had already been granted access to the site.
[1] [2007] O.J. No. 2677 (S.C.J.).
[2] [2007] O.J. No. 5511 (S.C.J.).

September 8, 2009

Competing Duties: Duty of an Insured to Disclose Material Changes v. Duty of an Insurer to do Due Diligence

The duty to disclose a material change in risk in an automobile insurance policy was recently considered by Howden J. in the case DeKoning v. Vector Insurance, [2009] O.J. No. 3461 (S.C.J.).

The Court had to balance competing duties. An insured has a duty to disclose material changes to the policy. An insurer has a duty of due diligence to obtain publicly or readily available information.

An insured under an automobile liability policy failed to report her knowledge to her auto insurance company of the driving record of her dependent teenager who was listed on the policy as an occasional driver.

The insurer took the position that represented a breach of a statutory condition of the policy and permits the insurer to treat the policy as void ab initio and unenforceable.

In this instance, the guardian had added the 16 year old as an occasional driver to her policy by telephone through her broker. The insurer obtained the driving record of the teen showing that his record was clear. Nearly a year later, the son had his license suspended by reason of demerit point accumulation. He had several traffic convictions, including speeding. The guardian assisted the teen in ensuring that all fines were properly paid. The teen did not drive the insured motor vehicle until his suspension ended.

Neither the guardian nor the teen reported to the insurer the fact that his license had been suspended. They subsequently claimed that they did not know of a duty to do so.

The insurer never obtained a subsequent driving record which it could have done for a fee of $12.00.

A few months later, the son was driving with three passengers when a serious accident occurred resulting in one of his passengers suffering catastrophic injuries.

The catastrophically injured passenger obtained a judgment for over $18 million dollars. The insurer made itself a statutory third party throughout those proceedings and took the position that the policy was void ab initio. The limit for third party claims on the insurer was $1 million.

The mother and son brought an action against the broker and insurer, claiming that the policy of insurance is binding and enforceable and seeking a declaration that the insurer was obligated to provide them with a defence in the passenger action. They also claimed indemnity from the insurer for all damages and costs assessed against them in the passenger action.

The Court considered the duty of good faith on insureds to disclose material changes in risk to insurers. The Court noted that Statutory Condition #1 requires an insured to notify the insurer or agent (broker) of any change in the risk material to the contract. The Court reviewed case law which imposes an obligation on an insured to disclose material facts, and then noted that in this instance, only the insurer knew that a couple of traffic tickets and a license suspension were material. Further, the insurer was aware that the additional insured was a novice driver when it added him to coverage and the insurer did not take any additional steps to update its records with respect to his driving record.

The Court held that the guardian as the named insured did not fail in her duty to disclose a material change in the risk since it was not clear in the policy that the driving tickets and suspension were material changes.

The insurer had a duty of due diligence to obtain a further driving record. Therefore, the insurer had no ground in law to void the policy and was obligated to indemnify its insureds.

September 1, 2009

Walking into a parked auto is not being "struck" or "hit" by it

In Lewis v. Economical Insurance Group, [2009] O.J. No. 2853 (S.C.J.), Eberhard J. held that there is no coverage for walking into a parked car under the uninsured provisions of the Standard Automobile Policy (s. 265 Insurance Act) or under the Family Protection endorsement (OPCF 44R).

It seems to make sense.

The plaintiff suffered injuries when she struck her head on a steel pole that was protruding from a vehicle.

The defendant insurer brought a motion for summary judgment on the basis that (i) the plaintiff had failed to establish an unidentified vehicle had been involved or could not have been ascertained and (ii) that there is no coverage in any event under the uninsured provisions policy or under OPCF 44R. The insurer won the motion on the latter issue.

The wording of the OPCF 44R endorsement is that the plaintiff is only covered if the plaintiff is not "an occupant of an automobile who is struck by an automobile".

The wording of the policy is that the plaintiff is only covered "when not in an automobile ... if hit by an unidentified or uninsured automobile" (policy).

The Court held that the meaning of hit or struck is not ambiguous: the automobile did not hit or strike the plaintiff pedestrian. The pedestrian walked into the automobile.

Here are paragraphs 9 and 10 of the Court's endorsement:

"This is quite unlike the circumstance of being hit/struck by something hit by an automobile or falling out of a moving vehicle as it is the movement of the vehicle that applies the force that gives rise to the hit/strike."

"It is also unlike the interpretation of "hit/struck" where a moving automobile created a peril which caused the insured to take evasive action which resulted in his injury. There, the visual impact of the automobile caused the injury. In the present case the Plaintiff did not see the pole and walked into it. Nothing about the automobile impacted upon the situation."