Elias et al. v. Koochek et al.; Continental Casualty Company et al., Third Parties

[Indexed as: Elias v. Koochek]

Ontario Reports

Ontario Superior Court of Justice,

Firestone J.

September 8, 2014

122 O.R. (3d) 360 | 2014 ONSC 5003

Case Summary

Insurance — Automobile insurance — Priority of insurance — Plaintiffs suing owner and driver of at-fault rental car but not suing renter — Owner bringing third party claim against renter for contribution and indemnity — Renter's insurer required to respond first to plaintiff's claim — Legislative intent to make renter's policy first to respond subverted by interpretation of s. 277(1.1) of Insurance Act which makes "availability" of renter's policy dependent on whether plaintiff names renter as defendant — Insurance Act, R.S.O. 1990, c. I.8, s. 277(1.1).

The plaintiffs were injured in a motor vehicle accident which occurred while they were passengers in a rented car. They sued the owner and driver of the car, but did not add the renter as a defendant. The owner brought a third party claim against the renter for contribution and indemnity. The renter's insurer took the position that the renter's policy was only "available" as that term is used in s. 277(1.1) of the Insurance Act when the plaintiff has sued the renter directly for damages. The owner's insurer brought a motion to determine which insurer was required to respond first to the plaintiff's claim.

Held, the motion should be granted in favour of the owner's insurer.

The renter's insurer was required to respond first. The amendments to the OAP 1, the Highway Traffic Act, R.S.O. 1990, c. H.8, and the Insurance Act in 2006 and 2007 were intended to make renters liable for damages sustained by reason of negligence in the operation of a rented vehicle and to relieve the insurer of the owner of the rented vehicle from being the first-loss insurer where other insurance is available to the renter or the driver of the rented vehicle. The legislative intent to make the renter's policy the first to respond would be subverted by an interpretation of s. 277(1.1) of the Insurance Act which makes the "availability" of a renter's policy dependent on whether the plaintiff has named the renter as a defendant.

Enterprise Rent-a-Car Canada Ltd. v. Meloche Monnex Financial Services Inc. (2010), 102 O.R. (3d) 87, [2010] O.J. No. 1498, 2010 ONCA 277, 93 M.V.R. (5th) 15, 261 O.A.C. 7, [2010] I.L.R. I-4971, 319 D.L.R. (4th) 176, apld

Other cases referred to

Nguyet v. King, [2011] O.J. No. 1699, 2011 ONCA 297, [2011] I.L.R. I-5136, varg [2010] O.J. No. 4418, 2010 ONSC 5506, [2011] I.L.R. I-5066 (S.C.J.); Xu (Litigation guardian of) v. Mitsui Sumitomo Insurance Co. (2014), 119 O.R. (3d) 587, [2014] O.J. No. 1719, 2014 ONSC 167, [2014] I.L.R. I-5579, 34 C.C.L.I. (5th) 132, 239 A.C.W.S. (3d) 745 (S.C.J.) [page361]

Statutes referred to

Budget Measures Act, 2005 (No. 2), S.O. 2005, c. 31

Highway Traffic Act, R.S.O. 1990, c. H.8 [as am.], s. 192 [as am.], (2) [as am.], (3) [as am.], (6)

Insurance Act, R.S.O. 1990, c. I.8 [as am.], ss. 241, 267.12, (1), (3), (4), 277(1), (1.1), (1.2) [as am.]

Legislation Act, 2006, S.O. 2006, c. 21, Sch. F, s. 64(1)

Negligence Act, R.S.O. 1990, c. N.1 [as am.]

Rules and regulations referred to

Rules of Civil Procedure, R.R.O. 1990, Reg. 194, rules 5.02, 5.03, 21.01(1)(a), 29

MOTION for a determination of a question of law.

No one appearing for plaintiffs.

Brigette A. Morrison, for moving party Aviscar Inc. and Continental Casualty Company.

Paul Omeziri, for third party Mosa Moshe.

1FIRESTONE J.: — The moving party, Aviscar Inc. ("Aviscar"), brings this motion pursuant to rule 21.01(1)(a) of the Rules of Civil Procedure, R.R.O. 1990, Reg. 194 (the "Rules") for the determination, before trial, of a question of law, namely, whether Intact Insurance ("Intact"), formerly Jevco Insurance Company, the insurer of the third party Mosa Moshe ("Moshe"), is required to respond first to the plaintiffs' claim.

2This motion requires a determination of the priority of insurance under s. 277(1.1) of the Insurance Act, R.S.O. 1990, c. I.8, as amended, as between Continental Casualty Company ("Continental"), the insurer of Aviscar, a named defendant in the main action and the owner of the vehicle involved in the subject collision, and Intact, the insurer of the third party Moshe, the renter of the defendant's vehicle who was not a named defendant in the main action.

3At issue is the meaning of "insurance available" as that term is used in s. 277(1.1) of the Insurance Act. Moshe (Intact) takes the position that the renter's policy is only "available" when the plaintiff has sued the renter directly for damages. Aviscar (Continental), on the other hand, submits that a renter's policy is available once there is a liability claim arising against the renter out of the subject collision, and as a result Aviscar's (Continental) third-party claim against Moshe (Intact) satisfies such requirement.

Factual Background

4This action arises following a motor vehicle collision which took place on February 7, 2009. Moshe rented a motor vehicle [page362] from Aviscar, the owner of the vehicle. The defendant Reza Koochek ("Koochek") was operating the rented vehicle at the time of the collision. The plaintiffs were passengers in the rental vehicle.

5At the time of the collision, Moshe was insured with Intact and had third-party liability limits of $1 million. Aviscar was insured with Continental and had the same third-party liability limits of $1 million. Koochek was an additional driver on the rental agreement. He did not have his own automobile insurance policy.

6The plaintiffs commenced an action against Koochek and Aviscar. Moshe was not a named defendant in the main action. Aviscar requested that Moshe be named as a defendant. Because this did not occur, Aviscar commenced a third-party claim against Moshe, seeking contribution and indemnity. Moshe filed a statement of defence to the main action.

(Decision continues with the full reasons exactly as above through paragraph [54] and concluding:)