Court of Appeal for Ontario

Date: 2017-01-24 Docket: C62283

Judges: Simmons, Brown and Roberts JJ.A.

Between

Routh Chovaz Insurance Brokers Inc. Plaintiff (Appellant)

and

Aviva Insurance Company of Canada Defendant (Respondent)

Counsel

Marina Stoeva, for the appellant

Christopher Reain and Michelle Fan, for the respondents

Heard: January 17, 2017

On Appeal

On appeal from the judgment of Justice Grant R. Dow of the Superior Court of Justice, dated May 25, 2016, with reasons reported at 2016 ONSC 2567.

Endorsement

Overview

[1] The appellant, Routh Chovaz Insurance Brokers Inc., sues the respondent, Aviva Insurance Company of Canada, to recover $23,658.31 it paid to a client, Mr. Waqar Zaidi, as compensation for damages a rear-end collision caused to his 2010 Mercedes-Benz. The lawsuit resulted from the following series of events.

[2] Mr. Zaidi owned a 2008 Mercedes Benz, which he had insured through Routh Chovaz with the Jevco insurance company. In 2013, he replaced the 2008 model with a 2010 Mercedes. He asked Routh Chovaz to arrange insurance for his new vehicle with Jevco. Routh Chovaz issued a new motor vehicle liability insurance card, a "pink slip", to Mr. Zaidi, but it failed to process the vehicle model change with Jevco.

[3] When the policy came up for renewal a year later in March 2014, Routh Chovaz arranged for insurance with Aviva. Through its further error, Routh Chovaz arranged the insurance for Mr. Zaidi's former car – the 2008 Mercedes – not the 2010 Mercedes. Aviva issued a policy of insurance for the vehicle specified by Routh Chovaz – the 2008 Mercedes. However, Routh Chovaz orally informed Mr. Zaidi that insurance had been arranged with Aviva for his 2010 Mercedes.

[4] On October 2, 2014, Mr. Zaidi's car was involved in a rear-end collision (the "Accident"). He claimed under the Aviva policy for the damage to the car. Aviva denied coverage on the basis the policy it issued only covered the 2008 car. Aviva refunded Mr. Zaidi the premiums he had paid.

[5] It was not disputed that had Routh Chovaz informed Aviva of the proper year and model sought to be insured, Aviva would have insured the 2010 Mercedes and the additional premium would have been $71.

[6] Mr. Zaidi looked to Routh Chovaz for compensation. Its errors and omissions insurer paid Mr. Zaidi's claim of $23,658.31. It then commenced this subrogated claim against Aviva seeking recovery of the $23,658.31 and a declaration that Aviva was responsible to defend and indemnify for any personal injury claims resulting from the Accident. As of the time of the appeal hearing, no such action had been served.

[7] The motion judge granted summary judgment to Aviva, dismissing Routh Chovaz's action. Routh Chovaz appeals.

Positions of the Parties

[8] Routh Chovaz's main ground of appeal can be summarized as follows. Aviva had authorized Routh Chovaz to bind it to insure motor vehicle risks. When Routh Chovaz orally informed Mr. Zaidi it had insured his 2010 Mercedes with Aviva, Aviva was bound to insure that vehicle notwithstanding Routh Chovaz misdescribed it as a 2008 Mercedes in the materials sent to Aviva. Given that obligation to insure, Routh Chovaz submits Aviva was required to indemnify it for the $23,658.31 it paid Mr. Zaidi, less the $71 increased premium.

[9] Routh Chovaz supports this position by submitting the motion judge erred by departing from established legal principles in concluding Aviva was not required to indemnify it. It points to cases affirming the insurer's right to recover for losses resulting from its agent's negligence, but limiting damages to the amount of the extra premium the agent should have collected where there is no doubt the insurer would have accepted the risk and there was no misrepresentation about it.

[10] On its part, Aviva submits the motion judge's conclusion it was not required to indemnify Routh Chovaz was based on his interpretation of the Brokerage Agreement governing the relationship between the two parties. As a question of mixed fact and law, his interpretation of that contract is entitled to deference.

Analysis

[11] The motion judge found the relationship between Routh Chovaz and Aviva was governed by a Brokerage Agreement dated June 15, 2011 between Aviva and Prolink Broker Network Inc. ("Prolink"). On appeal, Routh Chovaz does not take issue with that finding.

[12] That finding necessitated a determination by the motion judge of whether Routh Chovaz had established entitlement to payment of the $23,658.31 under the terms of the Brokerage Agreement, in particular s. 10.1 which states:

10.1 [Aviva] shall indemnify and hold the Brokerage harmless from and against all costs, expenses, claims, suits, demands or actions (the "Actions") including reasonable legal fees and expenses of investigation and defence incidental thereto, arising as a direct result of its negligent acts or omissions, to the extent that the Brokerage has not caused, contributed or compounded to such liability by its own acts or omissions.

[13] Although the motion judge held the terms of the Brokerage Agreement provided Aviva with a complete defence to Routh Chovaz's claim, apart from quoting several sections of the Brokerage Agreement, including s. 10.1 and s. 10.3 (which specify the insurer's and broker's obligations to indemnify), he did not explain how he reached that conclusion.

[14] To determine whether Routh Chovaz was entitled to indemnification under the Brokerage Agreement would require the motion judge to consider two issues under s. 10.1. First, is the amount claimed by Routh Chovaz one "arising as a direct result of [Aviva's] negligent acts or omissions"? Second, if it is, then did Routh Chovaz cause, contribute to or compound such liability by its own acts or omissions and, if so, to what extent? The motion judge did not deal with either issue in his reasons.

[15] In fairness to the motion judge, in its statement of claim Routh Chovaz did not frame its claim as one under s. 10.1 of the Brokerage Agreement. As well, on the motion below the parties did not squarely address those issues under s. 10.1.

[16] Nevertheless, the motion judge's reasons do not determine the key issue – whether Routh Chovaz established entitlement to be indemnified or held harmless by Aviva under s. 10.1 of the Brokerage Agreement. As a result, the reasons are not sufficient to permit appellate review. Consequently, the summary judgment dismissing Routh Chovaz's action must be set aside.

[17] This court is not in a position to resolve the dispute. Although the motion judge made certain findings of fact, he did not make all of the findings required to determine Routh Chovaz's entitlement under s. 10.1. As well, the record before us does not contain all the evidence needed to determine that issue. For example, neither party placed in evidence the Underwriting Requirements referenced in s. 2.1 of the Brokerage Agreement. In those circumstances, it would not be appropriate for this court to exercise its fact-finding powers under s. 134(4) of the Courts of Justice Act, R.S.O. 1990, c. C. 43. Accordingly, we direct the action to proceed to trial.

Disposition

[18] For the reasons set out above, we allow the appeal, set aside the judgment dismissing the action, and direct the action proceed to trial.

[19] We fix the costs of this appeal at $12,000, inclusive of HST and disbursements, as agreed by the parties. However, we order the costs to be paid in the cause of the action.

"Janet Simmons J.A."

"David Brown J.A."

"L.B. Roberts J.A."