Respondents, injured in car accident, applied for statutory accident benefits from own insurer, Intact Insurance. Intact paid most benefits, but claimed that two health service providers, Osler Rehabilitation and Assessment Direct, submitted invoices for excessive amounts and number and frequency of visits could not be justified. Intact settled with respondents. Respondents agreed to release Intact and Intact agreed to hold harmless and indemnify respondents from “any claims” brought by two service providers for outstanding accounts. Osler and Assessment sent demand letters to respondents, but Intact refused to act because neither Osler nor Assessment had commenced action. Respondents nevertheless commenced actions alleging Intact breached hold harmless agreements. Intact delivered notice of intent to defend in each action, but did not deliver statements of defence. Respondents moved promptly to obtain default judgment and noting of default. Intact moved to set aside defaults. Motion judge accepted that Intact moved promptly, had at least arguable defence and that setting aside defaults would not adversely affect integrity of administration of justice but refused to set aside defaults on ground Intact did not have reasonable explanation for default and respondents would be more prejudiced by granting Intact indulgence than Intact would be prejudiced by refusal to set aside defaults. Intact’s appeal allowed. Court has discretion to set aside default “on such terms as are just”. Motion judge considered relevant factors, but erred in refusing to set aside defaults because Intact had reasonable explanation and respondents would not have been prejudiced. Proper interpretation of hold harmless agreements was fundamental to Intact’s submission it had reasonable explanation but motion judge stopped short of interpreting the agreements. On plain wording, agreements did not come into effect until either Osler or Assessment sued respondents. Letters were “demands” for payment, not “claims”. Although Intact ought to have delivered statement of defence, it had reasonable explanation or excuse for not doing so. Setting aside defaults would cause no prejudice to respondents. Intact could not prevent either service provider from suing respondents and was entitled to resist paying full amounts on ground accounts were allegedly unjustified. Intact would be prejudiced if defaults not set aside because it could become liable for outstanding accounts it disputed and may not have obligation to pay. Shortness of period between delivery of statement of claim and noting of default, 45 days, was consideration on question of prejudice.
Intact Insurance Co. v. Kisel (Mar. 26, 2015, Ont. C.A., Laskin J.A., Simmons J.A., and Watt J.A., File No. CA C59338, C59339) Decision at 243 A.C.W.S. (3d) 556 was reversed. 251 A.C.W.S. (3d) 51.