Court File and Parties

Court File No.: CV-10-405456
Date: 20121017
Superior Court of Justice - Ontario

RE: JOHN DUNCAN and LAURA DUNCAN, Plaintiffs

AND:

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

BEFORE: Michael G. Quigley J.

COUNSEL: 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 Candidate

HEARD: In Chambers

COSTS ENDORSEMENT

[ 1 ] The defendant numbered company, operating as Affordable Automotive Centre, brought a summary judgment motion to dismiss the claims of the plaintiffs and the cross-claim against it by its co-defendant, Allstate Insurance Company of Canada. I dismissed that summary judgment by reasons issued on May 25, 2012 and reported at 2012 ONSC 3105 .

[ 2 ] In paragraph 56 of those reasons, I suggested that costs would follow the event and be payable by Affordable since its summary judgment motion failed, but also observed there was nothing technically improper about the summary judgment motion brought by Affordable. Further, I noted that its position that Allstate should not have standing was not without at least some technical merit. I asked the parties to try to reach agreement on the costs that are to be payable, but if they were unable to do so, advised that they could contact the court for further directions. Counsel could not agree on costs. Consequently, I instructed that both counsel were to make submissions in writing of not more than three pages in length to be accompanied by costs outlines. A timetable was provided. Both parties complied with that timetable. I will add neither party claimed that costs should be payable on a substantial indemnity scale.

[ 3 ] As the successful party, Allstate is presumptively entitled to costs: Rule 57. It claims partial-indemnity costs of $13,695.60, inclusive of HST, for successfully rebuffing Affordable's motion for summary judgment. Those costs include the appearance costs on April 24 and the cost of supplemental written submissions that I requested during the course of the hearing and that both counsel provided to me. I will return to that point.

[ 4 ] Allstate claims the proceedings were of moderate complexity, involving principles beyond Rule 20, including the admissibility of evidence, abuse of process, and the procedural interplay between Rule 20 and the law of subrogation relative to insurers. Affordable raised a number of arguments that touched on those legal principles and Allstate was obligated to respond.

[ 5 ] More importantly, the defendant Brian Morton is impecunious and the plaintiffs themselves took no position on the summary judgment motion, because they did not need to. They knew they would be compensated for their damages from either Allstate's pocket or the pockets of another insurer. The failure of the plaintiffs to oppose Affordable’s motion and their apparent indifference to who might be liable to pay for their damages, once proven, left Allstate in the position where it had to oppose any attempt by Affordable to be released from the proceedings.

[ 6 ] Allstate says that the stakes were high for it because of the extent to which it was at risk. It has reduced that risk as a result of its success because of the absolute liability provisions in section 258 of the Insurance Act , even if Affordable breached a condition of its insurance policy by permitting Brian Morton to drive one of the vehicles it owned. Those provisions will operate to reduce Allstate’s potential liability under the uninsured/underinsured provisions of the Duncans’ insurance policy by $200,000, but only so long as Affordable remains a defendant in the action. Taking that reality into account, Allstate had an important interest in preventing Affordable from succeeding on its summary judgment motion.

[ 7 ] Finally, Allstate claims that the time and effort it spent in responding to Affordable’s motion was reasonable and necessary in order to permit it to put its best foot forward. It says that obligation included securing an affidavit from Ms. Oatway, and obtaining the transcript from Mr. Morton's guilty plea relative to him having driven the vehicle without permission, because both of those elements raise genuine issues requiring a trial insofar as they called into question Affordable's claim that Mr. Morton had no authority to be in its vehicle. I am in complete agreement that this is what Allstate needed to do, and had every right to do.

[ 8 ] However, even though Allstate was successful in resisting its summary judgment motion, Affordable takes issue with both the amount and the appropriateness of costs sought by Allstate being payable in respect of the motion. Counsel for Affordable said he relied on the Court of Appeal’s decision in Combined Air Mechanical Services v. Flesch , 2011 ONCA 764 , [2011] O. J. No. 5431, and in particular at paragraph 57 for bringing its motion as it did, even if it was premature. That may well be true, but having brought the summary judgment motion to knock out the plaintiffs’ claim, it strikes me as presumptuous for Affordable to be critical of Allstate for opposing a summary judgment motion that I found was prematurely brought, but that would have left Allstate financially exposed had it not been opposed.

[ 9 ] Affordable also objects to the $13,500 claimed by Allstate as its costs for responding to the summary judgment motion. It claims that the account reflects excessive time taken on the matter, and that half of the amount claimed, or $6,750, would be a more reasonable figure. More importantly, however, Affordable takes the position that the costs should be payable in the cause, and only to the extent of $3,000 for the position that Allstate ultimately adopted.

[ 10 ] Much of Affordable's complaint about the costs sought by Allstate seems to focus on my finding at paragraph 35 that its motion was premature, and the issue of Allstate's status as a litigant under the uninsured motorist provisions of the Duncans’ policy when it had not yet made any payment of any damages amount to the plaintiffs, and as such had not yet become subrogated to their rights.

[ 11 ] Affordable says that in circumstances where a summary judgment motion is brought prematurely, the Court of Appeal in Combined Air , above, set out the procedure that ought to be followed at para. 58. It said that a party should seek directions under rule 1.04 (1), (1.1), (2) and 1.05, but Allstate did not bring such a motion for directions or ask for that relief until after all of the affidavits had been filed, the facta had been prepared, and only Allstate’s oral response to the moving party submissions remained.

[ 12 ] Further, while it was open to Allstate to take over the conduct of the litigation by making a payment of damages to the Duncans, and thus becoming subrogated in their rights, Affordable complains that it did not take such formal steps, and plainly, up until the time of the conclusion of the hearing, when I requested written submissions on the standing point, Allstate’s cause of action remained only one of contribution.

[ 13 ] However, I do not entirely accept Affordable’s position on this point. It was Affordable who chose to bring its summary judgment motion as it did, based solely upon the certificate of conviction of Mr. Morton relative to his guilty plea, when it ought to have been evident that such a piece of paper would not alone be determinative of the true relationship between Mr. Maharaj, the owner of Affordable, and Mr. Morton. The fact that neighbors in the vicinity of Affordable's car lot knew that Mr. Morton stayed at the dealership, and was regularly seen to drive its vehicles would at least raise the possible inference that he did so with the agreement of the owner. That in turn raised the genuine issue for trial of their relationship, going to the questions of whether or not Mr. Morton had permission to be driving a vehicle owned by Affordable that evening when the accident ensued. It surprised me that counsel for Affordable proceeded on the basis that the Certificate of Conviction alone could be determinative of that issue, and it was that view that appears to have permitted the summary judgment motion to be brought prematurely.

[ 14 ] Against that background, I accept Allstate’s position that it should not be penalized for not seeking directions from the court even though the summary judgment motion was found to be premature. I accept its position on the authority of Justice McDermot's sensible decision in Lefebvre-Jackson v. Salt , [2012] O.J. No. 1234 at para. 34 , that the determination of whether a motion for summary judgment should be brought depends on whether the evidence supported the motion at the time it was brought.

[ 15 ] On the other hand, I find merit in Affordable’s submission relative to the issue of Allstate’s standing in circumstances where it had not made any payment to the Duncans or taken any action that could cause it to be in charge of the litigation. Allstate effectively had it both ways. It did not make any payment to the Duncans, presumably preferring to wait and see what might happen at trial relative to Affordable's liability if it is found that Mr. Morton had permission from Mr. Maharaj to be driving one of his vehicles.

[ 16 ] I imagine it was surprised when the Duncans did not oppose Affordable’s summary judgment motion. Allstate should not have permitted itself to potentially be exposed in that way. I permitted it to have standing to oppose Affordable's motion, and accepted that the Freudmann-Cohen v. Tran line of authority requires, as a procedural matter, that the claims of all the parties relative to each other be dealt with together to avoid a multiplicity of proceedings. However, it was only because of the unusual circumstance in this case where the Duncans themselves acted with indifference and did not oppose a summary judgment motion that was being brought to dismiss their own claim for damages that I was prepared to reach the conclusion that the Duncans were not in fact in charge of the litigation, and that fairness required that Allstate be able to fill that role. However, this is not a conclusion for which I believe Allstate ought to be awarded in costs.

[ 17 ] Consequently, while Allstate is entitled to costs, I accept Affordable’s position that the amount claimed is excessive in all the circumstances. Instead of the costs claimed, I accept and agree with Affordable’s suggestion that $6,750 is an appropriate and reasonable amount of costs compensation in all of the circumstances, so an order shall go for costs of $6,750, all inclusive, to be payable by the defendant Affordable to Allstate within 30 days.

Michael G. Quigley J.

Date: October 17, 2012