Herbison et al. v. Lumbermens Mutual Casualty Co. [Indexed as: Herbison v. Lumbermens Mutual Casualty Co.]
77 O.R. (3d) 650
[2005] O.J. No. 3902
Dockets: C40602 & C39948
Court of Appeal for Ontario,
Borins, Feldman and Cronk JJ.A.
September 20, 2005
Insurance -- Actions against insurer -- Plaintiff successfully suing tortfeasor for damages in tort action and then bringing action against tortfeasor's insurer under s. 258(1) of Insurance Act when tortfeasor was unable to satisfy judgment -- Action dismissed at trial but Court of Appeal allowing plaintiff's appeal and ordering that he be indemnified by insurer in amount of damages and post-judgment interest awarded in tort action -- Court of Appeal inadvertently overlooking costs awarded to plaintiff in tort action -- Court varying judgment to correct that oversight and to permit plaintiff to recover costs awarded in tort action from insurer -- Insurance Act, R.S.O. 1990, c. I.8, s. 258(1).
The plaintiff successfully sued W for damages in a tort action. At the time of the accident, W was insured under a motor vehicle liability insurance policy issued by the defendant. As W was unable to satisfy the judgment in the tort action, the plaintiff sued the defendant under s. 258(1) of the Insurance Act, seeking indemnity for the damages, post-judgment interest and costs recovered in the tort action. The insurance action was dismissed at trial, but the Court of Appeal allowed the plaintiff's appeal and ordered that he be indemnified by the defendant in the amount of the damages that he had been awarded in the tort action. Inadvertently, the court overlooked the costs awarded in the tort action. The plaintiff brought an application asking the court to amend its reasons for judgment. The defendant opposed that request on the ground that it was not a party to the tort action.
Held, the application was granted.
The fact that the defendant was not a party to the tort action was irrelevant. Its obligation to indemnify the plaintiff flowed from s. 258(1) of the Act. The judgment obtained by the plaintiff in the tort action consisted of damages (plus post-judgment interest) and costs. The oversight in the court's order should be corrected to include those costs.
APPLICATION to have the Court of Appeal (Borins, Feldman JJ.A. (Cronk J.A. dissenting)) amend its reasons for judgment, reported at (2005), 2005 19665 (ON CA), 76 O.R. (3d) 81, [2005] O.J. No. 2262 (C.A.), to correct an oversight on an appeal from the order of Power J., [2003] O.J. No. 1731, [2003] O.T.C. 400 (S.C.J.) and cross-appeal from the judgment of Manton J., 2003 27300 (ON SC), [2003] O.J. No. 3024, [2003] O.T.C. 685 (S.C.J.).
Statutes referred to Insurance Act, R.S.O. 1990, c. I.8, ss. 239(1), 258(1) [page651]
Barry D. Laushway and Scott O. Laushway, for appellants and respondents by cross-appeal, the Herbison Group. Mark O. Charron and Colin R. Dubeau, for respondent and appellant by cross-appeal, Lumbermens Mutual Casualty Company.
[1] BORINS J.A. (FELDMAN J.A. concurring):-- This is an application by the successful appellant, Harold Herbison, asking the court to amend its majority reasons for judgment released on June 7, 2005, reported at (2005), 2005 19665 (ON CA), 76 O.R. (3d) 81, [2005] O.J. No. 2262 (C.A.).
[2] By way of background, Mr. Herbison successfully sued Fred Wolfe for damages arising from a hunting accident in which Mr. Wolfe shot him, having mistaken him for a deer. In the proceedings before this court, this was referred to as the "tort action". In reasons for judgment released on February 13, 2002, Power J. awarded Mr. Herbison damages of $832,272.85 together with post-judgment interest in the tort action. On July 23, 2003, Power J. awarded Mr. Herbison costs of the tort action fixed at $57,455.98.
[3] At the time of the accident, Mr. Wolfe was a named insured under a standard motor vehicle liability insurance policy issued by Lumbermens Mutual Casualty Company. Pursuant to s. 239(1) of the Insurance Act, R.S.O. 1990, c. I.8, the policy provided coverage for loss or damage "arising from the ownership or directly or indirectly from the use or operation" of an automobile owned by the insured. As Mr. Wolfe was unable to satisfy the judgment awarded by Power J., on February 26, 2002, Mr. Herbison sued Lumbermens under s. 258(1) of the Insurance Act, seeking to have the insurance proceeds payable under the policy applied in satisfaction of the judgment awarded to him in the tort action on the basis that his losses "[arose] from the ownership or directly or indirectly from the use or operation" of Mr. Wolfe's truck which he had used to drive to the location of the shooting accident. This was referred to as the "coverage action". As pleaded in para. 14 of Mr. Herbison's statement of claim , he asked for indemnity for the damages of $832,272.85 plus post-judgment interest and costs recovered in the tort action. When Mr. Herbison commenced the coverage action, the amount of costs was unknown, as Power J. had not issued his costs judgment. [page652]
[4] Manton J. dismissed the coverage action. A majority of this court allowed Mr. Herbison's appeal, ordered that he be indemnified by Lumbermens in the amount of $832,272.85 together with post-judgment interest, representing the amount of damages that he had been awarded by Power J. in the tort action. However, in making its order the majority overlooked costs of $57,455.98 awarded to Mr. Herbison in the tort action. He has now asked that the judgment be varied to correct the result of the oversight. Lumbermens opposes this request on the ground that it was not a party to the tort action.
[5] Lumbermens obligation to indemnify Mr. Herbison for the amount of costs that he was awarded in the tort action does not depend on whether it was a party to the tort action. Indeed, it is difficult to understand on what ground it should, or could, have been made a defendant in the tort action. Lumbermens obligation to indemnify Mr. Herbison flows from s. 258(1) of the Insurance Act. Had it wished to participate in the tort action, Lumbermens could have applied under s. 258(14) to be made a third party to that action.
[6] Section 258(1) states:
258(1) Any person who has a claim against an insured for which indemnity is provided by a contract evidenced by a motor vehicle liability policy, even if such person is not a party to the contract, may, upon recovering a judgment therefor in any province or territory of Canada against the insured, have the insurance money payable under the contract applied in or towards satisfaction of the person's judgment and of any other judgments or claims against the insured covered by the contract and may, on the person's own behalf and on behalf of all persons having such judgments or claims, maintain an action against the insurer to have the insurance money so applied.
(Emphasis added)
[7] Having recovered judgment in the tort action against Mr. Wolfe, who was insured by Lumbermens, Mr. Herbison's claim comes squarely within s. 258(1). That judgment consisted of damages of $832,272.85 plus post-judgment interest and costs of $57,455.98. Pursuant to s. 258(1), in the coverage action Mr. Herbison sued Lumbermens, as Mr. Wolfe's insurer, to recover the amount of the judgment which Mr. Wolfe had not paid. Unfortunately, the order made by the majority of this court overlooked the costs element of the judgment in the tort action.
[8] Accordingly, I would amend the first sentence of para. 117 of the majority's reasons to add after "February 13, 2002" the words "and costs of $57,455.98".
[9] In addition, pursuant to the agreement of the parties, I would award Mr. Herbison his costs of the trial in the amount of [page653] $40,000 and disbursements of $1,235.12, plus GST, and his costs of the appeal in the amount of $20,000 inclusive of disbursements and pre-judgment interest.
Application granted.