ONTARIO

SUPERIOR COURT OF JUSTICE

BARRIE COURT FILE NO.: B12-853
DATE: 20120920

B E T W E E N:

VINCENT HUESTIS Applicant (Moving Party)

Peter T.J. Danson, for the Applicant

• and -

EARL DAHMER Respondent

Grant D. Bodnaryk, for the Respondent

HEARD: September 13, 2012

REASONS FOR DECISION

LAUWERS J.:

[ 1 ] The applicant moves under rule 14.05(3) (d) and (h) of the Rules of Civil Procedure , R.R.O. 1990. Reg. 194 for the interpretation of provisions of insurance contracts, and asserts that there are no material facts in dispute. The respondent argues that there are material facts in dispute so that the application is premature.

[ 2 ] Richard Spatola sued the parties for personal injuries that he suffered. This application is a contest between Co-operators General Insurance Company, which is the insurer under the applicant’s home insurance policy, and Lombard General Insurance Company of Canada, which is the insurer under the respondent’s garage automobile policy. The applicant seeks a declaration that the respondent’s automobile insurer is exclusively liable to pay the applicant’s defence costs and indemnity for damages assessed against him in the action brought by Mr. Spatola.

[ 3 ] For the reasons set out below, I allow the application in part.

The Factual Context

[ 4 ] Mr. Dahmer owns and operates a tilting-bed tow truck. The truck was insured by Lombard under a garage automobile insurance policy. On September 21, 2007, Mr. Dahmer and Mr. Spatola picked up some equipment including a snow blower, riding lawn mower, and tool chest from a location in the City of Toronto for transport to Mr. Huestis’s house in the Township of Sunnidale. The house was insured by Co-operators under a home insurance policy.

[ 5 ] Mr. Huestis did not accompany Mr. Dahmer and Mr. Spatola on the drive from Toronto to Sunnidale but he was there when they arrived. Mr. Huestis assisted in unloading the tool chest, which was on wheels and weighed about 470 pounds. It was secured to the bed of the truck by straps.

[ 6 ] Just before the accident, Mr. Huestis and Mr. Spatola were both standing on the truck bed, which was in a level position. It is disputed whether they undid the straps securing the tool chest together, or whether Mr. Huestis stood by while Mr. Spatola undid them. Mr. Dahmer was on the ground at the rear of the truck where the controls for the tilting truck bed are located. Suddenly, and allegedly without warning, Mr. Dahmer caused the truck bed to begin to tilt. The tool chest began to roll. Mr. Spatola tried to get out of the way of the rolling tool chest but was struck by it. He jumped and struck a van that was parked nearby. Mr. Spatola was injured. The tool chest rolled off the truck and struck a door post of the garage.

[ 7 ] Precisely what Mr. Huestis did when he was on the truck bed is not yet clear on the evidence.

The Lawsuit

[ 8 ] Mr. Spatola sued Mr. Dahmer for his injuries. Mr. Dahmer served a Statement of Defence and the parties were examined for discovery. About a year later Mr. Dahmer commenced a third party action against Mr. Huestis for negligence in assisting Mr. Spatola with the offloading of the tool chest from the truck, and claims contribution and indemnity from Mr. Huestis. He referred the third party claim to Co-Operators, the insurer under his home insurance policy, which defended and now brings this application.

[ 9 ] The main action and the third party action are set to be tried in the November 2012 sittings. For practical purposes the outcome of this application will determine who will pay Mr. Huestis’s costs of defence and indemnity, if any, and whether he will be separately represented. No doubt Co-operators would prefer not to be present for settlement discussions at the pre-trial conference. (I am assured that Mr. Huestis will be adequately insured whatever the outcome of this application. There is, in my view, no reason why this intramural insurance fight should delay the trial of Mr. Spatola’s action.)

The Positions of the Parties

[ 10 ] The applicant’s position is set out in his factum:

Based on the pleadings and the discovery evidence, there is no dispute that the referred-to accident of September 21, 2007 occurred during the use and operation of Dahmer’s truck, and that Dahmer was the sole owner and operator of the truck, and had sole care and control of the truck at all material times. Therefore, if Huestis was in any way involved in the unloading of the tool chest, as alleged by Dahmer in his third party claim, then Dahmer’s policy of motor vehicle insurance ought to provide complete coverage to Huestis in the circumstances.

[ 11 ] The respondent’s position is set out in his factum:

Evidence from the Discoveries conducted to date make[s] it clear that there is plausible personal liability on the part of Huestis, not arising out of the use or operation of a motor vehicle, quite apart from any liability on the part of Dahmer. In such circumstances, Huestis’ own policy of insurance with Co-operators is obligated to continue to pay for a defence for Huestis, and ultimately indemnity Huestis according to any ultimate division in liability found by the trial judge, should there be a finding of negligence against Huestis, not arising out of the use and operation of a motor vehicle.

Analysis

[ 12 ] There are two questions before the court. The first is whether by doing what he did Mr. Huestis became an “occupant” of the truck within the meaning of the garage automobile policy. The second is whether Mr. Huestis falls within an exclusion in the home insurance policy. I consider each question in turn.

Was Mr. Huestis an “occupant” of the truck under the garage automobile policy?

[ 13 ] The relevant provisions are set out below. Section 239 of the Insurance Act , R.S.O. 1990, c. I.8 provides:

239. (1) … every contract evidenced by an owner’s policy insures the person named therein, and every other person who with the named person’s consent drives, or is an occupant of, an automobile owned by the insured named in the contract and within the description or definition thereof in the contract, against liability imposed by law upon the insured named in the contract or that other person for loss or damage,

(a) arising from the ownership or directly or indirectly from the use or operation of any such automobile; and

(b) resulting from bodily injury to or the death of any person and damage to property.

[ 14 ] The insurance policy contains the following definition:

7.2.7 “Occupant” in respect of an automobile, means,

(a) The driver,

(b) A passenger, whether being carried in or on the automobile,

(c) A person getting into or on or getting out of or off the automobile.

[ 15 ] This application obliges the court to choose between two decisions of the Court of Appeal that reached opposite results on similar facts: Djepic v. Kuburovic (2006), 2006 578 (ON CA) , 80 O.R. (3d) 21 (C.A.) and Axa Insurance v. Dominion of Canada General Insurance Co . (2004), 2004 34995 (ON CA) , 73 O.R. (3d) 391 (C.A.) . I consider each case in turn.

Djepic v. Kuburovic

[ 16 ] The respondent relies on the Court of Appeal’s decision in Djepic v. Kuburovic . The plaintiff’s minivan was parked in the defendant’s driveway. The parties had placed a mattress on the roof of the van and were trying to secure it with bungee cords. One of the cords came loose striking the plaintiff and blinding his right eye. The defendant’s home insurance company denied coverage and refused to defend him. The plaintiff’s automobile insurer did likewise, so the defendant brought a motion for an order that either the home insurer or the automobile insurer or both of them had a duty to defend the action.

[ 17 ] Rouleau J.A. found that the defendant was not covered by the auto insurance policy because he was not an “occupant” within the meaning of the policy. He explained:

10. Since Kuburovic was not a driver, a passenger or a person getting into or out of or getting onto or off Djepic's van, the motion judge concluded that Kuburovic was not an “occupant” of the van at the time of the accident and did not come within the definition of an “insured person”. I agree with this conclusion.

11. In my view, it cannot reasonably be inferred from the pleading that Kuburovic was physically on the vehicle as opposed to standing next to the vehicle, on the driver's side. In any event, Kuburovic would not have become an occupant simply because he had stepped onto a running board or other part of the van solely for the purpose of attaching the mattress to the roof. The definition of occupant of a vehicle focuses on persons who are, are about to or have been transported in the vehicle. It is not intended to cover someone who simply steps onto a part of the vehicle when that action is not connected in any way with being transported by that vehicle.

Axa Insurance v. Dominion of Canada General Insurance Co .

[ 18 ] The applicant relies on the Court of Appeal’s decision in Axa Insurance v. Dominion of Canada General Insurance Co . Dr. Isen had been sued by Dr. Simms for negligently causing him personal injury. Dr. Isen had put his boat on a trailer attached to his wife’s van. He used a bungee cord to secure a vinyl cushion for the drive. The cord suddenly detached, snapped across the boat and struck Dr. Simms in the eye, leading to the lawsuit.

[ 19 ] The automobile insurer Axa denied that it had to respond on behalf of Dr. Isen. MacPherson J.A. disagreed:

17. The parties agree that the leading case interpreting the phrase “arises out of the ownership, use or operation of a vehicle” is Amos v. Insurance Corp. of British Columbia , 1995 66 (SCC) , [1995] 3 S.C.R. 405, 127 D.L.R. (4th) 618, wherein Major J. formulated a two-part test, at para. 17:

18. Did the accident result from the ordinary and well-known activities to which automobiles are put?

19. Is there some nexus or causal relationship (not necessarily a direct or proximate causal relationship) between the appellant's injuries and the ownership, use or operation of his vehicle, or is the connection between the injuries and the ownership, use or operation of the vehicle merely incidental or fortuitous?

20. In my view, an affirmative answer should be given to both of these questions in the present case. An “ordinary and well-known” activity for automobiles in Ontario is to transport boats secured to trailers from waterways to homes and cottages. Moreover, the injury to Dr. Simms occurred, indirectly at least (per s. 239(1)(b) of the Act) from the ownership, use and operation of Dr. Isen's automobile and attached trailer. Dr. Isen was using the bungee cord to secure the automobile's cargo (the boat) to the trailer, with a view to making it safe for transport, when the accident occurred.

[ 20 ] A number of Ontario cases have taken a similar approach. In Russo v. John Doe (2009), 2009 ONCA 305 () , 95 O.R. (3d) 138 (C.A.) , the Court of Appeal stated at paragraph 20:

In addition to the requirement of an at-fault tortfeasor, the OPCF 44R Endorsement provides coverage only where the loss or damage arises “directly or indirectly from the use or operation” of an automobile. Two fundamental elements of this phrase determine its scope. First, as the provision includes “the use” and not just the “operation” of an automobile, its scope is broader than loss or damage that arises simply from a driver's manipulation of the mechanical controls of an automobile. Second, the provision covers loss or damage that arises both “indirectly” as well as “directly” from the use or operation of an automobile.

[ 21 ] Laskin J.A noted in CUMIS General Insurance Co. v. 1319273 Ontario Ltd. (cob Done Right Roofing) , (2008), 2008 ONCA 249 () , 91 O.R. (3d) 147 (C.A.) at paragraph 30 :

Well-established automobile insurance law recognizes that the use or operation of an automobile includes the loading or unloading of that automobile. Express reference in the automobile exclusion to loading or unloading is therefore unnecessary.

[ 22 ] Goodman J. took a similar approach in 430937 Ontario Ltd. (c.o.b. as Nicholson Service Station Maintenance) v. Zurich Insurance Company , 2012 ONSC 3093 , [2012] I.L.R. I-5290 at paragraph 59 . She concluded at paragraph 78:

As in this application, the alleged negligent act relied on by the applicant is the improper securing of the trailer to be towed. There was no other purpose for securing the trailer other than to tow it. I am satisfied on the facts here that both the securing and the towing, are the ordinary and well known activities to which automobiles are put. I find that Derksen is distinguishable on its facts and I am persuaded by the line of authorities from the Ontario Court of Appeal. I find that there is no concurrent liability in this case.

Discussion

[ 23 ] I conclude that the cases in line with the Court of Appeal’s decision in Axa Insurance v. Dominion of Canada General Insurance Co . should be applied on the facts of this case, and not the Court’s decision in Djepic v. Kuburovic .

[ 24 ] In my view the context is critical to the reasoning. The vehicle in question was a truck with its own special constellation of uses. Mr. Huestis was standing on the bed of the tow truck assisting Mr. Dahmer and Mr. Spatola in unloading the truck; the truck’s tilting-bed feature was actively engaged and moving when the accident happened. Mr. Huestis was “an occupant” of the vehicle within the meaning of the garage automobile insurance policy because he was involved in unloading, which is one of the ordinary and well-known uses to which trucks are put. In my view it would be inconsistent with a purposive approach to construing a garage automobile policy to be categorical about the cargo that tilting-bed tow trucks might ordinarily carry apart from wrecks, auto parts and associated paraphernalia. The truck was built to carry stuff and did so.

[ 25 ] I therefore find that Lombard is obliged to pay the applicant’s defence costs and indemnity for damages assessed against him in the action brought by Mr. Spatola, but not necessarily exclusively . This decision does not, therefore, dispose of the application. Although Mr. Danson took an ambivalent approach to the application of the exclusion clause in Co-operators’ home insurance policy, he was plainly aiming at a decision that would excuse the Co-operators from further participation in the main action.

Does Mr. Huestis fall within the exclusion in the home insurance policy?

[ 26 ] The Co-operators’ home insurance policy contains a provision that excludes liability for: “Damage arising from the ownership, use or operation of any motorized vehicle, trailer or watercraft except those for which coverage is provided for in this Section II.” If this exclusion clause applies then the Co-operators is out of the action.

[ 27 ] A similar issue arose in Djepic v. Kuburovic . The Court of Appeal was not prepared to find that the exclusion in the home insurance policy applied. Rouleau J.A. found at paragraph 29 that the motion judge had erred in dismissing the motion against the home insurer because the evidence on liability was missing since the court was relying only on the pleadings. At paragraph 30 he speculated on a number of possible causes for the breaking of the bungee cord, and concluded:

For Belair [the home insurer] to succeed, it must demonstrate two things. First that all of the possible scenarios pursuant to which the injury may have occurred are “claims arising from the use of an automobile” and second, that none of these scenarios also involved a concurrent non-auto related cause.

[ 28 ] Rouleau J.A. found on the facts that it might be possible “to identify acts of alleged negligence outlined in the pleadings that potentially constitute non-auto related concurrent costs of the accident.” If so, then it could be a case in which the home insurance policy would be obliged to respond, following the decision of the Supreme Court of Canada in Derksen v. 539938 Ontario Ltd. , 2001 SCC 72 () , [2001] 3 S.C.R. 398 (para. 35 ) that concurrent liability might exist.

[ 29 ] In this case, the precise cause of the accident and Mr. Huestis’s role in it are not yet known since, remarkably, he has not yet been examined for discovery. While there are more facts known in this application than in Djepic , additional facts are yet to emerge and there may be facts in dispute. Taking the lead from the Court of Appeal’s decision in Djepic , I find that this application is both premature and inconsistent with rule 14 because there may be material facts in dispute.

[ 30 ] In the circumstances I therefore exercise my discretion under rule 38.10 of the Rules of Civil Procedure and order that the remaining issue in this application, being the proper application of the exclusion clause in the Co-operators’ home insurance policy, be tried immediately following the trial of the main action in the fall sitting, pursuant to rule 6.01.

Costs

[ 31 ] The applicant has been partially successful on the motion but an issue in the application is still left alive. Nonetheless, in my view the applicant is entitled to the costs of the motion. The respondent submitted a costs outline on a partial indemnity basis seeking fees in the amount of $3,522.50 and disbursements in the amount of $176.77. This compares with the applicant’s partial indemnity costs claim in the amount of $9,567.35 covering the same matters but including H.S.T. Mr. Danson’s billing rate is substantially higher than Mr. Bodnaryk’s rate. Considering the degree of success and the other factors set out in rule 57.01, I fix costs payable by the respondent to the applicant in the amount of $6,000.00 inclusive of disbursements and H.S.T., to be paid within 30 days, subject to any further submissions on the effects of any offers to settle. If submissions are not received within ten days of this order, I will assume that nothing further on costs is required.

P.D. Lauwers J.

Released: September 20, 2012