COURT FILE NO.: CV-11-430083
DATE: 20150928
ONTARIO
SUPERIOR COURT OF JUSTICE
BETWEEN:
DIMITAR JELIAZOV, SYLVIA JELIAZOV and NIKOLY JELIAZOV
Plaintiffs
– and –
JOHN DOE, THE SUPERINTENDANT OF FINANCIAL SERVICES, THE ECONOMICAL INSURANCE GROUP, PERTH INSURANCE COMPANY, JEFFREY ALLEYNE, EASYWAY INSURANCE BROKERS
Defendants
Eric Zeldin and Payam Ezzatian, for the Plaintiffs
Andrew Papadimitropoulos, for the Defendants, Economical Insurance Group and Perth Insurance Company
HEARD: November 13, 2014 and June 26, 2015
REASONS FOR DECISION
Firestone J.
[1] The moving party, defendants Economical Insurance Group (“Economical”) and Perth Insurance Company (“Perth”), which is a subsidiary of Economical, collectively referred to as (“Perth”) bring this motion under Rule 20 of the Rules of Civil Procedure, R.R.O. Reg. 194 (“the Rules”) for an order dismissing the action against them. The co-defendants, The Superintendent of Financial Services (“Superintendent”), Jeffrey Alleyne (“Alleyne”) and Easyway Insurance Brokers (“Easyway”) did not participate in this motion and did not file any evidence regarding the issues to be determined on this motion.
Factual Background
[2] On July 5, 2009, the Plaintiff Dimitar Jeliazov (“Jeliazov”) was involved in a collision with an unidentified motorist. At that time he was the operator of a newly acquired 2008 Kawasaki motorcycle (“motorcycle”) purchased by him on or about June 18, 2009, and delivered to him on or about June 29, 2009.
[3] On July 5, 2011, Jeliazov commenced an action against Perth for damages as a result of injuries sustained in the subject collision. He did so pursuant to the unidentified-underinsured provisions of the automobile policy No. 006548413 (the “policy”) he had with Perth. This policy insured his 2004 Land Rover bearing license plate number BCRX 819. Damage claims were also commenced by Jeliazov’s parents pursuant to the Family Law Act, R.S.O.1990, c. F.3 as amended. On the date of the subject collision, Jeliazov was also the registered owner of an unplated 2004 Lexus motor vehicle. In addition to Perth, an action was also commenced against The Superintendent of Financial Services (“Superintendent”) as well as Jeffrey Alleyne (“Alleyne”) and Easyway Insurance Brokers (“Easyway”).
[4] The plaintiffs allege that the newly acquired motorcycle was insured and that Jeliazov was an “insured person” under the Perth policy. Perth therefore is required to provide insurance coverage and indemnity to the plaintiff’s for their damage claims arising from the subject collision. Perth, in response, argues that insurance coverage does not extend to the newly acquired motorcycle based on the factual matrix of this case.
Issues for determination
Is this an appropriate case for summary judgment?
Was Jeliazov’s newly-acquired motorcycle insured under the Perth policy at the time of the collision?
Is Jeliazov entitled to relief from forfeiture?
Position of the Parties
1. Is this an appropriate case for summary judgment?
[5] Jeliazov argues that there is a genuine issue requiring a trial. The case involves questions of law which are unsettled and the matter should not be resolved by way of summary judgment.
[6] Perth submits that there is no genuine issue requiring a trial and that summary judgment should be granted. There is, it submits, a full and sufficient evidentiary record which would allow the court to make the necessary findings of fact and apply the law to those facts in order to achieve a fair and just determination. Jeliazov has, Perth argues, no further evidence regarding the mechanical inoperability of the Lexus which is central to the issues to be determined on this motion. Rather than await trial for the plaintiff to advance anything further, this court should draw an adverse inference from Jeliazov’s inability to answer questions regarding the mechanical inoperability of the Lexus.
2. Was Jeliazov’s newly-acquired motorcycle insured under the Perth Policy at the time of the collision?
[7] Jeliazov argues that at all material times he was an insured person. He submits that the premium he had already paid to Perth for his insurance policy covers and includes the automatic extension of coverage to a newly-acquired vehicle for 14 days. He submits that all conditions for coverage were met.
[8] Perth argues that Jeliazov’s motorcycle was not insured. They submit that Jeliazov’s failure to insure a vehicle in the plaintiff’s name, namely the Lexus, automatically excluded him from coverage for his newly- acquired motorcycle.
[9] Central to the determination to be made on this motion is whether or not the uninsured Lexus was operable at the time of the accident.
[10] Jeliazov argues that the Lexus was an inoperable ‘salvage vehicle’. The vehicle, he submits, was unfit to drive. It was sold to him without ever having been driven. It had no permit and no license plates. It was not stored at his home. Many things were not working with the vehicle. Although he cannot remember whether the Lexus started or not, he knew it would not pass a safety inspection and therefore never had it inspected.
[11] The Vehicle Identification Number (“VIN”) history of the Lexus states its vehicle status as “unfit”, its brand as “salvage” and its registrant status as “inactive”. He relies on case law for the proposition that a designation that a vehicle is “unfit” implies that it is unfit for mechanical safety and is not permitted to be operated until it is repaired and inspected: (O.P.S.E.U. v. Ontario (Ministry of Transportation), [2006] O.L.R.B. Rep.196, 2006 CarswellOnt 2814).
[12] Perth argues that Jeliazov has failed to submit sufficient evidence to support the allegations deposed in his affidavit that the Lexus was mechanically inoperable and not drivable. They submit that he refused many questions put to him at his examination for discovery. They submit that the Jeliazov is in the best possible position to give evidence of the mechanical condition of the Lexus and has not done so.
[13] Jeliazov argues that he met the conditions for coverage and was at all material times an insured person. As such, he has not specifically responded to Perth’s argument that he was statute-barred from bringing this action.
[14] Perth grounds their motion for summary judgment on the basis that Jeliazov is statute-barred from bringing this action against them. They submit that, as he was uninsured at the time of the collision, he was in contravention of the Compulsory Automobile Insurance Act, R.S.O. 1990, c.C-25. As such, section 267.6 of the Insurance Act, R.S.O. 1990 c.I.8 as amended bars him from recovering for any loss or damage arising from the use of an automobile.
[15] Jeliazov argues that the principles governing the interpretation of the insurance contracts favour his right of recovery. Relying on Meadowview Heights Ltd. v. Revivo (2004), 2004 41175 (ON SC), 73 O.R.(3d) 777, O.J. No. 4742, he submits that coverage provisions in the policy should be interpreted broadly; exclusion clauses should be interpreted narrowly; that the doctrine of Contra proferentem should apply; and that the reasonable expectations of the parties should be given effect.
[16] Central to Jeliazov’s position is his allegation that he received advice from his insurance broker (Alleyne) that the motorcycle would be covered. In their pleading the broker denies this but there is no direct evidence in the record from Jeliazov or the broker defendants on this issue.
[17] At paragraph 12 of the plaintiffs’ statement of claim (“claim”) they plead “Easyway were Mr. Jeliazov’s previous and at the time of the accident insurance brokers whom he relied on for their expertise and knowledge. He contacted Mr. Alleyne on June 26, 2009 for the purpose of obtaining motorcycle insurance for the Kawasaki. Mr. Jeliazov was advised by Mr. Alleyne that the Kawasaki was insured as of the same date.” At paragraph 14 of the claim, they further plead “Mr. Jeliazov was at all material times he was under explicit advisement from Mr. Alleyne that he had insurance on the Kawasaki including coverage for any future accidents” [sic].
[18] At paragraph 5 of Alleyne and Easyway’s statement of defence, they plead, “Alleyne was an employee of Easyway on or about June 26, 2009, but did not advise the plaintiff Dimitar Jeliazov (“Dimitar”) that his 2008 Kawasaki motorcycle (the “Motorcycle”) was insured.” Jeliazov maintains that he did not know and could not reasonably have known that the insurer does not cover motorcycles.
[19] Perth submits that the fact that they do not insure motorcycles automatically relieves them of any duty to indemnify Jeliazov for the damages claim being made in this action. They argue that Jeliazov ought to have been more diligent in informing himself regarding the scope of coverage available under to him under his policy with Perth.
3. Is Jeliazov entitled to relief from forfeiture?
[20] Jeliazov submits that he is entitled to relief from forfeiture under the Courts of Justice Act, R.S.O. 1990, c. I.8. A failure to grant such relief would subject him to inequitable an unnecessary hardship. He submits that if there was a breach, it amounts to imperfect compliance. The fact that the Lexus was uninsured, he submits, does no violence to the reasonable expectations of either party. There was no additional risk to Perth given that the Lexus was inoperable.
[21] Jeliazov further argues that non-compliance is only found in the rarest of cases. Two examples are given of cases where an insured’s conduct was held to be non-compliance: drinking heavily prior to driving: Stuart v. Hutchins (1998), 1998 7163 (ON CA), 40 O.R. (3d) 321,164 DLR (4th) 67, cited in Kozel v. The Personal Insurance Company, 2014 ONCA 130, 119 O.R. (3d) 55 at para. 47, and making repeated material misrepresentations to the insurer: Lavoie v. T.A McGill Mortgage Services Inc; 2014 ONCA 257. Jeliazov asserts that the conduct in this case is not comparable to those fact scenarios.
[22] Jeliazov did at all material times, he argues, conduct himself reasonably and in good faith. At no time was he given any information about the insurer’s policy indicating that they did not underwrite motorcycles. Further, he was unaware that by operating the motorcycle on the day in question, he ran the risk of being uninsured. Again, central to this argument is his assertion that he contacted his broker who informed him that newly-acquired vehicles were automatically covered during a 14 day notice period. The day after the subject collision, he notified his insurance company of the loss by telephone.
[23] Perth argues that Jeliazov is not entitled to relief from forfeiture under the Insurance Act or the Courts of Justice Act. They submit that Jeliazov’s breach of the terms of his automobile insurance policy amounted to a serious and substantial breach of a fundamental term of the contract. As such, the breach constitutes non-compliance with a condition precedent for coverage. Therefore Jeliazov is not entitled to equitable relief.
[24] Perth submits that Jeliazov’s conduct amounts to non-compliance with a condition precedent for coverage. They argue that the language “as long as” in section 2.2.1 of the O.A.P. signifies that the term is fundamental and a condition precedent to coverage.
[25] As a result, Perth argues that the plaintiff’s conduct was reckless and willfully blind. He should have, they submit, made further inquiries about his insurance coverage before operating the motorcycle.
Analysis
Is this an appropriate case for summary judgment?
[26] Rule 20.04 of the Rules reads:
(2) The Court shall grant summary judgment if:
(a) the court is satisfied that there is no genuine issue requiring a trial with respect to a claim or defence; or
(b) the parties agree to have all or part of the claim determined by a summary judgment and the court is satisfied that it is appropriate to grant summary judgment.
[27] In Hryniak v. Maudlin, 2012 SCC 7, the Supreme Court of Canada wrote at para. 4:
… a trial is not required if a summary judgment can achieve a fair and just adjudication, if it provides a process that allows the judge to make the necessary findings of fact, apply the law to those facts, and is a proportionate, more expeditious and less expensive means to achieve a just result than going to trial.
[28] The court in Hryniak emphasized that “the standard for fairness is not whether the process is as exhaustive as a trial, but whether it gives the judge confidence that she can find the necessary facts and apply the relevant legal principles so as to resolve the dispute” (at para. 50).
[29] In Sweda Farms Ltd. v. Egg Farmers of Ontario, 2014 ONSC 1200, aff’d. 2014 ONCA 878, at paras 33-34, the court provided the following overview of the approach to be taken summary judgment motion:
(1) The court will assume that the parties have placed before it, in some form, all of the evidence that will be available for trial;
(2) On the basis of this record, the court decides whether it can make the necessary findings of fact, apply the law to the facts, and thereby achieve a fair and just adjudication of the case on the merits;
(3) If the court cannot grant judgment on the motion, the court should:
(a) Decide those issues that can be decided in accordance with the principles described in (2) above;
(b) Identify the additional steps that will be required to complete the record to enable the court to decide any remaining issues;
(c) In the absence of compelling reasons to the contrary, the court should seize itself of the further steps required to bring the matter to a conclusion.
[30] For the reasons that follow, I am of the view that this is not an appropriate case for summary judgment. The limited evidentiary record before me does not provide the necessary evidence required to make the necessary findings of fact in order to achieve a fair and just adjudication of the dispute between the parties as framed by the pleadings when considering the litigation as a whole.
[31] In this case, central to a just determination of the dispute between the parties is a determination of what Jeliazov was or was not told by the insurance broker defendants regarding whether his newly acquired motorcycle was covered under the policy. There is no direct evidence from the broker or his employer on this issue. An allegation in a pleading of what was said or not said is not evidence. As a result, there is a genuine issue requiring a trial regarding this important and central issue which involves findings of credibility. The Supreme Court has held that summary judgment will likely be inappropriate where “serious credibility issues” are present: Hryniak, at para.19. The context under which Jeliazov believed that the motorcycle was insured cannot be considered in isolation. It is relevant to the issues to be determined on this motion.
[32] The interests of justice require a complete evidentiary record. As stated by the Ontario Court of Appeal in Baywood Homes Partnership v. Haditaghi, 2014 ONCA 450,120 O.R. (3d) 438 at para. 44: “Great care must be taken by the motion judge insure that decontextualized affidavit and transcript evidence does not become the means by which substantial unfairness enters, in a way that would not likely occur in a full trial with the trial judge sees and hears it all.”
[33] Having found that there is a genuine issue requiring a trial, with this backdrop in mind: (and in accordance with Hryniak at para. 68), I am to determine whether the need for such a trial can be avoided by using the powers under Rules 20.04 (2.1) and (2.2) which include a “Mini-Trial”. I may, at my discretion, employ those powers provided such use is not against the interest(s) of justice.
[34] When considering the factual matrix of this case and the issues to be determined as a whole, in my view a mini trial would not be appropriate in the circumstances and would be against the interests of justice. The broker defendants continue to be named in this lawsuit and will be giving evidence at trial in any event. It is not in the interests of justice to have these defendants give evidence twice in a piecemeal fashion. Based on the record as it stands now, I am not confident that the dispute can be fairly resolved by way of a mini trial. The record does not provide me with the necessary evidence to adjudicate the dispute between the parties in a timely, affordable and proportionate procedure. For the reasons above, a mini trial is not advisable when considering the issues in the litigation as a whole.
[35] In Baywood at para. 33, that court confirmed the principle in Hryniak that the motions judge must “assess the advisability of the summary judgment process in the context of the litigation as a whole.” In Hryniak the Supreme Court specifically states, at para. 60, that “the ‘interest of justice’ inquiry goes further and also considers the consequences of the [summary judgment] motion in the context of the litigation as a whole”.
[36] It is important to note that the dispositive issue on this motion is whether or not the plaintiff was excluded from automatic coverage for his newly acquired motorcycle because of his failure to insure his Lexus. That determination in part involves a credibility finding or determination of what Jeliazov was or was not told by the broker regarding whether or not the newly acquired motorcycle was insured under the policy. It would not been interests of justice to determine this issue and the other related issues on this motion in a vacuum.
[37] The Supreme Court of Canada directs in Hryniak, at para 78, that when a motion judge dismisses a summary judgment motion, he or she should remain seized of the matter in the absence of compelling reasons to the contrary.
[38] I conclude that the purpose behind the Supreme Court’s direction would not be well- served in the circumstances of this case. I have made no findings about the evidence on this motion beyond saying that there is a genuine issue for trial. I therefore exercise my discretion not to remain seized of this case.
Disposition
[39] For the reasons set forth above, the motion for summary judgment is dismissed.
[40] If the parties cannot agree on costs, I may be contacted in order to set a timetable for the delivery of cost submissions.
Firestone J.
Released: September 28, 2015
ONTARIO
SUPERIOR COURT OF JUSTICE
BETWEEN:
DIMITAR JELIAZOV, SYLVIA JELIAZOV and NIKOLY JELIAZOV
Plaintiffs
– and –
JOHN DOE, THE SUPERINTENDANT OF FINANCIAL SERVICES, THE ECONOMICAL INSURANCE GROUP, PERTH INSURANCE COMPANY, JEFFREY ALLEYNE, EASYWAY INSURANCE BROKERS
Defendants
REASONS FOR JUDGMENT
Firestone J.
Released: September 28, 2015