On April 23, 2009, the Apology Act1, came into force in Ontario. The chief effect of the Act on liability insurance is that apologies by an insured, which previously could have been used as evidence of fault or liability, are no longer admissible for this purpose. Secondly, insurers are prevented from denying coverage in the face of an apology by an insured person.
The Act defines an apology to mean:
"an expression of sympathy or regret, a statement that a person is sorry or any other words or actions indicating contrition or commiseration, whether or not the words or actions admit fault or liability or imply an admission of fault or liability in connection with the matter to which the words or actions relate." (Our emphasis).
The effect of this expansive definition is that apologies that admit liability, whether expressly or impliedly, may be made without leading inevitably to a finding of liability. This protection is provided in Section 2 of the Act.
No admission, coverage preserved
Section 2 provides as follows:
Effect of apology on liability
2. (1) An apology made by or on behalf of a person in connection with any matter,
- does not, in law, constitute an express or implied admission of fault or liability by the person in connection with that matter;
- does not, despite any wording to the contrary in any contract of insurance or indemnity and despite any other Act or law, void, impair or otherwise affect any insurance or indemnity coverage for any person in connection with that matter; and
- shall not be taken into account in any determination of fault or liability in connection with that matter
(2) Clauses (1) (a) and (c) do not apply for the purposes of proceedings under the Provincial Offences Act.
In other words, the Apology Act allows insured people to admit liability without that admission having any legal effect. Critics of this legislation argue that any admission followed by the words "I'm sorry" are protected, making such admissions meaningless. Proponents of the legislation point out that claimants frequently attach great value to an expression of regret, whether or not that admission produces legal consequences.
Section 2 (3) provides that apologies by or on behalf of a person are not admissible "in any civil proceeding, administrative proceeding or arbitration" to prove fault or liability. In the insurance context, an insured who apologizes or admits liability before a proceeding is commenced has the right to not have their apology used against them during the proceeding, subject to exceptions.
The first exception applies where a person apologizes "while testifying at a civil proceeding". In other words, apologies made at an examination for discovery, a cross-examination on an affidavit, or at any step after a proceeding has begun, are not protected. The policy behind this exception may be that apologies serve less of a social purpose if they are only given after a claimant has started a proceeding.
The second exception is found in Section 2(2), which allows apologies to be used as admissions for the purposes of the Provincial Offences Act. Insurers should be alert to this exception where their insured party is facing any charge that may be prosecuted under the Provincial Offences Act. For example, if an insured in a motor vehicle claim is facing charges under the Highway Traffic Act, the Apology Act will not protect that insured's apology from being used against him or her in the Highway Traffic Act prosecution. A similar exception2 maintains the common-law rule that an admission voluntarily given can be used against an accused in a criminal proceeding. In other words, statements made by your insured to the police will continue to be assessed for voluntariness and under the Charter to determine their admissibility in criminal proceedings.
Even though the apology itself is inadmissible to prove fault in a civil proceeding under the Act, it may be used for another purpose. On damages, for example, insurers might actually lead evidence of their insured's apology if the apology should have mitigated the claimant's damages, such as mental distress.
It should be emphasized that apologies under the Act are only inadmissible as evidence of fault or liability. If your insured gives information while apologizing that leads a claimant to discover further evidence, this derivative evidence will be admissible to prove fault. For example, if an insured driver admits, in the context of an apology, that he or she was speeding, but does not admit to hitting the claimant, the Act would not stop a claimant from using that admission as the basis for an expert accident reconstruction, which could then be used to prove that the insured's speeding made it more likely that he or she hit the claimant. Indeed, we can expect to see claimants attempt to parse factual admissions away from actual expressions of apology in an attempt to make the factual admission admissible, while defendants will seek to construe inadmissibility under the Act broadly, so that any admission made contemporaneously with an expression of regret will be protected. It remains to be seen how judges, arbitrators and tribunals will apply the inadmissibility provision.
Acknowledgements of debts still restart limitation periods
The Limitations Act, 2002 provides that a written acknowledgment of a debt restarts the limitation period for the creditor.3 If the limitation period on a creditor's claim was about to expire, and the debtor apologized for the debt and promised to pay it, the creditor might be lulled into letting the limitation period expire. The Limitations Act, 2002 addressed this mischief by providing that an acknowledgement of liability for a debt restarts the limitations clock. The Apology Act leaves this effect intact.
Accordingly, if your insured is facing a claim on which the limitation period is about to expire, he or she may not want to admit liability for the debt, as the Apology Act will not prevent the admission from restarting the limitation period.
No Protection Outside Ontario
Insureds should also pay attention to the territorial limits of this legislation. The Apology Act does not apply to proceedings outside Ontario. In any context where an insured could be liable under the laws of another Province or jurisdiction, the common-law rules remain. For example, an Ottawa resident who apologizes for the inadequate maintenance of icy steps at his or her cottage in Québec will get no protection from the Apology Act against a claim brought in Québec.
The Apology Act provides a statutory privilege to expressions of regret, including admissions of liability, when made outside the context of a civil proceeding. The apology may be made by an individual or a corporation. On the other hand, apologies can still be used to prove fault or liability in quasi-criminal (Provincial Offences Act) matters and criminal matters. Apologies made while testifying, whether in court or out of court, remain admissible. A conviction for a criminal or Provincial Offence may still be used in a civil proceeding, even if the conviction was based on an apology. Finally, insurers will be required to provide coverage and defend insureds who admit liability, notwithstanding any policy language to the contrary, from any claim to which the liability insurance would otherwise respond.
1 S.O. 2009, Chapter 3 (the "Act")
2 At Section 3
3 Limitations Act, 2002, S.O. 2002, Chapter 24, Sch B, Section 13
Author: Mark Seebaran, © Nelligan O'Brien Payne LLP 2010