Court File and Parties

CITATION: 2259084 v. Travelers Insurance Company of Canada, 2016 ONSC 5942

DIVISIONAL COURT FILE NO.: 160/16

DATE: 20161024

SUPERIOR COURT OF JUSTICE – ONTARIO

DIVISIONAL COURT

RE: 2259084 Ontario ltd., o/a/ practicar/rent-a-wrek car & truck rentals, and 2417602 ontario ltd., o/a/ practicar/rent-a-wreck car & truck rentals, Plaintiffs/Moving Parties

AND:

Travelers insurance company of canada, baird macgregor insurance brokers lp, practicar systems inc. and the dominion of canada general insurance company, Defendants/Responding Parties

BEFORE: Stewart J.

COUNSEL: Ben V. Hanuka, for the Plaintiffs/Moving Parties

Douglas O. Smith and Corry Lomer for the Dominion of Canada General Insurance Company and Travelers Insurance Company of Canada, Gillian Scott for Practicar Systems Inc., and Barry Papazian for Baird MacGregor Insurance Brokers LP

HEARD at Toronto: In Writing

ENDORSEMENT

Nature of the Motion

[1] The Plaintiffs 2259084 Ontario Ltd., o/a Practicar/Rent-a-Wreck Car & Truck Rentals (“225”) and 2417602 Ontario Ltd., o/a Practicar/Rent-a-Wreck Car & Truck Rentals (“241”) seek leave to appeal from the decision of Pollak, J. dated March 23, 2016 in which she dismissed their motion for injunctive relief and for an order requiring the Defendants to provide the Plaintiffs with insurance coverage for their fleet of rental vehicles.

[2] The Defendants take the position that leave to appeal should not be granted.

Test for Leave to Appeal

[3] The test for granting leave to appeal under Rule 62.02(4) is well-settled. It is recognized that leave should not be easily granted and the test to be met is a very strict one. There are two possible branches upon which leave may be granted. Both branches involve a two-part and, in each case, both aspects of the two-part test must be met before leave may be granted.

[4] Under Rule 62.02(4)(a), the moving party must establish that there is a conflicting decision of another judge or court in Ontario or elsewhere (but not a lower level court) and that it is, in the opinion of the judge hearing the motion, desirable that leave to appeal be granted. A conflicting decision must be with respect to a matter of principle, not merely a situation in which a different result was reached in respect of particular facts: Comtrade Petroleum Inc. v. 490300 Ontario Ltd. (1992), 7 O.R. (3d) 542 (Div. Ct.).

[5] Under Rule 62.02(4) (b), the moving party must establish that there is reason to doubt the correctness of the order in question and that the proposed appeal involves matters of such importance that leave to appeal should be granted. It is not necessary that the judge granting leave be satisfied that the decision in question was actually wrong – that aspect of the test is satisfied if the judge granting leave finds that the correctness of the order is open to very serious debate: Nazari v. OTIP/RAEO Insurance Co., [2003] O.J. No. 3442 (S.C.J.); Ash v. Lloyd’s Corp, (1992), 8 O.R. (3d) 282 (Gen. Div.). In addition, the moving party must demonstrate matters of importance that go beyond the interests of the immediate parties and involve questions of general or public importance relevant to the development of the law and administration of justice: Rankin v. McLeod, Young, Weir Ltd. (1986), 57 O.R. (2d) 569 (H.C.J.); Greslik v. Ontario Legal Aid Plan (1988), 65 O.R. (2d) 110 (Div. Ct.).

Fresh Evidence

[6] The Defendant The Dominion of Canada General Insurance Company sought to adduce fresh evidence on this motion. The evidence sought to be adduced relates to the disposition by the Plaintiffs of the fleet of vehicles for which the motion judge was asked to order insurance to be provided by the Defendants.

[7] By consent order of Dambrot, J. dated June 4, 2016, the evidence was admitted as evidence on this motion.

[8] After the release of the decision of the motion judge, the proposed evidence discloses that the Plaintiffs have sold or otherwise disposed of the vehicles that made up their fleets. Because there are now no fleets to insure, the Defendants argue that this motion for leave and any appeal are consequently moot.

[9] The Plaintiffs do not challenge the credibility or accuracy of the fresh evidence. Rather, they argue that what happened following release of the motion judge’s decision is irrelevant to this motion for leave which they say raises important issues and should be determined on its merits. They say there is no evidence upon which it might be concluded that they could not acquire replacement vehicles that could be insured by the Defendants if the appeal were to be allowed.

[10] The Defendants point out that there is no evidence on the record that the Plaintiffs actually do intend to replace the vehicles and have the financial ability to do so if the appeal for which leave is sought is granted.

[11] I agree with the position advanced by the Defendants on the issue of mootness. As the fleets of vehicles no longer exist, the subject matter of the injunctive relief sought has disappeared. Accordingly, the issues raised on the leave to appeal motion and any appeal from the motion judge’s decision are now moot. The Plaintiffs are free to pursue the other claims advanced in their action or elsewhere.

[12] I therefore would dismiss this motion for leave to appeal on that basis. Having said that, I nevertheless will address the merits of the motion for leave to appeal.

Decision of the Motion Judge

[13] The motion judge summarized the basis for the Plaintiffs’ request for injunctive relief as follows (at para. 10):

The Moving Parties claim that their exclusion from the insurance coverage under the master policy is arbitrary and made in bad faith. They rely on evidence that there has never previously been an exclusion of any other franchisee under this master insurance policy. They submit that the Insurer owes them a duty of “utmost good faith in relation to the performance of its obligation under the policy” because of the uneven bargaining power between the Insurer and the Plaintiffs. The Plaintiffs are in a position of reliance and vulnerability. Further, it is alleged that the Plaintiffs’ relationship with the Broker is dependent on trust and that it is the Broker’s obligation to “conduct itself honestly and to have regard to the legitimate contractual interests” of the Plaintiffs. The Insurer and the Broker owe the Plaintiffs a duty to cooperate with them in order to obtain insurance coverage. They therefore should have used reasonable efforts to obtain the coverage for them under the master policy. It is alleged that the Defendants used their contractual powers in bad faith to withhold insurance coverage from the Plaintiffs as the terms of the policy are not within the Plaintiffs’ control because the Plaintiffs do not negotiate the terms of the policy.

[14] The motion judge found that the evidence before her disclosed that the contract of insurance on the Plaintiffs’ vehicles had already expired. As a result, she viewed the request for the relief advanced by the Plaintiffs as being one which sought a mandatory injunction that would require the Defendants to provide such insurance. A strong prima facie case must be shown in such circumstances.

[15] Applying the strong prima facie standard to the Plaintiffs’ claim, the motion judge found that there was no contractual right provided in the master contract of insurance for any automatic renewal, nor any positive obligation under the Insurance Act, R.S.O. 1990, c. I. 8. to renew. As a result, she stated (at paras. 23 and 24):

On this basis, I find that the Plaintiffs cannot establish that they have a strong prima facie case with respect to their claims that they are entitled to the injunctive relief claimed on the basis of their allegations that there have been breaches of the common law duty to act in good faith with respect to the provisions of the contracts of insurance. As well it should be noted that it is not clear, in my view, that the Plaintiffs have pleaded in their Amended Statement of Claim that there have been contractual breaches of the common law duty of good faith which arise by virtue of the insurance contract.

The Plaintiffs also submit that the Defendants have breached their obligations pursuant to the statutory provisions of the Act, and in particular, that the Insurer and the Defendants have engaged in unfair practices. The Defendants rely on s. 20 of the Act which provides that the Superintendent of Insurance has exclusive jurisdiction to exercise the powers (which include the power to order any remedial action necessary, as well as interim relief) conferred on that office under the Act and to determine all questions of fact or law that arise in any proceeding under the Act. The Defendants also rely on the provisions of the Act and its Regulations for the granting of interim relief. I agree with the submission of the Defendants that on this basis alone, the Plaintiffs cannot establish that they have a strong prima facie case with respect to these allegations. The Moving Parties’ claims should have been made pursuant to the Act, following the provisions of the Act, and not to the Superior Court. The Act provides for interim relief for the specific type of claims that are made by the Plaintiffs in this action. This Court must respect the jurisdictional provisions in the Act. The Plaintiffs did not make any submissions on the estoppel argument they made in their Factum. I do not accept that this argument supports a finding that the Plaintiffs have established a “strong prima facie” case.

[16] The motion judge also found that the balance of convenience did not favour the granting of the injunctive relief sought.

[17] The motion judge further pointed to the strength of the Defendants’ position on the irreparable harm issue as well as the sufficiency of the Plaintiffs’ undertaking as to damages, but did not specifically decide these issues as the Plaintiffs had not met the other prongs of the requisite test for injunctive relief.

Discussion

[18] The decision of the motion judge was highly fact-specific and based upon an application of the correct test for the granting of injunctive relief in the circumstances (see: RJR-Macdonald Inc. v. Canada (Attorney General), [1994] 1 S.C.R. 311).

[19] As correctly held by the motion judge, the common law does not recognize the duty or obligation of a person to create a contractual relationship. The Plaintiffs have put forward no case that conflicts or even questions this principle.

[20] With respect to the strong prima facie case requirement, the motion judge correctly found that there was no common law, contractual, or statutory duty on the Defendant The Dominion of Canada General Insurance Company to renew the fleet insurance coverage. An automobile insurance policy does not provide for automatic continued extensions of the policy. At the renewal date of the policy, a new contract may be entered into.

[21] With respect to any statutory requirement for renewal of the fleet insurance, there is no statutory right to the renewal of a contract of fleet insurance contained in the Insurance Act or any regulations thereunder.

[22] The motion judge further held that section 20 of the Act provides the Superintendent of Insurance with exclusive jurisdiction to exercise the powers conferred on that office and that the Moving Parties’ claim should have been made pursuant to the Act, and not to the Superior Court.

[23] On the available evidence, the motion judge therefore properly concluded that the Plaintiffs had not met the onus on the test for the granting of an injunction, and dismissed the motion.

[24] I do not view any of the cases relied upon by the Plaintiffs as amounting to a conflicting decision to comply with the test for the granting of leave to appeal under Rule 62.02(4) (a).

[25] Similarly, the arguments advanced by the Plaintiffs do not establish any doubt as to the correctness of the motion judge’s decision. Accordingly, this part of the test under Rule 62.02 (4) (b) has not been met.

[26] Finally, the nature of the issue does not make it desirable that leave to appeal be granted, nor have the Plaintiffs shown that matters of general or public importance have been raised.

Conclusion

[27] For these reasons, the motion is dismissed.

Costs

[28] Costs fixed in the amount of $3500.00, inclusive of all disbursements and applicable taxes, shall be paid by the Plaintiffs to The Dominion of Canada General Insurance Company within 45 days of today’s date. Costs in the amount of $2500.00, inclusive of applicable taxes, shall be paid to Baird MacGregor Insurance Brokers LP by the Plaintiffs within 45 days of today’s date.

Stewart J.

Date: October 24, 2016