COURT FILE NO.: CV-10-405456

DATE: 2012-05-25

ONTARIO

SUPERIOR COURT OF JUSTICE

BETWEEN:

JOHN DUNCAN and LAURA DUNCAN

Plaintiffs

– and –

BRIAN MORTON, 1747483 ONTARIO INC., O/A AFFORDABLE AUTOMOTIVE CENTRE and ALLSTATE INSURANCE COMPANY OF CANADA

Defendants

Christine Boulos, for the Plaintiffs/Respondents

Christopher I.R. Morrison and Stephanie R. Quesnelle, for the Defendant/Moving Party, 1747483 Ontario Inc. o/a Affordable Automotive Centre

Ian D. Kirby, for the Defendant/Responding Party, Allstate Insurance Company of Canada

HEARD: April 24, 2012 at Toronto, Canada

REASONS FOR JUDGMENT

michael g. quigley j.

[1] The defendant numbered company, operating as Affordable Automotive Center, seeks summary judgment dismissing the claim of the plaintiffs, John Duncan and Laura Duncan and the cross-claim against its by its co-defendant, Allstate Insurance Company of Canada.

[2] The other defendant, Brian Morton, was an uninsured driver who caused the motor vehicle accident in which John Duncan was injured. Morton was charged with operating a motor vehicle without consent and he pleaded guilty to that charge only a couple of months after the accident, but a full year and a half before this lawsuit commenced. At the time of his plea, Mr. Morton said that he was driving Affordable’s vehicle without the consent of Affordable, or its principal, Mr. Denesh Maharaj.

[3] Affordable argues here that the facts read into the record and Mr. Morton's plea of guilty that resulted in his conviction proves the facts that were admitted to at the time the conviction was entered. Absent reasons to the contrary, it says the doctrine of abuse of process requires that those facts be accepted as conclusively establishing that Morton was driving the vehicle without Affordable’s consent. It asks for summary judgment dismissing the plaintiffs’ claims and Allstate’s cross-claim against it since it claims there is no basis upon which Affordable could be found to be liable.

[4] Moreover, Affordable claims that Allstate’s failure to have paid any amounts to the Duncan’s under the uninsured motorist provisions of their policy means that it does not yet have a cause of action, and as such, that it has no standing to oppose Affordable’s motion for summary judgment. The Duncan's do not oppose Affordable's claim – they know they will get paid if damage is proven – but Allstate opposes the dismissal of its cross-claim.

[5] I am not persuaded that this is a case where summary judgment should or can be granted in favour of Affordable at this time, but I am persuaded that Allstate does have standing to oppose the motion. In these particular circumstances, I find that I do not have the full appreciation of the evidence that Combined Air Mechanical Services Inc. v. Flesch[^1] shows is necessary to be present as a threshold before summary judgment can be granted. For the reasons that follow, I conclude that it would not be fair to Allstate in these circumstances to grant summary judgment to Affordable on the basis that Morton's conviction has preclusive evidentiary effect.

Summary of Facts

[6] On November 4, 2008, John Duncan was driving his motorcycle on Park Road South near the intersection of Malaga Road in Oshawa when he was struck by a Nissan Sentra vehicle that was making a left-hand turn and that was driven by the defendant, Brian Morton. Mr. Duncan sustained serious injuries. He was taken to Lakeridge Health Center in Oshawa by EMS emergency medical services.

[7] The police were called and Officer David Cormack of Durham Regional police attended at the scene, investigated and prepared a report. Officer Cormack learned that Mr. Morton did not own the Nissan vehicle he had been driving. He learned that the vehicle driven by Morton was an unplated vehicle owned by the defendant Affordable that comprised part of its used car sales inventory.

[8] Mr. Morton was charged at the scene of the accident with having taken that motor vehicle without the consent of Affordable contrary to section 355(1) of the Criminal Code of Canada. He was also charged with two Highway Traffic Act offences, including careless driving. He was not charged with theft. Offenses under section 355 (1) are punishable on summary conviction only, unlike theft, which may proceed on summary conviction or indictment under section 322 (1) of the Code.

[9] Two months later, Mr. Morton entered into a plea bargain on January 15, 2009 with the assistance of duty counsel, under which he agreed to plead guilty to the offence of having taken Affordable's motor vehicle without the consent of its owner, with the other charges being dropped. His guilty plea was taken by Justice R.J. Richards in the Ontario Court and he received a suspended sentence and 12 months of probation plus 60 hours of community service. He was not fined and he spent no time in jail. The evidence revealed, however, that the owner of Affordable, Mr. Maharaj, knew Mr. Morton as a friend and a person who sometimes performed odd jobs and cleaning around the premises of his dealership. That evidence read in also revealed (i) that Maharaj claimed to know that Morton had no drivers’ licence, and (ii) that he did not have permission to drive the dealership cars.

[10] It was only a year and a half later, in June of 2010, that the Duncans commenced an action against Mr. Morton, Affordable, and Allstate as the uninsured insurer.

[11] Allstate says that a key issue at trial will be whether Mr. Morton had the consent of Affordable to be driving that vehicle, either explicitly or on an implied basis. If he did, then Affordable is responsible and liable in law for the damages caused to Mr. Duncan. If Mr. Morton did not have the consent of Affordable, then it is Allstate's responsibility as the Duncan’s insurer to pay for the plaintiff’s damages pursuant to the uninsured motorist provisions of the plaintiff’s automobile insurance policy. Allstate’s position is that it should not be bound to accept the facts relating to the conviction of Morton as conclusively proving that neither Affordable nor Mr. Maharaj gave consent to Morton’s use of the vehicle, and thus that it is not potentially liable to the Duncan’s.

The Test for Summary Judgment

[12] Summary judgment is only to be granted if the court is satisfied that there is no genuine issue requiring a trial with respect to a claim: Rule 20.04(2)(a) of the Rules of Civil Procedure.

[13] Although new Rule 20.04 (2.1) expands the powers of the summary judgment motions judge to weigh evidence and evaluate the credibility of deponents and to draw inferences from the evidence, those enhanced powers may not be used if it is in the interest of justice that they be exercised only at trial.

[14] Further, the well-established principles relating to the parties’ obligations on summary judgment motions continue to apply. In particular, each party must still put forward their best case as if at trial and the moving party must provide a level of proof that demonstrates that a trial is unnecessary to fairly and justly resolve the issues: Healey v. Lakeridge Health Corp.[^2]

[15] Most importantly, following the decision in Combined Air, above, the first question that the court must ask itself on a summary judgment motion is whether the full appreciation of the evidence and the issues it is required to consider in order to make dispositive findings can be achieved by way of summary judgment, or whether that can only be achieved by way of a trial? Where the motions judge cannot gain the full appreciation of the matter that is required or where real conflict remains on important evidentiary aspects of the matter, and that conflict cannot be resolved using the enhanced Rule 20 powers, the motion cannot succeed and the matter must be sent on for trial.

[16] The legal burden rests on the moving party on the summary judgment motion to show that there is no genuine issue for trial, and that burden never shifts. To resist a motion for summary judgment, the responding party must adduce coherent evidence based on an organized set of facts to show that there is a real issue to be tried on admissible evidence.[^3] Recent case law decided since Combined Air shows that the question of “who knew what and when” is the very kind of case that ought to go to trial,[^4] and older case law establishes that where the issue of consent is alive, summary judgment should not be granted.[^5]

[17] Stated simply, there are two issues on this summary judgment motion. The first is whether fairness demands that the matter proceed further to permit a fuller panoply of evidence to develop, notwithstanding the moving party’s claim to summary judgment on the basis that the evidence of Morton's conviction conclusively establishes an absence of consent. The second question is whether Allstate has any status as a litigant in this case as the Duncan’s insurer under the uninsured motorist provisions of their policy, when it has not yet made any payment of any damages amount to the plaintiffs, and as such has not become subrogated to their rights.

Analysis

The Consent Issue

[18] Under section 22 of the Evidence Act, Mr. Morton's conviction of the charge of driving a motor vehicle without consent is proof of the facts that were read into the record when that plea was taken "in the absence of evidence to the contrary." It is the doctrine of abuse of process that generally operates to prevent relitigation in such circumstances. The theory is that it would be abusive to go behind the conviction to challenge the facts upon up which it was based. It is effectively a variant on the principle of res judicata.

[19] Counsel for Affordable argues strenuously that the decision of the Supreme Court of Canada in Toronto (City) v. Canadian Union of Public Employees (C.U.P.E.), Local 79 [^6] requires that the facts read into the record as part of the entering of Mr. Morton's conviction be taken as definitively established. Thus, he says that conclusively proves that Morton did not have Affordable’s consent to drive its vehicle at the time of the motor vehicle accident. I agree C.U.P.E. establishes that a conviction is prima facie proof of the facts that are advanced to support it, unless there are reasons to the contrary, and counsel did acknowledge cases where the conviction has not been treated conclusively. However, he claimed those were different cases, cases where it would have been "unfair in the circumstances" to give preclusive effect to the evidence of the conviction or where the accused himself came forward and said he was not guilty notwithstanding the earlier entering of a guilty plea, circumstances that he says are absent here.

[20] In Shah v. Becamon,[^7] evidence relative to the prior conviction was not held to be established conclusively because the offence in question was only a provincial Highway Traffic Act matter and not a criminal charge, because the accused had no legal representation, and because she had difficulty with the English language. Those were circumstances that were not present here, or in another case, Watteel v. Lacaille,[^8] where McKinnon J. held at para. 5 that the conviction could not be regarded as conclusively established because the accused came forward and denied that he was actually guilty. In both of those cases, the subsequent stakes in a civil proceeding was considered to outweigh the stakes in the original criminal or quasi-criminal proceeding such that the original result “should not be binding in the new context.” However, counsel for the moving party insists that none of those circumstances were present here.

[21] As such, (i) in the absence of evidence to the contrary concerning voluntariness or the validity of his plea, and (ii) in the absence of other admissible evidence to the contrary, Affordable argues that the effect of Mr. Morton's conviction should be regarded as preclusive. It relies on D. Brown J.’s observations in Andreas v. Pinto,[^9] that the guilty plea should have preclusive effect when it was obtained “voluntarily, unequivocally, and on an informed basis,”[^10] and where the circumstances showed whether the person had adequate incentive "to generate a full and robust response." In such circumstances, he held that there is no disconnection of the stakes between two successive hearings, the point to which the Supreme Court in C.U.P.E. linked whether considerations of fairness would require or permit a relitigation of the issue.

[22] This aspect of fairness arises from Justice Arbour’s commentary in C.U.P.E. on circumstances where re-litigation may enhance the integrity of the judicial system, one of those being where fairness dictates that the original result should not be binding. As paras. 52-3 she states as follows:

The discretionary factors that apply to prevent the doctrine of issue estoppel from operating in an unjust or unfair way are equally available to prevent the doctrine of abuse of process from achieving a similar undesirable result. There are many circumstances in which the bar against re-litigation, either through the doctrine of res judicata or that of abuse of process, would create unfairness. If, for instance, the stakes in the original proceeding were too minor to generate a full and robust response, while the subsequent stakes were considerable, fairness would dictate that the administration of justice would be better served by permitting the second proceeding to go forward than by insisting that finality should prevail. An inadequate incentive to defend, the discovery of new evidence in appropriate circumstances, or a tainted original process may all overcome the interest in maintaining the finality of the original decision. (citations omitted)(my emphasis)

[23] In this case, however, I agree with Allstate that there is an important aspect to Toronto v. C.U.P.E. that must inform whether it applies here – the facts against which it was decided that are fundamentally different from those present in this case.

[24] That case involved a sexual assault charge levied against the employer. At the criminal trial, evidence was led and there was extensive examination and cross-examination. Following the trial and after such examinations, the employee was convicted. On the basis of that conviction, the City terminated his employment but he launched a grievance with the union, C.U.P.E.

[25] As the record in the Supreme Court reflects, the accused employee gave evidence at the grievance, but the complainant did not testify again. As a result, the arbitrator ruled, surprisingly, that the conviction was admissible but rebuttable. The arbitrator found that there was evidence to rebut the conviction evidence (the evidence of the convicted employee), but no evidence to the contrary (the complainants evidence). The employee was reinstated. However, the Divisional Court then quashed the decision of the arbitrator and the Court of Appeal dismissed the appeal, so the appellant appealed to the Supreme Court of Canada.

[26] To my mind, Justice Arbour’s comments that re-litigation carries serious detrimental effects and should be avoided unless the circumstances dictate it is necessary to enhance the credibility and effectiveness of the adjudicative process as a whole must be viewed against that factual background, and in that light. She considered that such circumstances might be present when a first proceeding was tainted by fraud or dishonesty, or when fresh, new evidence, previously unavailable, conclusively impeaches the original results, or most importantly here, when fairness dictates that the original result should not be binding in the new context.[^11] In the C.U.P.E case, fairness actually required that the original result be binding given the extensive examination and cross-examination that took place. It would not have been fair to permit the employee convicted there of sexual assault in the prior proceeding to avoid that conclusion, and its relevance to whether there was an appropriate foundation for the termination of his employment, simply because the complainant had not testified at the subsequent proceeding.

[27] That was a very different case than this one. I accept that Morton acknowledged certain facts in the course of entering his plea to the criminal charge, and the duty counsel, who acted for him that day, undertook a plea comprehension inquiry to ensure that Morton understood that he was pleading guilty, understood what the allegations were, and was entering that plea voluntarily. He acknowledged to the police officer at the scene of the accident that he was not supposed to be driving. He knew his license was suspended. Relative to the issue of consent, however, the only evidence present in the Ontario Court on the day Mr. Morton's plea was taken was the Crown reading the following fact into the record relative to information obtained from the owner of the vehicle:

…Mr. Maharajah advised that Mr. Morton is a friend he's helping out, who's down on his luck. Morton sometimes cleans up at the dealership and at the detailing shop if needed. Mr Maharaj is aware that Morton does not have a driver’s license and he did not have permission to have Mr. Maharajah's car. Those are the facts.

[28] However, the reality of this case is that Morton entered that plea at a point in time when he was not under any jeopardy relative to a civil lawsuit having been commenced against him, and even if he was, as an uninsured driver in impecunious circumstances the civil suit brought by the Duncan’s against him, Affordable, and Allstate, has no real economic repercussions for him.

[29] The real issue here is whether Affordable has proven that there is no genuine issue requiring a trial with respect to the issue of consent. In my view, they have not. There was no robust examination or cross-examination conducted relative to the facts of this matter at the time that Mr. Morton's plea was taken. Mr. Morton himself could be in no economic jeopardy as a consequence of any subsequent civil case that might be commenced against him, or against Affordable. There was no cross-examination of Mr. Maharaj on a supporting affidavit that one would reasonably have expected him to have sworn in these proceedings. The fact that he did not and that the moving party prefers to rely on the flimsy statement of agreed facts read in on the taking of Morton’s plea is itself a source of question.

[30] Allstate claims that all three of the circumstances raised by Justice Arbour in Toronto v. C.U.P.E., come into play in this case. It claims that both the evidence at the criminal proceedings and the conclusion was tainted because there was evidence that Mr. Morton worked for Affordable and may have lived on site at the dealership, and yet there has been no examination for discovery and the affidavit on this application is not that of Mr. Maharajah or Affordable, but rather of the solicitor. I agree with the respondent – that is not Affordable putting "its best foot forward."

[31] Secondly, Allstate raises the prospect of fresh evidence, but says it is too early to know that with certainty because discoveries have not yet taken place in the civil action. Nevertheless, of particular interest in that regard, is the competing evidence of Ms. Oatley and Officer Cormack. Obviously Ms. Oatley's notes prepared not long after the collision in relation to her discussion with Officer Cormack are business records which could be introduced at trial, or for the purposes of discovery, but they reflect a very different evidentiary foundation than the limited set of facts recorded on the day the plea was taken in the Ontario Court.

[32] Moreover, now, three years later, Officer Cormack has filed an affidavit indicating that he never even spoke to Ms. Oatley. Clearly there is a credibility issue that arises there and to the extent that such a discussion did take place between Ms. Oatley and Officer Cormack, a discussion which may have a direct bearing on the question of whether Affordable did actually consent explicitly or implicitly to Mr. Morton using its vehicle, fairness demands that an opportunity be provided for that inquiry to be made. In order for that inquiry to be made this matter must at least proceed to the discovery stage.

[33] The principle is quite simple here. It is only appropriate to grant summary judgment in circumstances where the moving party put forward its best case and where the court can conclude that it has the full appreciation of the evidence that makes the granting of summary judgment a potentially appropriate disposition for the matter, rather than requiring it to proceed to trial.

[34] At its root, Allstate's position is that it must have standing to argue against this motion and that the motion ought to be dismissed because it is to avoid permitting Affordable to be in the position where it is able to say that there was no consent to Morton's use of Affordable's motor vehicle, when a trial on that issue may well have shown that there was such consent, either express or implied. There is an absence of rigorous examination and cross-examination in the circumstances of taking a guilty plea in this case on a relatively innocuous criminal charge, with the accused having faced little jeopardy, either in terms of the sentence that was imposed, or as a result of economic claims realistically being made against him. To my mind, those circumstances weigh in favour of forcing this matter to go to trial or at least to the discovery stage where counsel can get to the bottom of these open questions through vigorous examination or cross-examination on affidavits, not of the lawyers involved, but of the personalities themselves.

[35] I agree with Allstate that Affordable's motion is premature. It must be dismissed.

The Standing Issue

[36] Although framed as a claim for "contribution and indemnity", Allstate has no right of action under the terms of the Negligence Act against Affordable.[^12] A tortfeasor may only recover contribution or indemnity from another tortfeasor who is or would have been liable in respect of the damage caused. In its cross-claim, however, Allstate pleads that it is entitled to claim any monies that are paid out under the uninsured or inadequately insured provisions of its policy against Affordable pursuant to the provisions of the Insurance Act,[^13] In contrast to that claim, however, in respect of uninsured motorist coverage, it appears that Allstate's only applicable right of recovery is set out in section 265 of the Insurance Act and that is to be subrogated to the rights of the Duncan’s. That right arises only when an amount has been paid to them. Until such time, while an inchoate right may exist, it is said that there is no basis for Allstate to be subrogated to the rights of the plaintiffs.

[37] In this case, there is no issue that the Duncan’s have not yet been paid any amounts as plaintiffs under the uninsured provisions of the policy and, consequently, Affordable claims that there is no right of action in the name of Allstate as against the other parties. It insists that there are no other provisions of the Insurance Act, which would permit Allstate to maintain an action in its own name. Moreover, while Affordable recognizes that Allstate has a potential subrogated cause of action, merely permitting Allstate to amend its pleadings would not solve the problem, because in Affordable’s submission, the problem for Allstate is when and how they are entitled to assert and control the subrogated claim.

[38] Affordable says that the claim under the UIM does not arise until payment is made. Further, they argue that it is evident from a review of section 20 of the OPCF44 (underinsured coverage endorsement), that the right of subrogation exists at the time the claim is made, but that that right, unlike the right contained in the UIM, is only to maintain an action in the name of the insured. Affordable says that the right to bring such a claim was predicated on the insured themselves not making the claim or otherwise dealing with the alleged tortfeasor. It acknowledges that the only cases that deal directly with the insurer maintaining an action in its own name prior to indemnifying its insured deal with situations where the insured has not brought an existing claim against the putative tortfeasor.[^14]

[39] However, where the insured has brought a claim against the tortfeasor and has not been indemnified, Affordable says that the appropriate procedures are those set out by Griffiths J. close to 40 years ago in Corrigan v. Employers Insurance of Wausau A. Mutual Company.[^15] In that case, Griffiths J. directed that the action rests with the insured, but if it is determined that the UIM insurer must pay the cause of action, then it is assigned to the insurer.

[40] That same issue was before Master Donkin in Harris v. Floyd.[^16] He noted at paragraphs 10–12 that there was no right for the insurer to bring a cross-claim under the predecessor to OPCF44 where a claim had been issued by the insured and there was neither payment to the insured nor assignment or equitable subrogation.[^17] Pursuant to section 21 of the OPCF44R, the actual assignment of all rights of action only occurs once the payment has been made.

[41] Affordable claims that this is consistent with binding authority of the Supreme Court of Canada in Somersall v. Friedman,[^18] and Zürich Insurance Company v. Ison T.H. Auto Sale Inc.[^19] In Somersall, at paragraph 59, the majority of the Supreme Court noted that the insured can maintain the action until “such time as the insurer assumes control” and that, further, “so long as the insured acts in good faith… the insurer cannot complain of the insured’s own diligence in speedily and successfully resolving the underlying dispute.”

[42] The Supreme Court further noted that the obligation of the insured to cooperate with the insurer and to assign the right of action only occurred once indemnity was provided and that “the insurer's entitlement of such causes of action is not affected by the fact that such actions are not, in fact, able to be pursued successfully,” due to the earlier conduct of the insured. Similarly, in the Ison decision, the Court of Appeal held that the insured was dominus litis, the party who makes the decisions in a lawsuit, until the insurer has fully indemnified the insured.

[43] But here, having made no payment pursuant to the policy, Affordable argues that Allstate has no right to either bring its counterclaim action in its own name, or to control the insured’s action. To allow otherwise, it says, will allow two actions to exist for the same cause of action. The plaintiffs would not be able to resolve their own complaint against the putative tortfeasors because they would be unable to deal with their own action unless the OPCF44 carrier agreed. That conclusion runs directly contrary to the decision in Somersall that control of the claim ought to rest with the party who has suffered the loss, and until the insurer has paid, that party is the insured. Once the insurer has paid, then it is the insurer who has suffered the loss. Consequently, Affordable claims that unless and until payment is made to the Duncan’s, control of the action continues to rest with them, who Affordable notes do not oppose its motion.

[44] Finally, In a recent decision, the Ontario Court of Appeal dealt with the case wherein an insurer attempted to appeal the motion for judgment as against, amongst others, itself and its insured in an action where it was being sued under the uninsured motorist UIM and OPFC44 provisions of the policy. In the absence of the evidence of the payment, the Court of Appeal held there that the insurer had no right to pursue its claim separately: see Fedele v. Burke Estate.[^20] Affordable claims that this case as well supports its position that Allstate is without standing on this motion.

[45] In summary, since Allstate has no cause of action of its own and in its own name, but since its cause of action is said to arise only once it makes payment to the Duncans as plaintiffs, and since no monies have yet been paid to them, Affordable claims that Allstate has no status to speak at this hearing whatsoever.

[46] With respect I disagree. I have no fundamental disagreement with the positions of law put forward by Affordable, but they miss the point that the issue here is one of procedural fairness in the absence of any material action or appropriate positioning by the plaintiff’s, not one of the creation of two competing causes of action.

[47] It is beyond doubt that Rule 28 of the Rules of Civil Procedure permits Allstate to cross-claim against the other defendants. It is permitted because the assertion of a cross-claim in the main action may avoid a multiplicity of proceedings. Allstate correctly makes reference to paragraph 18 of Freudmann-Cohen v. Tran, above, which emphasizes the important policy reasons that exist to permit a defendant to assert a cross-claim in the main action, even though its claim may be based on a right of subrogation against the co-defendant:

The position taken by E. MacDonald J. in Morey v. Knipple that the right of the insurer to subrogation not be defeated by the technical impediment that it cannot, and the particular circumstances, bring the third-party claim in the name of the insured, but only in its own name, is a fair and just position. It is consistent with the policy objective underlying the amendment to Rule 29 of having the rights of all the parties involved in the same factual situation determined without a multiplicity of proceedings. It does appear, however, to fly in the face of the words of OEF 44, and the common law, which both appear to permit the insurer to maintain an action of this sort only in the name of the insured.

[48] Furthermore, the Ontario Court of Appeal stressed at paragraphs 32-35 that where the procedural principles of subrogation collide with the objective of more effective and less costly litigation, as well as avoiding a multiplicity of proceedings, it is the latter that should prevail:

If is important that principle was the requirement that an insurer pay the claim before suing to recover on its subrogated rights can yield to the desired goal of promoting that this position of all relevant issues between all relevant parties and one action, thus avoiding the multiplicity of proceedings, I see no reason in principle why the same result should not flow when the provisions of rule 29.01 collide with the procedural principle and subrogation law requiring the insurer to sue in the name of the insured.[^21]

[49] Although Freidman-Cohen involved the defendant asserting a third party claim under Rule 29, I agree with Allstate that the substantive language of that rule and Rule 28 are for all intents and purposes identical relative to the advancement of such claims. As such, it seems to me to be a reasonable interpretation that Allstate is entitled to assert a cross-claim against the co-defendants in this action. [^22]

[50] If the position advanced by Affordable on the summary judgment motion were to be accepted on this point, it would result in multiple proceedings that could otherwise be effectively disposed of at once in this action. Thus, while Affordable's submissions are correct as far as they go relative to the position of Allstate as the uninsured insurer for a plaintiff's claim, in circumstances where they have not yet become subrogated to the plaintiff's rights by reason of having made payment to them, that confuses substantive and procedural principles. It confuses the substantive law principle that an insurer first indemnify its insured before suing with the procedural principle that since the parties rights in this action all arise from the same transaction, they should be disposed of in one proceeding. Indeed, in Freudmann-Cohen, our Court of Appeal rejected the very technical impediment that Affordable has raised on the basis that it would frustrate the modern objectives of efficient litigation and the avoidance of a multiplicity of proceedings.

[51] The right to cross-claim brought by Allstate against co-defendants is one that is clearly supported by the Rules and by the authorities that have applied in similar circumstances. It also has behind it the sensible commendation that it is consistent with the policy of efficient litigation. However, in addition to these reasons, there is one further important reason why Allstate must be granted standing in this proceeding notwithstanding that no payment has yet been made to the Duncans – that point is that the Duncans themselves are prepared to abandon the litigation against Affordable.

[52] The defendants in this matter are Brian Morton, Affordable, and Allstate as the insurer for uninsured drivers. Clearly Allstate is not a joint tortfeasor. It is present only because of its statutory obligation to make good on claims brought by injured motorists against uninsured drivers. Much of Affordable's argument objecting to Allstate having standing on this motion is predicated on the notion that the plaintiffs, the Duncans, are themselves “controlling the action.” The facts of this matter make plain, however, that nothing could be further from the truth.

[53] The very fact that the plaintiffs do not oppose summary judgment being granted dismissing their claim as against the moving party, and dismissing Allstate’s counterclaim against Affordable as a co-defendant, shows that John Duncan and Laura Duncan hardly have control of this litigation. They do not appear to care whether summary judgment is granted against them, or whether Affordable obtains summary judgment dismissing Allstate’s counterclaim because they can continue along in the blithe knowledge that whatever damage they are able to prove as against Brian Morton for his role in the motor vehicle accident that resulted in injuries to John Duncan, will unquestionably be paid by Allstate.

[54] They took no position on this motion, a surprising stance to my mind given that they are aware that Morton is impecunious, but that if Affordable gave consent to Morton to drive its vehicle, either explicitly or implicitly, then it Affordable's insurer, not Allstate, that will have a legal obligation to pay for John Duncan's damages.

[55] Consequently, as I see it, the fundamental flaw that lies at the foundation of Affordable’s efforts to deprive Allstate of status on this summary judgment motion hearing is that while the Duncans may be dominus litis as a technical matter, nothing could be further from the truth practically speaking. The Duncan’s have stood aside and taken no position in this proceeding – as is their right. They are entitled to content themselves with the prospect of receiving insurance coverage from one of the insurers and leaving it to the two of them to essentially duke it out to see who pays. However, Allstate can only play its role in that debate or drama if it has status to speak in this matter. It needs to have that voice out of fundamental fairness because no one else will advance the concerns that it raises, but which need to be brought forward to the extent that they go to the heart of the search for truth and the ultimate allocation of damages to the party properly responsible to pay for them.

Conclusion

[56] For the foregoing reasons, the defendant’s summary judgment motion is dismissed. It seems appropriate that costs would follow the event and be payable by Affordable since it’s summary judgment motion failed, but here was nothing technically improper about the summary judgment motion brought by Affordable, nor indeed was its position that Allstate should not have standing on this proceeding without at least some technical merit. As such, I presently see no foundation for an award of substantial indemnity costs. Nevertheless, I acknowledge that I have not heard any submissions on costs and am not aware of any other matters that might impact on the appropriate scale of costs. Accordingly, the parties are requested to try to reach agreement on the costs that are to be payable, but if they are unable to do so, may contact the court for further directions.

Michael G. Quigley J.

Released: May 25, 2012

ONTARIO

SUPERIOR COURT OF JUSTICE

BETWEEN:

JOHN DUNCAN and LAURA DUNCAN

Plaintiffs

– and –

BRIAN MORTON, 1747483 ONTARIO INC., O/A AFFORDABLE AUTOMOTIVE CENTRE and ALLSTATE INSURANCE COMPANY OF CANADA

Defendants

REASONS FOR JUDGMENT

Michael G. Quigley, J.

Released: May 25, 2012

[^1]: 2011 ONCA 764.

[^2]: 2010 ONSC 725, [2010] O.J. No. 417 (Ont. S.C.J.) at paras. 29-30.

[^3]: Miltonberg v. Metro Inc., [2012] O.J. No.662 (S.C.J.O.), at paras. 21–25; Smith v. Barnett Estate, [2012] O.J. No.510 (S.C.J.O.), at para. 22.

[^4]: Honest Art Inc. v. Decode Entertainment Inc., [2012] O.J. No.365 (S.C.J.O.), at paras. 11–20.

[^5]: Smith v. Barnett Estate, above, at paras. 26 and 30; Ladouceur v. Zimmerman, [2009] O.J. No. 4777 (S.C.J.O.), at paras. 57, 64, 65 and 69; Ahmetpasic v. Love, [2002] O.J. No.5093 (S.C.J.O.) at paras. 2, 12, 18 – 21; Watteel v. Lacaille, above, at paragraph 11.

[^6]: 2003 SCC 63, [2003] 3 S.C.R. 77.

[^7]: 2009 ONCA 113, [2009] O.J. No. 478 (C.A.).

[^8]: 2008 21729 (ON SC), [2008] O.J. No. 1821 (S.C.J.O.).

[^9]: 2009 50220 (ON SC), [2009] O.J. No. 3910 (S.C.J.O.).

[^10]: In reliance on R. v. T. (R.), 1992 2834 (ON CA), 1992 CarswellOnt 117 (C.A.)

[^11]: This was stated unequivocally by the Supreme Court in Danyluk v. Ainsworth Technologies Inc., 2001 SCC 44, [2001] 2 SCR 640, at para. 80.

[^12]: Negligence Act, R.S.O.1990, c. N.1, section 2.

[^13]: Insurance Act, R.S.O.1990, c. I.6

[^14]: See Freudmann-Cohen v. Tran, 2004 CarswellOnt 1585 (C.A.).

[^15]: [1984] 1 I.L.R. 1–1832 (Ont. S.C.).

[^16]: 1991 CarswellOnt 1072.

[^17]: See also Metz v. Breland, 1990 ABCA 303, 1990 CarswellAlta 178 (Alta. C.A.).

[^18]: 2002 SCC 59, 2002 CarswellOnt 2550 (S.C.C.).

[^19]: 2011 Carswell on 11273 (C.A.).

[^20]: 2010 ONCA 734, 2010 CarswellOnt 8247 affirming 2009 CarswellOnt 9671 (S.C.J.O.).

[^21]: Freudmann-Cohen v. Tran, above, at para. 35. See also Chatham Motors Ltd. V. Fidelity and Casualty Insurance Co. of New York, [1983] O.J. No. 3106 (Div. Ct.) at paras. 12-13: “That an insurer may not recover on a subrogated claim of the insured against a third-party is, I agree, substantive law. As a matter of principle, it does not seem to me that it necessarily follows that, as a matter of procedure, the insurer should therefore not be entitled to employ third-party procedure unless it has first indemnified the insured, at least in the circumstances of this case.”

[^22]: Nuvo Electronics Inc. v. London Assurance, [2000] O.J. No. 808 (Div. Ct.).