Firewalls between AB and BI departments - A Cautionary Tale
Nov 03, 2021
Amin v. Bhandhoal 2021 ONSC 6952 (“Amin”) is a cautionary tale for insurers who maintain a “firewall” between their AB and BI departments.
Amin involves a motor vehicle collision which occurred on a private parking lot. The uninsured plaintiff sought the advice of counsel in the wake of the accident, and was advised against pursuing with his/her claim due to the belief that the Insurance Act deprived them of any remedy in tort.
In an abundance of caution, the plaintiff’s lawyer issued a statement of claim on their own initiative on the two-year anniversary of the date of loss. The plaintiff discovered the existence of the claim in 2021, five years after the claim was first issued. The plaintiff immediately served the claim upon the defendants and made a motion to the court for an order extending time for service nunc pro tunc.
The motion was presided over by Associate Judge Wiebe. Justice Wiebe asked whether the requested extension of time for service would prejudice the defendants, and whether the plaintiff had adequately explained his failure to serve in time.
1. Has the delay in service produced prejudice to the defendants?
In considering whether to grant the plaintiff’s order, Wiebe A.J. relied upon the ONCA decision in Chiarelli v Wiens 2000 CanLii 3904 (“Chiarelli”). Chiarelli establishes that the Court is concerned primarily with the rights of litigants, and not with the conduct of counsel when deciding whether to grant an extension of time for service. In arguing that the defendants had suffered no prejudice, plaintiff’s counsel indicated that the defendant’s insurer had accumulated thousands of pages of medical records, assessment notes, and surveillance evidence within the accident benefit file for the plaintiff, that coincidentally the defendant’s insurer happened to be the same insurer for. The defence countered that the plaintiff’s failure to comply with s. 258.1(b) of the Insurance Act had resulted in real prejudice, and that an absence of notice had prevented the defendant from investigating the tort claim. While acknowledging the existence of the AB file, the defence argued that the defendant insurer could not have benefited due to the existence of a “firewall” which served to separate the AB and BI departments and prevent any transfer of information between the two.
Following a review of the documents disclosed, A.J. Wiebe inferred that the defendant’s AB department had notified the BI department of potential liability in 2014. In light of this, A.J. Wiebe found no evidence to compel a court to conclude that the defendant’s “firewall” was operative, and that the BI department remained unconnected to the AB file. Although the defence attempted alternative arguments, Wiebe was unconvinced and held that no prejudice had resulted to the defendants.
2. Has the Plaintiff adequately explained his failure to serve on time?
To succeed in his motion to extend time for service, a plaintiff must adequately explain the inordinate delay in serving the statement of claim. A.J. Wiebe noted that there was a clear and consistent explanation for the five-year delay in bringing the statement of claim: the plaintiff had relied upon incorrect legal advice in choosing not to pursue what they believed was a meritless claim.
The defence argued that the plaintiff had abandoned his claim, and pointed to several admissions obtained from the plaintiff under cross examination. The defence argued that the plaintiff admitted to choosing not to proceed with his claim on the basis of his lawyer’s representations—a decision they believed constituted abandonment. A.J. Wiebe was unconvinced by the defence’s reasoning, and found that there was no proof that the plaintiff ever deliberately ceased pursuing the defendants. He noted that no formal abandonment of the matter had been conveyed to the defendants from the plaintiff. In his decision, Wiebe relied upon Chiarelli in finding that “…on a motion to extend the time for service, the court should be concerned mainly with the rights of litigants, not with the conduct of counsel.” Satisfied by the plaintiff’s reasons for the delay, Wiebe granted the order for extension of time for service of the statement of claim nunc pro tunc.
Amin affirms Chiarielli in finding that a Court must be concerned primarily with the rights of litigants, and not with the conduct of counsel when deciding whether to grant an extension of time for service. Any defendant insurer looking to rely upon the existence of a “firewall” in such instances should be prepared to indicate that the “firewall” was demonstrably in effect throughout the proceeding. This decision is disturbing, in that it infers that the firewall only protects a plaintiff from sharing private information when it seeks to do so, but when the plaintiff needs to waive the firewall, long after the fact to prove a lack of prejudice, the Court seems willing to do so.