M.T. MEGAW QUEEN’S BENCH FOR SASKATCHEWAN Citation: 2014 SKQB 31 Date: 2014 01 27 Docket: Q.B.G. No. 1035 of 2012 Judicial Centre: Saskatoon BETWEEN: BARRY JAMES SWEET, VERA MARLENE SWEET and SWEET ACRES LTD., and GLEN WESLEY SWEET, MICHELLE CATHIE SWEET, SWEET INVESTMENTS LTD. and JEFF KEELER, FIRST DEFENDANTS and SASKATCHEWAN MUTUAL INSURANCE COMPANY, SECOND DEFENDANTS Counsel: Robert L.J. Stevenson for the plaintiffs M. Kim Anderson, Q.C. for the defendants FIAT MILLS J. January 27, 2014 INTRODUCTION [1] The real issue in the application before the court is whether Saskatchewan Mutual Insurance Company (“SMI”) was in special relationship of insurer with the plaintiffs that carried duty of good faith and fair dealing. The plaintiffs are policy holders of the defendant SMI. This policy is not an issue in the action commenced by the plaintiffs and is not relied on for coverage in respect of the claim. SMI is the insurer for the defendants and is involved in this claim by virtue of policy of insurance with the defendants. The plaintiffs submit that because SMI also has an insurer relationship with them, duty of good faith and fair dealing arises between the plaintiffs and SMI obliging SMI to settle the plaintiffs’ claim against Glen Wesley Sweet, Michelle Cathie Sweet, Sweet Investments Ltd. and Jeff Keeler, (the “first defendants”) with that duty in play. [2] The plaintiffs are farmers. They farm land adjacent to the first defendants, who are also farmers. The claim alleges that the first defendants sprayed herbicide on their land which drifted across to the plaintiffs’ land and caused crop damage and subsequent financial loss. This is relatively common type of action in Saskatchewan. The claim by the plaintiffs was initially against the first defendant farmers for the crop loss. [3] The defendant farmers had insurance coverage for this type of loss and turned the claim over to SMI to be dealt with. Negotiations ensued, but the claim was not settled. The plaintiffs then filed an amended claim adding SMI as second defendant. The basis of the claim against SMI is predicated on the fact that the plaintiffs also have policy of insurance with SMI. This policy of insurance does not cover the type of loss sustained by the plaintiffs, and the plaintiffs did, therefore, not seek coverage or indemnification from SMI on their policy of insurance. The plaintiffs’ policy of insurance with SMI is not the subject of the court action and otherwise plays no part in these proceedings. Paragraph of the claim forms the nub of the action against SMI. 7. The plaintiffs first became aware of the said damage from the herbicide on or about July 25, 2010 and immediately notified the first defendants of the problem who in turn notified their insurer, SMI. At all material times, both the plaintiffs and the first defendants were covered under similar policies of insurance by SMI which consequently owed and owes them duty of good faith and fair dealing. In particular, the first defendants were and are covered for the said loss by SMI which owes to the first defendants the duty to pay the plaintiffs’ loss. Because of SMI’s exclusive control over the matter of settlement and litigation expressly reserved to it in the first defendants’ policy of insurance, it is obligated to settle claims asserted against the first defendants for any amount up to and including the policy limits where the claim justifies such settlement. At the same time, because of the subsisting relationship with the plaintiffs and consequential duty of good faith and fair dealing arising out of an identical, except for the insured, insurance contract, as more particularly stated in paragraph 2.1 above, SMI was and is duty bound to adjust the plaintiffs’ loss accordingly and is not entitled to treat the plaintiffs as adversaries. The plaintiffs duly submitted their claim for their said loss and damage together with proofs of loss required by SMI, but SMI has refused to settle on reasonable basis, instead using bad faith, ‘stonewalling’ tactics including: PARTICULARS OF BAD FAITH a) Failing to reasonably investigate and evaluate the plaintiffs’ claim when SMI’s agrologist committed material errors including having the land location wrong, the crop description wrong, the crop insurance zone comparison wrong and the plaintiffs’ loss consequently understated; b) Following its faulty investigation and erroneous evaluation, on May 18, 2011 ‘low-balling’ the plaintiffs’ claim by offering $32,511.96 in settlement; c) Having reached an erroneous conclusion regarding the plaintiffs’ loss, then refusing to either revisit or revise that conclusion in the light of subsequent information; d) Using incompetent or inadequately trained personnel for the investigation and evaluation of the plaintiffs’ claim; e) Failing to adopt and implement reasonable standards for the prompt investigation and settlement of claims including the plaintiffs’ claim arising under the first defendants’ policy; f) Not attempting in good faith to effectuate prompt, fair and equitable settlement of the plaintiffs’ claim as submitted in which liability is clear; g) Compelling the plaintiffs’ to institute this lawsuit to recover amounts due under its policy with the first defendants by offering substantially less than the said loss; h) Forcing the plaintiffs to litigate its valid claim, with attendant delay and cost, as strategy of wearing them down to accept settlement for less than the value of the loss; warranting in accordance with the rule in Whiten Pilot Insurance Co. punitive damages for the purposes of retribution, deterrence and denunciation and further or in the alternative solicitor and client costs of the litigation. [4] SMI brought an application pursuant to Rule 173(a) of the former Queen’s Bench Rules to have the claim against it struck in its entirety. The plaintiffs responded with an application to add further parties to the action. These third parties were either employees or agents of SMI. The nature of the proposed claim against these third defendants is as follows: 7.1 From on or about May 18, 2011, continuing until the present, the second defendant and third defendants conspired and combined amongst themselves to defraud and to injure the plaintiffs in order to delay or defeat the plaintiffs’ obvious and substantial crop loss because of chemical spray drift. In pursuance and in furtherance of the said conspiracy, the said defendants did the following overt acts, namely: a) particulars of bad faith as stated in paragraph above of the plaintiffs’ claim are hereby repeated; b) On November 30, 2012, the second defendant SMI caused to be disclosed to the plaintiffs two binders of documents thereby admitting relevancy and admissibility of those documents and waiving privilege, if any, in relation to those documents; c) Binder number covers the period of November 7, 2010 to February 28, 2011 and the documentary materials include the third defendant Frith’s agrologist report, compensation package, summary of findings, videotape transcript and evidence in essence confirming the fact of the plaintiffs’ crop loss as alleged for which compensation of $32,511.96 was offered in settlement of the plaintiffs’ loss estimated in the amount of $141,000; d) Binder number contains documentary materials supplementary to the materials from Binder number which were obtained, gathered or prepared for the sole or dominant purpose of aiding or abetting the said conspiracy to defraud. On or about March 30, 2012, the third defendant, Junop, deliberately submitted false plant sample, not of the plaintiffs’ crop, which he knew in advance would not show Touchdown and Banvel and would show 2, 4-D and Picloram; e) The certificate of analysis thus obtained, based on false plant sample, was used by the third defendant Frith, who as an agrologist knowledgeable about farm chemicals so that he knew better, deliberately used false lab results along with specious allegations of flooding to wrongfully zero out the plaintiffs’ compensation claim. 7.2 Each of the acts specified in the preceding paragraph hereof was done by the person or persons therein alleged on behalf of himself or themselves and his or their co-conspirators in furtherance of the said conspiracy. There was no allegation of an increased loss as result of the claim against the third party defendants. [5] The applicable rule to the application is Rule 7-9 of The Queen’s Bench Rules, which reads: 7‑9(1) If the circumstances warrant and one or more conditions pursuant to subrule (2) apply, the Court may order one or more of the following: (a) that all or any part of pleading or other document be struck out; (b) that pleading or other document be amended or set aside; (c) that judgment or an order be entered; (d) that the proceeding be stayed or dismissed. (2) The conditions for an order pursuant to subrule (1) are that the pleading or other document: (a) discloses no reasonable claim or defence, as the case may be; (3) No evidence is admissible on an application pursuant to clause (2)(a). [6] SMI has argued that Rule 7-9(3) includes implicitly the ability to file documentation referred to in the claim (McCreight v. Canada (Attorney General), 2013 ONCA 483 (CanLII), 116 O.R. (3d) 429) where on an identical rule the Ontario Court of Appeal allowed that “...a statement of claim is deemed to include any documents incorporated by reference into the pleading and that form an integral part of the plaintiff’s claim. Among other things, this enables the court to assess the substantive adequacy of the claim.” did not need to make determination on this issue as the claim itself sufficiently describes the policy and the factual basis upon which ruling can be made. [7] The test to be applied under Rule 7-9 for striking claim as disclosing no reasonable cause of action is still found in Hunt v. Carey Canada Inc., 1990 CanLII 90 (SCC), [1990] S.C.R. 959, 74 D.L.R. (4th) 321, “...assuming that the facts as stated in the statement of claim can be proved, is it ‘plain and obvious’ that the plaintiff’s statement of claim discloses no reasonable cause of action?” The plaintiffs make an application under Rule 3-72(1)(c)(ii) which replaces Rule 165 of the former Queen’s Bench Rules: 3‑72(1) party may amend the party’s pleading, including an amendment to add, remove, substitute or correct the name of party, as follows: (a) before statement of defence is filed, any number of times without the Court’s permission; (b) subject to subrule (2), in the case of an action proposed as class action, before statement of defence is filed; (c) after statement of defence is filed: (i) by agreement of the parties filed with the Court; or (ii) with the Court’s prior permission, in any manner and on any terms that the Court considers just. [8] The appropriate approach to this type of application is found in Roussy v. Red Seal Vacations Inc., 2011 SKCA 116 (CanLII), 377 Sask.R. 68, where the court stated: 13 It is common ground that the proper approach to Rule 165 application is reflected in the line of decisions including Duke v. Puts, 1997 CanLII 11015 (SK QB), [1998] W.W.R. 510 (Sask. Q.B.) at paras. and 9; Aquino v. First Choice Capital Fund Ltd. (1999), 1999 CanLII 20566 (SK QB), 179 Sask. R. 221 (Sask. Q.B.) at para. 21; Judith River Farm and Water Ltd. v. Saskatchewan, 2003 SKQB 443 (CanLII), 243 Sask. R. 74 at paras. 11 and 12; Sheppard v. Sheppard, 2003 SKQB 461 (CanLII), 243 Sask. R. 79 at paras. 23‑26. 14 These cases say an amendment under Rule 165 should not be allowed if the result would be pleading that could be struck pursuant to Rule 173. Rule 173 reads as follows: ... [9] The application to amend the claim to include SMI’s agents and employees as defendants under tort of conspiracy to defraud and injure the plaintiffs falls to be determined on the same basis as the claim against SMI. If no claim exists against SMI, then the attempted addition of its agents and employees in the circumstances of this nuisance or negligence claim against the first defendants cannot stand. [10] The plaintiffs rely heavily on Whiten v. Pilot Insurance Co., 2002 SCC 18 (CanLII), [2002] S.C.R. 595. The Supreme Court of Canada dealt primarily with the question of the appropriateness of the award and amount of punitive damages. The Ontario Court of Appeal decision, 1999 CanLII 3051 (ON CA), 170 D.L.R. (4th) 280, 42 O.R. (3d) 641, in upholding the claim stated at paras. 25 and 28: 25 ...A contract of insurance between an insurer and its insured is one of utmost good faith. Although the insurer is not fiduciary, it holds position of power over an insured; conversely, the insured is in vulnerable position, entirely dependent on the insurer when loss occurs. For these reasons, in every insurance contract an insurer has an implied obligation to deal with the claims of its insureds in good faith. That obligation to act in good faith is separate from the insurer’s obligation to compensate its insured for loss covered by the policy. An action for dealing with an insurance claim in bad faith is different from an action on the policy for damages for the insured loss. In other words, breach of an insurer’s obligation to act in good faith is separate or independent wrong from the wrong for which compensation is paid. 26 Vorvis [1989 CanLII 93 (SCC), [1989] S.C.R. 1085] requires an independent actionable wrong, not an independent actionable tort. Indeed, if Pilot’s submission were correct, punitive damages could never be awarded against an insurer for bad faith in the handling of an insurance claim. Such result would be contrary to all Canadian authority and to four cases since Vorvis, each of which has recognized that punitive damages may be awarded against insurers in first party cases, that is in actions brought by insureds against their own insurer. find support for my position in the following passage from the Ontario Law Reform Commission’s 1991 Report on Exemplary Damages which endorses punitive damage awards in first party insurance cases: There is at least one type of case of breach of contract where the arguments in favour of punitive damages are compelling. This is the case where the defendant breaches the contract deliberately, and refuses or fails to tender compensation known to be owing to the plaintiff. This could be case where, without justification, the defendant fails to perform and does not tender damages for the breach, or case where the defendant declines to honour known contractual obligation to pay money. Of course, the court would have to distinguish between true case of denying contractual obligations known to exist, and bona fide dispute over the existence or extent of liability. ... The case for punitive damages in these circumstances is much the same as it is in the tort for profit situation, and may be justified on both retributive and deterrence grounds. The fact that the defendant refuses to honour known obligation to pay money suggests that there exists some imbalance of power in the relationship that makes it worthwhile for the defendant to do so. This approach also seems to address the concerns that support punitive damages in the so‑called bad faith insurer cases. One variation occurs where insurance companies fail to honour clear first party obligations. This latter type of case might escape the confines imposed in Vorvis. The statutory obligation to pay first party benefits has been relied upon to distinguish this from the purely contractual claim ... Insurance contracts are said to be governed by duties of utmost good faith. This supports the substantive case for punitive damages. It also provides an avenue for the development of duty in tort, if Vorvis makes this necessary. This type of case is one where the argument for deterrence gross up is also compelling. This raises the possibility of more restrictive approach to punitive damages for the failure to honour known obligation to pay money. Punitive damages might be limited to wrongful dismissal and insurance cases, the types of cases that have given rise to punitive damages in Canada to date. Such cases typically involve the abuse of contractual power, which might not be the case in all other circumstance captured by more general rule. 27 If Vorvis makes it necessary, like the Commission, would be prepared to hold that an insured has duty in tort of good faith towards its insureds. duty in tort has been propounded by some Australian and American courts and was hinted at by Mason J. of the Alberta Court of Queen’s Bench in Adams v. Confederation Co. [(1994), 1994 CanLII 9244 (AB QB), 25 C.C.L.I. (2d) 180 (Alta. Q.B.)]. The Australian decisions focus on the insurer’s superior bargaining position and on the insured’s dependence and vulnerability. The nature of the relationship makes it “just and reasonable” to impose on the insurer duty of good faith. The American decisions acknowledge that an insurer has an implied contractual covenant to deal with its insureds in good faith, but hold that the insurer also has duty in tort, distinct from its implied contractual covenant. These American cases are consistent with recent Canadian jurisprudence, which has recognized, in variety of settings, concurrent liability in contract and tort. For example, in Central Trust Co. v. Rafuse, [1986 CanLII 29 (SCC), [1986] S.C.R. 147], solicitor’s negligence case, Le Dain J. held that common law duty of care may be created by relationship of sufficient proximity and is not confined to relationships that arise apart from contract: Where the common law duty of care is co‑extensive with that which arises as an implied term of the contract it obviously does not depend on the terms of the contract and there is nothing flowing from contractual intention which should preclude reliance on concurrent or alternative liability in tort. 28 strong argument can be made for finding that the relationship between insurer and insured is of sufficient proximity to give rise to concurrent duty in tort alongside the insurer’s implied contractual obligation to act in good faith. [11] The factual situation in Whiten, supra, involved claim by the Whitens against their insurance company under their policy of insurance. To utilize the phrase of the plaintiffs, the “special relationship” that arose between the insurance company and the insured came from the insurance company’s adjustment of that insured’s claim under that insurance policy. [12] In Saskatchewan Government Insurance v. Wilson, 2012 SKCA 106 (CanLII), 405 Sask.R. 8, our Court of Appeal dealt with the duty of good faith at para. 3: SGI admitted at trial that, as an insurer, it owes duty of good faith to Ms Wilson (fr.: Whiten v. Pilot Insurance Co., 2002 SCC 18 (CanLII), [2002] S.C.R. 595 at para. 79). In Fidler v. Sun Life Assurance Co. of Canada, 2006 SCC 30 (CanLII), [2006] S.C.R. 3, at para. 63, the Supreme Court of Canada adopted the description of an insurer’s duty of good faith as set forth in 702535 Ontario Inc. v. Lloyd’s London, Non‑Marine Underwriters (2000), 2000 CanLII 5684 (ON CA), 184 D.L.R. (4th) 687 (Ont. C.A.), at para. 29, where O’Connor J.A. said the duty requires an insurer “to deal with its insured's claim fairly” in terms of investigating and assessing the claim and in deciding whether to pay. More particularly, O’Connor J.A. held that an insurer is required to “assess the merits of claim in balanced and reasonable manner” and that payment decisions must be based on reasonable interpretation of the insurer’s obligations under the policy of insurance. [13] SMI argues that there must be breach of the contract of insurance between the insurer and insured before breach of the duty of good faith is actionable. [14] In Saskatchewan Government Insurance v. Wilson, supra, the court had this to say about an action for breach of the duty of good faith at para. 9: While agree that breach of the duty of good faith typically walks hand‑in‑hand with denial of benefits or other breach under the express terms of contract of insurance, breach of the implied duty of good faith does give rise to separate cause of action. This finding, reached by O’Connor J.A. in 702535 Ontario Inc., was reiterated by Charron J.A. (as she then was) in Ferme Gérald Laplante Fils Ltée v. Grenville Patron Mutual Fire Insurance Co. (2002), 2002 CanLII 45070 (ON CA), 217 D.L.R. (4th) 34 (Ont. C.A.), where she wrote: [78] breach of the duty to act fairly and in good faith gives rise to separate cause of action that is distinct from the cause of action founded on the express terms of the policy and that is not restricted by the limits in the policy. Hence it may result in an award of consequential damages distinct from the proceeds payable under the policy. It is important to note, however, that the duty to pay promptly, as component of the duty of good faith, must be considered in that context; it is not an absolute obligation giving rise to an automatic claim for consequential damages in the event of any failure to make timely payment in accordance with the policy. The latter contention was made by the insured in 702535 Ontario Inc. and rejected by this court. O’Connor J.A. stated as follows (at para. 37): ... the broader interpretation urged by the appellants could have far‑reaching effects for the insurance industry. In some cases, the risk of being found liable for consequential damages resulting from unsuccessfully contesting claim under policy would constitute substantial disincentive for insurers to deny claims, even those which they reasonably and in good faith consider to be either unfounded or inflated. In general sense, insurers and insureds have common interest in ensuring that only meritorious claims are paid. Increased payments by insurers lead to increased premiums for insureds. In order to effectively screen claims, insurers must be free to contest those claims which in good faith they have reason to challenge, without running the risk that if they are ultimately found to be wrong, they will be liable to indemnify the insured for losses not underwritten in the policy contracted for by the insured. [79] In addition, in an exceptional case where the insurer’s misconduct is sufficiently malicious, vindictive or reprehensible so as to warrant punishment in addition to compensation, breach of the duty to act fairly and in good faith can also found claim for punitive damages. [15] The Wilson, supra, case involved finding of an express breach of the contract of insurance. Both Whiten and Wilson, supra, and all other cases decided in this area are cases involving claim by the plaintiff under its policy of insurance issued by the defendant. There are no cases that suggest that a duty to act fairly and in good faith arises from the issuance of a policy where no claim is made against it. That is the case we have here. The plaintiffs submit that because they happen to have policy issued by the same insurer, duty is created to act fairly and in good faith on behalf of the plaintiffs while also being responsible to the defendant insureds on the same basis. [16] In our adversarial system to impose a duty upon an insurer to act fairly and in good faith to its insured in defence of the claim, while at the same time to act fairly and in good faith to the plaintiff in prosecution of the claim, is impossible. The plaintiffs argue that the insurance company by having an insurance relationship with both parties has put itself in conflict of interest on claim arising under one of the policies after their issuance. The plaintiffs say the problem is of SMI’s own making, and, therefore, they have to sort out the issue. Presumably that means paying more than they would normally have had to pay pursuant to its contractual obligations under the defendants’ policy, as SMI has an obligation to ensure that the plaintiffs also get fair value in settlement of their claim. That position is untenable. The obligations created in this case are by SMI to the first defendants, the holders of the policy that provides coverage for the claim. [17] SMI is obliged to defend the interests of the first defendants under the policy. It is entitled to attempt to limit the liability of the first defendants. SMI has referred this court to numerous decisions where no duty to third party by an insurance company was found to exist. good explanation of the theory behind this is found in Warner v. Balsdon (2008), 2008 CanLII 23713 (ON SCDC), 237 O.A.C. 317, 91 O.R. (3d) 124 (Ont. Sup. Ct.), where it was stated: 37 duty of care between third party liability insurer and persons who have made claims against the insurer’s insured would create conflicts of interest. As an indemnity provider, liability insurer is obligated to defend the interests of its insured and to limiting the liability of its insured. That translates into an effort by the insurer to avoid paying out on claims or minimizing the amounts paid. The insurer also owes duty to its policy holders to minimize premiums and one way of satisfying that duty is to minimize the number of claims paid, and the amount paid on any claims. D.M. v. Alberta Lawyers Insurance Assn., 2006 ABQB 598 (CanLII), [2006] A.J. No. 983 (Q.D.), per Booker J., at paras. 58 and 59. 38 To place duty of care on liability insurer vis‑à‑vis the party making claim, would require the insurer to breach the duties described above, placing the indemnity insurer in an impossible situation, which would not advance the law or the public interest. D.M. v. Alberta Lawyers Insurance Assn., supra, at para. 60. See also: Karamanolis v. Prudential Insurance Co. (1983), 1983 CanLII 1647 (ON SC), 42 O.R. (2d) 752, 150 D.L.R. (3d) 81 (Ont. Ct. J.); Hanna v. Polanski, 2012 ONSC 3229 (CanLII), [2012] O.J. No. 2459 (QL). [18] In Ernst Young Inc. v. Chartis Insurance Co. of Canada, 2012 ONSC 5020 (CanLII), [2012] O.J. No. 4399 (QL), the court stated: 143 ... An insurer owes no duty to person asserting claim against its insured. The claimant is stranger to the relationship between the insurer and the insured and is not in privity of contract with them (see: Karamanolis et al. v. Prudential Insurance Co. Ltd., 1983 CanLII 1647 (ON SC), [1983] O.J. No. 3140, 42 O.R. (2d) 752). Recognizing such duty would be “completely unworkable in the context of [an] adversarial relationship”, would create “irreconcilable conflicts of interest” and lead to “breakdown of the indemnity system” (see: D.M. v. Alberta Lawyers Insurance Assn., 2006 ABQB 598 (CanLII), [2006] A.J. No. 983, 271 D.L.R. (4th) 246, at paras. 57‑59). 144 On this basis, there could be no independent duty of good faith owed by Chartis to Ernst Young Inc. ... [19] There are further policy considerations that make the submission of the plaintiffs untenable. An insurance contract may provide a duty to defend, but not a duty to indemnify. In an action by plaintiff for damages, the insured will be responsible for the losses sustained if the plaintiff is successful. The insured will be relying upon the insurer to vigorously defend the plaintiff’s claim. Anything less would be breach of the insurance company’s duty to its insured. If it happens that the plaintiff is also policy holder with the insurance company on policy that has no bearing to the claim, the insurance company would be in the impossible position of owing duty of good faith and fair dealing to the plaintiff. This would result in an inability to utilize tactical or substantive errors by the plaintiff in the prosecution of its claim. It would be difficult to understand in what fashion duty to the plaintiff could be implemented by the insurer without compromising its obligations to the insured. [20] There are also, of course, insurance policies that have co-insurance provisions or deductibles that provide that the insured be responsible for either portion of or specified amount of payment for damages sustained. [21] To impose duty on the insurance company to act fairly in resolving the claim would put its insured’s financial position at risk. The insurer’s primary obligation arises from its contractual obligations to its insured under the policy being claimed on and not to third party who may be insured in circumstances unrelated to the action. [22] In my opinion the claim by the plaintiffs against SMI in the circumstances of this case has no reasonable chance of success or arguable case. In the words of Sagon v. Royal Bank of Canada, (1992) 1992 CanLII 8287 (SK CA), 105 Sask.R. 133, [1992] S.J. No. 197 (QL) (Sask. C.A.), it is plain and obvious the plaintiff will not succeed in this aspect of its claim. If SMI is not valid defendant under para. of the amended claim, then do not see how the allegation of conspiracy among SMI and its employees and agents can give rise to claim as framed in the proposed amended claim in para. [23] do not need to deal with the other arguments raised by SMI under the combination of Rules 3-72 and 7-9. Under Rule 7-9(2)(a) only the statement of claim is to be considered. Under ss. (2)(b), (c), (d) and (e) affidavit evidence is allowed to deal with those issues. The plaintiffs and defendants filed significant affidavit material on those issues. Part of the claim by the plaintiffs relies on settlement offers being made by SMI to the plaintiffs on behalf of the principal defendants. Those offers are utilized by the plaintiffs to establish that good faith dealing has not occurred. [24] As stated, do not consider it necessary to deal with the affidavit material given my conclusions under ss. (2)(a). The defendant SMI, however, has raised objections to the significant amount of information provided in the plaintiffs’ affidavits. For the most part, the objections raised to the affidavit material filed are valid. Those parts of the affidavit material that deal with settlement discussions should not have been tendered by the plaintiffs. need go no further than refer to the decision of Dufour J. in Tucker-Lester v. Lester, 2012 SKQB 443 (CanLII), 410 Sask.R. 153, while dealing with this issue. The plaintiffs have even referred to settlement discussions, negotiations and amounts in its proposed amended amended statement of claim to establish bad faith. This situation is further example of how the plaintiffs’ initial position on the existence of duty to the plaintiffs in the circumstances of this action is misguided. [25] Although determined that the plaintiffs’ improper affidavit material was not relevant to my consideration, the defendant still had to deal with the allegations made and prepare its brief of law challenging the admissibility of those statements as advanced by the plaintiffs. SMI should be entitled to its costs in so doing. fix them at $500. The defendant has been successful in its application to strike the claim as it relates to SMI. The plaintiffs have been unsuccessful in their application to amend their claim to include the agents and employees of SMI as party defendants. In the circumstances, SMI is entitled to its costs, which fix at $2,000. Hopefully the plaintiffs can get on with what this action is really about, which is the claim remaining by the plaintiffs against the neighbouring farmers who are alleged to have allowed chemical to drift onto the plaintiffs’ field and destroy their crop.
Civil Procedure – Affidavits – Admissibility HELD: The Court could not locate any cases that suggested there was a duty to act fairly and in good faith by an insurance company because of an insurance policy where no claim was made against it. The Court found that it would be impossible for SMI to act fairly and in good faith to the plaintiffs and to concurrently act fairly and in good faith to the first defendants. SMI only had a duty to defend the first defendants pursuant to their policy of insurance. The Court noted the following in making its conclusion: 1) if SMI also had a duty to the plaintiffs, they could not use tactical or substantive errors of the plaintiffs to minimize their payment obligation. The insurer would not be able to vigorously defend the claim; and 2) the first defendant may be required to pay more if there was a duty by SMI to the plaintiffs. Many insurance policies have co-insurance provisions or require deductibles be paid by the insured. The Court held that the claim against SMI, and its employees and agents, had no reasonable chance of success. The Court also awarded costs against the plaintiffs for filing improper affidavit material. The improper material included information on settlement discussions.