CITATION: Gordon-Taitt v. Travelers Canada Corp. and Jennifer Polak, 2022 ONSC 712

DIVISIONAL COURT FILE NO.: DC-19-1634

DATE: 20220201

ONTARIO

SUPERIOR COURT OF JUSTICE

BETWEEN:

SYREETA GORDON-TAITT

Appellant

– and –

TRAVELERS CANADA CORP. and JENNIFER POLAK

Respondent

G. McGuire, for the Appellant

M. Dugas, for the Respondent

HEARD: January 14, 2022

reasons for decision

mccarthy j.

The Appeal

[1] The Appellant appeals from the order of Deputy Judge Kowalishin of the Oshawa Small Claims Court (“the deputy judge”) dated May 2, 2019, dismissing her action against the Respondent, Jennifer Polak. The Appellant does not appeal from that part of the order dismissing her action as against the Defendant Travelers Canada Corp (“the insurer”).

Background

[2] The appeal arises out of a claim for the diminution in value to the Plaintiff’s 2017 Honda Accord (“the vehicle”) caused by a motor vehicle accident (“the collision”) which occurred on May 29, 2017.

[3] The parties agree that the Respondent was at fault for the accident. The parties also agree that, because of the collision, the vehicle sustained physical damage which diminished its resale value by $5,500.00.

The [Insurance Act](https://www.canlii.org/en/on/laws/stat/rso-1990-c-i8/latest/rso-1990-c-i8.html)

[4] The Appellant was insured under a standard policy of automobile insurance (“the policy”) with the insurer at the time of the collision. The policy was subject to the Insurance Act, R.S.O. 1990, c. I.8 and the regulations thereunder (“the Act”). The Act contains the following provisions in respect of compensation for property damage:

DIRECT COMPENSATION – PROPERTY DAMAGE

s. 263(1) This section applies if,

(a) an automobile or its contents, or both suffers damage arising directly or indirectly from the use or operation in Ontario of one or more automobiles;

(2) If this section applies, an insured is entitled to recover for the damages to the insured’s automobile and its contents and for the loss of use from the insured’s insurer under the coverage described in subsection 239(1) as though the insured were a third party

Restrictions on other recovery

(5) If this section applies,

(a) an insured has no right of action against any person involved in the incident other than the insured’s insurer for damages to the insured’s automobile or its contents or for loss of use.

[5] The insurer duly paid the cost of repairs to the Appellant’s vehicle but declined to compensate the Appellant for the diminution in the vehicle’s resale value. The Appellant therefore commenced her Small Claims Court action against both the tortfeasor and the insurer seeking compensation of $5,500 for the economic loss she suffered because of that diminution in value.

The Decision

[6] In her oral reasons for dismissing the claim, the deputy judge summed up the Appellant’s position as follows:

The plaintiff submits that on account of the “parallel wording” of subsections 263(2) and 263(5) of the Insurance Act, section 263(5) of the Act is to be interpreted so as not to deprive an insured of a common law right of recovery for diminution in value to his or her motor vehicle on account of a motor vehicle accident. In other words, the omission of the head of damages, diminution of value, from these subsections and the emergence of claims for such damages in the 30 years since the enactment of section 263 of the Act mean, fairly construed, that section 263(5) of the Act has not foreclosed a claim such as the plaintiff’s in this case.

[7] The deputy judge rejected that argument. She cited the following passage from the Ontario Court of Appeal’s decision in Clarendon National Insurance v. Candow, 2007 ONCA 680, [2007] O.J. No. 3797, at para. 1:

This appeal raises the question of whether there are circumstances in which Ontario’s ‘no-fault’ insurance regime permits a tort action for recovery of property damage against a negligent party. I conclude that the ‘no-fault’ regime prohibits all tort actions for recovery of property damage against a negligent party. This prohibition applies not only to claims of individuals, but also to subrogated claims brought by insurers.

[8] Applying the legal standard in Clarendon to the facts before her, the deputy judge went on to conclude that a diminution of value claim is a tort action for recovery of property damage and is therefore prohibited under Ontario’s no-fault insurance regime.

Standard of Review and Analysis

[9] The standard of review for questions of law or the application of a legal principle to a set of facts is that of correctness.

[10] I am unable to find any legal error on the part of the deputy judge. She correctly cited the appropriate legal principle and applied that principle to the agreed set of facts.

[11] In Clarendon, the Court of Appeal expounded on the purpose of the direct compensation scheme in the Act at paragraph 7 of its decision:

Section 263 of the Insurance Act replaced the tort system that resolved automobile damage claims prior to its enactment. In the new statutory scheme, insureds can no longer sue the tortfeasor driver whose negligence has caused damage to their cars. Rather, their own liability insurer pays for the damage, to the extent that they were not at fault, under the third-party liability section of their motor vehicle liability policies. Insureds can recover the at-fault portion of their damage by purchasing collision coverage. Insurers have no right of subrogation for payments to their own insureds, but, on the other hand, do not have to pay the subrogated claims previously brought by other insurers in the tort system. The result is that the statutory regime eliminates the transaction costs that were inherent in the system.

[12] Although Clarendon involved an out of province insurer’s subrogated claim, the principle which emerged from the court’s decision was, in my view, abundantly clear: the former right to sue a tortfeasor driver for damages caused to one’s motor vehicle has been statutorily removed from Ontario’s common law by s. 263 of the Insurance Act.

[13] The Appellant advanced creative and interesting arguments for why a diminution in value claim should not be caught by the restrictions on recovery section of the Act. These arguments include:

i. That other common law jurisdictions have allowed diminution in value claims;

ii. That diminished value does not constitute “damages to the insured’s automobile” and is therefore not caught by the statutory exclusion;

iii. That the Legislature intended to transfer, not eliminate or reduce liability for property damage;

iv. As remedial legislation, the Act should be read so as not to remove rights unless such an intention is express;

v. Consumer protection weighs in favour of allowing such actions because the direct property compensation coverage under the policy does not include diminution in value;

vi. There is Ontario jurisprudence allowing recovery for diminution in value to a plaintiff’s automobile: see Wood v. Husband, [1978] O.J. No. 267 (Co. Ct.).

[14] These arguments fail to persuade. The decision in Wood v. Husband pre-dates the changes to the Act brought about in 1990 with the introduction of the Ontario Motorist Protection Plan (OMPP). A plain reading of the relevant sections of the Act makes it clear that the legislature intended to eliminate actions against tortfeasors for auto property damage. “Damages to the insured’s automobile” is a broad enough term to include any diminution in value to a vehicle which might result from a collision. In my view, it would offend both the plainly expressed wording in s. 263(5) as well as the overall intention of the OMPP to permit actions for diminished value to be advanced. As stated by Sharpe J. (as he then was) in McCourt Cartage Ltd. v. Fleming Estate, 1997 12297 (ON SC), [1997] O.J. No. 3933 (Ont. C.J., Gen. Div.), at para. 3:

The intended effect of s. 263 was to remove the insured’s right to sue for property damage and to confer the right to claim such losses not caused by the fault of the insured against one’s own insurer.

Disposition

[15] I am unable to find any legal error on the part of the deputy judge. Her interpretation of the governing legislation was in line with the Court of Appeal’s dictum in Clarendon. Her application of that legal principle to the agreed set of facts was correct.

[16] For the foregoing reasons, I would dismiss the appeal. The Respondent is entitled to costs of the appeal which I would fix on a partial indemnity basis in the amount of $7,500. Those costs are payable by the Plaintiff/Appellant to the Defendant/Respondent forthwith.

McCARTHY J.

Released: February 1, 2022