



COURT OF APPEAL FOR ONTARIO

CITATION:
Zefferino v. Meloche
    Monnex Insurance Company, 2013 ONCA 127

DATE: 20130301

DOCKET: C54965

Rosenberg, MacPherson and LaForme JJ.A.

BETWEEN

Nicola Zefferino

Plaintiff/Appellant

and

Meloche Monnex Insurance Company

Defendant/Respondent

Jane L. Poproski and Andrew L. Rudder, for the appellant

R. Donald Rollo, David Visschedyk and Stuart M. Ghan,
    for the respondent

Heard: February 22, 2013

On appeal from the judgment of Justice R.B. Reid of the Superior
    Court of Justice, dated January 9, 2012.

ENDORSEMENT

[1]

The appellant commenced an action against the respondent relating to an
    insurance contract between the parties. The appellant alleged that the respondent
    failed to offer optional income replacement benefits and claimed a loss of
    income replacement benefits the appellant says should have been available.

[2]

The appellant brought a summary judgment motion; the respondent agreed
    to this route for disposing of the action.

[3]

In a judgment dated January 9, 2012, Reid J. dismissed the appellants
    action. He accepted the appellants submissions that the respondent owed him a
    duty of care and breached the applicable standard of care by failing to
    properly offer optional income replacement benefits. However, he held against
    the appellant, saying that he fails in the third issue necessary to establish
    a successful claim in negligence in that he has not shown on a balance of
    probabilities the necessary causal connection between the defendants breach of
    duty and his loss.

[4]

The appellant appeals on the causation issue. The respondent
    cross-appeals on the standard of care issue.

[5]

The appellant submits that on a claim arising out of insurance broker
    negligence, the plaintiff need not prove that the acts or omissions of the
    insurer caused the loss. In her very helpful submissions, Ms. Poproski argues
    that the insured need only show that the insurer had a duty to inform the
    insured, that it breached its duty of care and that there was a gap in
    coverage. The appellant submits that this exception from the normal rule that a
    plaintiff must prove causation can be justified by the fact that insurance
    contracts are different from normal contracts and that to do otherwise would place
    an impossible burden on the insured. The appellant relies upon the following
    passage from the leading case of
Fletcher v. Manitoba Public Insurance
    Company
, [1990] 3 S.C.R. 191 at 226-27:

The respondent submits that even if it had provided more
    information in its flyer, Mr. Fletcher would not have purchased UMC since he
    failed to read the flyer. Therefore, MPIC argues that it should not be held
    liable for the appellants' loss since its acts or omissions did not cause that
    loss. Mr. Fletcher was the author of his own misfortune.

This argument is without merit. The finding that MPIC did not
    discharge its duty to inform the appellants does not hinge solely on the
    adequacy or inadequacy of the flyer. Rather, it rests on the combined effect of
    MPIC's initial omission to tell Mr. Fletcher about UMC when he first bought his
    coverage, the misleading renewal form and flyer, and MPIC's failure to mention
    UMC when he paid for his renewal in person. Faced with this combination of acts
    and omissions by the respondent, the appellants cannot be viewed as the authors
    of their own misfortune.

[6]

We cannot agree with this submission. First, the immediately following
    paragraph from
Fletcher
indicates that the insured in that case was
    entitled to succeed because he had proved that the insurers negligence
    resulted in damages:

The trial judge found that Mr. Fletcher would have
    purchased UMC had he been told of its availability. Had MPIC not breached its
    duty, the Fletchers would have been covered against loss caused by an underinsured
    motorist up to a limit of $2,000,000.
The shortfall between the
    underinsured motorist's insurance and the appellants' loss was $887,090. I
    therefore find that the respondent's breach of duty caused the appellants' loss
    and hold it liable for damages in the amount of the shortfall. [Emphasis
    added.]

[7]

Second, earlier in her reasons for judgment in
Fletcher
, Wilson
    J. makes clear that whether the negligence caused a loss is a question of fact.
    There is no suggestion that because of the insurance broker context the
    plaintiff is relieved of the normal burden of proof. See, for example, the
    following excerpts from pages 204-6:

These authorities, in my view, make crystal clear the test for
    determining when it is appropriate for an appellate court to depart from a
    trial judge's findings of fact: appellate courts should only interfere where
    the trial judge has made a "palpable and overriding error which affected
    his assessment of the facts." The very structure of our judicial system
    requires this deference to the trier of fact. Substantial resources are
    allocated to the process of adducing evidence at first instance and we entrust
    the crucial task of sorting through and weighing that evidence to the person
    best placed to accomplish it. As this Court and the House of Lords have
    repeatedly emphasized, it is the trial judge who is in the best position to
    assess the credibility of testimony. An appellate court should not depart from
    the trial judge's conclusions concerning the evidence "merely on the
    result of their own comparisons and criticisms of the witnesses": see Lord
    Sumner in
The S.S. Hontestroom, supra
, at p. 47.

In the appeal now before us Finlayson J.A. departed from the
    trial judge's findings of fact on at least two counts. He did not accept
    McKeown J.'s finding that Mr. Fletcher had relied on the respondent's employees
    for information and advice.
Nor did he accept McKeown J.'s finding that had
    Fletcher been offered UMC, he would have purchased it. Yet at no point did
    Finlayson J.A. apply the test that this Court set out in "Kathy K",
    supra, and Lewis v. Todd and McClure, supra. No attempt was made to spell out
    whether and in what respects the trial judge's findings of fact constituted
    "palpable and overriding errors"
. Instead, Finlayson J.A.
    explained his decision to depart from the trial judge's findings of fact by
    observing that the trial judge had "stretched the evidence in favour of
    Fletcher". He refused to give much credence to the testimony of Fletcher,
    calling it "self-serving" and "entirely subjective", and
    concluded by observing that he did not propose to give much weight to the trial
    judge's findings of fact.

With respect, I do not think that it was open to the Court
    of Appeal to depart from the trial judge's findings of fact absent evidence of
    a palpable and overriding error.
An appellate court should not substitute
    its views about the facts for those of the trial judge without carefully
    applying the strict test which has been developed over the years by the highest
    courts in England and Canada. Absent some manifest and palpable error, the
    trial judge's assessment of the witnesses' credibility must be allowed to
    stand.



Mr. Fletcher also testified that if he had been advised
    about the availability of UMC, he would have purchased it for additional safety.
McKeown J. commented, at p. 632, that "This is credible since the cost was
    only $15. He had always followed his insurance broker's advice in Ontario, and
    [his former insurance broker] said that he was an insurance conscious
    person." In summarizing his findings
McKeown J. said: "I find
    that if John  Fletcher had been offered underinsured motorist coverage he would
    have purchased the coverage."



McKeown J.'s findings of fact must stand. There is no
    reason to believe that he made a "palpable and overriding error".
He concluded, as he was entitled to do, that Mr. Fletcher was an extremely
    credible witness. On that basis he found that Mr. Fletcher relied on the
    respondent's employees for information and advice and that he would have
    purchased UMC had it been offered.
These findings are entirely reasonable
    and it is no more open to this Court than it was to the Court of Appeal to
    depart from them.

[Emphasis added.]

[8]

Thus, the Supreme Court treated it as a question of fact whether the
    insured would have purchased the additional insurance, if there had not been a
    breach of the duty of care. In
Fletcher
, the trial judges finding of
    fact that the insured would have purchased the additional insurance stood,
    absent a palpable and overriding error.

[9]

In this case, the trial judge came to the opposite conclusion. He found
    as a fact, after assessing the evidence in a procedure agreed to by the
    appellant, that the appellant would not have purchased the additional
    insurance. We have not been persuaded that the trial judge made any palpable
    and overriding error in making this finding of fact.

[10]

In
    our view, the trial judge carefully reviewed the relevant facts and reached a
    conclusion that was open to him. He noted that the appellant had never before
    purchased anything other than basic automobile insurance coverage and that according
    to the insurers records, the appellants wife indicated that optional coverage
    was declined because there was no need. He also drew, permissibly in our view,
    an adverse inference against the appellant because his wife, who dealt with the
    respondents representatives, provided no evidence about her dealings with
    those respondents.

[11]

Finally,
    we do not agree that requiring proof of the elements of the tort would put an
    impossible burden on the insured. Each case will turn on its own facts. In
Fletcher
,
    the insured adduced a body of evidence that led the trial judge to find that he
    would have purchased the insurance had it been offered. The difficulty in this
    case is that there was nothing but the bald and self-serving assertion in the
    appellants affidavit. There was nothing in the record to explain why the
    appellant would have taken the additional insurance. Against the bald assertion
    was the appellants history of never taking the additional coverage although he
    and his wife had dealt with at least five different insurance companies over
    the years. And, as we have said, there was the significant gap in the
    appellants case because of his failure to call his wife, who had dealt with
    the respondents representatives on all but one occasion.

[12]

The
    appeal is dismissed. It follows that it is not necessary to consider the
    cross-appeal. There will be no costs of the cross-appeal.

[13]

The
    respondent is entitled to its costs of the appeal fixed at $5,000 inclusive of
    disbursements and HST.

M.
    Rosenberg J.A.

J.C.
    MacPherson J.A.

H.S. LaForme J.A.


