COURT OF APPEAL FOR ONTARIO

CITATION: Wilson v. Beck, 2013
    ONCA 316

DATE: 20130510

DOCKET: C54124

MacPherson, Cronk and Pepall JJ.A.

BETWEEN

Patricia Wilson, personally and as Estate Trustee
    for the Estate of Kenneth Wilson, Sarah Wilson by her litigation guardian,
    Patricia Wilson, Jordan Wilson by his litigation guardian, Patricia Wilson,
    Makayla Wilson, by her litigation guardian, Patricia Wilson, Dorothy Wilson,
    Ken Wilson, and George Wilson

Plaintiffs (Respondents)

and

Dr. Ian Vincent Beck, Dr.
    Douglas Gordon D. Cram, Dr. Katherine Maria Walewski Habdank-Kossowski
,
    St. Josephs Health Care Centre and Thames EMS Inc.

Defendants (
Appellants
)

Andrea Plumb and Dara Lambe, for the appellants

Paul Bates, David B. Williams and Mana Khami, for the
    respondents

Heard: January 15, 2013

On appeal from the judgment of Justice Johanne N.
    Morissette of the Superior Court of Justice, dated July 8, 2011, with reasons
    reported at 2011 ONSC 1789.

MacPherson J.A.
:

A.

INTRODUCTION

[1]

The appellants Dr. Ian Beck, Dr. Gordon Cram and Dr. Katherine Habdank-Kossowski
    (Dr. Habdank) appeal from the judgment of Morissette J. of the Superior Court
    of Justice dated July 8, 2011, holding them liable to the
    plaintiffs/respondents for their diagnosis and treatment of the deceased,
    Kenneth Wilson.  Mr. Wilson died as a result of complications of infective
    endocarditis (IE) caused by  staphylococcous aureus bacteria (staph aureus).

[2]

Dr. Beck and Dr. Habdank were found liable in negligence.  The trial
    judge found that Dr. Cram was not negligent, but held him vicariously liable
    for the negligence of Dr. Habdank.

[3]

The appeal raises issues of vicarious liability, standard of care, and
    causation.

B.

FACTS

(1)

The parties and events

[4]

On December 22, 2003, 34-year-old Kenneth Wilson visited his family
    physician, Dr. Ian Beck, for bacterial conjunctivitis (pink eye).  Dr. Beck
    prescribed topical antibiotics for five days.

[5]

On December 26, Mr. Wilson began feeling unwell.  By December 27, he had
    a temperature of 38°C.  He began to suffer from fever, chills, headache,
    diarrhea, lack of appetite, dizziness and fainting spells.  He said his stomach
    burned when he ate or drank.

[6]

Mr. Wilsons wife, Tricia, a registered nurse, administered Tylenol
    every four hours for his fever and encouraged him to increase his fluid
    intake.  Not seeing any improvement, Mrs. Wilson called Dr. Becks office on
    December 29 and booked the first available appointment for that evening.

[7]

Dr. Beck diagnosed Mr. Wilson with viral gastroenteritis (commonly known
    as the stomach flu).  He considered a bacterial infection, but ruled it out.
    He recommended rehydration and told Mrs. Wilson that the flu takes a long time
    to resolve.

[8]

From December 29 to 30, Mr. Wilson hydrated and took Tylenol.  He felt some
    improvement.  However, in the early morning hours of December 31, he was
    startled awake by the family cat and felt a sharp shoulder pain.  Concerned
    that he had dislocated his shoulder, Mr. Wilson asked his brother George to
    drive him to the emergency department of St. Josephs Hospital in London that
    morning.  Mrs. Wilson accompanied them.  She filled out a SARS form for her husband.
    She checked the Yes box for these two questions: Is the patient feeling
    feverish, had shakes or chills in the last 24 hours? and Is the temperature
    above 38°C?

[9]

Mrs. Wilson advised the triage nurse about Mr. Wilsons previous
    symptoms and treatment.  The triage nurse did not record these symptoms and
    there was no evidence at trial that she spoke to anyone else about what Mrs.
    Wilson told her.  She did not take Mr. Wilsons vital signs.

[10]

Dr.
    Habdank, a first year resident in internal medicine who was completing a
    rotation in emergency medicine, assessed Mr. Wilson. Dr. Habdank took a general
    history, recording that except for the complaint about his shoulder, Mr. Wilson
    was otherwise healthy.  Relying on x-rays, she diagnosed a soft tissue injury
    to the shoulder, ordered the administration of pain medication, and discharged
    Mr. Wilson once improvement was noted, with instructions to return if his
    symptoms worsened.  This diagnosis and plan were reviewed with, and approved
    by, Dr. Cram, the supervising emergency physician working in the emergency room
    that day.  Dr. Cram did not see Mr. Wilson.

[11]

After
    midnight on January 1, 2004, Mrs. Wilson found Mr. Wilson in the bathroom
    unable to catch his breath.  She called 911.  Upon the arrival of the paramedics,
    Mrs. Wilson informed them of Mr. Wilsons condition and recent history.  They
    assured her that Mr. Wilsons shortness of breath was due to his fever.  One of
    the paramedics had left her glasses in the ambulance and so did not take Mr.
    Wilsons pulse or blood pressure.  The paramedics counselled Mrs. Wilson not to
    go to the hospital because the emergency department was full of New Years Eve
    partiers.  Thames EMS Inc. admitted that the paramedics breached the standard
    of care expected of them.

[12]

From
    January 2 to 4, 2004, Mr. Wilson was generally very weak, requiring help to
    stand and go to the bathroom.  However, his fever was lower and his appetite
    returned a little.  Nevertheless, on January 5, Mr. Wilson became disoriented
    and unable to swallow his mucus.  Mrs. Wilson called Dr. Becks office and
    booked an appointment for later the same day.  When George arrived to take his
    brother to Dr. Becks office, Mr. Wilson did not recognize him.  Mrs. Wilson
    called 911.  When the paramedics arrived, they lectured Mrs. Wilson for not
    seeking medical attention sooner.

[13]

Mr.
    Wilson was taken to St. Josephs Hospital and was transferred to the ICU that
    night.  On January 6, an echocardiogram was ordered and the treating physician
    diagnosed Mr. Wilson with IE, a bacterial infection of the inner lining of the
    heart.  He was transferred to London Health Sciences Centre on January 7, where
    the physicians determined that he was not a candidate for surgery because the
    infection was out of control and the antibiotics were not working.  By January
    8, Mr. Wilson had minimal brain functionality.  Sadly, he passed away on
    January 9, 2004.

[14]

There
    are other facts relevant to the disposition of this appeal.  They are better
    dealt with in the context of the legal issues to which they relate.

(2)

The trial judgment

[15]

Two
    of the defendants entered into a Perringer Agreement with the plaintiffs, which
    resulted in the dismissal of the action against Thames EMS Inc. and St.
    Josephs Health Care Centre.  The trial proceeded against the non-settling
    doctors.

[16]

The
    trial judge stated that Dr. Beck was to be held to the standard of care of a
    prudent family doctor, Dr. Habdank to the standard of a prudent resident, and Dr.
    Cram to the standard of a prudent emergency physician.

[17]

The
    trial judge found that Dr. Beck breached his standard of care by not
    recommending a follow-up visit if Mr. Wilsons fever persisted and by providing
    a treatment plan that created a risk.
[1]

[18]

The
    trial judge found that Dr. Habdank breached her standard of care by failing to
    consider, or being wilfully blind to, all the clinical history provided by Mr.
    and Mrs. Wilson, including the history of a febrile illness (fever), shakes and
    chills documented in the SARS form.

[19]

The
    trial judge found Dr. Cram vicariously liable, as supervisor, for Dr. Habdanks
    negligence.

[20]

On
    the causation issue, the trial judge found that an echocardiogram is the only
    way to diagnose IE.  In order for an echocardiogram to be ordered at any stage
    of Mr. Wilsons illness, he would have to have presented with both a fever,
    which was obvious throughout, and, crucially, a heart murmur.  All the experts
    agreed that in the absence of either a fever or an audible heart murmur, the
    investigations necessary to diagnose IE would not have been undertaken.  As
    expressed by the trial judge:

In order for the plaintiffs to succeed, they must establish
    that in addition to Kens fever, there was a discernable heart murmur on or
    shortly after December 29
th
, December 31
st
or January 1
st
.
    That is the only way that the next step of ordering investigative tests would
    have led to a diagnosis of infective endocarditis.

[21]

After
    reviewing the evidence, including expert evidence and the medical literature,
    the trial judge found on the balance of probabilities (just over 50%), that on
    December 31
st
, a murmur would likely have been heard. A multitude
    of tests, including listening to his heart would have been ordered.  This
    treatment plan would have resulted in a completely different course of action
    and Ken would likely be alive today.

[22]

The
    trial judge awarded total damages of $557,289.  She apportioned liability for
    these damages as follows: St. Josephs Health Care Centre  20%; Thames EMS
    Inc.  20%; Dr. Beck  25%; and Dr. Habdank and Dr. Cram  35%.  The trial
    judge found no contributory negligence on the part of Mr. or Mrs. Wilson.

[23]

The
    appellants appeal the vicarious liability finding against Dr. Cram, the
    liability finding against Dr. Habdank, and the causation conclusion.

C.

ISSUES

[24]

The
    appellants raise three issues:

(1)

Did the trial judge err in law in
    finding Dr. Cram vicariously liable for the actions and omissions of Dr.
    Habdank?

(2)

Did the trial judge err in fact
    and law in finding a breach of the standard of care by Dr. Habdank?

(3)

Did the trial judge err in finding
    that the negligent conduct of the defendants caused Mr. Wilsons death?

D.

ANALYSIS

(1)
Vicarious
    liability  Dr. Cram

[25]

The
    trial judges analysis and conclusion on this issue are contained in a single
    sentence: Dr. Cram is only vicariously liable if Dr. Habdank is found to be
    liable.

[26]

The
    appellants contend that there was no basis for the trial judge to have held Dr.
    Cram vicariously liable for the actions of Dr. Habdank. The plaintiffs did not
    plead that Dr. Cram was vicariously liable.  Rather, the claims pleaded against
    Dr. Cram were in negligence.  As well, Dr. Crams vicarious liability was not argued
    at trial.

[27]

The
    respondents acknowledge that the possible vicarious liability of Dr. Cram was
    not an issue at trial.  They do not contend that this finding by the trial
    judge should be upheld.  This is a fair concession.  The case law is clear.  It
    is fundamental to the litigation process that lawsuits be decided within the
    boundaries of the pleadings. A finding of liability and resulting damages on a
    basis not pleaded in a Statement of Claim cannot stand, as it deprives the
    defendant of the opportunity to address that issue in the evidence at trial:
    see
Rodaro v. Royal Bank of Canada
(2002), 59 O.R. (3d) 74 (C.A.), at
    paras. 58-63.

[28]

The
    respondents assert that their claim against Dr. Cram at trial was one of direct
    liability, namely, that Dr. Cram, as the supervising physician in the Emergency
    Department, was ultimately responsible for Mr. Wilsons care.  Accordingly, if
    Dr. Habdank were negligent, so must have been Dr. Cram.

[29]

In
    my view, this is still the concept and language of vicarious liability.
    Indeed, in their factum, after discussing the evidence relating to what they
    want to call Dr. Crams direct liability, the respondents commence their
    legal analysis by formulating the issue in this fashion:

Thus, the issue relating to Dr. Cram is this: as the attending
    physician, did he have responsibility for Dr. Habdanks failure? This issue may
    be re-formulated in the language of vicarious liability as discussed in Ontario
    medical malpractice jurisprudence.

[30]

In
    other words, the respondents attempt to keep alive the possibility of a
    finding of direct liability against Dr. Cram collapses quickly and entirely
    into the concept of vicarious liability which, they concede, was neither
    pleaded nor argued at trial.

[31]

For
    these reasons, I would allow the appeal on this ground.

(2)
Liability
     Dr. Habdank

[32]

When
    Mr. Wilson arrived at the Emergency Department on December 31, 2003, Mrs.
    Wilson completed a SARS form.  As noted earlier, she checked the Yes box for
    these two questions: Is the patient feeling feverish, had shakes or chills in
    the last 24 hours? and Is the temperature above 38°C?

[33]

The
    trial judge found as a fact that the SARS form was on Mr. Wilsons chart when
    he was assessed by Dr. Habdank.  She also found as a fact that Dr. Habdank
    would have looked at it, but only for reasons of personal safety, not as a
    clinical document relating to Mr. Wilson.  The trial judge found that this
    breached the standard of care:

That, in my opinion, is to deprive her of [an] important piece
    of clinical history associated with Kens attendance on December 31
st
,
    2003.  All experts agree that one cannot ignore historical information no
    matter how it is obtained and for what purpose.

[34]

The
    appellants contend that the trial judge erred in finding that the SARS form was
    present on the chart at the time of Dr. Habdanks assessment.  They say there
    was no evidence to support this conclusion.

[35]

I
    do not accept this submission. In her testimony, Dr. Habdank accepted that the
    SARS form could have been on Mr. Wilsons chart when she assessed him.  She
    could not recall his attendance at the hospital.  She had seen SARS forms on
    patients charts before.  Dr. Cram testified that he did not recall seeing the
    SARS form on Mr. Wilsons chart but the practice of the hospital was to keep
    all documents relating to a patient together.  It was his sense that all
    records were kept together in the Emergency Room.  Finally, the hospital
    produced its records relating to Mr. Wilson as a package, including the SARS
    form.

[36]

Taken
    together, these factors strongly support the trial judges finding on this
    issue; in any event, the finding is far removed from being a palpable and
    overriding error.

[37]

The
    appellants contend that the trial judge erred in finding that Dr. Habdank fell
    below the standard of care in failing to review the SARS form to glean any
    potential clinical information that may be contained therein.

[38]

I
    disagree.  According to the trial judge, [a]ll experts agree that one cannot
    ignore historical information no matter how it is obtained and for what
    purpose.  Dr. Habdank, Dr. Cram and Dr. Thompson all agreed that information of
    a febrile illness would have changed their entire assessment of Ken. The
    record amply supports the trial judges conclusion that Dr. Habdank failed to
    meet the standard of care.

(3)

Causation

[39]

The
    appellants contend that the trial judge erred in several respects in her
    causation analysis.

[40]

The
    trial judge engaged in an extensive discussion of the causation issue (63
    paragraphs).  A fair summary of her causation analysis would be that it is
    based on three critical findings.

[41]

First,
    the trial judge concluded that in order to establish causation, the plaintiffs
    needed to show that Mr. Wilson had both a fever and a heart murmur on or
    shortly after December 29
th
, December 31
st
or January 1
st
.
    Only by first establishing both of those symptoms could the plaintiffs show
    that but for the defendants negligence in not listening to Mr. Wilsons heart
    sounds, they would have heard the heart murmur, ordered the appropriate tests,
    and diagnosed IE earlier.

[42]

Second,
    the trial judge agreed with the plaintiffs that Mr. Wilson never had any other
    illness besides a bacterial infection caused by staph aureus.  She disagreed
    with the defendants theory that Mr. Wilson had a viral infection upon which a
    bacterial infection was superimposed.  She thus implicitly answered her
    question of whether Mr. Wilson had IE on December 31 affirmatively, finding he
    had had IE from December 27.

[43]

Third,
    the trial judge determined that since Mr. Wilson had IE on December 27, he,
    more likely than not, had a heart murmur when he was at the Emergency
    Department on December 31.  She therefore found that but for the negligence of
    the defendants, Mr. Wilson would have been diagnosed with IE earlier than he
    was.

[44]

The
    appellants challenge two of these findings.  As causation is a factual inquiry,
    the appellants must establish that the challenged findings amount to palpable
    and overriding errors in order to succeed: see
Housen v. Nikolaisen
, 2002
    SCC 33, [2002] 2 S.C.R. 235, at paras. 10, 19;
Ediger v. Johnston
,
    2013 SCC 18, at para. 29.

[45]

The
    law of causation in medical malpractice cases has been the subject of many
    major decisions by the Supreme Court of Canada and this court: see, for
    example,
Snell v. Farrell
, [1990] 2 S.C.R. 311;
Athey v. Leonati
,
    [1996] 3 S.C.R. 458;
Cottrelle v. Gerrard
(2003), 67 O.R. (3d) 737
    (C.A.);
Aristorenas v. Comcare Health Services
(2006), 83 O.R. (3d)
    282 (C.A.);
Clements v. Clements
, 2012 SCC 32; [2012] 2 S.C.R. 181;
Goodman
    v. Viljoen
, 2012 ONCA 896, 299 O.A.C. 257; and
Ediger
.  A fair
    reading of these decisions easily establishes that this is a complex and
    difficult area of law for appellate judges.  It should not be forgotten that
    this is also true for trial judges.

[46]

The
    Supreme Court of Canada has again recently confirmed that the standard test for
    proving causation in a negligence case is the but for test  a plaintiff must
    show on a balance of probabilities that, but for the defendants negligent act,
    the injury would not have occurred: see
Ediger
;
at para. 28,
Clements
, at
    para. 8.  In applying this test, courts may take a robust and pragmatic
    approach to the facts: see
Snell
, at pp. 328-30. Finally, by way of
    setting the jurisprudential context for this appeal, Sharpe J.A. set out the
    proper analytical framework for medical negligence cases involving an alleged
    delay in diagnosis in
Cottrelle
, at para. 25:

I agree with the appellants submission that in an action for
    delayed medical diagnosis and treatment, a plaintiff must prove on a balance of
    probabilities that the delay caused or contributed to the unfavourable
    outcome.  In other words, if, on a balance of probabilities, the plaintiff
    fails to prove that the unfavourable outcome would have been avoided with prompt
    diagnosis and treatment, then the plaintiffs claim must fail. It is not
    sufficient to prove that adequate diagnosis and treatment would have afforded a
    chance of avoiding the unfavourable outcome unless that chance surpasses the
    threshold of more likely than not.

[47]

Against
    the backdrop of this brief description of the trial judges reasoning on the
    causation issue and this summary of the relevant legal principles, I turn to
    the appellants submissions on this issue.

[48]

The
    appellants do not challenge the trial judges first finding. They agree that in
    order to establish causation, the plaintiffs had to establish that Mr. Wilson
    had both a fever and a heart murmur, especially on December 31, 2003, when he
    attended the Emergency Department at St. Josephs Hospital.

[49]

The
    appellants challenge the trial judges second and third findings. They submit
    that she erred by finding both that Mr. Wilson had IE on December 27 and that
    he had a heart murmur on December 31.

[50]

The
    trial judges ultimate conclusion on causation is summarized in three
    paragraphs in her reasons:

If on day one of the infection, only 40% of patients have an
    audible murmur, and on day ten of the infection, it is more likely than not that
    85% of patients have an audible murmur (due to the progression of the
    vegetation), then a reasonable inference can be made that on day five, or
    December 31
st
, 2003, the halfway point, there would have been more
    likely than not an audible murmur, had his heart been listened to.

This inference is especially reasonable if between 20 to 40%
    die within a two-week period, it is safe to conclude that on a balance of
    probability, from December 27
th
, 2003 to January 5
th
,
    2004 (10 days), it is more likely than not that a heart murmur would have been
    heard by no later than December 31
st
(the half-way point).

So as the disease progressed, I find that on a balance of
    probabilities (just over 50%), that on December 31
st
, a murmur would
    likely have been heard.

[51]

The
    appellants submit that there was no evidence to support a finding that Mr.
    Wilson had IE by December 27, no evidence to support a finding that a heart
    murmur was likely present on December 31, and no evidence to support the trial
    judges mathematical analysis in the above passage.

[52]

I
    will deal with each proposition in turn.

[53]

In
    my view, there was evidence to support the trial judges finding that Mr.
    Wilson had IE by December 27, 2003.  Dr. John Jordan, a doctor called by the
    defence and qualified to give expert testimony on family medicine, testified in
    cross-examination that Mr. Wilsons presentment was compatible with a bacterial
    infection from the start.

[54]

Dr.
    Harry Rakowski, a cardiologist since 1976, testified as an expert witness for
    the plaintiffs.  His opinion was that Mr. Wilson had a bacterial infection, endocarditis,
    throughout his illness.  In his examination-in-chief, he said:

Q.      And can you tell us in relation to the Emergency Room
    standard of care of the physicians at that time what your analysis was?

A.      My analysis was that the standard of care was not met
    by either Dr. Habdank or Dr. Cram.

Q.      All right, and can you tell us what you took into
    account in arriving at that, in terms of Mr. Wilsons, what was relevant to his
    presentment and what they did and didnt do?

A.      So, I looked at a patient who went from being sick,
    visiting the family doctor, going to the Emergency Department, and then dying
in
    a 14 day course
, and that throughout that course there was really never
    any evidence that he was anything but sick. So, its not as though for a very
    short of time he was  its likely that he was healthy.  Heres someone who you
    know ends up having staph aureus endocarditis.  We know that
that organism
    typically is associated with you having bacteria in the bloodstream throughout
    the course of when  when you start to get sick to the end
, especially
    without antibiotic therapy.
And so, I have to believe that he was sick
    throughout, and not only sick, but quite sick.... He came in with concerns of
    an infection that initially were called viral, but in point of fact, you have
    to consider that he had
endocarditis
throughout the whole course
and he then comes to the Emergency Department.          [Emphasis and
    underlining added.]

[55]

In
    my view, there was also evidence to support the trial judges finding that Mr.
    Wilson probably had a heart murmur on December 31, 2003.  The trial judge
    clearly obtained the 40% and 85% figures she cited in the first paragraph set
    out above from Douglas P. Zipes,
Braunwalds Heart Disease: A Textbook of
    Cardiovascular Medicine
(Philadelphia: Elsevier Saunders, 2005), which was
    Exhibit 20 at trial.  The textbook states, at p. 1637: Heart murmurs are heard
    in 30 to 45 percent of patients on initial evaluation and are ultimately heard
    in 75 to 85 percent as a consequence of intracardiac damage.  This quote was
    properly in evidence because it was put to Dr. Rakowski in cross-examination
    and he accepted it, after some explanation, saying so I agree with that.

[56]

It
    is true that there were other studies in evidence with different percentages
    for heart murmurs at both initial evaluation and in the late stages of the
    disease.  It is also true that the trial judge was critical of Dr. Rakowskis
    testimony with respect to the percentage of cases in which a heart murmur could
    be detected at early presentation.  However, that does not detract from the
    fact that the relevant extract from the
Braunwald
text, a leading text
    in the field, was introduced into evidence, placed before an expert, and the
    expert agreed with it.  The trial judge then accepted and applied those
    conclusions, as she was entitled to do.

[57]

Once
    the appellants first and second no evidence propositions are rejected, the
    third no evidence proposition  there was no evidence to support the trial
    judges mathematical analysis in the passage set out above  falls away
    automatically.  The numbers the trial judge employed as book ends, i.e. that 40%
    of patients have an audible heart murmur at the onset of IE and 85% have a
    heart murmur ten days into the disease, are firmly grounded in the evidence.
    Her ultimate conclusion  a heart murmur was likely (on a balance of
    probabilities) present when Mr. Wilson attended the Emergency Department on
    December 31, 2003  is a fair extrapolation from the book end numbers.  In any
    event, it is far removed from being a palpable and overriding error.

E.

disposition

[58]

I
    would dismiss the appeal.

[59]

The
    respondents are entitled to their costs of the appeal which I would fix at
    $75,000 inclusive of disbursements and HST.

Released: May 10, 2013 (J.C.M.)

J.C. MacPherson J.A.

I agree. E.A. Cronk J.A.

I agree. S.E. Pepall J.A.

[1]
The appellants do not challenge this finding in this appeal.


COURT OF APPEAL FOR ONTARIO

CITATION: Ashak v. Ontario (Family Responsibility
    Office), 2013 ONCA 375

DATE: 20130606

DOCKET: C55781

Simmons, Hoy and Strathy JJ.A.

BETWEEN

Haiata
    Ashak, both personally and as Litigation Guardian for Steven Toma, Mona Toma and Mary Toma

Plaintiffs (Respondents)

and

Her
    Majesty the Queen in Right of Ontario, as
    represented by the Director for the Family Responsibility Office

Defendant (Appellant)

Lise Favreau and Chantelle Blom, for the appellant

John Bruggeman, for the respondents

Heard: May 17, 2013

On appeal from the judgment of Justice A. Duncan Grace of
    the Superior Court of Justice, dated June 15, 2012.

By the Court:

[1]

On May 17, 2013,
we dismissed this
    appeal for want of jurisdiction and indicated that our reasons would follow.
    These are our reasons.

[2]

The respondent, Ms.
    Ashak, and her children sued Her Majesty the Queen in Right of Ontario as
    represented by the Director of the Family Responsibility Office (FRO) for
    negligence and breach of fiduciary duty in collecting support arrears owing to
    Ms. Ashak by her former husband, for child and spousal support under an order
    made in 1996.

[3]

On June 15, 2012, Grace J.
    dismissed a summary judgment motion brought by FRO requesting that the action
    be dismissed. Rather than accepting FROs position that it did not owe a duty
    of care to the respondents, in the course of his reasons, the motion judge
    indicated he was satisfied that Ms. Ashak had established a
prima
    facie
duty of care in relation to her
    negligence claim and that other issues required a trial. Some examples of the
    motion judges comments are the following:

·

I am of the view [that] Ms. Ashak has established a
prima
    facie
duty of care and that there are several aspects of her claim which
    require a trial for their just determination (para. 34).

·

In my view, a
prima facie
duty of care arises in this
    case from the legislative scheme and the interactions between FRO and Ms.
    Ashak (para. 44).

·

In my view, the relationship between Ms. Ashak and FRO is
    sufficiently close  or proximate  that a
prima facie
duty of care
    arose (para. 59).

·

This is the rare situation identified by McLachlin C.J. in
Imperial
    Tobacco
. Writing for a unanimous court, the Chief Justice wrote: Some
    statutes may impose duties on state actors with respect to particular
    claimants (para. 70).

[4]

Despite these statements, in the
    section of his judgment entitled Conclusion and Disposition, the motion judge
    did not recite any specific findings that could lead to a conclusion of law,
    nor did he state any such conclusion. Rather he said:

For the reasons given, the motion for summary judgment is
    dismissed.

I was not asked to and have therefore not given directions or
    imposed terms pursuant to rule 25.05. If there are directions or terms counsel
    agree would be appropriate, I would be pleased to assist.

[5]

The formal order in this matter
    reads, "THIS COURT ORDERS that the motion for summary judgment is
    dismissed."

[6]

On appeal to this court, FRO took
    the position that the order is a final order because the motion judge finally
    determined the question of whether FRO has a
prima facie
duty of care to the respondents in the circumstances
    of this case and that finding will be binding on the trial judge.

[7]

We do not accept this submission.
    As was noted by this court in
Leone v. University of Toronto Outing
    Club
, 2007 ONCA 323, at para. 2, it is
    well-established that, in general, an order dismissing a motion for summary
    judgment is not a final order because a decision under Rule 20 determines only
    that a genuine issue requiring a trial exists. Accordingly, to the extent that
    a motion judge may purport to make findings of fact in reasons for judgment
    dismissing a Rule 20 motion, such findings do not have binding effect:

An order dismissing a motion for summary judgment brought under
    Rule 20 is not a final order in that it determines only that there are genuine
    issues for trial. Consequently, any apparent findings of fact made by this
    motion judge in the course of his reasons for dismissing the motion for summary
    judgment do not support a
res judicata
or issue estoppel claim in the
    subsequent proceedings: see
V.K. Mason Construction Ltd. v. Canadian
    General Insurance Group Limited
(1998), 42 O.R. (3d) 618 (C.A.).

[8]

At para. 3 of its reasons, the
    court in
Leone
went on to
    identify the ability of a motion judge to make binding determinations of fact
    under rule 20.05 when dismissing a motion for summary judgment. However, the
    court was careful to emphasize that, if a motion judge proposes to exercise the
    powers under rule 25.05, the motion judge should say so  and the formal order
    should reflect that:

We note that Rule 20.05(1) and (2) do contemplate, in the
    circumstances described in Rule 20.05(1), findings of fact even where a motion
    for summary judgment is dismissed. If a motion judge proposes to make findings
    of fact under Rule 20.05(1), he or she should expressly invoke that provision
    and the order should refer to that provision.

[9]

In our view, a similar power to
    make binding determinations of law when dismissing a motion for summary
    judgment likely exists under rule 20.04(4). Concerning this issue, we note that
    in
S.(R.) v. H.(R.)
(2000), 52
    O.R. (3d) 152, at para. 21, Morden J.A., speaking for this court, indicated,
    albeit in
obiter
, that that was
    probably the case:

I should note that in
Air Canada v. British Columbia
[citations omitted], it was held that where a party singled out an issue for
    resolution on a motion for summary judgment, the resolution of that issue
    against the party gave rise to issue estoppel. In the same vein, an order
    dismissing a motion for summary judgment on a question of law, where the only
    genuine issue is the question of law (as provided for in rule 20.04(4)) should
    probably be regarded as giving rise to a
res judicata
and, hence, a final
    order.

[10]

We note that rule 20.04(4) states
    that [w]here the court is satisfied that the only genuine issue is a question
    of law, the court may determine the question and grant judgment accordingly.

[11]

Like the court in
Leone
, it is our view that, if a motion judge dismissing a
    motion for summary judgment proposes to exercise the power under rule 20.04(4)
    to make a binding determination of law, the motion judge should specifically
    invoke the rule, and reference to the rule, as well as the legal determination
    made, should form part of the formal order. In our opinion, the issue of whether
    an order is final or interlocutory should not turn on the forcefulness of the
    reasons for the conclusion: see
S.(R.) v. H.(R.)
,
at para. 16.

[12]

Concerning the content of the formal
    order, we note that in
Ball v. Donais
(1993), 13 O.R. (3d) 322 (C.A.), a case relied upon by FRO, the order
    under appeal set out the question of law decided against the appellant. In
Ball
, the defendant moved under rule 21.01(1)(a) for a
    determination before trial of a question of law raised by the pleadings,
    namely, that the action was barred by a limitation period. The motion judge
    decided the question of law against the defendant and the formal order read as
    follows:

1.THIS COURT DETERMINES that the action
    herein is not barred by the reason of the two year limitation period as
    provided in Section 180(1) of the Highway Traffic Act, R.S.O. 1980, chapter 198
    as amended.

[13]

In our view, in most instances, the
    content of the formal order is integral to determining what has been decided
    against a party in a fashion that is binding. As this court held in
Grand
    River Enterprises v. Burnham
(2005), 197
    O.A.C. 168 (C.A.), "the law is clear that an appeal lies from an order,
    not from the reasons given by the judge making the order" (at para. 10).

[14]

In this case, FRO did not refer to
    rule 20.04(4) in its notice of motion or single out for determination the
    question of whether it owes a
prima facie
duty of care to the respondents or the constituent
    findings that would lead to that conclusion. The motion judge did not invoke
    rule 20.04(4) and the formal order does not refer to either the rule or any
    formal conclusions that were reached.

[15]

In support of its position that
    the order under appeal is a final order, FRO relied heavily on this courts
    decision in
Almrei v. Canada (Attorney General)
2011 ONCA, 2011 ONCA 779, 345 D.L.R. (4th) 475, in
    which an order dismissing a summary judgment motion was held to be a final
    order. Although it is not clear from this court's decision what was contained
    in the formal order, we have confirmed that the formal order contained in the
    appeal book in that case simply dismisses the motion for summary judgment and
    makes no reference to rule 20.04(4). Nonetheless, in our view, that decision should
    not be viewed as establishing a general principle that the question of whether
    an order dismissing a motion for summary judgment is final can be determined
    based on the motion judges reasons.

[16]

In
Almrei
, the appellant had been subject to two security certificates
    in succession under the
Immigration and Refugee Protection Act
, S.C. 2001, c. 27. After a lengthy hearing, parts of
    which were held
in camera
or
ex
    parte
, a federal court judge quashed the
    second certificate as being unreasonable. In addition to his public reasons,
    the federal court judge gave secret reasons to which Mr. Almrei did not have
    access. In a subsequent civil proceeding against Canada for negligent
    investigation, false imprisonment and various
Charter
breaches, Mr. Almrei sought partial summary judgment
    based on the operation of issue estoppel. Lederman J. dismissed the motion,
    holding that the test for issue estoppel had not been met and that the
    operation of an estoppel in that case would be unfair. On a motion brought by
    Canada to quash Mr. Almreis appeal, this court determined Lederman J.s order
    dismissing the summary judgment motion was a final order. In doing so, this
    court relied on the novel nature of the appellants proposed use of issue
    estoppel as a sword rather than as a shield and on the unusual context of the
    case. In our opinion,
Almrei
should not be viewed as establishing a general principle that where a judge
    purports to make legal determinations in reasons dismissing a summary judgment
    motion those determinations should be treated as binding. We reach this
    conclusion for several reasons.

[17]

First, as the court in
Almrei
noted, Mr. Almrei singled out for determination on
    the summary judgment motion the question of the use of issue estoppel. Because
    he did so, and because of the nature of the issue, dismissal of the motion for
    summary judgment led to the inevitable conclusion that Mr. Almrei could not
    rely on issue estoppel at trial. Such a result does not follow in cases such as
    this one where the moving party has not formally singled out the precise legal
    issue that the motion judge purportedly decided.

[18]

Second, in
Almrei
, this court concluded that, because of the unusual
    facts of the case, Lederman J.s determination of the issue estoppel question
    potentially deprived Mr. Almrei of substantive rights. This was because Mr. Almrei
    might never have access to or be able to call portions of the evidence heard by
    the federal court judge. The finding that issue estoppel could not operate
    therefore potentially deprived Mr. Almrei of the ability to prove his case.

[19]

Third, unlike the situation in
    this case, where the respondents acknowledge that the
prima facie
duty of care issue has not been finally determined,
    in
Almrei
,
Canada maintained
    that the question of issue estoppel was
res judicata
.

[20]

In contrast to the situation in
Almrei
, in many cases, it would be difficult to determine
    the scope of the point of law conclusively determined by a motion judge who
    dismisses a Rule 20 motion if the precise finding is not carefully singled out
    by either the parties or the motion judge and is not embodied in a court order.

[21]

In our view, that is especially
    the case here, where one of the issues identified in FROs notice of motion was
    whether a genuine issue requiring a trial exists concerning whether FRO owes a
    duty of care for the good faith exercise of statutory discretion. The answer to
    that question required consideration of the two-step
Anns
[1]
test as it has been applied in Canada. The motion
    judge made definitive statements about the existence of a
prima
    facie
duty of care, which is the first step
    of the two-step analysis. However, his reasons were not so definitive about the
    precise components of the first step that led to that conclusion, particularly
    in relation to where and how policy considerations factored into his analysis.

[22]

Without a more precise elaboration
    of the constituent elements of the
prima facie
duty of care finding, the motion judges
    determination would leave it unclear how the trial judge should address the
    policy considerations crucial to the two-step duty of care analysis.

[23]

As we have said, this is not a
    case like
Almrei
where the moving party had singled out an issue for
    determination and where, because of the nature of the issue (a novel use of
    issue estoppel), dismissal of the summary judgment motion led to the conclusion
    that Mr. Almrei could not rely on issue estoppel at trial. On the contrary,
    especially in the circumstances of a case such as this one, had the parties or
    the motion judge intended any portion of the motion judges reasons to
    constitute a final order, they ought to have ensured that the motion judges
    findings on each element of the first step of the
Anns
test was embodied in a formal order.

[24]

FRO also argued that it is clear
    from his reasons that the motion judge intended to make a final order.  We do
    not accept that submission. As we have said, the motion judge did not make any
    findings in the Conclusion and Disposition section of his reasons. Moreover,
    he noted that he had not been asked to give directions or impose terms under
    rule 20.05 and invited the parties to agree upon directions or terms for
    submission to him. They did not do so.

[25]

In the result, we have concluded
    that the motion judge's determination that FRO owed the respondents a
prima
    facie
duty of care is not binding on the
    trial judge and is not a final order. Accordingly, the appeal is dismissed for
    lack of jurisdiction.

[26]

For the sake of completeness, we
    note that the respondents took no issue with FROs appeal to this court until
    after Lederer J. raised the issue of the proper appeal route on an application
    for leave to appeal other aspects of the June 15, 2012 order to the Divisional
    Court. Even then, the respondents did not bring a formal motion to quash in
    advance of the appeal hearing. We note as well that, during the course of the
    oral hearing, we denied FROs request for an adjournment to permit it to
    attempt to obtain an amendment of the formal order.

[27]

We make no comment on the subject
    of whether FRO can or should be entitled to pursue a further leave application
    to the Divisional Court other than to say that nothing in these reasons should
    be taken as affecting that issue.

[28]

Costs of the appeal are to the
    respondents on a partial indemnity scale fixed in the amount of $10,000
    inclusive of disbursements and applicable taxes.

Released: June 6, 2013 JS                                            Janet
    Simmons J.A.

Alexandra
    Hoy J.A.

G.R.
    Strathy J.A.

[1]

Anns v. Merton London Borough Council
, [1978] A.C.
    728.


COURT OF APPEAL FOR ONTARIO

CITATION: Aviva Insurance Company of
    Canada v. Lombard General Insurance Company of Canada, 2013 ONCA
    416

DATE: 20130620

DOCKET: C55661

Blair, Tulloch and Lauwers JJ.A.

BETWEEN

Aviva Insurance Company of Canada
, Tandem
    Realty Administration Inc., Tandem Group Management Inc., Van Forbell and Paul
    Reid

Plaintiff
    (Respondent/

Appellant by way of cross-appeal)

and

Lombard General Insurance Company of Canada

Defendant (Appellant/

Respondent by way of cross-appeal)

Ronald G. Slaght, Q.C. and Dena N. Varah, for the
    appellant/respondent by way of cross-appeal

Steven Stieber and Elizabeth Bowker, for the respondent/appellant
    by way of cross-appeal Aviva Insurance Company of Canada

Heard: March 18, 2013

On appeal from the judgment of Justice A. Duncan Grace of
    the Superior Court of Justice, dated June 1, 2012, with reasons reported at
    2012 ONSC 3219.

Blair
    J.A.:

Overview

[1]

Aviva Insurance Company of Canada and Lombard General Insurance Company
    of Canada disagree over the ranking of policies required to respond to losses
    arising from a fire in a Toronto apartment building.  One of the corollaries to
    their respective manoeuvrings is this appeal.

[2]

The tragic fire occurred in January, 1995.  Six people died and numerous
    others were seriously injured.  Eight legal proceedings resulted, and among the
    various defendants held liable were the owner of the building, Axes Investments
    Inc., and the property manager, Tandem Group Management Inc.  Axes and Tandem
    were jointly represented by one counsel at trial and liability was not
    apportioned between them; instead, they were found liable as one defendant.

[3]

There were three policies of insurance available to respond to their liability:

(i)

a Lombard primary policy, with limits of $1 million, insuring both Axes
    and Tandem;

(ii)

a Lombard umbrella policy, with limits of $9 million, insuring both Axes
    and Tandem; and

(iii)

an Aviva policy, with limits of $5 million, insuring Tandem only.
[1]

[4]

It was clear early on that the extent of the plaintiffs claims in the
    tort actions would exceed the limits of the Lombard primary policy, and there
    was never any dispute about whether that policy would be responsible for the
    first $1 million in damages.  Since the outset, however, Aviva and Lombard have
    engaged in a sophisticated and protracted contretemps over which insurer was
    responsible for what portion of the excess losses.

[5]

Lombard took the position that the Aviva policy was required to respond next
    after the Lombard primary policy and that the Lombard umbrella policy was only
    triggered if and when the Aviva $5 million limits had been exhausted.  Aviva took
    the opposite position, maintaining that the Lombard umbrella policy was next to
    respond completely because it covered both the owner and the property manager.

[6]

Acting on the advice of experienced senior counsel, each insurer carefully
    planned its strategy and tactics to achieve their desired result, and much
    litigious ground has been ploughed to this end.  At the end of the day, however
     in the circumstances I will describe below  Aviva paid the entire amount of
    the excess claim to the tort plaintiffs.

[7]

In this action, Aviva submits that Lombard should be responsible for
    one-half of that payment because Avivas policy covered only Tandem (the
    property manager) whereas the Lombard umbrella policy covered both Tandem and
    Axes (the owner), and because Tandem and Axes were each liable to pay that
    portion of the damages assessed against them in the tort actions.  Lombard
    argues that, because a previous proceeding determined that Aviva was required
    to respond next after the Lombard primary policy to the liability of their
    joint insured, Tandem, and because Avivas payment satisfied the liability
    claim in full, Lombards responsibility under its excess umbrella coverage was
    never engaged, and full responsibility therefore lies with Aviva.

[8]

At trial, Grace J. agreed with Aviva and gave judgment against Lombard
    in the amount of $1,086,195.70 plus pre-judgment interest and costs,
    representing 50% of the amount paid by Aviva.

[9]

I too agree, although not entirely for the same reasons, and I would
    dismiss the appeal.  I would also dismiss Avivas cross-appeal in relation to
    costs.

Background

[10]

What
    happened is not in dispute and is well summarized by the trial judge in his
    reasons.

[11]

Lombards
    primary policy covered the first $1 million of the damages arising from the
    fire, and it paid that amount.  The debate is about who is responsible for the
    significant excess amount needed to satisfy the portion of the judgments
    obtained by the tort plaintiffs for which Axes and Tandem (as a single
    defendant) were found responsible.

[12]

The
    conundrum arises because of the way in which Aviva and Lombard decided to
    approach the defence of the tort actions.  Lombard acknowledged that its
    primary policy was first to respond; it retained experienced counsel to defend
    the owner and property manager  both covered under its policies  and funded
    their defence.  Although entitled to do so, Aviva did not participate in the
    defence of the tort actions or retain its own counsel for that purpose.

[13]

There
    has been much blaming and finger pointing in both directions regarding why
    Aviva (itself acting on the advice of experienced counsel) chose not to defend
    and whether Lombard was taking advantage of Aviva by solely defending the tort
    actions and not appointing separate counsel for Axes and Tandem. Was Aviva
    simply lying in the rushes awaiting the outcome and hoping, if necessary, to
    be able to raise its conflict of interest arguments against Lombard and thus
    avoid making any payments altogether?  Was Lombard attempting to take advantage
    of Aviva by bringing what is described below as the Priority Proceeding, to
    avoid paying anything over and above its primary policy limits?

[14]

Like
    the trial judge, I am somewhat puzzled by the rhetoric these issues have evoked.
    As he aptly observed at para. 69:

Both insurers point self-righteous fingers at the other.  I do
    not know why.  They are sophisticated, knowledgeable and experienced.  They
    tried to outwit the other.  The priority proceeding made Avivas objective of
    paying nothing on account of the tragic fire unattainable.  The result of that
    proceeding before Hoilett J. seems to have been the catalyst for Lombards
    attempt to avoid paying anything beyond that expended under the primary policy.
    I observe with interest but am unaffected by the insurers approach.

[15]

I
    am not persuaded that the allegations surrounding the parties respective
    tactical and strategic manoeuvres have much relevance to the ultimate
    resolution of the issues before us.  Each insurer was entitled to protect its
    own position.

[16]

What
    emerges from these tactics, however, is that the parties presented a unified
    defence in the tort actions, with only one counsel representing both owner and
    property manager.  They did not assert any cross-claims seeking an
    apportionment of liability as between them, should their insureds be found
    liable.  In the result, Lane J.  the trial judge in the test case that
    proceeded (called the
Bakhtiari
action)
[2]
 made no findings apportioning liability as between Axes and Tandem.  He found
    them liable, as one defendant, for a portion of the plaintiffs damages.

[17]

The
    judgment in
Bakhtiari
was appealed.  Before that appeal was heard, Lombard
    commenced the Priority Proceeding, seeking a declaration that, after Lombards
    $1 million payment under its primary policy, Avivas policy was next to respond
    to the damages.  On August 22, 2003, Hoilett J. ruled in Lombards favour,
[3]
finding that Avivas policy was a primary policy with an excess coverage clause
    ranking ahead of Lombards true umbrella policy.  Lombard reads this decision
    as establishing that Avivas policy is next to respond in relation to
all
of
    Lombards umbrella policy obligations with respect to the Axes/Tandem unit, up
    to the point where Avivas policy limits are exhausted.

[18]

While
    Aviva was appealing Hoilett J.s ruling in the Priority Proceeding, this Courts
    decision on the judgment of Lane J. in the
Bakhtiari
action was
    released, on February 6, 2004.  Lane J.s findings as to liability were upheld,
    but his judgment was varied to decrease the percentage of responsibility
    assigned to the defendant unit of Axes and Tandem from 70% to 45%.

[19]

At
    this point, the games between Aviva and Lombard peaked.  The tort plaintiffs
    demanded payment.  They could do so from either or both insurers.  Aviva
    proposed a joint payment, sharing the claim equally.  Lombard did not agree.

[20]

Ultimately,
    in the words of Lombards counsel  Aviva blinked.  Without a decision on the
    appeal in the Priority Proceeding and faced with (a) a clear order that it was
    next to respond in relation to Tandems liability, (b) the threat of
    enforcement and a potential claim for punitive and exemplary damages for
    failure to pay, and (c) Lombards refusal to agree to a joint contribution by
    both insurers, Aviva paid the Axes/Tandem portion of the plaintiffs damages.  The
    amount it paid was $2,493,343.13, including pre-judgment interest and costs.
[4]

[21]

After
    Avivas payment, this Courts decision in the Priority Proceeding was
    released.  This Court specifically varied Hoilett J.s order to clarify that
    Avivas exposure to respond next related solely to the liability coverage
    afforded to [Tandem].  This decision, as varied, is known as the Ranking
    Decision.
[5]

[22]

The
    Priority Proceeding and the Ranking Decision did
not
touch on whether,
    or to what extent, liability would be shared if Avivas payment on behalf of
    Tandem exhausted the liability of both defendants, jointly.  This unresolved
    matter brought Aviva before Grace J., seeking  and being granted  recovery from
    Lombard for one-half of its damages payment. Lombard now appeals this decision.

Analysis

[23]

For
    purposes of this analysis, it is significant that the two insurers agreed to
    present a common defence in the tort actions, with one set of counsel.  It may
    be that in agreeing to this approach, Avivas objective was to position itself
    so that it would end up paying nothing at all with regard to the fire losses.  Attaining
    this objective was precluded by the Ranking Decision, as it turned out.  At the
    same time, it can fairly be said that Lombards objective was the opposite  to
    position itself so that it would have to pay nothing over and above the limits
    of its primary policy.  As the trial judge observed, each tried to outwit the
    other.

[24]

The
    result of this manoeuvring was Aviva and Lombards decision to defend the tort
    actions as one defendant, without seeking any decision as to contribution and
    indemnity as between them.  As the trial judge correctly noted at para. 38:

[T]he owner and property manager were treated both at trial and
    on appeal as if they were one defendant.  No effort was made to distinguish
    between the acts or omissions of the owner and property manager.  In other
    words, the process of allocation of fault between the owner and property
    manager did not fail.  It was never engaged. By choice.

[25]

Contrary
    to Lombards contention, Aviva does not resile from that position here.
    Rather, it relies upon the one defendant determination in the tort action.
    It argues that because the tort action treated two distinct defendants (each
    with different insurers) as one defendant for the purpose of finding
    liability, and because the trial judge did not apportion liability as between
    them, the issue in this proceeding is not about how to apportion
liability
as between two defendants; it is about how to apportion
responsibility
for that one defendant liability as between the two insurers.

[26]

In
    my opinion, these issues are properly resolved in the final analysis through
    the application of notions of equitable contribution, or some combination of
    equitable contribution and the restitutionary principles of unjust enrichment
    both simply examples of the fair play rules imposed by equity.  These
    principles operate to require Lombard to contribute to Avivas payment of the total
    loss.  Payment of the loss was in reality a payment on behalf of
both
Tandem and Axes.  Lombard insured both Tandem and Axes.  While Lombard was not
    required to respond next to the loss on behalf of Tandem (in view of the
    Ranking Decision), it
was
required to respond to the loss on behalf of
    Axes.  It should therefore contribute to the total loss on a 50/50 basis.

[27]

I
    arrive at this conclusion on the following basis.

a)

Equitable Contribution

[28]

The
    trial judge did not find contribution to be an appropriate basis for recovery.
    In my view, however, principles of equitable contribution are germane to these
    circumstances.

[29]

The
    traditional criteria for applying the doctrine of equitable contribution as
    between insurers are the following:

(i)

All policies concerned must comprise the same subject-matter.

(ii)

All policies must be effected against the same peril.

(iii)

All policies must be effected by or on behalf of the same assured.

(iv)

All policies must be in force at the time of the loss.

(v)

All policies must be legal contracts of insurance.

(vi)

No policy must contain any stipulation by which it is excluded from
    contribution.

[30]

These
    criteria were confirmed by the Supreme Court of Canada in
Family Insurance
    Corp. v. Lombard Canada Ltd.
, 2002 SCC 48, [2002] 2 S.C.R. 695,  at para.
    15, adopting the criteria set out in E.R. Hardy Ivamys
General Principles
    of Insurance Law,
6th ed. (London: Butterworths, 1993), at p. 518.  I
    shall refer to them as the Ivamy criteria for purposes of these reasons.

[31]

Equitable
    contribution in the insurance context has traditionally been applied to prevent
    over-recovery by an insured with more than one insurer covering the same risk,
    and to do so by calling on all relevant insurers of that same risk to share pro
    rata in payment of that loss.  In her text,
General Principles of Canadian
    Insurance Law
, 1st ed. (Markham: LexisNexis, 2008), at p. 317, Barbara
    Billingsley explains the concept in this way:

Where a given loss is covered by more than one insurance
    policy, the principle of indemnity still applies.  In other words, despite the
    fact that the insured has multiple sources of insurance coverage, the insured
    is not entitled to recover more than the value of the loss.  In order to
    prevent over-recovery by the insured, the doctrine of contribution applies.
Contribution
    requires payment of the loss to be shared by the relevant insurers.
This
    sharing of the loss ensures that the insured is not over-indemnified by
    recovering the full amount of the loss from multiple sources.  Contribution
    also ensures that each insurer fulfills its indemnity obligation
and is not
    relieved of its payment obligations by the existence of other applicable
    insurance.
[Emphasis added.]

[32]

As
    the Supreme Court of Canada put it in
Family Insurance Corp.
, at para.
    14: [t]he selected insurer, in turn, is entitled to contribution from all
    other insurers
who have covered the same risk
 (emphasis added).

[33]

Here,
    Aviva is equivalent to the selected insurer because it has paid the damage
    claim in full; Lombard is another insurer who [has] covered the same risk,
    i.e. the risk of indemnifying against the losses associated with the one
    defendant award made against Axes/Tandem.

[34]

As
    I appreciate the way in which the doctrine of equitable contribution has been
    applied in the insurance context, two different considerations are at play. The
    first is the need to prevent over-recovery by an insured who can look to more
    than one insurer for payment.  The second is the need to avoid a windfall to
    insurers other than the selected insurer because that selected insurer paid
    in full a claim arising out of shared liability.  This latter goal is achieved
    by requiring the other insurers who cover the same risk to share pro rata in
    responding to that risk.

[35]

In
    this case, that risk is the equal obligation on the part of Aviva and Lombard to
    respond to the tort plaintiffs claim against the Axes/Tandem unit.

[36]

Lombard
    and Aviva chose to put forward a one defendant case to the tort action trial
    judge.  They invited and had a one defendant damage award made against them.
    As a result, the tort plaintiffs were entitled to enforce the portion of the
    damage award allocated to the Axes/Tandem unit against either Axes or Tandem
    for the full amount, and threatened to do so.  To the extent they had sought to
    enforce the full amount of the claim against Axes alone, Lombard was obligated
    to respond in full because of its obligation to indemnify Axes; indeed, Aviva
    did not insure Axes at all.  To the extent the tort plaintiffs had sought to
    enforce the judgment against Tandem alone, Tandem could potentially look to
    either Aviva or Lombard, because Tandem was insured by both, but with the
    Ranking Decision putting Aviva next in line to respond following Lombards
    primary policy.  Although Lombard had the benefit of the Ranking Decision for
    purposes of its umbrella policy, that did
not
discharge its obligation
vis-à-vis Axes
in terms of responsibility for the Tandem payment.

[37]

In
    short, Lombard and Aviva were each equally obligated to respond to the
    plaintiffs claims in full.  The fact that Aviva blinked first does not
    detract from Lombards legal obligation to respond, had the tort plaintiffs
    pursued Axes alone. Blinking cannot be the defining principle of insurance
    law upon which the respective responsibilities of Aviva and Lombard for
    responding to the losses are determined.

(i)

The Ranking Decision

[38]

I
    do not think the Ranking Decision affects this result.

[39]

Much
    was said about that decision in argument.  Lombard contended that its effect
    was to eliminate any obligation on the part of Axes or Lombard to respond to
    the losses unless and until Avivas limits on behalf of Tandem had been
    exhausted.  I do not read the Ranking Decision in that way.  In my view its
    only effect was to settle that Aviva was required to respond next to satisfy
Tandems
liability.  That was the case because Avivas policy was a primary policy
    with an excess coverage clause, as opposed to a true umbrella policy. As such, it
    took priority over the Lombard umbrella policy also providing excess coverage
    to Tandem: see
Trenton Cold Storage Ltd. v. St. Paul Fire and Marine
    Insurance Co.
, 199 D.L.R. (4th) 654 (Ont. C.A.)
.
The Ranking
    Decision did not determine that Axes had no liability to pay until this had
    been done or that Lombard had no obligation to respond to the liability of
Axes
.  I do not accept Lombards submission to the contrary, and I do not
    think the Ranking Decision precludes the operation of the doctrine of equitable
    contribution here.

(ii)
         The Same Assured

[40]

I
    recognize that the third Ivamy criterion stipulates that [a]ll the policies
    must be effected by or on behalf of the same assured, and that there are two
    insured entities here, Axes and Tandem.  However, I do not see this criterion
    as a rigid impediment to extending the doctrine of equitable contribution to
    the circumstances found in this case.  Resort to principles of equity calls for
    flexibility.

[41]

At
    its heart, the doctrine of equitable contribution as between insurers turns
    less on the existence of a single insured than on the fact that multiple
    insurers are responsible for
the same liability
of that insured
    arising out of the same risk.  In
Family Insurance Corp
, at para. 14,
    the Supreme Court of Canada highlighted the basic principle underlying the
    doctrine of equitable contribution: [t]he doctrine of equitable contribution
    among insurers is founded on the general principle that
parties under a
    coordinate liability to make good a loss
must share that burden pro rata
    (emphasis added).

[42]

This
    is the rationale underpinning contribution as between insurers, which, in turn,
    is the means by which over-recovery is prevented.  When two insurers insure the
    same risk, and choose  as Aviva and Lombard did here  to present a united
    front as one defendant in the tort actions arising from the occurrence of
    that risk, the two insurers (the one defendant (Axes/Tandem)) may in effect
    be viewed as though they are subject to a coordinate liability and, therefore,
    as if they were the the same assured for purposes of that particular risk, in
    my view.

[43]

Just
    as it is not equitable to permit the second of two insurers to escape with no
    responsibility where the first insurer, covering the same loss on behalf of the
    same insured, pays the claim in full, it would be similarly inequitable to
    permit the second insurer to do so in the circumstances that exist here.

[44]

In
    these circumstances, the fact that Avivas policy was ranked ahead of Lombards
    with respect to Tandem is not determinative of the result.  In my view, the
    same result would flow if Lombard had only insured Axes and not Tandem at all.
    By putting forward a one defendant stance in the tort action, and inviting
    the trial judge to impose a single damage award against them both, without any
    attribution of liability as between them, Aviva and Lombard effectively created
    one insured for purposes of responding to the damages awarded against
    Axes/Tandem.  They are equally obligated to pay the plaintiffs.  They should
    share that obligation equally, in the absence of any contractual or statutory
    provision to the contrary (neither of which has been brought to our attention).

[45]

In
    these circumstances, the Axes/Tandem defendant was liable to pay, and Aviva and
    Lombard had a coordinate liability to make good that loss in relation to that
    defendant.  I do not see why Lombard ought not to be required to fulfill[] its
    indemnity obligation or why it should be relieved of its payment obligations
    by the existence of other applicable insurance (Billingsley, p. 317).

[46]

Just
    as it does not lie in the mouth of an insurer covering the same risk in the
    single insured context to say there is nothing to pay because the selected
    insurer has paid the full amount and therefore there is no outstanding
    liability, it does not lie in Lombards mouth in these circumstances to say in
    effect, too bad, so sad: Aviva has paid the joint liability of Axes
and
Tandem by responding to the claim against Tandem, and as a result there is
    nothing left for Axes, nor therefore for us, to pay.

b)

Restitution

[47]

There
    is another basis for upholding Lombards responsibility to contribute equally
    to the damages awarded against Axes/Tandem, one that was relied upon by the
    trial judge in his alternative reasoning: the principle of restitution known as
    unjust enrichment.

[48]

Recently,
    in
Kerr v. Baranow
, 2011 SCC 10, [2011] 1 S.C.R. 269, at paras. 31-32,
    Cromwell J. summarized the rationale and legal framework underlying the unjust
    enrichment concept as it has evolved in Canadian law:

At the heart of the doctrine of unjust enrichment lies the
    notion of restoring a benefit which justice does not permit one to retain:
Peel
    (Regional Municipality) v. Canada
, [1992] 3 S.C.R. 762, at p. 788.  For
    recovery, something must have been given by the plaintiff and received and
    retained by the defendant without juristic reason.  A series of categories
    developed in which retention of a conferred benefit was considered unjust.
    These included, for example: benefits conferred under mistakes of fact or law;
    under compulsion; out of necessity; as a result of ineffective transactions; or
    at the defendants request: see
Peel
, at p. 789; see, generally,
    G.H.L. Fridman,
Restitution
(2
nd
ed. 1992), c. 3-5, 7, 8
    and 10; and Lord Goff of Chieveley and G. Jones,
The Law of Restitution
(7
th
ed., 2007), c. 4-11, 17 and 19-26.

Canadian law, however, does not limit unjust enrichment claims
    to these categories.  It permits recovery whenever the plaintiff can establish
    three elements: an enrichment of or benefit to the defendant, a corresponding
    deprivation of the plaintiff, and the absence of a juristic reason for the
    enrichment:
Pettkus; Peel,
at p. 784.  By retaining the existing
    categories, while recognizing other claims that fall within the principles
    underlying unjust enrichment, the law is able to develop in a flexible way as
    required to meet changing perceptions of justice:
Peel
, at p. 788.

See also
Rathwell v. Rathwell
, [1978] 2
    S.C.R. 436, at p. 455;
Sorochan v. Sorochan
, [1986] 2 S.C.R. 38, at p.
    44;
Pettkus v. Becker
, [1980] 2 S.C.R. 834; and
Peter v. Beblow
,
    [1993] 1 S.C.R. 980.

[49]

Cromwell
    J. also observed, at para. 34, that while the underlying legal principles of the
    law of unjust enrichment are the same for all cases, the courts must apply
    those common principles in ways that respond to the particular context in which
    they are to operate.  They must be applied with flexibility and common sense.

[50]

In
    my view, the trial judge was correct in concluding that these criteria have
    been met in the circumstances of this case.

[51]

Lombard
    argues that no case for a restitutionary remedy has been made out.  Mr. Slaght
    submits that Lombard did not receive any benefit from Avivas payment of the
    judgment because Lombard had no obligation to respond until after Aviva had
    paid on behalf of Tandem to the full extent of the Aviva policy limits.  Once
    Aviva paid, there was no further obligation to the tort plaintiffs for Lombard
    to discharge.  In these circumstances  so the argument goes  Aviva did not
    relieve Lombard from a legal burden that Lombard would otherwise have been
    obliged to assume; Aviva was simply complying with its own obligation to pay on
    behalf of Tandem.  On a similar analysis, Aviva was not deprived of anything,
    because Aviva was obliged to respond to Tandems obligation to the full extent
    of the Aviva policy limits as a result of the Ranking Decision.

[52]

I
    disagree.

[53]

As
    explained earlier in these reasons, the Ranking Decision did not negate
    Lombards obligation under its umbrella policy to cover the liability of Axes.
    It simply ranked the competing policies in terms of responding to Tandems
    liability.  The variation of Hoilett J.s judgment by this Court, and Hoilett
    J.s reasons themselves, make this clear: Avivas obligation to respond next
    after the Lombard primary policy related to the liability coverage afforded to
    the defendant Tandem.

[54]

At
    the instance of the two insurers, Lane J. awarded damages against Axes/Tandem
    as one defendant, a single united tortfeasor.  The tort plaintiffs had the
    right to pursue enforcement against either or both of Axes and Tandem.  In this
    respect, it matters little whether that liability is described in the judgment
    as joint and several or not: both Axes and Tandem were obliged to pay the
    portion of the damages awarded against them in full.  Tandem had the right to
    be indemnified by both Lombard and Aviva, but as a result of the Ranking
    Decision, Aviva was next to respond to that indemnity claim.  At the same time,
    if the tort plaintiffs had decided to pursue Axes alone, as they would have
    been entitled to do, Axes was entitled to claim indemnity under the Lombard umbrella
    policy because Lombard remained fixed with the obligation to respond to that
    liability in relation to Axes.

[55]

In
    such an event, Lombard would have been in exactly the same position as an
    insurer who paid the claim of an insured who was able to choose from several
    insurers of the same risk; it would be entitled to seek contribution from those
    other insurers.  The reverse is true when the payment is made in these
    circumstances by Aviva.

[56]

I
    observe in passing that this analysis overlaps in some aspects with the
    analysis leading to the adoption of equitable contribution principles.  This is
    not surprising.  Both equitable contribution and unjust enrichment have their
    roots in notions of equity, and what is at issue here, at its core, is whether it
    would be unfair for Lombard to be relieved of its payment obligations by the
    existence of other applicable insurance, to adopt the equitable contribution
    language cited above from p. 317 of Billingsleys text.

[57]

For
    purposes of the unjust enrichment analysis, the point is that Lombard retained
    its obligation to pay on behalf of Axes, notwithstanding the Ranking Decision.
    When Aviva covered that obligation  even though it did so in the course of
    covering its own obligation in relation to Tandem  it conferred a benefit on
    Lombard in the sense that the payment spared Lombard from incurring an expense it
    would otherwise have had to incur: see
Kerr
, at para 38.  Aviva also
    suffered a corresponding deprivation.  I agree with the trial judge at para. 80
    that [t]o the extent Aviva paid more than the property managers [Tandems]
    proper share, the payments were to Avivas detriment.  Had Lombard complied
    with its obligation to indemnify Axes for its share of the damage award, Aviva
    would not have had to cover Lombards share of the loss.

[58]

Nor
    can I see any juristic reason for conferring such a benefit on Lombard in these
    circumstances.  The Ranking Decision only resolved the issue of whether
    Lombards umbrella policy had to respond next (after its primary policy limits
    had been paid) for both Tandem and Axes, or whether Avivas policy stood next
    in line in relation to Tandems coverage. There could be no basis upon which
    Avivas policy could rank ahead of the Lombard umbrella policy in relation to
    the liability of Axes: Aviva did not insure Axes.

[59]

For
    the reasons expressed above, in the words of Cromwell J. in
Kerr
, at
    para. 40, there is no reason in law or justice for Lombards retention of the
    benefit conferred by Aviva.

[60]

I
    would therefore uphold the trial judges finding that Lombard is required to
    reimburse Aviva for one-half of the Axes/Tandem liability on unjust
    enrichment/restitutionary grounds.

c)

Aetna Insurance Co. v.
    Canadian Surety Co.

[61]

Both
    Aviva and the trial judge relied on a decision of the Alberta Court of Appeal
    in
Aetna Insurance Co. v. Canadian Surety Co.
(1994), 149 A.R. 321, to
    support the conclusion that responsibility for payment of the Axes/Tandem
    damages should be shared equally between Aviva and Lombard.

[62]

In
    that case, damages were awarded in Montana proceedings as a result of a fatal
    tractor-trailer accident involving a trucking unit owned by Alberta parties.
    The tractor and the trailer were each insured by different insurers.  It was
    the drivers negligence that caused the accident, and there was no other basis
    for attributing negligence to the tractor or the trailer.  The Montana court
    made no apportionment of liability as between the two, in effect treating the
    tractor and trailer as one defendant for purposes of the damage award.

[63]

Aetna
    ultimately paid the claim on behalf of its insured, the owner of the trailer,
    and commenced proceedings in Alberta against the insurer of the tractor for
    contribution and restitution.  Acknowledging that it was impossible to
    apportion liability as between the owner of the tractor and the owner of the
    trailer, the Alberta Court of Appeal attributed half of the operators
    negligence to the tractor and half to the trailer.  The Court concluded that
    for the purpose of assessing ultimate responsibility (para. 119), the only
    reasonable solution [was] to apportion responsibility for that negligence
    equally (para. 121).

[64]

Lombard
    submits that the
Aetna
decision is not helpful, arguing that it is
    distinguishable on a number of factual and statutory grounds.  The trial judge
    recognized the factual distinctions, but concluded that the facts and analysis
    in the decision were analogous.  He pointed out at para. 53 that in
Aetna
,
    the allocation of responsibility involved the negligent operation of two
    things (the tractor and the trailer) by one person, whereas the case here
    involves negligence in relation to one thing (the property) by two people (the
    owner and property [manager].  He therefore found the Alberta Court of Appeals
    analysis with respect to the tractor and trailer applicable to Axes and Tandem
    here.

[65]

Whether
    the distinguishing features render the
Aetna
decision inapplicable in
    this case or not matters little, in my view.  It is simply an example of a
    decision that gives effect to the concept of coordinate liability in the
    context of equitable contribution.

[66]

I
    am satisfied that the appeal may be disposed of on the basis of the equitable
    contribution and restitution analyses set out above.

Cross-Appeal as to Costs

[67]

Aviva
    seeks leave to appeal and, if granted, to appeal from the trial judges failure
    to award its costs on a substantial indemnity basis.  He awarded $56,841.85
    inclusive of disbursements on a partial indemnity basis.

[68]

Avivas
    principal submission is that the trial judge erred in failing to consider a
    proposed resolution set in a letter of September 21, 2005, from Avivas counsel
    to Lombards counsel.  Aviva says the outcome at trial was essentially the
    proposed resolution contained in the letter, and that Lombard wrongly ignored
    the letter.  Lombard counters with the argument that the primary purpose of the
    letter was to initiate discussions about the quantum of damages, without
    addressing the issue of apportionment of responsibility between the insurers.

[69]

I
    do not read the letter in quite the same way as Lombard does.  In the letter,
    Mr. Stieber specifically outlined the principles upon which it is suggested
    that the
apportionment
be carried out  essentially a 50/50 split
    between the Aviva policy and the Lombard umbrella policy, after payment of the
    initial $1 million under the Lombard primary policy.  That said, the letter
    does not constitute an offer to settle on the basis outlined in it, only a
    suggestion as to how the apportionment should be carried out.

[70]

While
    the trial judge does not appear to have addressed his mind to the letter in his
    endorsement on costs, and although he may have been entitled to give it some
    weight, I do not think his failure to do so constituted an error in principle
    that would justify our interfering with his decision not to award substantial
    indemnity costs.  Nor do I think Lombards refusal to respond to the letter was
    conduct of such an egregious nature that would justify such an award.

[71]

Accordingly,
    while I would grant leave to appeal, I would dismiss the appeal as to costs.

Disposition

[72]

For
    the foregoing reasons I would dismiss the appeal and the cross-appeal.

[73]

Counsel
    have agreed on costs.  I would therefore fix Avivas costs of the appeal and
    the cross-appeal, together, in the amount of $12,500 all inclusive, in
    accordance with the agreement of counsel.

R.A. Blair J.A.

I agree M.H. Tulloch
    J.A.

I agree P. Lauwers
    J.A.

Released: June 20, 2013

[1]
In fact, the policies were with predecessors of Lombard and Aviva, but nothing
    turns on this distinction.

[2]

Bakhtiari v. Axes Investments Inc.,
[2001] O.J. No. 4720 (S.C.).

[3]

Lombard General Insurance Co. v. CGU Insurance Co. of Canada
, [2003]
    O.J. No. 3385 (S.C.).

[4]
This amount represents the outstanding portion of the damage award attributed
    to Axes/Tandem, after deduction of Lombards $1 million primary policy
    coverage.

[5]
Lombard
    General Insurance Co. v. CGU Insurance Co. of Canada
, [2004] O.J. No. 2269
    (C.A.).