Citation: Collings v PEI Mutual Insurance Co. Date: 20031223 2003 PESCTD 104 Docket: GSC-17965 Registry: Charlottetown PROVINCE OF PRINCE EDWARD ISLAND IN THE SUPREME COURT - TRIAL DIVISION BETWEEN: DERRELL COLLINGS and GERTRUDE COLLINGS AND: PLAINTIFFS PRINCE EDWARD ISLAND MUTUAL INSURANCE COMPANY DEFENDANT Before The Honourable Justice David H. Jenkins (In Chambers) (Decision on Defendant s motion to bifurcate jury trial) Appearances: Peter C. Ghiz, for the plaintiffs Benjamin Taylor, Q.C., for the defendant Place and date of motion Place and date of judgment Charlottetown, Prince Edward Island November 26, 2003 Charlottetown, Prince Edward Island December 23, 2003 PUBLISHERS NOTE: Pursuant to agreement among counsel and the Court, it is ordered that there be no publication of this decision before the jury retires to consider its verdict on Part II of the trial.
Citation: Collings v PEI Mutual Insurance Co. Date: 20031223 2003 PESCTD 104 Docket: GSC-17965 Registry: Charlottetown BETWEEN: AND: PROVINCE OF PRINCE EDWARD ISLAND IN THE SUPREME COURT - TRIAL DIVISION DERRELL COLLINGS and GERTRUDE COLLINGS PRINCE EDWARD ISLAND MUTUAL INSURANCE COMPANY Prince Edward Island Supreme Court - Trial Division Before: Jenkins J. (In Chambers) (Decision on Defendant s motion to bifurcate jury trial) Date of motion: November 26, 2003 Date of decision: December 23, 2003 (8 pages) PLAINTIFFS DEFENDANT PRACTICE: motion to bifurcate civil jury trial. CASES CONSIDERED: Whiten v. Pilot Insurance Co., [2002] 1 S.C.R. 595 (S.C.C.); Marrelli v. Deathe, [2003] O.J. No. 2204 (Ont. Sup. Ct.); Sempecos v. State Farm Fire and Casualty Insurance Co., [2002] O.J. No. 4498 (Ont. Div. Ct.) appealed [2003] O.J. No. 2886 (Ont. C.A.); Wonderful Ventures Ltd. v. Maylam, [2001] B.C.J. No. 1144 (B.C.S.C.); DaCosta (Litigation Guardian of) v. Cochen (1996), 1 C.P.C. (4 th ) 292 (Ont. Gen. Div.); Smiley v. Wolch, [1997] B.C.J. No. 2377 (B.C.S.C.); Hodges v. S.C. Toof & Co. (1992) 833 S.W. (2d) 896 (Supreme Court of Tennessee). STATUTES CONSIDERED: Supreme Court Act, R.S.P.E.I. 1988, Cap. S-10; Jury Act, R.S.P.E.I. 1992, Cap. J-5.1. RULES CONSIDERED: Rules of Civil Procedure, Province of Prince Edward Island, Rule 5.05 and Rule 52.07(1). ARTICLES CONSIDERED: William E. McNally and Barbara E. Cotton, The Case for Bifurcation of Issues in a Class Action Proceeding, Advocates Quarterly, Volume 25 (2002) at p. 391. Appearances: Peter C. Ghiz, for the plaintiffs Benjamin Taylor, Q.C., for the defendant PUBLISHERS NOTE: Pursuant to agreement among counsel and the Court, it is ordered that there be no publication of this decision before the jury retires to consider its verdict on Part II of the trial.
Jenkins J.: [1] The Defendant asks for bifurcation of the trial to sever the issues of entitlement to payment under the insurance contract and damages from the issues of entitlement to punitive damages and quantum. The Plaintiffs consent to the concept of bifurcation, but on circumscribed terms which do not meet the Defendant s objective. [2] The action will be heard by a jury. Trial is scheduled to run three weeks commencing January 12, 2004. This motion envisions a single and continuous jury trial. The motion does not seek to remove any issues from the jury, or to sever any issues for hearing in a separate trial or before another jury. The Defendant s counsel estimates that Part I of the trial, which would deal with the fire, the nature and cause of the fire, and motive and opportunity for deliberate setting of the fire by a Plaintiff and nonpayment by the Defendant respectively, would consume the first two weeks; and that Part II of the trial, which would deal with the bad faith issues, would take up the third week for the jury. At the end of each of Parts I and II, the jury would be instructed and then recess, deliberate, and return its verdict on the questions then put to it by the Court. [3] The Plaintiffs have a fire insurance policy with the Defendant. The Plaintiffs home and contents were damaged or destroyed by fire. The Defendant refused to pay for the loss. The Plaintiffs commenced this action. The Defendant denied liability on the ground that the fire resulted from intentional or criminal act of the Plaintiffs or either of them or of another person at the direction of one or both of them. In response, the Plaintiffs added in a claim that the Defendant failed to honour its duty to act in good faith and acted in bad faith in dealing with the Plaintiffs, which they identified as a separate actionable wrong, and for which claim punitive and aggravated damages. The Plaintiffs amended claim was filed before Whiten v. Pilot Insurance Co., [2002] 1 S.C.R. 595 (S.C.C.), which upheld a jury award of $1 million dollars punitive damages in conjunction with a fire loss of $345,000. [4] The jurisprudence at all levels in Whiten, supra was obviously a driving force in the Plaintiffs move in this proceeding to claim punitive and aggravated damages. Whiten, supra is equally influential toward the Defendant s motion to bifurcate the jury trial. Defendant s counsel acknowledges that bifurcation is substantially novel, and that it introduces some challenges in terms of trial management and precedence with jury trials. He submits though that these considerations are outweighed by the concern for prejudice and the objective of trial fairness. He submits that if the two very separate issues are heard together, the prospect of serious prejudice to the Defendant is obvious. In his submission, it is apparent the Plaintiffs objective is to adduce evidence before the jury on the bad faith issue and the Defendant s deep pockets to influence the jury s view of the Defendant s credibility i.e. if there are problems in some areas, there are probably problems in other areas as well; and the insurer can well afford to pay. Defendant s counsel submits that the trial management issues can be effectively addressed without undue logistical problems, and that a bifurcated trial would reduce the risk of confusion
Page: 2 for the jury as the issues for Part I and Part II are disparate, and complex and difficult. [5] There is little guidance to be obtained from the statutory provisions regarding conduct of trials. Section 59 of the Supreme Court Act, R.S.P.E.I. 1988, Cap. S-10, cited by the Plaintiff, which stipulates that as far as possible, multiplicity of legal proceedings shall be avoided, has no application. Rule 5.05 of the Rules of Civil Procedure, Province of Prince Edward Island, cited by the Defendant, which provides for separate hearings where it appears that the joinder of multiple claims or parties in the same proceeding may unduly complicate or delay the hearing or cause undue prejudice to any party, has only limited application. The Defendant s motion does not seek severance of an issue into a separate proceeding, or separate trial within the same proceeding the evidence would be heard and decision made by the same finder of fact within one trial divided into two parts. The Jury Act, R.S.P.E.I. 1992, Cap. J-5.1 contemplates a continuous trial, but contains no direction against or regarding bifurcation. Rule 52 of the Rules of Civil Procedure do contain directions for trial procedure. Rule 52.07(1) directs the order of presentation in jury trials. A trial judge has a limited discretion to hear a trial in stages. All of this brings an expectation that a trial judge has a discretion to make subsidiary rules for the conduct of a jury trial so as to avoid prejudice accomplish a fair trial. [6] The basis for entertaining bifurcation is found in the Supreme Court decision in Whiten, supra by Binnie J. on behalf of a seven judge majority. There, a jury found that the defendant insurer had wrongfully alleged arson and refused to pay the plaintiffs claim for a residential fire loss. Mrs. Whiten did not have any financial resources, and the jury found that the insurer s conduct towards her was reprehensible to the point of deserving the punitive damages award of $1 million. A majority of the Ontario Court of Appeal found this quantum to be excessive and substituted an award of $100,000. The Supreme Court of Canada restored the $1 million award. Binnie J. discussed the relationship between an insurer and an insured and the good faith relationship involved in a contract of residential fire insurance, the basis of a punitive damages claim, and the distinction between claims in contract and for punitive damages. By the following language he opened the door for trial judges to consider bifurcation of the trial: 121 The fact the respondent s assets of $231 million were mentioned to the jury in this case was unhelpful. Pilot was obviously a substantial corporation. Disclosure of detailed financial information before liability is established may wrongly influence the jury to find liability where none exists (i.e., the subliminal message may be What s a $345,000 insurance claim to a $231 million company? ).... 122 Where a trial judge is concerned that the claim for punitive damages may affect the fairness of the liability trial, bifurcated proceedings may be appropriate. On the facts of this case, no harm was done by the procedure followed, including the mention of the $231 million figure.
Page: 3 [7] This is a fledgling area of the law. There is minimal jurisprudence in Canada to date. There is some comparative American jurisprudence from which guidance might be sought. [8] Marrelli v. Deathe, [2003] O.J. No. 2204 (Ont. Sup. Ct.) is a ruling which dealt with a motion for bifurcation. I agree with the classification of the relief sought as stated by Jennings J. Also, recognizing that the motion there was based on expedition, and each case will be decided on its own facts, this conclusion at paragraph 18 is noteworthy:... given the relatively minor inconvenience of two charges and two periods of deliberation, should the trial proceed to its conclusion, and notwithstanding my reluctance to dictate to a party how a case will be presented to a jury, I find that on the facts presented to me the potential benefits to the parties of an early resolution to this dispute outweigh any possible prejudice. I direct that the trial proceed as suggested by those supporting the motion. [9] The decisions in Sempecos v. State Farm Fire and Casualty Insurance Co., [2002] O.J. No. 4498 (Ont. Div. Ct.); and in [2003] O.J. No. 2886 (Ont. C.A.) are of interest. The Divisional Court upheld a motions judge refusal to sever a plaintiff s claim under a homeowner s policy from their claims for punitive, aggravated, and mental distress damages. The underlying premise in the decision at both levels was the general principle that it is the right of a litigant to have all issues in dispute decided in one trial, and that a split trial should only be ordered in the clearest of cases. It was found that the defendant would not necessarily face the dilemma of which it complained. The first two decisions in Sempecos, supra preceded Whiten v. Pilot Insurance Co., supra. In the Ontario Court of Appeal, it was recognized that the law in this area changed in the meantime. The Court of Appeal found there was no evidence that the insurer would actually suffer the prejudice alleged in its motion and dismissed the appeal on that basis. However, the dismissal was stated to be...without prejudice to the appellant s right, if so advised, to bring a further motion on the appropriate evidence.... [10] Wonderful Ventures Ltd. v. Maylam, [2001] B.C.J. No. 1144 (B.C.S.C.) is a decision on a motion on issues similar to this motion. The parties agreed and the Court endorsed the contract claim and the bad faith claim being distinct and separate causes of action. The motions judge discussed the competing considerations of trial efficiency and prejudice, and found that the prejudice to the insurer of having the contract claim and the bad faith claim tried together overrode any inconvenience, cost or expense which may be suffered by the insured as a result of severing the bad faith claim from the contract claim. Protection of privileged communications was in issue there. [11] The origins, basis, and traditional judicial approach to bifurcation is discussed in
Page: 4 William E. McNally and Barbara E. Cotton, in The Case for Bifurcation of Issues in a Class Action Proceeding, Advocates Quarterly, Volume 25 (2002) at p. 391. The normal practice in Canadian courts is that all issues be tried together in a single trial. There appears to be a general reticence to bifurcate issues in a trial, and good reason needs to be shown to do so: DaCosta (Litigation Guardian of) v. Cochen (1996), 1 C.P.C. (4 th ) 292 (Ont. Gen. Div.). The usual driving force for a split trial is saving time and money, and the results on this count are considered suspect. In jury trials, bifurcation of the issues may also be seen to reduce the complexity of matters presented to the jury and thereby facilitate jury deliberation. Whether bifurcation will create an injustice has been viewed as a factor. [12] Prior to the Supreme Court decision in Whiten v. Pilot Insurance Co., supra some courts held that it was not even possible to sever issues in a jury trial. In Smiley v. Wolch, [1997] B.C.J. No. 2377 (B.C.S.C.), a personal injury damages case involving a chronic fatigue-type claim, consideration was given to a motion for severance of liability and damages. Justice Leggatt first recognized the discretion to order severance in limited special circumstances, and then declined to follow the liberal English practice of granting severance where it is just and convenient to do so, or with the jury trial at all because severance would involve removing the issue of liability to be determined by a judge alone. He said: 17 It is not possible to recall a jury, whether discharged or not, at some later time in order for them to make a determination on damages (Beddow v. Megyesi (1992), 62 B.C.L.R. (2d) 158 (S.C.)). Severance of this trial would require the issue of damages to be heard by a different Jury and perhaps in front of a different Judge. Such an order would be both illogical an (sic) unjust. This was recognised by Finch, J. In Anderson v. University of British Columbia et al (1990), 51 B.C.L.R. (2d) 393 (S.C.) when, ordering severance in a much more compelling case than the one which is before me, he held that: It is a condition of the order for severance that the trial of both liability and, if necessary, damages be by judge alone. If the plaintiff had not been prepared to waive his right to trial by jury, I would have refused the order for severance. [13] McNally and Cotton discuss the earlier and broader American experience with bifurcation of jury trials. They point out the comparative differences, and they repeat the caution against adopting particular rules from the American matrix for Canadian civil jury trials. [14] The Canadian authorities generally hold that for severance, the applicant must establish that there exists extraordinary, exceptional, or compelling reasons for severance and not merely that it would just and convenient.
Page: 5 [15] This ruling will not serve as a full treatise on the issue of bifurcation in civil jury trials. This ruling is crafted to deal with the potential prejudice complained of by the Defendant and the concerns expressed in response by the Plaintiffs regarding unimpeded opportunity to present their case to the jury. This ruling occurs in the presence of a traditional judicial view prior to Whiten v. Pilot Insurance Co., supra that bifurcation of a jury trial is either not possible, or if it is, then it is extraordinary, modified by the Supreme Court suggestion that bifurcation may sometimes be a remedial response to the spectre of serious prejudice. [16] Concern over prejudice to the Defendant is the prevailing factor in this ruling. I am not particularly moved by the issues of expediency, cost saving, and presenting multiplicity of issues to the jury. I view the potential for prejudice to be sufficiently likely and the likely prejudice to be sufficiently substantial that an order for bifurcation will be granted. [17] Bifurcation will be ordered on the following terms. I see no need to use the word bifurcation before the jury. It is more descriptive and better understood to state that the trial will be divided into two parts, and the jury will be asked to deliberate and return a verdict at the end of each Part. Part I will deal with the issue of liability under the insurance contract and related damages. Part II will deal with the issues of aggravated damages and punitive damages. Of course the jury would not be told before rendering their verdict on Part I that Part II of the trial would be unnecessary should they find the Defendant is not liable to pay under the insurance contract. Counsel are aware the jurors might well be able to figure that out. There are two related questions regarding conduct of the trial: (i) the line of bifurcation; and (ii) the evidence admissible during Part I. [18] I mentioned at the outset that Plaintiffs counsel consented, but not to the extent considered necessary by Defendant s counsel. Plaintiffs counsel agrees to the adoption of a line of bifurcation stated in the American case Hodges v. S.C. Toof & Co. (1992) 833 S.W. (2d) 896 (Supreme Court of Tennessee). That case advised that liability for punitive damages be determined within Part I, and only the amount of the punitive damages be severed to be included in the separate Part II. This passage is pertinent: Further, because punitive damages are to be awarded only in the most egregious of cases, a plaintiff must prove the defendant s intentional, fraudulent, malicious, or reckless conduct by clear and convincing evidence. This higher standard of proof is appropriate given the twin purposes of punishment and deterrence: fairness requires that a defendant s wrong be clearly established before punishment, as such, is imposed; awarding punitive damages only in clearly appropriate cases better effects deterrence.
Page: 6 Clear and convincing evidence means evidence in which there is no serious or substantial doubt about the correctness of the conclusions drawn from the evidence. In a trial where punitive damages are sought, the court, upon motion of defendant, shall bifurcate the trial. During the first phase, the factfinder shall determine (1) liability for, and the amount of, compensatory damages and (2) liability for punitive damages in accordance with the standards announced above. During this phase, evidence of a defendant s financial affairs, financial condition, or net worth is not admissible. If the factfinder finds a defendant liable for punitive damages, the amount of such damages shall then be determined in an immediate, separate proceeding. During the second phase, the factfinder shall consider, to the extent relevant, at least the following:... [factors listed] Defendant s counsel submits that it is necessary to remove liability for punitive damages, as well as quantum, to Part II or else the prejudice sought to be avoided by the bifurcation would still remain. [19] In my assessment, effective bifurcation in the present case calls for full separation of the issues of contract and damages into Part I, and liability for both aggravated damages and punitive damages and quantum thereof into Part II. This line of demarcation effectively addresses the prejudice sought to be avoided; and it is also more expeditious. If there is no liability under the insurance contract, then a jury would find there would be no liability for aggravated or punitive damages. The basis for aggravated damages is separate actionable wrong; and punitive damages are designed to punish a transgressor for its wrongful deeds, which involves an assessment of a defendant s underlying reprehensible conduct. Liability and measurement of aggravated and punitive damages are better kept together in Part II, and separate from Part I of the trial. In making this determination, I am most mindful not to intrude more than is necessary on the Plaintiffs ususal right to have their claim determined in a single trial, and consequently that the exercise of my discretion should be regarded as a circumscribed power. (See: Elcano Acceptance Ltd. et al. v. Richmond, Richmond, Stambler & Mills, [1986] 55 O.R. (2d) 56 (Ont. C.A.).) As such, I recognize that during Part I of the trial, it will be necessary to always exercise care not to exclude evidence that has overlapping application and is relevant to the issues in Part I. [20] Arguably, aggravated damages could be considered in either Part. Aggravated damages are typically found in cases of intentional wrongdoing but can be awarded in negligence cases if the plaintiff s emotional trauma is heightened by extreme recklessness on the part of the defendant. The Plaintiffs allege the Defendant s wrongdoing was intentional and that its investigation was oppressive. On that basis, it seems to me that
Page: 7 in this case aggravated damages should be grouped with the punitive damages claim and kept separate from the breach of contract claim. Regarding aggravated damages only, should my ruling here be problematic for the Plaintiffs, I would be prepared to entertain further formal pretrial submissions from counsel. [21] The second related question regarding conduct of the trial is which matters of evidence would be admissible during Part I. Having decided the foregoing questions, I do not consider it useful to rule in this motion on admissibility of individual items of evidence. The better course to follow is for differences over those matters to be decided by evidentiary rulings as they arise in trial. That said, these observations can be made now. First, it is apparent that there may be some areas of overlap in which particular evidence may be relevant in both parts of the trial. Evidence which is relevant and probative to the issues in Part I will be admissible in Part I; and evidence which is not relevant or pertains only to Part II will not be admitted. Some evidence may relate to both Parts, and the jury can be instructed accordingly at the appropriate time. Either or both of the parties may wish or need to recall witnesses to give additional testimony. That can be permitted, while still ensuring that issues decided in Part I will not be relitigated in Part II. The Court and counsel will keep in mind that duplication will be reasonably minimized, bearing in mind that an objective of bifurcated trials is expedition and economy. Beyond that general guidance, it can be readily observed that some matters are clearly not relevant to Part I, including the Defendant s financial situation i.e. ability to pay punitive damages, and whether the Defendant has been subjected to previous punitive damage awards based upon the same wrongful act. [22] Second, counsel posed suggestions and questions about the admissibility of particular evidence during Part I. Once the bifurcation has occurred, the question becomes: Considering the issues under consideration in this Part of the trial, and the purpose of the evidence, is the evidence admissible in accordance with the rules of evidence? Put another way: Would the evidence be admissible on the claim for payment under the insurance contract if there was no claim for aggravated damages and punitive damages? [23] Central to the Plaintiffs claim will be an assessment of both parties credibility. It can be envisioned that evidence impacting on credibility of both parties could well be relevant and probative in the determination of liability to pay or be paid under the contract of insurance. Traditionally, the courts have leaned against splitting issues of liability and damages where general credibility may arise. All of this will need to be taken into consideration. [24] Plaintiffs counsel submits that the Defendant should have brought the motion for bifurcation earlier. I recognize the validity of the Plaintiffs submission that early is better in view of the considerations involved. However, I have no question about the
Page: 8 procedure or timing followed by Defendant s counsel in this case. The motion for bifurcation should be brought before the trial judge. The Defendant s counsel asked the Court administration to appoint a trial judge so that this motion could be heard. Immediately following my assignment to the case, Defendant s counsel brought the motion. [25] The Defendant requests costs of the motion and the Plaintiffs submit that costs should be in the cause. I agree with Plaintiffs counsel. This is a novel matter. The law before the Supreme Court of Canada decision just a year ago in Whiten v. Pilot Insurance Co., supra advised against bifurcation in jury trials, either completely or mostly. This is a motion where costs should be in the cause. [26] This decision should not be considered by the jury. Accordingly, there shall be no publication of this decision until the jury has retired to deliberate its final verdict in the proceeding. December 23, 2003 Justice David H. Jenkins