Accident Rights Guide - Bayda Ludwar Law Firm

Gingara v. Przybylski

Between
Sharon Gingara, plaintiff, and
Benno Przybylski and Tiana Brigitte Przybylski, defendants

[1997] A.J. No. 1243 Action No. 9603 06814

Alberta Court of Queen's Bench
Judicial District of Edmonton
Cooke J.

December 15, 1997.
(21 pp.)

Counsel:
Jason Bodnar, for the plaintiff.
K.B. Haluschak, for the defendant.

Reasons for Judgment

COOKE J.:— The plaintiff in this case was involved in a motor vehicle accident in circumstances in which she believed she had a claim for damages against the driver and owner of the other vehicle. Almost immediately after the accident she was approached by State Farm Insurance (State Farm) the insurers of the defendant owner. The date of the accident was March 17, 1994.
The plaintiff initially dealt with Jody Kibblewhite, an employee of State Farm. However, the conduct of the file was assumed by Marty Schmidt, a more senior employee on March 16, 1995.
A series of correspondence and telephone calls ensued between the plaintiff and Schmidt culminating in a precise settlement proposal supported with medical reports delivered to Schmidt on Wednesday, March 13, 1996. The expiration of the two year statutory limitation was Sunday, March 17, 1996. It is acknowledged that by the close of the Office of the Clerk of the Court on Friday, March 15, 1996 she would have been required to file a Statement of Claim in order to meet the statutory requirements of the Limitations of Actions Act, R.S.A. 1980, c. L-15. She failed to do so.
On March 25, 1997 by Consent Order it was directed as follows:
1. There shall be a trial of the issues set forth below, before trial of this action, pursuant to Rule 221 of the Alberta Rules of Court;
2. The issues to be determined are as follows:
  1. is the within cause of action against the Defendants, Benno Przybylski and Tiana Brigitte Przybylski, statute barred because of the statutory limitation period set forth in the Limitations of Actions Act, R.S.A. 1980, c. L-15 as am.;
  2. did the Defendants' motor vehicle liability insurer owe the Plaintiff a duty of care;
  3. if the Defendants' motor vehicle liability insurer did owe a duty of care, was the standard of care met;
  4. if the Defendants' motor vehicle liability insurer did not meet the standard of care, was it the cause of the Plaintiff's claim becoming statute barred;
  5. if the Defendants' motor vehicle liability insurer was the cause of the Plaintiff's claim becoming statute barred, was the Plaintiff contributorily negligent;
  6. have the defendants waived their right to plead and rely upon the Limitation of Actions Act, as a defence; or
  7. are the Defendants estopped from asserting and relying upon the Limitations of Actions Act, as a defence;
3. The trial of the issues to be scheduled by the Civil Trial Coordinators upon the request of Counsel for the Parties;
4. Costs are in the cause.
The matter comes before me to address the issues set forth in the Consent Order but not the motor vehicle claim on its merits.

The Facts

The plaintiff and Marty Schmidt were the only witnesses called.
It should be noted that State Farm paid out the damage claim with respect to the plaintiff's car.
I find that in the initial telephone discussion between Schmidt and the plaintiff it was indicated clearly by him that:
1. a lawyer was not necessary in order to negotiate a settlement;
2. that the intercession of a lawyer on the plaintiff's behalf would unnecessarily prolong the settlement process;
3. that State Farm would be fair with her in their dealings; and
4. that they were open to discussion at anytime with a view to achieving a settlement.
I also find that in subsequent telephone calls in 1995 Schmidt on at least one occasion and perhaps as many as three, reiterates that it was not necessary for her to retain counsel. He gave evidence that he had authority from his supervisors to advise clients that it was not necessary to retain lawyers.
Schmidt also conceded that he personally preferred that she not retain counsel as it was his experience, over several years of claims negotiation involving as many as 100 settlements per year, that settlements with unrepresented claimants were more expeditiously and more favourably resolved. He also told her that if she retained counsel he would no longer be able to deal with her.
I further find that it was the plaintiff's intention to make every attempt to settle this claim without counsel. I believe that although she realized that a lawyer may become necessary if she could not obtain a settlement she gave it little thought due to her conviction that she would be able to negotiate with State Farm to her satisfaction. From the evidence of both parties it is clear that there were never any discussions or representations relating to limitation periods, statements of claim or the significance of the expiration of the two year period.
The plaintiff relies on her interpretation of the phrase "at anytime" as found in the second paragraph of Exhibit 2 being the March 17, 1996 letter from Schmidt to the plaintiff which reads:
- I understand you are not yet ready to settle your injury claim, however we are open to input from, or discussion with you, at anytime. Please feel free to contact me at your convenience.
The plaintiff at trial says she understood "at anytime" to mean that the process of settlement would extend over an indeterminate time continuum the only constraint applicable being the delivery of a formal demand within two years.
I reject her evidence in that regard. That is an unreasonable interpretation to place on these words and I do not accept that it was her subjective understanding throughout the relevant time frame. Schmidt said it was simply meant as an accommodation provision namely that he would arrange his time to suit her.
The plaintiff's evidence was that she understood she was obliged, within two years of the date of the accident, to make a demand on State Farm of a specific damage amount supported by medical reports and receipts. From her health care professionals she came to believe that no evaluation of her condition could be undertaken for at least one year by reasons of the nature and extent of her injuries.
She received repeated written requests during 1995 from State Farm for details of her claim and supporting documentation. However, she had not received these reports from her doctors. At one point she advised Schmidt that it was not necessary for him to keep renewing his written requests and phone calls as she would provide the information as soon as it was available.
The material became available in March of 1996 and she compiled what can only be described as a most complete and well organized settlement proposal. Indeed its language and structure would suggest she received professional input. The plaintiff insisted she prepared it without assistance. She phoned Schmidt on March 11 or 12, 1996 and asked to meet with him in order to present her claim and discuss it with him. Schmidt, somewhat curtly she felt, advised her that it was not necessary for them to meet but that she could mail the report or deliver it as she chose. She then delivered it to State Farm on March 13 and it came to Schmidt's attention that same day.
Schmidt conceded that he had her work and home telephone numbers and had the opportunity during the Wednesday, Thursday and Friday filing deadline to phone her and advise her he was not prepared to consider her offer but did not do so. Schmidt in his evidence said he was busy for the balance of the week from Wednesday, March 13 but that he intended to review the proposal the following week. I find this latter statement to be somewhat mendacious for uppermost in his mind was the fact that by 4:30 p.m. Friday, March 15, 1996 the plaintiff would have lost her opportunity to commence legal action and there would be no reason to review her settlement proposal thereafter.
It is clear, however, from the plaintiff's evidence that her initial intention existing prior to her first discussion with Schmidt and predicated on her misunderstanding of the law was to make a formal written demand by way of a settlement offer prior to the expiration of the two year period and from this she never wavered.

The Law

The plaintiff argues promissory estoppel but more broadly enlists an equitable remedy in the circumstances of the case which it is argued would constitute unfairness to allow the statutory limitation period to prevail.
The circumstances which it is argued support the granting of equitable relief include:
1. payment by State Farm for the damages to the plaintiff's car;
2. Schmidt's early letters advising that State Farm is open to discussion with respect to settlement, specifically Exhibit 2;
3. verbal advice that a lawyer is not necessary to effect settlement and indeed could prolong the process;
4. that State Farm would treat her fairly; and
5. that the plaintiff was misled by Schmidt telling her within days of March 17, 1996 that he would review her file the following week.
Plaintiff's counsel conceded that he could not find a case on point but did refer to Maracle v. Travellers Indemnity Co. of Canada (1991), 80 D.L.R. (4th) 652 and Marchischuk v. Dominion Industrial Supplies Ltd., [1991] 4 W.W.R. 670. Both are Supreme Court decisions in which the court found that the facts could not ground a promissory estoppel argument based on the expiration of the limitation period during settlement negotiations.
I am not prepared to craft an equitable remedy out of my own subjective view of fairness when a framework of well established remedies has been judicially forged.
I shall examine this case in accordance with the following established principles.

Did State Farm Owe a Duty of Care to the Plaintiff?

I intend to consider this issue under two headings:
1. Was there a duty on State Farm to advise the plaintiff of the existence of the Limitation of Actions Act and specifically the manner in which it would impact on her claim?
2. Was there a duty on the part of State Farm to advise the plaintiff on March 13, 14 or 15 that it was no longer prepared to consider a settlement offer from her?
Of assistance is a recent Supreme Court decision Hercules Management Ltd. v. Ernst & Young (1997), 146 D.L.R. (4th) 577. The two part test for the determination of a duty of care in tort as developed in Anns v. Merton London Borough Council, [1978] A.C. 728 (H.L.) at 751-752, as restated by Wilson J. in Kamloops (City) v. Nielson, [1984] 2 S.C.R. 2, is as follows:
1. Is there a sufficiently close relationship between the parties (the [defendant] and the person who has suffered the damage) so that, in the reasonable contemplation of the [defendant], carelessness on its part might cause damage to that person? If so,
2. Are there any considerations which ought to negative or limit (a) the scope of the duty and (b) the class of persons to whom it is owed or (c) the damages to which a breach of it may give rise?

(1) Was there a duty on State Farm to advise the plaintiff of the existence of the Limitation of Actions Act and specifically the manner in which it would impact on her claim?

I turn to the first duty of care, that of advising of the existence of the Limitations Act. Even assuming a relationship existed which I am prepared to do for the sake of argument I am of the view that the plaintiff fails on the second part of the test. Public policy as set forth by Statute and incorporated in the existing policy of insurance, Exhibit 1, would negative the class of person to whom the duty is owed.
State Farm was under a statutory and contractual obligation to act in the best interests of its insured. Sections 306(a) & (b) and 315(1)(c) of the Insurance Act c. I-5 read as follows:
- S. 306 Every contract evidenced by a motor vehicle liability policy shall provide that, when a person insured by the contract is involved in an accident resulting from the ownership, use or operation of an automobile in respect of which insurance is provided under the contract and resulting in loss or damage to persons or property, the insurer shall
  1. on receipt of notice of loss or damage caused to persons or property, make such investigations, conduct such negotiations with the claimant and effect such settlement of any resulting claims as are considered expedient by the insurer,
  2. defend in the name and on behalf of the insured and at the cost of the insurer any civil action that is at any time brought against the insured on account of loss or damage to persons or property,
- S. 315(1) Every motor vehicle liability policy issued in Alberta shall provide that, in the case of liability arising out of the ownership, use or operation of the automobile in any province,
  1. the insured, by acceptance of the policy, constitutes and appoints the insurer his irrevocable attorney to appear and defend in any province in which an action is brought against the insured arising out of the ownership, use or operation of the automobile.
These statutory provisions are incorporated into the State Farm policy with its insured. State Farm's first duty is to its insured and any conduct by State Farm to compromise the legal position of their insured would be a breach of that duty. The adversarial position of the plaintiff and the insured as reflected in the Insurance Act provisions precludes the existence of a duty owed by State Farm to the plaintiff to advise her of the potential loss of her action by expiration of the time prescribed by the Limitation of Actions Act.
Having found as I have I simply add that in respect of the creation of the relationship one would have to consider the concept of proximity in the context of any discussions or reference to the existence of the limitation period.

(2) Was there a duty on the part of State Farm to advise the plaintiff on March 13, 14 or 15 that it was no longer prepared to consider a settlement offer from her?

As I have stated in the facts my finding is that on March 13, 1996 Schmidt had no intention of reviewing her settlement offer nor did he intend to do so when he told her to send in her settlement offer and he would consider it. I refer again to the Hercules (supra) decision at page 588:
- The first branch of the Anns/Kamloops test demands an inquiry into whether there is a sufficiently close relationship between the plaintiff and the defendant that in the reasonable contemplation of the latter, carelessness on its part may cause damage to the former. The existence of such a relationship -- which has come to be known as a relationship of "neighbourhood" or "proximity" -- distinguishes those circumstances in which the defendant owes a prima facie duty of care to the plaintiff from those where no such duty exists. In the context of a negligent misrepresentation action, then, deciding whether or not a prima facie duty of care exists necessitates an investigation into whether the defendant-representor and the plaintiff-representee can be said to be in a relationship of proximity or neighbourhood.
- What constitutes a "relationship of proximity" in the context of negligent misrepresentation actions? In approaching this question, I would begin by reiterating the position I took in Norsk, supra, at pp. 1114-15, that the term "proximity" itself is nothing more than a label expressing a result, judgment or conclusion; it does not, in and of itself, provide a principled basis on which to make a legal determination.
* * *
- In order to render "proximity" a useful tool in defining when a duty of care exists in negligent misrepresentation cases, therefore, it is necessary to infuse that term with some meaning. In other words, it is necessary to set out the basis upon which one may properly reach the conclusion that proximity inheres between a representor and a representee.
- This can be done most clearly as follows. The label "proximity", as it was used by Lord Wilberforce in Anns, supra, was clearly intended to connote that the circumstances of the relationship inhering between the plaintiff and the defendant are of such a nature that the defendant may be said to be under an obligation to be mindful of the plaintiff's legitimate interests in conducting his or her affairs. Indeed, this idea lies at the very heart of the concept of a "duty of care", as articulated most memorably by Lord Atking in Donoghue v. Stevenson, [1932] A.C. 562, at pp. 580-81. In cases of negligent misrepresentation, the relationship between the plaintiff and the defendant arises through reliance by the plaintiff on the defendant's words. Thus, if "proximity" is meant to distinguish the cases where the defendant has a responsibility to take reasonable care of the plaintiff from those where he or she has no such responsibility, then in negligent misrepresentation cases, it must pertain to some aspect of the relationship of reliance. To my mind, proximity can be seen to inhere between a defendant-representor and a plaintiff-representee when two criteria relating to reliance may be said to exist on the facts: (a) the defendant ought reasonably to foresee that the plaintiff will rely on his or her representation; and (b) reliance by the plaintiff would, in the particular circumstances of the case, be reasonable.
Using this test I am satisfied that the first portion has been met by the plaintiff; that is, Schmidt, given the spirit of cooperation that existed between them, and his assurances that she would be treated fairly by State Farm and that she did not require a lawyer, ought reasonably to have foreseen that the plaintiff would rely on his representations. The second portion of the test asks "would reliance by the plaintiff in the particular circumstances of the case be reasonable"? I take the words "in the particular circumstances of the case "to impart some degree of subjectivity to the plaintiff's determination. The plaintiff acknowledged that she knew Schmidt was acting for the defendant and as such was adverse in interest to her. Furthermore, it is difficult to imagine that the plaintiff could have structured a settlement proposal in the form in which she did without some assistance from a person knowledgeable in motor vehicle litigation.
However, given the assurances provided by both White and Schmidt as to the fair treatment she could expect from State Farm, the derogatory remarks which Schmidt directed toward the legal fraternity generally and the frequent letters and phone calls requesting her material in order that negotiation could begin, I am inclined to believe that her reliance in the circumstances was reasonable.
Assuming that by the tests enunciated in Hercules (supra) State Farm owed a duty to the plaintiff to advise her on March 13 or 14 that it was no longer prepared to consider her offer of settlement and that it breached that duty. What consequences flow from it? There is no evidence from the plaintiff as to what steps she would have taken, if any, prior to the close of business on Friday, March 15, 1996.
It would be pure speculation to find that had she been advised on Thursday, March 14 she would have immediately sought legal advice prior to the expiration of the limitation period. She believed that she had done what was legally required to preserve her rights, namely deliver a formal demand for a specified sum prior to March 17, 1996. As a result, I cannot find a causal link between the breach of duty to advise of cessation of settlement consideration and the failure of the plaintiff to meet the limitation deadline.
The Supreme Court in The Queen v. Cognos Inc., 99 D.L.R. (4th) 626 at 643 sets forth the five requirements for a successful negligent misrepresentation action as follows:
- The required elements for a successful Hedley Byrne claim have been stated in many authorities, sometimes in varying forms. The decisions of this court cited above suggest five general requirements:
  1. there must be a duty of care based on a "special relationship" between the representor and the representee;
  2. the representation in question must be untrue, inaccurate, or misleading;
  3. the representor must have acted negligently in making said misrepresentation;
  4. the representee must have relied, in a reasonable manner, on said negligent misrepresentation; and
  5. the reliance must have been detrimental to the representee in the sense that damages resulted.
In my previous analysis relating to a duty to advise of the existence of the Limitation of Actions Act and its impact on her claim, I held that the plaintiff had not met her burden with respect to number 1 in Cognos.
With respect to a duty on State Farm to advise her that it would no longer entertain settlement the plaintiff may have established item number 1 in Cognos. However with respect to item number 2, all of the representations by Schmidt were true and not misleading save for the comment in the final telephone call, namely deliver your proposal and I will review it.
To the extent that I have found that he did not intend to review it, unless he ascertained after the expiration of the limitation period that a Statement of Claim had been filed in a timely fashion, it could be found that the plaintiff has met item number two in Cognos.
I find however that in terms of Cognos the plaintiff has failed in item number five in that the conduct of the plaintiff was not altered in reliance on that one misleading statement for there is no evidence of the causal link, that is even if Schmidt had told her that he would not negotiate the plaintiff has not shown that such a statement would have caused her to file within the limitation period. Her reliance on Schmidt's advice that he would review her proposal was not the cause of her damages.

(3) Estoppel

The payment of loss with respect to the automobile does not constitute an admission of liability with respect to the personal damages and even if it did, such an admission does not necessarily amount to a promise not to rely on the limitation period.
In discussing insurance claim negotiations in which liability has been admitted Sopinka J. said at 756 (h):
- An admission of liability is frequently made in the course of settlement negotiations. This is often a preliminary step in order to clear the way to enter into a discussion as to quantum. Indeed, when an offer to pay a stated amount is made by one party to the other, an admission of liability is usually implicit. In this type of situation, the admission of liability is simply an acknowledgment that, for the purpose of settlement discussions, the admitting party is taking no issue that he or she was negligent, liable for breach of contract, etc. There must be something more for an admission of liability to extend to a limitation period. The principles of promissory estoppel require that the promisor, by words or conduct, intend to affect legal relations. Accordingly, an admission of liability which is to be taken as a promise not to rely on the limitation period must be such that the trier of fact can infer from it that it was so intended. There must be words or conduct from which it can be inferred that the admission was to apply whether the case was settled or not, and that the only issue between the parties, should litigation ensure, is the issue of quantum.
There are no words or conduct on the part of Schmidt from which I could objectively conclude that it was his intention not to rely upon the limitation period. He did not intend to alter the existing legal relationship. No words ever passed between them that had reference to time limits within which the plaintiff would be obliged to act.

Waiver

In 1994 the Supreme Court in Saskatchewan River Bungalows Ltd. v. Maritime Life Assurance Co., 115 D.L.R. (4th) 478 had the following comments on the principle of waiver:
- Waiver occurs where one party to a contract or to proceedings takes steps which amount to foregoing reliance on some known right or defect in the performance of the other party: Mitchell and Jewell Ltd. v. Canadian Pacific Express Co. (1974), 44 D.L.R. (3d) 603, [1974] 3 W.W.R. 259 (Alta. C.A.); Marchischuk v. Dominion Industrial Supplies Ltd. (1991), 80 D.L.R. (4th) 670, [1991] 2 S.C.R. 61, 3 C.C.L.I. (2d) 173 (waiver of a limitation period). The elements of waiver were described in Federal Business Development Bank v. Steinbock Development Corp. (1983), 42 A.R. 231 (C.A.), cited by both parties to the present appeal (Laycraft J.A. for the court, at p. 236):
  - The essentials of waiver are thus full knowledge of the deficiency which might be relied upon and the unequivocal intention to relinquish the right to rely on it. That intention may be expressed in a formal legal document, it may be expressed in some informal fashion or it may be inferred from conduct. In whatever fashion the intention to relinquish the right is communicated, however, the conscious intention to do so is what must be ascertained.
  Waiver will be found only where the evidence demonstrates that the party waiving had (1) a full knowledge of rights; and (2) an unequivocal and conscious intention to abandon them. The creation of such a stringent test is justified since no consideration moves from the party in whose favour a waiver operates. An overly broad interpretation of waiver would undermine the requirement of contractual consideration.
The payment of the motor vehicle damages by State Farm does not constitute an unequivocal and conscious intention to abandon its rights under the Limitation Act in respect of any personal injury claims. This is particularly so where the vehicle damage payment is shortly after accident and before the defendant has any inkling as to the magnitude of the personal injury claim.
The plaintiff has failed to carry the burden on every argument considered at trial and her action is dismissed.
The question of costs must now be addressed.
The conduct of Schmidt was not as egregious as the insurer in Den Boon v. Wall, 19 Alta. L.R. (2d) 240, where Dixon J. gave costs on a solicitor and client basis.
Even though Schmidt's conduct was not the cause of the plaintiff's loss it was of such a nature that the courts should not be seen to be rewarding it by costs.
That conduct included:
1. The carrying out of company policy (according to Schmidt) of advising claimants that they did not require a lawyer.
2. Schmidt's own conduct in advising the plaintiff that a lawyer would only delay and make more difficult the resolution of her claim.
3. Reinforcing that argument by making derogatory comments about the legal profession. This is significant in light of Schmidt's evidence that the majority of his claims are settled without the intervention of a lawyer and in those cases on more favourable terms for the insurer than otherwise.
4. His statement to the plaintiff that he would review her settlement offer which I have found was untrue. There is little doubt that when he received that offer he believed that the plaintiff was unaware of the consequences of allowing the March 17th date to pass.
Insurers should not be encouraged by the courts in these types of negotiating tactics by the award of costs.
To the extent that there remains some degree of discretion to the trial judge in the matter of costs I decline to award any to the defendant in this case.

COOKE J.