Dillon v Guardian
Somewhat off-topic: absolute liability for offers to settle.
@graham ,
I was curious what you think the purpose of including this case in the CAS exam is. You'll not below a recent case in BC effectively quashed this interpretation of Fitzpatrick. Some suggested exam solutions have been framed around the concept of "absolute liability" for these cases, but that is clearly not accurate.
What is this supposed to teach a future actuary?
NEw Case Law: Fredrikson v. ICBC (1990)
In the result, Fitzpatrick J. found it unnecessary to decide which standard should be applied, although he expressed a preference for the rule of absolute liability...Fitzpatrick J. quoted a passage which outlines the submissions of counsel in Crisci in support of the rule of absolute liability which is:
... whenever an insurer receives an offer to settle within the policy limits and rejects it, the insurer should be liable in every case for the amount of any final judgment whether or not within the policy limits.
Although the California court expressed itself as sympathetic to the proposed rule, it did not apply it. I am told by counsel, who have researched this area of the law in great depth, that no court has ever applied such a rule. To do so would, of course, be a striking example of judicial legislation. Even had some American courts adopted such a rule, it would in my view be no more open to this court to adopt it than to adopt the rule of absolute liability in respect of claims against manufacturers, which is well established in many American jurisdictions.
Comments
I'm not familiar with the Frederickson case. Dillon v Guardian is from 1983 so there may have been a lot of developments in the 35+ years since then that I wouldn't know about, not having studied it. The main point of Dillon seems to be that if the insurer decides to reject a settlement within the policy limits but the jury then awards an amount greater than the policy limits, the insurer is liable for the amount above the limit. It's the reasoning behind the decision over which there seems to be debate - whether absolute liability should be applied or whether there is a different way to arrive at the conclusion. As to why it's on the syllabus, I'll check my Magic 8-Ball and get back to you. :-)
In the battle card it says:
BC only: reject absolute liability
Does that mean if this case happened, insurer would've won?
Since in BC they reject absolute liability, and the cap would have applied?
This is referring to a footnote at the end for a different case and is specifically referring to Fredrikson vs ICBC. So yes, in BC absolute liability would have been rejected but not in Ontario according to the study kit