Court of Appeal for Ontario

Date: November 15, 2019 Docket: C66138

Judges: Strathy C.J.O., Doherty and Sharpe JJ.A.

Between

William Conners Plaintiff (Appellant/Responding Party)

and

Francesco D'Angelo, Vincenza Tartaglia, a.k.a. Enza Tartaglia and Gore Mutual Insurance Company Defendants (Respondent/Moving Party)

Counsel

Aliza Karoly, for the appellant

Arthur R. Camporese, for the respondent

Heard: October 30, 2019

On Appeal

On appeal from the judgment of Justice Thomas R. Lederer of the Superior Court of Justice, dated September 26, 2018, with reasons reported at 2018 ONSC 5694.

Decision

Strathy C.J.O.:

Facts and Background

[1] The appellant sustained injuries in a motor vehicle accident. He was a passenger in a vehicle driven by an unlicensed driver, without the permission of the owner. He sued the driver of the vehicle, the owner of the vehicle, and the owner's liability insurer. He claimed that he was an "insured" under the owner's policy issued by the respondent, Gore Mutual Insurance Company, and was entitled to uninsured motorist coverage for damages under s. 265(1) of the Insurance Act, R.S.O. 1990, c. I.8.

[2] On summary judgment, the motion judge dismissed the appellant's claim against the insurer. He found that, pursuant to s. 1.8.2 of the standard Ontario Automobile Policy ("OAP 1"), the insurance contract excluded uninsured motorist coverage for the appellant because the automobile was operated without the owner's consent.

[3] Consequently, the appellant's claim under the owner's policy was limited to certain Statutory Accident Benefits ("SABs"). Any other claim would have to be made to the Motor Vehicle Accident Claims Fund.

Appellant's Arguments

[4] The appellant challenges this conclusion on several grounds, none of which I find persuasive. In my view, the disposition of the appeal is governed by the decision of this court in Shipman v. Dominion of Canada General Insurance Co., 73 O.R. (3d) 144 (C.A.).

[5] The appellant asserts that he qualifies as an "insured" under s. 224(1) of Part VI (Automobile Insurance) of the Insurance Act because, as an occupant of the vehicle, he was entitled to receive SABs under the owner's policy.[1]

[6] Having qualified as an "insured", the appellant asserts that he also qualifies as "a person insured under the contract" under s. 265(1) and is therefore entitled to uninsured motorist coverage. Section 265(1) (a) and (b) provides that:

Every contract evidenced by a motor vehicle liability policy shall provide for payment of all sums that,

(a) a person insured under the contract is legally entitled to recover from the owner or driver of an uninsured automobile or unidentified automobile as damages for bodily injuries resulting from an accident involving an automobile;

(b) any person is legally entitled to recover from the owner or driver of an uninsured automobile or unidentified automobile as damages for bodily injury to or the death of a person insured under the contract resulting from an accident involving an automobile. [Emphasis added.]

Statutory Framework

[7] However, this provision is expressly,

subject to the terms, conditions, provisions, exclusions and limits as are prescribed by the regulations. [Emphasis added.]

[8] Thus, even if the appellant does qualify as "a person insured under the contract", the coverage available can be modified or excluded by regulation.

[9] One such regulation is R.R.O. 1990, Reg. 676, entitled Uninsured Automobile Coverage. It has a schedule setting out the terms, conditions, provisions, exclusions, and limits applicable to payments under s. 265(1) of the Act, which are to be attached to or included in every motor vehicle liability policy.

[10] Section 10 of that Regulation, under the heading "Application of General Provisions", provides:

In so far as applicable, the general provisions, definitions, exclusions and statutory conditions as contained in a motor vehicle liability policy also apply to payments under the contract under subsection 265(1) of the Act.

[11] In other words, s. 10 provides that, in so far as applicable, an exclusion in a motor vehicle liability policy can limit coverage for claimants under s. 265(1) of the Act.

The Standard Ontario Automobile Policy

[12] This takes me to the OAP 1. The OAP 1 is approved by the Superintendent of Financial Services and serves as the standard automobile policy for use by automobile owners in Ontario. Section 1.8.2 of the OAP 1, which was relied upon by the motion judge, provides:

Except for certain Accidents Benefits coverage, there is no coverage (including coverage for occupants) under this policy if the automobile is used or operated by a person in possession of the automobile without the owner's consent or is driven by a person named as an excluded driver of the automobile.

Application of Shipman Precedent

[13] In Shipman, this court considered the impact of s. 1.8.2 of the OAP 1 on entitlement to coverage under s. 265 of the Act. Goudge J.A. found that s. 265, Regulation 676, and s. 1.8.2 of the OAP 1 had to be read together to determine whether the plaintiff was entitled to coverage under the policy. Reading the provisions together, he held that the effect of s. 1.8.2 is to exclude coverage for damages for personal injury under the uninsured automobile coverage where the operator is in possession of the automobile without the owner's consent. He also concluded that, based on its language, s. 1.8.2 is applicable to both occupants of the vehicle and non-occupants. In the specific circumstances of that case, while it was agreed that the plaintiff – a pedestrian struck and injured by a motor vehicle – was entitled to statutory accident benefits under the relevant policy, she was found to be excluded from uninsured automobile coverage under s. 265. She was left to resort to the Motor Vehicle Accident Claims Fund for coverage.

[14] Based on the reasoning in Shipman, coverage for the appellant in this case, an occupant of a vehicle driven without the owner's consent, is plainly excluded (other than for certain SABs).

Distinguishing Arguments Rejected

[15] In an attempt to distinguish his case from Shipman, the appellant relies on two decisions of this court, Taggart (Litigation Guardian of) v. Simmons, 52 O.R. (3d) 704 (C.A.), leave to appeal refused, [2001] S.C.C.A. No. 206, and McArdle v. Bugler, 2007 ONCA 659, 87 O.R. (3d) 433. However, these decisions do not assist the appellant as neither involved the operation of a vehicle without consent of the owner and neither considered the effect of s. 1.8.2 of the OAP 1.

Conflict with the Act

[16] The appellant also submits that s. 1.8.2 conflicts with the Act and that the coverage provided by the Act can only be restricted by statute. I do not agree. A submission to substantially the same effect was rejected by this court in Ortiz v. The Dominion of Canada General Insurance Co., 52 O.R. (3d) 130 (C.A.), at paras. 10-14. There is no conflict with the Act. The Act, the regulation, and the OAP 1 operate in harmony.

Disposition

[17] For these reasons, I would dismiss the appeal.

Cross-Appeal on Costs

[18] The respondent seeks leave to cross-appeal the motion judge's costs award of $15,000 for the summary judgment motion.

[19] Costs awards are discretionary and the test for leave to appeal costs is appropriately stringent: Colistro v. Tbaytel, 2019 ONCA 197, 145 O.R. (3d) 538, at para. 65, leave to appeal refused, [2019] S.C.C.A. No. 173. The respondent has not identified strong grounds to find that the motion judge erred in exercising his discretion. The motion judge gave appropriate consideration to the principle of proportionality and to whether a portion of the costs claimed were necessary in the defence of the proceeding.

[20] I would therefore dismiss the motion for leave to cross-appeal costs.

[21] I would order costs of the appeal in favour of the respondent, fixed in the agreed amount of $7,500, inclusive of disbursements and applicable taxes.

Released: November 15, 2019

"G.R. Strathy C.J.O."

"I agree. Doherty J.A."

"I agree. Robert J. Sharpe J.A."

Footnote

[1] Pursuant to s. 224(1), an "insured" includes "every person who is entitled to statutory accident benefits under the contract whether or not described therein as an insured person."