ONTARIO
SUPERIOR COURT OF JUSTICE
COURT FILE NO.: 07-CV-335088PD3
DATE: 20141002
BETWEEN:
SOLOMON BROWN and GARY GRANT
Plaintiffs
– and –
BRIAN WILLIAMSON and BELAIR DIRECT INSURANCE COMPANY
Defendants
- and –
WAWANESA MUTUAL INSURANCE COMPANY
Third Party
No one appearing for the Plaintiffs
Christie Ngan, for the Defendant/Responding Party, Belair Direct Insurance Company
No one appearing for Brian Williamson
David Tompkins, for the Moving Party/Third Party, Wawanesa Mutual Insurance Company
HEARD: July 4, 2014
REASONS FOR DECISION
Firestone J.
[1] The moving party, Wawanesa Mutual Insurance Company (“Wawanesa”), brings this motion pursuant to Rule 20 of the Rul the third party claim of the defendant, Belair Direct Insurance Company (“Belair”), against them.
[2] This motion requires a determination of a dispute between Belair and Wawanesa concerning whether, on the facts of this case, Wawanesa has any obligation to indemnify the defendant Brian Williamson (“Brian”) for any legal liability determination made against him based on his alleged use and operation of the motor vehicle which was involved in a motor vehicle collision involving the plaintiffs Solomon Brown (“Brown”) and Gary Grant (“Grant”).
[3] In this action Belair has been named by the plaintiffs as both the uninsured and underinsured insurer under Brown’s policy. Belair, in their third party claim, pleads that at all material times Brian was insured under a policy of insurance issued to Brian’s father, Herbert Williamson (“Herbert”).
Background Facts
[4] The main action arose following a motor vehicle collision which took place on August 16, 2006. At that time Brian was operating a Honda Accord (“the vehicle”) which collided with a car driven by plaintiff Brown, in which the plaintiff Grant was a passenger. At the time of the subject collision, the vehicle being driven by Brian was listed on Wawanesa automobile insurance policy #7833506, issued to Brian’s father, Herbert. Both Herbert and Donna Williamson (“Donna”) were named insureds on the policy. At the time of the collision Donna was married to Herbert. Brian is Herbert’s son from a previous marriage.
[5] It is agreed between the parties that Herbert purchased the vehicle approximately one year before the subject collision. Brian’s evidence is that Herbert purchased the vehicle with the intention of transferring it to Brian once Brian had paid him approximately $9,000. On March 27, 2006, Herbert transferred the registered ownership of the vehicle to Brian. Brian claims he did not know of the transfer and was still approximately $2000 short of the full agreed upon sum.
[6] It is unclear from the record whether Herbert and Donna maintained control of the vehicle and where it was kept. On the day of the collision, Brian alleges he had borrowed the vehicle from Herbert and Donna with Donna’s permission. This is specifically denied by Donna. There is no evidence from Herbert on the issue of consent. The day after the collision, Wawanesa removed the vehicle from their policy and listed Brian as an excluded driver.
[7] Wawanesa subsequently denied coverage to Brian on the basis that Brian was not an insured under the policy. Accordingly, Belair, as insurer of the plaintiff Brown, was added as a defendant pursuant to the uninsured and underinsured provisions of the Belair policy. Belair issued a third party claim against Wawanesa on the basis that Wawanesa insured the vehicle at the time of the accident.
Relevant Dates
[8] To summarize, the significant dates relating to the insurance of the vehicle are as follows:
Nov. 27, 2005 - Effective dates of Wawanesa policy #7833506 issued to Herbert and
Nov. 27, 2006 Donna as named insureds, and listing the Honda Accord as an owned vehicle.
March 27, 2006 Date on which Herbert transferred ownership of the Honda Accord to Brian.
August 16, 2006 Date of the accident.
August 17, 2006 Effective date of Wawanesa’s amended declaration removing the vehicle from the policy and listing Brian as an excluded driver.
August 28, 2006 Date on which Wawanesa obtained an excluded driver endorsement with respect to Brian.
Applicable Statutory Framework
[9] The following sections of the Insurance Act, R.S.O. 1990, c. I.8 (“IA”) are relevant to the determination of this issue:
- (1) Subject to section 240 [excluded drivers], 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.
Any person insured by but not named in a contract to which section 239 or 241 [coverage of non-owner’s policy] applies may recover indemnity in the same manner and to the same extent as if named therein as the insured, and for that purpose shall be deemed to be a party to the contract and to have given consideration therefor.
(1) Any person who has a claim against an insured for which indemnity is provided by a contract evidenced by a motor vehicle liability policy, even if such person is not a party to the contract, may, upon recovering a judgment therefor in any province or territory of Canada against the insured, have the insurance money payable under the contract applied in or towards satisfaction of the person’s judgment and of any other judgments or claims against the insured covered by the contract and may, on the person’s own behalf and on behalf of all persons having such judgments or claims, maintain an action against the insurer to have the insurance money so applied.
(4) The right of a person who is entitled under subsection (1) to have insurance money applied upon the person’s judgment or claim is not prejudiced by,
(a) an assignment, waiver, surrender, cancellation or discharge of the contract, or of any interest therein or of the proceeds thereof, made by the insured after the happening of the event giving rise to a claim under the contract;
(b) any act or default of the insured before or after that event in contravention of this Part or of the terms of the contract; or
(c) any contravention of the Criminal Code (Canada) or a statute of any province or territory of Canada or of any state or the District of Columbia of the United States of America by the owner or driver of the automobile,
and nothing mentioned in clause (a), (b) or (c) is available to the insurer as a defence in an action brought under subsection (1).
(5) It is not a defence to an action under this section that an instrument issued as a motor vehicle liability policy by a person engaged in the business of an insurer and alleged by a party to the action to be such a policy is not a motor vehicle liability policy, and this section applies with necessary modifications to the instrument.
[10] The following provisions of the Ontario Automobile Policy, Owner’s Policy (OAP 1) are also relevant:
1.3 Throughout this policy the words you and your refer to the person or organization show on the Certificate of Automobile Insurance as the named insured.
Other people may also be covered under certain conditions. We call both them and you insured persons.
3.1 This Section of your policy provides coverage for amounts that the law holds you or other insured persons responsible for bodily injuries or losses others suffer in an automobile incident.
3.2 You are covered when you, or anyone else in possession of a described automobile with your consent, uses or operates it. We will consider these other people insured persons.
3.3 You or other insured persons may be legally responsible for the bodily injury to, or death of others, or for damage to the property of others as a result of owning, using or operating the automobile. In these cases, we will make any payment on your or other insured persons’ behalf that the law requires, up to the limits of the policy. …
Issues for Determination
[11] The parties do not agree on how the issues for determination should be framed. Wawanesa submits the issue is whether Wawanesa has any exposure to the main action damages and/or any obligation to indemnify Brian for his alleged negligent driving.
[12] Belair submits that the real issue is whether Wawanesa is required to pay the claims of the plaintiffs to the minimum limits of $200,000.
Positions of the Parties
The Moving Party, Wawanesa
[13] Wawanesa argues that Brian was not covered by Herbert and Donna’s automobile policy. Herbert and Donna were not the owners or the drivers of the subject vehicle at the time of the accident, and therefore their automobile policy cannot be engaged.
[14] Wawanesa highlights that Brian in his statement of defense, dated July 12, 2007, admits that he was the owner of the subject vehicle. All parties agree that Brian was listed as registered owner on the Ministry of Transportation (“MTO”) registration for the vehicle. Brian is not named on the policy, and was not driving a car owned by an insured named on the policy. Because Herbert and Donna were not owners of the vehicle as of the date of the accident, they are not vicariously liable under s. 192(2) of the Highway Traffic Act, R.S.O. 1990, c. H.8.
[15] Insurance, Wawanesa argues, is for a person, not a vehicle. Automobile liability insurance is by its nature indemnity insurance. Under a contract of insurance the insurer agrees to indemnify the insured for a third party claim. This is consistent with the basic indemnity principle of liability insurance, which is that indemnification is for a claim brought against an insured. Wawanesa submits that here there has been no claim made against an insured person, and therefore no insured person has incurred liability. The OAP 1 is clear that it is a contract between “you” and “us,” with “you” defined as the person shown on the Certificate of Automobile Insurance as the named insured. The OAP 1, s. 3.1 provides for liability coverage “for amounts that the law holds you or other insured persons responsible for bodily injuries or losses others suffer in an automobile incident.”
[16] Wawanesa submits that while there are situations in which parties to lawsuits may not be the named insured (for example, passengers or casual users with consent), the courts always recognize that automobile insurance follows the person, not the vehicle. As Finlayson J.A. stated in Pagliarella v. Di Biase Brothers Inc. (1989), 68 O.R. (2d) 597 (C.A.): “It appears to me that the scheme of the coverage is that the insurance follows the person and not the vehicle” (at page 604).
[17] Wawanesa argues that the decision in Campanaro v. Kim (1998), 41 O.R. (3d) 545 (C.A.) does not apply to the facts of this case.
The Responding Party, Belair
[18] Belair submits to this court that it should find that Wawanesa is required to pay the claims of the plaintiffs up to the minimum limits of $200,000.
[19] Campanaro, Belair argues, applies to this case, and Wawanesa is therefore absolutely liable to the plaintiffs as per IA s. 258(5).
[20] Belair submits there is no precondition, as Wawanesa suggests, that the fictitious owner be sued in order for s. 258 to apply.
[21] Belair argues that the OAP 1 demonstrates by its language that it covers automobiles, not people.
[22] Belair submits that case law supports the interpretation of automobile insurance as following vehicles, not people. It cites Wen v. Unifund Assurance Co., 2012 ONSC 5274.
[23] Belair argues that the holding in Wen illustrates, in two ways, that automobile insurance policies insure automobiles.
[24] Belair’s second and alternative argument is that, even if this court finds that Campanaro and IA s. 258 do not apply and that Wawanesa is therefore not absolutely liable, Brian was, at the time of the accident, an insured person under Herbert’s policy.
[25] Belair submits that although Brian was the registered owner of the vehicle at the time of the accident, registered ownership is not determinative of ownership at common law. In Hayduk v. Pidoborozny, the Supreme Court held that registered ownership is to be treated as proof of ownership “unless and until the contrary be shown”.
[26] Belair submits that Herbert had possession and control of the vehicle.
[27] Belair submits that Brian had the implied consent of Herbert as owner to use the car.
Analysis
[28] Belair’s position is premised on s. 258(1) of the IA.
[29] Section 239(1) of the IA referred to above defines the extent of coverage under a motor vehicle policy.
[30] The OAP 1 s. 3 outlined above deals with liability coverage.
[31] Belair submits that Herbert is the common law owner of the vehicle and therefore has an insurable interest in it.
[32] Herbert and Wawanesa by their actions acknowledged that Herbert continued to have a monetary interest in the vehicle at the time of the subject collision.
[33] There are significant discrepancies between Donna’s oral evidence given at the hearing of this summary judgment motion and Brian’s examination for discovery evidence.
[34] Regarding the issue of consent, Brian alleges that Donna provided express consent the morning that he took the vehicle and further that Herbert’s consent can be implied.
[35] Brian’s version of events on the day of the collision is directly contradicted by Donna’s viva voce evidence.
[36] In light of such conflicting evidence between Brian and Donna on the key issues of ownership and the possibility of Herbert’s implied consent, Herbert’s evidence is necessary before a proper determination can be made by way of summary judgment.
[37] Wawanesa is not attempting to resist Belair’s s. 258(1) claim on the basis of a misrepresentation or other default by the named insured.
[38] I do not accept Belair’s submission that Campanaro stands for the proposition that an insurer is absolutely liable under s. 258 of the IA when any automobile listed in its policy is involved in a collision.
[39] Not every person who operates a listed automobile is “an insured” for whom “indemnity is provided.”
Disposition
[40] Rule 20.04(2)(a) states that the court shall grant summary judgment if the court is satisfied that there is no genuine issue requiring a trial.
[41] In my view, Herbert’s evidence is necessary in order to properly and justly determine the issues of ownership and consent by way of summary judgment as opposed to trial.
[42] I will therefore remain seized of this matter. The parties are to contact my assistant in order to schedule a date for the oral evidence of Herbert Williamson to be presented on the issues of ownership and consent, following which a determination on this motion can be made.
[43] I wish to thank counsel for both their written and oral submissions, which were exceptional and of great assistance to the court.
Firestone J.
Released: October 2, 2014
ONTARIO
SUPERIOR COURT OF JUSTICE
BETWEEN:
SOLOMON BROWN and GARY GRANT
Plaintiffs
– and –
BRIAN WILLIAMSON and BELAIR DIRECT INSURANCE COMPANY
Defendants
- and –
WAWANESA MUTUAL INSURANCE COMPANY
Third Party
REASONS FOR DECISION
Firestone J.
Released: October 2, 2014