COURT OF APPEAL FOR ONTARIO

CITATION: Pye Bros. Fuels Ltd. v. Imperial Oil Limited, 2012 ONCA 153

DATE: 20120312

DOCKET: C54487

Winkler C.J.O., Armstrong and LaForme JJ.A.

BETWEEN

Pye Bros. Fuels Ltd.

Respondent

and

Imperial Oil Limited

Appellant

Amy B. Pressman and Jonathan Davis-Sydor, for the appellant

Stephen J. Wojciechowski, for the respondent

Heard: March 5, 2012

On appeal from the judgment of the Divisional Court (Justice J. Wilson, Justice D.J. Gordon and Justice T.R. Lederer), dated June 9, 2011 allowing the appeal from the decision of Justice Bonnie Warkentin of the Superior Court of Justice dated August 24, 2010.

ENDORSEMENT

Background

[1] Pye Bros. and Imperial Oil are co-defendants in an action for damages related to the alleged release of oil from a home heating fuel oil tank at a residence. Various allegations of negligence are made against Imperial Oil and Pye Bros. and damages are sought in the amount of $350,000 plus costs and interest. Pye Bros. has cross-claimed against its co-defendants, including Imperial Oil, but only for contribution and indemnity.

[2] This action is being case managed with several other actions in which home heating oil tanks made by a common manufacturer are all alleged to have failed.

[3] Pye Bros. brought a motion before the case management judge under Rule 30.02(3) for production of an insurance policy in the possession of Imperial Oil. The motion judge concluded that the policy did not meet the criteria for production under the Rule and that Pye Bros. was seeking the policy for a collateral purpose.

[4] The Divisional Court allowed Pye Bros.’ appeal and ordered production of the insurance policy. That court essentially accepted Pye Bros.’ submissions; that the motion judge had made two palpable and overriding errors. The first is that she erroneously made findings regarding the terms of the insurance policy without any reference to the policy itself. That is, she relied solely on the affidavit evidence filed, which was evidence tendered by a party with an interest adverse to that of Pye Bros. The second is that the motion judge erred in her application of Rule 30.02(3).

[5] We disagree with the Divisional Court’s conclusion that the motion judge committed these errors. Moreover, we disagree with the Divisional Court’s reasons for reaching its conclusions and the appeal must be allowed.

Discussion

[6] First, it was not a palpable and overriding error for the motion judge to rely on Imperial Oil's evidence without reading the policy itself. The Divisional Court’s conclusion otherwise, which included the fact that the evidence was provided by a party who was adverse in interest to Pye Bros, is wrong. If one party's evidence on a material fact is entirely unchallenged – here Pye Bros. did not conduct any cross-examination of Imperial Oil’s affidavit evidence – or is uncontradicted, it is not an error in any sense for a trier of fact to rely on that evidence.

[7] Moreover, if it was an error for the motion judge to decide this issue without reading the insurance policy, we would note that the Divisional Court committed the very same error. In any case, it was not an error in the circumstances of this case.

[8] Second, Pye Bros. is not asserting that the insurance policy is a relevant document to the main litigation. Rather, the real issue that is being advanced is the duty to defend, although this was not the position on the motion. But, Pye Bros., as the motion judge correctly observed, has not made any claims against Imperial Oil relating to its insurance coverage, or its contractual relationship, or any alleged duty to defend.

[9] Rule 30.02(3) is not intended to provide a means to obtain discovery of documents in advance of commencing a separate action relating to coverage or contractual obligations. The purpose of the Rule is to provide a specific and limited exception to the general rule that only relevant documents need be produced. It is to assist the making of informed and sensible decisions by parties involved in litigation in circumstances where recourse may be had to any available insurance money: Sabatino v. Gunning, 1985 2013 (ON CA), 50 O.R. (2d) 171 (C.A.).

[10] In this case, the motion judge was not interpreting the policy. Rather, she was simply considering two uncontradicted facts about the policy: (i) that the deductible limit of the policy exceeded the amount of the claim made by the plaintiffs; and (ii) that the policy was a "claims made" type of policy and no claims had been made to trigger the coverage. She could clearly decide this issue on the record before her without the need to refer to the policy itself.

[11] We agree with counsel for Imperial Oil; the Divisional Court appears to have analyzed the matter as if this were a case between Pye Bros. and Imperial Oil, without regard to the actual pleadings in the underlying action. Because of this, the court effectively ordered production of a document that is not relevant, on the basis of an implied contractual right that was not asserted in the pleadings by Pye Bros.

[12] In our view, the motion judge was entitled to consider the purpose for which production of the policy was sought and to refuse production of it. She did not err in either her interpretation of the law or her approach to deciding the motion. The Divisional Court, on the other hand, was in error in deciding that she was.

Disposition

[13] The appeal is allowed. Imperial Oil is awarded its costs of leave to appeal to this court and the appeal fixed in the aggregate amount of $22,000 inclusive of disbursements and HST. Imperial Oil is also entitled to its costs of the appeal to the Divisional Court in the same amount that court awarded Pye Bros. Finally, Imperial Oil’s costs award made by the motion judge is reinstated.

“Winkler C.J.O.”

“Robert P. Armstrong J.A.”

“H.S. LaForme J.A.”