ONTARIO

SUPERIOR COURT OF JUSTICE

COURT FILE NO.: CV-14-503089-00A1

DATE: 20151119

BETWEEN:

PAUL CHRETIEN

Plaintiff

– and –

RYDER TRUCK RENTAL CANADA LIMITED and NELLA DIRIENZO

Defendants

and THE PERSONAL INSURANCE COMPANY, OLD REPUBLIC INSURANCE COMPANY OF CANADA and ELITE INSURANCE COMPANY

Third Parties

No one appearing for the Plaintiff

John J. Jones, for the Defendant Ryder Truck Company and Third Party, Old Republic Insurance

Gregory Gryguc, for the Defendant, Nella Dirienzo

Nicholas Mester, for the Third Party, Elite Insurance

Michael Burgar, for the Third Party, The Personal Insurance Company

HEARD: August 25, 2015

G. DOW, j

reasons FOR DECISION

[1] The defendant, Nella Dirienzo (“Dirienzo”) requests a declaratory order against one (or more) of the third party insurers to defend her in the main action and reimburse her the legal costs she has incurred to date.

[2] The third party insurers resist the motion individually on the basis their policy is not required to respond, another policy is in priority, or alternatively, in the case of the Dirienzo’s homeowner’s policy with The Personal Insurance Company (“The Personal”) is excess insurance.

Facts

[3] On May 7, 2012, the plaintiff Paul Chretien (“Chretien”) rented a Ford E450 16’ Diesel Step Van from the defendant, Ryder Truck Rental Canada Limited (“Ryder”) that included a hydraulic lift on its rear. This was operated by a switch at the passenger side rear of the vehicle. The reason for the rental was to move some furniture from Dirienzo’s home in Richmond Hill. Mr. Chretien owned and insured a 1976 Ford Club Wagon insured under the Standard Ontario Automobile Policy or OAP 1 with Elite Insurance Company (“Elite”).

[4] Ryder, as owner of the truck, insures its vehicles including this one through Old Republic Insurance Company of Canada (“Old Republic”) with all of the terms and provisions of the OAP 1. Dirienzo, has both a homeowner’s policy with The Personal as well as a motor vehicle policy (OAP 1) in which she is the owner and named insured of a 2011 Mazda.

[5] At the Dirienzo residence, Chretien, while on the lift portion of the Ryder truck with a piece of furniture is injured as the hydraulic lift is moving upwards (while allegedly being operated by Dirienzo) resulting in portions of two fingers of Chretien’s left hand being “chopped off” (paragraph six of the Statement of Claim).

[6] The causes of action include nuisance, breach of the Occupier Liability Act, R.S.O. 1990 c. 0.2 and the allegations of negligence in the Statement of Claim are drafted broadly with 24 separate particulars of negligence that describe various activities some of which make no reference to the operation of the hydraulic lift on the Ryder vehicle.

Analysis

[7] At this early stage of the action, the Court is required to address the duty to defend (as opposed to the duty to indemnify). In Djepic v. Kuburovic, 2006 578 (ON CA), [2006] O.J. No. 97 (C.A.), at paragraph 31, the Court described the test to be applied to be “whether on a reasonable reading of the pleadings, a claim within coverage can be inferred”. In this regard, counsel for Old Republic references the injury occurred when the plaintiff’s fingers were crushed against the ceiling of Dirienzo’s home (likely the garage). This is not contained in the Statement of Claim or Dirienzo’s Statement of Defence, but only in paragraph 7f) of the Statement of Defence and crossclaim of Ryder.

[8] Further, the Court has indicated it is the substance and not the form of the pleadings which must govern the insurer’s duty to defend (Unger v. Unger, 2003 57446 (ON CA), [2003] O.J. No. 4587 (C.A.) at paragraph 16). It is my view that the use or operation of the rented vehicle is the substance of the claim.

[9] I am reassured in this conclusion by comments made in Djepic, supra, where the plaintiff, Djepic is blinded in his right eye while attempting to secure a mattress onto the roof of his minivan and a bungee cord slips out of the hand of the defendant, Kuburovic, while the van was situate on Kuburovic’s driveway. The dispute regarding coverage was between Djepic’s auto insurer, Dominion of Canada and Kuburovic’s homeowner policy with Belair Direct. In rejecting Djepic’s auto policy was required to respond, the Court refused to find Kuburovic was an occupant of the vehicle which is defined in Part VI Automobile Insurance under section 224 of the Insurance Act, R.S.O. 1990, c. I.8. The definition of occupant is either the driver, or a passenger, whether being carried in or on the automobile or a person getting into or on or getting out of or off the automobile.

[10] It should be noted the Court was also required to distinguish what will be addressed below: that insurance coverage is provided under automobile policies and section 239 of the Insurance Act. That section uses the phrase “arising from the ownership or directly or indirectly from the use or operation of any such automobile”. At paragraph 43 of Djepic, supra, the Court states that a “different methodology and approach is to be used when interpreting coverage as opposed to exclusion clauses”. The inference is that an “identical phrase may be interpreted differently depending on whether it is used in a coverage or an exclusion clause”.

Issue – Application of Homeowner’s Policy

[11] The basis for coverage under the homeowner’s policy is under Coverage E-Legal Liability and references both personal liability and premises liability covering claims “arising from legal liability for unintentional bodily injury or property damage arising out of”;

a) for personal liability “your personal actions anywhere in the world” (clause 1.1.1) and;

b) for premises liability “your ownership, use or occupancy of the premises” (clause 1.1.2).

[12] The exclusion section (clause 1.5) and particularly subparagraph 10 is with regard to “ownership, use or operation of any motorized vehicle”. As an exclusion clause, in AXA Insurance v. Dominion of Canada General Insurance Company et al., 2004 34995 (ON CA), [2004] O.J. No. 4492 (C.A.) at paragraph 32, Justice MacPherson confirms “the case law supports the general proposition that coverage clauses should be interpreted generously and exclusion clauses strictly”. I take that to mean a more narrow interpretation of the exclusion clause as opposed to a more broad interpretation as occurs when the same words are in, for example, section 239(1)(a) of the Insurance Act, R.S.O. 1990 c. I.8.

[13] The alternative argument, on the basis one of the auto policies is required to respond, relies on section 1.6 “Other Insurance” that addresses if other insurance applies to the loss or claim, the homeowner policy will be considered excess insurance and not available “until the amount of such other insurance is used up”. This was the conclusion in AXA, supra, where the plaintiff was struck in the eye by a bungee cord while it was being placed over a boat owned by the alleged tortfeasor. The boat and its trailer were insured by Dominion of Canada. The trailer and boat were attached to the alleged tortfeasor’s van, insured under an OAP 1 by AXA. The alleged tortfeasor had a homeowner policy with Cooperators. In this case, both the motions Judge and the Court of Appeal concluded section 239(1) of the Insurance Act and the OAP 1 reference to coverage arising from “use or operation” was wide enough to include what occurred. The analysis included whether the use and operation of the vehicle was a direct or proximate cause of the incident or merely incidental or fortuitous. I agree with that analysis and, applied to the facts at hand, conclude it is sufficient to exclude the homeowner’s policy as primary. However, it would appear to be excess insurance.

Issue – Application and Priority of Auto Policies

[14] I propose to take each auto policy in turn and determine if it affords coverage to Dirienzo and, if so, in what priority to the other policies.

[15] The first policy is that held by Chretien with the Third Party, Elite. That is, Chretien is the named insured and his vehicle is not involved in the incident in any direct or indirect manner. Dirienzo needs to somehow come within the wording of that policy. I fail to see how this can occur. Further, Djepic, supra, appears to reject coverage occurring in the circumstances even when the plaintiff’s vehicle was indirectly involved in the incident.

[16] The claim has to be predicated on an extension of coverage for the plaintiff, Chretien and Dirienzo as a result of the plaintiff renting that vehicle. Coverage for vehicles that are rented is referred to in section 2 of the OAP 1 and particularly at section 2.2.4 but extends coverage only to “the person renting the automobile” and for incidents “arising from the negligence of the driver of that automobile.”

[17] While I am prepared to describe Dirienzo’s operation of the lift on the rental vehicle as “use and operation”, she is not the person renting nor the person driving. I believe there is support for the conclusion Dirienzo’s operation of the lift is within use or operation. Justice Laskin’s comment in CUMIS General Insurance Co. v. 1319273 Ontario Ltd. (Done Right Roofing), 2008 ONCA 249, 2008 91 O.R. (3d) 147 (C.A.) that loading or unloading of an automobile is recognized as use or operation is repeated at paragraph 21 of the reasons in Huestis v. Dahmer, [2012] ONSC 5161.

[18] Second, there is the auto policy held by Dirienzo with The Personal. Dirienzo, in this policy, is the named insured. She is covered along with other “insured persons” for “incidents occurring in Canada”. Under section 1.2.5 she is covered for “other automobiles” (which I would expand to be vehicles) but only when “driven by you” under section 2.2.3 and for other vehicles that are rented or leased “by you” in section 2.2.4, neither of which is helpful.

[19] Section 3.3 covers her for legal responsibility for bodily injury “as a result of owning, leasing or operating the automobile or renting or leasing another automobile”. While coverage could extend to “operating”, it appears to be curtailed by the fact she did not rent or lease the other automobile. Overall, the circumstances and the wording of the policy does not appear to afford coverage in the circumstances.

[20] The third policy is that of Old Republic as insurer of the Ryder truck. It is the described vehicle although Dirienzo is not the renter of the vehicle. Dirienzo would appear to fall within a person to whom coverage would be afforded given she was operating the vehicle with the consent of the person who rented the vehicle. The operative section of the policy would appear to be 3.2 Who is Covered which states, “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”.

[21] The difficulty with this analysis is whether Dirienzo had “possession” of the described automobile. The limit of “possession” was considered in Djepic v. Kuburovic, supra, with the conclusion more than authorized touching or contact is required and there needs to be the exercise of some element of dominion, control or occupancy (paragraph 21). However, should it become necessary, the fact that Chretien, who rented the vehicle and was on the lift when the incident occurred strikes me as his still being in possession and overcomes this hurdle.

[22] Old Republic has the added benefit, as the insurer of Ryder truck who rented the vehicle, to the 2006 amendments to the Insurance Act and particularly section 277(1.1) which sets out the priority of coverage for rented/leased vehicles where other policies exist. As I understand the amendments, the policy of the rental company is not required to respond where the individual who rented the vehicle has his or her own policy on another vehicle. That is not the situation at hand as it was Chretien who rented the vehicle, not Dirienzo.

[23] The next insurance available under subparagraph 2 is that “under which the driver of the automobile is entitled to indemnity” which expands the previous priority insurer to situations where another motor vehicle liability policy may be available. However, in this situation, this would not appear to be the case as Dirienzo is not a “driver”.

[24] Counsel for Old Republic directed me to the decision in Nguyet v. King, 2010 ONSC 5506 where Justice Belobaba, at paragraph 10 stated, “The legislative intent was clear: if you are driving a rented car and are involved in a car accident causing loss or damage and your own auto insurance policy has third party liability coverage, then your own auto insurer must respond first. The car rental company’s insurer is last in priority.” As repeatedly indicated above, this appears to be restricted to situations of “driving” which did not occur in the facts at hand.

[25] There is a value and purpose to Ryder as owner of the vehicle having insurance. Whether it is in the straightforward situation where someone rents a vehicle from them because they do not have their own vehicle or access to another vehicle and its (compulsory) automobile liability insurance or the more convoluted situation such as the one at hand, there are still situations where that policy will be required to defend the individual against whom the action is commenced. I therefore conclude that Old Republic has not only a duty to defend, but the primary duty to defend, Dirienzo.

Costs

[26] Dirienzo has been successful and submitted a bill of costs totalling $21,795.82 on a complete indemnity scale inclusive of fees, HST and disbursements and $16,431.15 on a partial indemnity scale. My review of the bill is that the time expended to prepare and serve the defence, prepare and serve the third party claim and draft this motion is excessive. Counsel retained by Dirienzo is an experienced litigator in the field of personal injury and insurance issues. In my view, the sum of $12,500 is an appropriate amount inclusive of fees, HST and disbursements on a full indemnity basis for the legal work required on behalf of Dirienzo.

[27] I am reinforced in this conclusion by the costs outline submitted by Elite Insurance who prepared pleadings and responding motion material claiming $8,374.60 inclusive of fees, HST and disbursements on a partial indemnity basis rising to $12,135.02 on a substantial indemnity basis. I accept and fix the costs of Elite Insurance at $8,374.60 inclusive of fees, HST and disbursements.

[28] Counsel for The Personal submitted a costs outline for partial indemnity costs in the amount of $8,315.11 inclusive of fees, HST and disbursements. This claim is also accepted. Counsel for Old Republic failed to provide a costs outline as required under 57.01(6). Upon review of the costs outline of the other two insurers, my sense was his claim would have been at the same level.

[29] Given my conclusion that Old Republic is responsible for defending Ms. Dirienzo, it is also responsible for the payment of her costs of the action including this motion along with the motion costs of Elite and The Personal.

Mr. Justice G. Dow

Released: November 19, 2015

COURT FILE NO.: CV-14-503089-00A1

DATE: 20151119

ONTARIO

SUPERIOR COURT OF JUSTICE

BETWEEN:

PAUL CHRETIEN

Plaintiff

– and –

RYDER TRUCK RENTAL CANADA LIMITED and NELLA DIRIENZO

Defendants

and THE PERSONAL INSURANCE COMPANY, OLD REPUBLIC INSURANCE COMPANY OF CANADA and ELITE INSURANCE COMPANY

Third Parties

REASONS FOR DECISION

Mr. Justice G. Dow

Released: November 19, 2015