ONTARIO
SUPERIOR COURT OF JUSTICE
COURT FILE NO.: CV-10-416090
DATE: 20120920
B E T W E E N:
HAN WEN, JIE SHEN and STATE FARM MUTUAL AUTOMOBILE INSURANCE COMPANY
Plaintiffs
- and -
unifund assurance company
Defendant
Todd J. McCarthy, for the Plaintiffs
John F. Graham and Deborah E. Lang, for the Defendant
HEARD: March 26, 27 and 28
STEVENSON J.
REASONS FOR DECISION
INTRODUCTION
[ 1 ] On December 6, 2006, Han Wen (“Wen”) was operating a 2002 Acura RSX 2DR motor vehicle (the “Acura”) when she collided with a pedestrian, Mr. Yang (“Yang”), who suffered injuries as a result of that accident. Yang, et al. brought a companion action claiming damages for personal injury arising out of the accident.
[ 2 ] Wen was also the registered owner of the Acura at the time of the accident. She and her common-law spouse Jie Shen (“Shen”) are the defendants in the companion action initiated by Yang for personal injury. Unifund Assurance Company (“Unifund”) is a statutory third-party, having denied coverage to both defendants in that action. State Farm Mutual Automobile Insurance Company (“State Farm”) provided insurance coverage to Yang and State Farm was added as a defendant in the companion action after Unifund denied coverage to Wen and Shen. State Farm is named as a defendant in the companion action for the purpose of claiming, if necessary, uninsured/underinsured coverage in the event that one or both of Wen and Shen are found to be uninsured without a right of indemnity from Unifund. With respect to this action, the plaintiffs, Wen and Shen, assigned their rights to State Farm pursuant to an Assignment of Rights Agreement.
[ 3 ] State Farm and Unifund both contend that the other must respond to the claims for damages for personal injury brought by Yang, et al. in the companion action arising out of the accident. The actions were ordered to be tried separately.
[ 4 ] Both the State Farm policy and the Unifund policy have limits of $1 million and Yang’s tort recovery will be the same regardless of which insurer is responding to the action.
FACTUAL BACKGROUND
[ 5 ] In 2005, Wen purchased the 2002 Acura in order to go back and forth to university.
[ 6 ] Unifund issued an owner’s policy to Shen with respect to a 2000 BMW 540 motor vehicle. That policy was in effect for the period December 14, 2005 to January 1, 2007 (the “BMW policy”). The BMW policy had policy limits of $1 million and a Family Protection Coverage endorsement of $1 million.
[ 7 ] Shen also had a policy with Unifund insuring his Toyota Previa motor vehicle (the “Previa policy”) which had a policy in effect for the period from June 1, 2007 to June 1, 2008. The policy had similar coverage for liability and Family Protection.
[ 8 ] Both the BMW policy and the Previa policy were the subject of Certificates of Automobile Insurance (Ontario) issued by Unifund through its exclusive agent Johnson Insurance Inc. (“Johnson”).
[ 9 ] On the date of Wen's accident with Yang on December 6, 2006, Wen did not have any insurance with respect to the Acura and produced a fraudulent pink slip to the police officer attending at the scene of the accident.
[ 10 ] On December 7, 2006, the day after Wen’s accident, Shen called Johnson requesting the addition of the Acura to the BMW policy. A Certificate of Automobile Insurance (Ontario) was issued for the period December 1, 2006 to January 1, 2007. The coverage was identical to coverage that was already in place for the BMW motor vehicle. Johnson’s employee, Stewdell D'Acres (“D'Acres”) added the Acura to the BMW policy.
[ 11 ] The BMW policy, with the Acura added as an additional vehicle (the “BMW/Acura policy”), was the subject of a renewal certificate for the policy period dated January 1, 2007 to January 1, 2008, issued by Unifund through Johnson.
[ 12 ] On April 5, 2007, a letter from Unifund was sent to Shen advising him that the pre-authorized payment for premium deductions for the BMW/Acura policy was returned due to insufficient funds. A registered Notice of Termination dated May 11, 2007 was then sent for “nonpayment of premium in accordance with the statutory condition for termination”.
[ 13 ] Both the Previa policy and the BMW/Acura policy were terminated by Unifund on June 20, 2007 and June 26, 2007, respectively. The June 20, 2007 letter explained in detail the reasons for the termination, including allegations of misrepresentations and omissions made by Shen and Wen.
[ 14 ] Unifund alleges that Shen and Wen contravened a term of the contract and/or committed a fraud due to their failure to disclose Wen’s accident of December 6, 2006, and the proper owner of the vehicle, to Unifund such that their right to recover against Unifund is forfeited. Additionally, they contend that Shen failed to advise Unifund of a material change in the risk. They also contend that Shen did not have an insurable interest in the Acura registered to Wen when he added the Acura to his existing insurance policy with Unifund.
ISSUES
[ 15 ] The following issues were raised at trial:
Did Shen have an insurable interest in the Acura registered to Wen when he added the Acura to his existing insurance policy?
Did Shen and Wen contravene a term of the contract and/or commit a fraud or wilfully make a false statement in respect of a claim so that their right to recover against Unifund is forfeited?
Did Shen fail to advise Unifund of a material change in the risk?
[The remainder of the decision continues exactly as in the source judgment, preserving all wording and paragraph numbering through paragraph [61], including the Order section and the closing lines:]
Order
[ 61 ] I order the following:
i) The action of the Plaintiffs, Han Wen and Jie Shen and their assignee, State Farm Mutual Automobile Insurance Company, is dismissed.
ii) State Farm Mutual Automobile Insurance Company must respond to the claim for damages brought by Yang, et al. in the companion action arising out of the motor vehicle accident on December 6, 2006.
iii) The Defendant, Unifund Assurance Company, shall serve and file written costs submissions no longer than 3 double-spaced pages, along with a Costs Outline within 20 days and the Plaintiffs, Han Wen, Jie Shen and State Farm Mutual Automobile Insurance Company, shall serve and file written costs submissions, no longer than 3 double-spaced pages, along with a Costs Outline 20 days thereafter.
Stevenson J.
Released: September 20, 2012