Ontario court rules against City of Hamilton for refusing to participate in mediation over auto accident injury claim

The Ontario Court of Appeal ruled Tuesday against the City of Hamilton over its refusal to participate in mediation for an auto injury claim.

The appeal court overturned one of the findings of a decision by the Ontario Superior Court of Justice in Dale Williston’s lawsuit against the city, and an individual co-defendant, over a personal injury resulting from a vehicle accident.

Although the trial judge, in September 2011, found the defendants 100% responsible for $100,000 in damages and also awarded Williston partial indemnity costs, the court also found at the time that Williston could not be awarded the $40,000 in “augmented damages” he had asked for on the grounds that the city refused to participate in mediation.

Section 258.6 of the provincial Insurance Act requires that when a plaintiff sues for personal injury arising from the use or operation of an automobile, the insurer for the defendant “shall participate in mediation if the other party so requests” and that failure to comply “shall be considered by the court” in awarding costs.

In his 2011 decision on Williston’s lawsuit, Mr. Justice James Ramsay wrote that the City of Hamilton “is not an insurer either as named defendant or, as far as I know, by way of subrogation.” This was the part of Judge Ramsay’s decision that the Court of Appeal overturned Tuesday.

In the specific circumstances of Williston’s case, the Court of Appeal found he was “justified in dealing with the legal services division of the City of Hamilton as representing both the City and the insurer.”

According to court records, the City of Hamilton, in November 2007, advised Williston it had a coverage limit of $10 million under a policy written by The Guarantee Company of North America. This happened a year after Williston had served notice, as required by the Insurance Act, to the city of his intention to commence an action. At that point the city was required, by section 258.3 of the Insurance Act, to notify its insurance carrier within seven days.

“In light of the statutory requirement, it is reasonable to presume that the respondents did in fact transmit the notice to the insurer,” the Court of Appeal wrote, noting that the city had argued “there was no basis for concluding that an insurer defended the action,” and that it was the city’s legal department that defended the lawsuit.

Lawyers for the city had also contended that Williston had not proven that the insurance carrier ever received his notice of intent to commence action and that Williston had not proven that the insurer was asked to participate in mediation.

According to court records, in February 2011, Williston wrote to the City of Hamilton’s legal services division requesting, pursuant to the Insurance Act, private mediation.

“No response was received from the legal services division of the City,” Mr. Justice Paul Rouleau wrote on behalf of the Court of Appeal. “There was no suggestion that the legal services division of the City was not in a position to accept such a request on behalf of the insurer.”

Williston sent two more letters to the city in July of 2011 and, according to court records, the city replied to the first of those to state “it would pass the request for mediation onto its principals, but would not recommend mediating until further discovery, production, and a medical exam had been done.”

The city’s response, the Court of Appeal noted, “did not suggest that the legal services division of the City was not in a position to accept the request for mediation on behalf of the insurer.”

The court added there is “no other reasonable conclusion but that the legal services division of the City of Hamilton was, at a minimum, holding itself out to the appellant as being authorized by the insurer to provide the response required of an insurer upon receipt of a s. 258.3(1)(b) notice and to respond on the insurer’s behalf to mediation requests made pursuant to s. 258.6(1).”

The 258.3(1)(b) notice refers to Williston’s original letter in November, 2006 notifying the city of his intent to pursue a claim in connection with an auto accident.

In increasing, from $60,000 to $80,000, the total cost award that the city has to pay Williston, the Court of Appeal noted the award resulting from a failure to participate in mediation “should reflect the censure of the court and provide appropriately significant recovery.” The Court of Appeal also awarded Williston $15,000 of his appeal costs.

In his September 2011 decision, Judge Ramsay noted the city had offered to settle for $45,000 plus costs, but Williston had wanted to settle for $113,400 plus costs. Court records indicate that on September 9, 2011, four days before the trial started, the city had agreed on $100,000 in damages.

“I would say that the City has not seriously tried to settle the litigation,” Judge Ramsay wrote in his 2011 decision. “Instead, four days before the commencement of the trial it agreed to damages that were more than double its offer to settle of July 2011 and then, having settled the difficult issue after tying up plaintiff’s counsel all summer with damages, it dug in its heels on the issue on which it had no hope of success beyond contributory negligence, and little hope of that. Unlike the plaintiff, the City has the resources to afford this sort of approach.”