SUPERIOR COURT OF JUSTICE - ONTARIO

COURT FILE NO.: 12-CV-55020

DATE: 2015/07/22

RE: RORY WAYNE PARKER, Plaintiff

AND

ABOUBEIDA DIRAR AND ALI SALIH MAHMOUD, Defendants

BEFORE: Mr. Justice Douglas Rutherford

COUNSEL: John P. Lundrigan, for the Plaintiff

Bryan A. Carroll, for the Defendants

Brendan Haynes, for State Farm Mutual Automobile Insurance Company

HEARD: March 4, 2015

ENDORSEMENT

[1] The plaintiff, Mr. Parker, was seriously injured on August 1, 2011 when his motorcycle collided with a minivan that made a left turn across his path in the intersection through which he was travelling. The minivan was driven by the defendant, Mr. Dirar, and owned by the defendant, Mr. Mahmoud.

[2] Mr. Mahmoud has a policy of insurance with State Farm Mutual Automobile Insurance Company (State Farm) providing $300,000 liability coverage in relation to his minivan, and further “umbrella” coverage of $1 million, also with State Farm.

[3] At the time of the accident, Mr. Dirar owned a car himself, and had an insurance policy on it, also through State Farm, providing liability coverage of $1 million. The plaintiff brings this motion pursuant to Rule 21 for a determination before trial whether State Farm, as insurer for both Mr. Mahmoud and Mr. Dirar, must respond to the plaintiff’s claim. The plaintiff also seeks leave to admit affidavit evidence on this motion providing factual information necessary to interpret the insurance policy and resolve the coverage issue.

[4] State Farm responded to the motion, filing a Respondent’s Record and factum and appearing by its own counsel on the hearing of the motion. Counsel for the defendants appeared on the motion, but filed no material and left it to State Farm to respond.

[5] The evidentiary background said to be required to interpret the insurance provision in issue, drawing on the factums of the parties, can be summarized as follows.

Mr. Dirar moved from the Republic of the Sudan to Canada in or about April 2011. After he moved, Mr. Dirar temporarily resided with Mr. Mahmoud in an apartment located at 506 Main Street in Winchester, Ontario until on or around October 2011. The purpose of this arrangement was so Mr. Dirar could save money to bring his wife and children from Sudan to live with him in Canada. Mr. Dirar did not pay rent to Mr. Mahmoud and he did not contribute to Mr. Mahmoud’s hydro bills, water bills, or property taxes. He did, however, contribute to the household by purchasing groceries. Mr. Dirar looked for a new living space for himself and his family while he lived with Mr. Mahmoud. In October 2011, he moved to Nepean with his family.

Mr. Mahmoud is the owner of a pizza delivery business in Winchester, Ontario which operates as Milano’s Pizzeria. After moving to Canada in April 2011, Mr. Dirar worked as a self-employed delivery driver for Milano’s Pizzeria. He was paid on an hourly basis and used his own Toyota Corolla vehicle to make pizza deliveries. He never used Mr. Mahmoud’s vehicle to make deliveries. On the day of the accident, Mr. Dirar was on his way to Ottawa, he was not working, and he was not using the Mahmoud vehicle in the course of his employment.

[6] The provisions in Rule 21 that are at play here are,

21.01 (1) A party may move before a judge,

(a) for the determination, before trial, of a question of law raised by a pleading in an action where the determination of the question may dispose of all or part of the action, substantially shorten the trial or result in a substantial saving of costs;

(2) No evidence is admissible on a motion,

(a) under clause (1) (a), except with leave of a judge or on consent of the parties;

[7] Mr. Dirar’s policy with State Farm insures him against liability when driving his own car, and as to his driving other vehicles, the policy provides

Automobiles, other than a described automobile, are also covered when driven by you, or driven by your spouse who lives with you.

however, this coverage is subject to the following exclusion.

For all coverages, except Accident Benefits, the other automobile cannot be an automobile that you or anyone living in your dwelling owns or regularly uses. Nor can the other automobile be owned, hired or leased by your employer or the employer of anyone living in your household.

[8] State Farm takes the position that the above exclusionary provision precludes coverage of the accident in question under its policy of insurance with Mr. Dirar. But before even getting to the matter of the exclusion clause, State Farm argues that the plaintiff has no standing to bring this motion seeking a determination whether Mr. Dirar or Mr. Mahmoud’s policies must respond to the plaintiff’s claims for damages. In argument, State Farm appears to concede that Mr. Mahmoud’s policies will respond to the plaintiff’s action, but oppose this motion in relation to the Dirar policy. State Farm points to ss. 258(1) of the Insurance Act, R.S.0.1990, c. 1.8, in support of its position on standing. It provides that

258(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 may, on the person’s own behalf… maintain an action against the insurer to have the insurance money so applied.

[9] The plaintiff argues that the insurer’s duty to defend is triggered by the mere possibility that the claim could succeed; that this is a low threshold, and the concern for making premature factual findings at a preliminary stage is not raised here in that the factual background is not contentious. His factum contends at paragraph 19 that,

Determining insurance coverage prior to trial saves costs and ensures that insureds are not subjected to incurring unnecessary costs if a duty to defend can be found;

The insurer benefits if a duty to defend is found to exist at an early stage in the proceeding as it allows the insurer to take the necessary steps to mount an appropriate defence prior to trial;

Neither the defendants nor the insurer suffer prejudice in determining whether a duty to do defend can be found at an early stage of the proceedings;

Rather, it is to the advantage of all parties to have an early determination of the duty to defend issue.

[10] Noting that a passenger on the plaintiff’s motorcycle, Ms. Summers, was also seriously injured and is plaintiff in a separate action, counsel for Parker argues that the court should admit the necessary evidence and make the determination as to State Farm’s duty to defend at this early stage, because,

The parties have yet to attend mediation in this action and in Ms. Summers’ related action. In order for mediation to be productive in one or both actions, Mr. Parker and Ms. Summers need to know the applicable policies that are available to respond to their claims for damages;

If the issue remains unresolved, settlement negotiations are unlikely to be productive as Mr. Parker and Ms. Summers would not be able to make meaningful decisions on potential offers to settle without knowing the applicable liability limits that are available to them. They will not be adequately compensated for their injuries unless both Mr. Mahmoud’s and Mr. Dirar’s policies apply to their claim.

The matter fails at mediation, the same issue will arise at pre-trial and the pre-trial judge will not be able to provide any useful guidance to the parties;

The pre-trial judge will have to set aside time and resources for conducting a trial, all of which may be unnecessary if the issues of the applicable policies is resolved at an early stage of the proceedings; and

It is also to State Farm’s advantage to resolve this issue at an early stage as if the matter is left until the completion of trial to be determined, the process of enforcing the judgment will begin anew, requiring additional legal time, costs and resources.

[11] Notwithstanding the appeal of the plaintiff’s position, and the possible beneficial consequences of that determining whether Mr. Dirar is covered with liability insurance under his own policy of insurance with State Farm while he was driving Mr. Mahoud’s vehicle at this early stage of the litigation, I have concluded that, as counsel for State Farm argues, the plaintiff has no standing or other proper basis on which to call for such a determination at this point. I conclude this notwithstanding the array of authorities submitted by Mr. Lundrigan in which courts have permitted relevant issues of law to be determined pre-trial pursuant to Rule 21. None is a precedent for what is sought here.

[12] To begin with, I think the determinations sought here involve at best, questions of mixed fact and law. Whether the Main Street apartment in Winchester is a dwelling for both Mr. Mahmoud and Mr. Dirar depends upon findings of fact, whether disputed or not. So too does whether Mr. Dirar, in delivering pizzas for Milano’s Pizzeria is an employee of Mr. Mahmoud or a self-employed independent contractor.

[13] Second, even if they are questions of law, I don’t think that they are raised by the pleadings. Neither the Statement of Claim nor the Statement of Defence makes any reference to insurance policies or insurers of the parties. No claim is made against any insurer, and no insurer had been made a party to the action. Should the plaintiff obtain judgment against one or both defendants, the liability of State Farm under one or other of the policies could become an issue and become litigious under ss. 258 of the Insurance Act. At this stage, however, the questions sought to be determined on this motion are not raised by a pleading in the action.

[14] Third, and most important, the plaintiff does not have the standing to seek the relief sought in this motion. I accept the submission on behalf of State Farm found at paragraphs 33-44 of its factum, including the authorities cited, that at this stage, the plaintiff in this action has no cause of action against State Farm, and no contractual relationship with State Farm that would justify granting the relief sought in this motion. In Williams v Pintar, 2014 ONSC 1606, Master (now Mr. Justice) Pierre Roger refused the plaintiff’s request to grant declaratory relief against the defendant’s insurer and describes the proper role of ss. 258(1) of the Insurance Act as among the parties to an accident and their insurers (see particularly paragraphs 20, 21, and 32).

[15] The Insurance Act provision in s. 258, set out above under paragraph 8, makes it clear that a cause of action by a plaintiff against a defendant’s insurer arises only once the plaintiff has secured judgment against the insured. Interesting as the question whether the circumstances in which the accident occurred fall within the exclusionary clause set out above in paragraph 7 may be, and whether a pure question of law or not, it may fall to be answered only following the plaintiff obtaining judgment against Mr. Dirar, and in the event that policy limits otherwise in play under Mr. Mahmoud’s policies will not satisfy the judgment. There may well be issues of priority then at play as well.

[16] Having determined that the plaintiff cannot seek the determinations sought here, I do not have to decide whether to grant leave to admit external evidence on the motion. In my opinion, the relief sought by the plaintiff against State Farm in this motion cannot be granted and the motion fails.

Costs of the Motion

[17] Both the plaintiff and State Farm delivered Costs Outlines on of the presentation of the motion. In light of these submissions, the complexity of the issues, the materials presented, the time required in presenting the motion in court and, of course, its outcome, I award costs of $7,700 on a partial indemnity basis, payable by the plaintiff to the respondent insurance company, in the cause. By that I mean that the plaintiff will owe State Farm $7,700 in costs in the event that he is unsuccessful in his action against either defendant insured by State Farm. I confine payment of the award to the case in which the plaintiff is unsuccessful in his action because the plaintiff’s motion, while untenable in law, had arguable benefits if it could have been sustained.

Order accordingly

Rutherford J.

Date: Wednesday July 22, 2015

Parker v. Dirar and Mahmoud,

COURT FILE NO.: 12-CV-55020

ONTARIO

SUPERIOR COURT OF JUSTICE

RE: Parker, Paintiff

AND

Dirar and Mahmoud, Defendants

State Farm, Respondents

BEFORE: Mr. Justice Rutherford

COUNSEL: John Lundrigan, for the Plaintiff

Bryan Carroll, for the Defendants

Brendan Haynes, for State Farm

ENDORSEMENT

Rutherford J.

Released: July 22, 2015