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Court weighs Class Proceedings Act objectives in business interruption insurance carriage motions

Factors considered include best interests of class, fairness, access to justice, judicial economy

Court weighs Class Proceedings Act objectives in business interruption insurance carriage motions
An Ontario Superior Court judge says many insurers are denying Covid-19 business interruption claims

The pandemic has produced an issue of whether the insurance policy of a business covers COVID-19-related income losses due to restrictions and lockdowns, said Justice Edward Belobaba in his decision on carriage motions before the Ontario Superior Court of Justice.

In Workman Optometry et al v. Aviva Insurance et al, 2021 ONSC 142, Justice Belobaba noted that many insurers seem to be denying such coverage for business interruption insurance even if the language of their policies appears to suggest otherwise. Belobaba expects the filing of even more proposed class actions invoking this issue, in addition to the numerous ones already initiated.

The carriage contest before the Superior Court involved two groups: first, the Nordik Consortium (Lax O'Sullivan Lisus Gottlieb LLP, Thomson Rogers and Miller Thomson LLP) and Lerners LLP, whose clients were only suing Aviva Insurance, and second, the Workman Consortium (Koskie Minsky LLP and Merchant Law Group LLP), whose clients were suing around 16 insurers including Aviva. These two groups were seeking carriage of the Aviva portion, which was likewise a subset of a broader omnibus action.

The court concluded that it would be in the best interests of the Aviva classes, fair to the Aviva defendants and consistent with the objectives of the Class Proceedings Act, 1992, SO 1992, c 6, for the Nordik/Lerners Aviva actions to be carved out of the Workman omnibus action and to proceed expeditiously, with the Nordik Consortium and Lerners serving as carriage counsel, and for the Workman omnibus action to proceed without the Aviva defendants, with the Workman Consortium serving as carriage counsel.

The court stressed the paramount importance of a speedy determination and the context of these carriage motions, including the impacts of the COVID-19-related restrictions and lockdowns on big and small businesses and the harms on Canadians, which are occurring in real time.

The court considered the following factors: the best interests of the proposed class, the fairness to the defendants and the objectives of the Class Proceedings Act, which are access to justice, judicial economy and behaviour modification.

As to the best interests criterion, the court said that it would be in the best interests of the Aviva classes for the Nordik/Lerners Aviva actions to continue because such class actions, if certified, show an obvious and pressing need to be determined on their merits as speedily as possible. The applicable conventional carriage factors would not prevail over this finding, the court ruled.

As to the fairness factor, it would be unfair to Aviva if it would be required to defend both the Nordik/Lerners actions and the Workman Consortium omnibus action, the court said. Thus, the Aviva actions should be carved out of the Workman Consortium omnibus action.

The court said that its decision would help to attain the objectives of the Class Proceedings Act, including access to justice, the primary objective, particularly with respect to the class members in the Nordik/Lerners Aviva actions. The court then said that no one has suggested that a single omnibus proceeding was required by the judicial economy objective. Lastly, Aviva’s behaviour would more likely be positively modified if it was the only target in an Aviva-focused action, rather than if it was one of 16 defendants in an omnibus action, the court said.

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