Passero v. Fitt

CITATION: 2015 ONSC 6723

COURT FILE NO.: 1634/10; 3683/11; 53291/11

DATE: 2015-11-02

SUPERIOR COURT OF JUSTICE – ONTARIO

RE: Maria Rosa Passero, Trustee of the Estate of Andrew Martin Passero et al., plaintiffs

AND: Gordon Fitt, Deanna Fitt, Youngs Insurance Brokers Inc. and Axa Canada Inc., defendants

AND: State Farm Mutual Insurance Company, Intact Insurance Company and Dalton Timmis Insurance Group Inc., third parties

AND RE: Heron et al. v. Fitt et al. (3683/91); Barker et al. v. Fitt et al. (53291/11)

BEFORE: Mr Justice Ramsay

COUNSEL: Sheila P. Marcantonio for the plaintiffs; James Greve for Deanna Fitt; Douglas N. Patton for State Farm; David Murray for Intact Insurance; Christopher P. Klinowski for Axa Canada Inc.; Steven C.J. Venhuizen for Scott Heron; Peter Sheppard for Cooperators Insurance; Sharon Mackay for Dodie Barker; Arthur Camporese for Gore Mutual;

HEARD: October 27 and 29, 2015

ENDORSEMENT

[1] On October 21, 2009 Gordon Fitt, driving a 2006 Dodge Charger on the Queen Elizabeth Way in Niagara Falls, collided with a pickup truck driven by Andrew Passero. Passero was killed. His passenger, Scott Heron, was injured. Fitt’s passenger, Dodie Barker, was also injured. Passero’s estate and family sued. In separate actions, Heron and Barker and their family members sued.

[2] At the time of the accident, the registered owner of the Charger was Fitt’s then wife, who has since divorced him, re-married and changed her name to Stafford. For that reason from time to time I find it easier to refer to them by their Christian names. The accident took place after the separation. By then, Deanna had a liability insurance policy with State Farm with a $1,000,000 limit. Gordon had a policy with the same limit from ING Novex, which has been succeeded by Intact Insurance. The three sets of plaintiffs have their own insurers for uninsured and underinsured motorist coverage – Axa for the Passero plaintiffs, Cooperators for Scott Heron and Gore Mutual for Dodie Barker. The parties in all three actions participated in the motion and all want the ruling to apply to all three actions.

[3] The motion before me is the Passero plaintiffs’ motion for partial summary judgment. They want me to find

a. that Deanna Stafford and Gordon Fitt were both owners of the vehicle,

b. either that Deanna Stafford consented to Fitt driving the vehicle or that her consent or lack of consent is legally irrelevant to her liability; and

c. that the insurance companies are liable for $1,000,000 each, to a total of $2,000,000 between them, to the maximum of the plaintiffs’ actual damages or the policy limits, whichever is less.

[4] The plaintiffs also moved for summary judgment on the question of whether the Intact policy was in force at the time of the accident. This aspect of the motion has been adjourned sine die on consent of the plaintiffs and Intact. I have been asked to assume without deciding that the Intact policy was in force for the purposes of deciding the question in paragraph 3 c. I shall proceed on that basis, although not without reservations. It is generally better to avoid hypothetical rulings, but the parties agree that this would be the most efficacious way to proceed, and I shall take their word for it.

[5] Also before me is Deanna Stafford’s motion for summary judgment. Her position is that she was the sole owner of the vehicle and Gordon Fitt took it without her consent. As a result, it is submitted, she is not liable for the accident and the action against her should be dismissed.

Summary judgment

[6] This is a case for summary judgment one way or the other on the questions that have been put to me. The basic facts are not in issue. A trial is not necessary.

Facts

[7] Deanna Stafford was the registered owner of the Dodge Charger. She and Gordon Fitt went to the dealership and bought the car together. On the agreement of purchase and sale she is listed as the purchaser and he is listed as the co-signer. On the conditional sales agreement she is the buyer and he is the co-buyer. They both obliged themselves to Daimler Chrysler Financial Services to repay a loan in monthly instalments. The payments were made from an account at Meridian Credit Union held by Fitt’s business. Deanna and Gordon both had signing authority on the account. While the parties were together, both used the vehicle during the summer. Every winter Gordon made arrangements to suspend the insurance and every spring he made arrangements to reinstate it. He insured the vehicle with Novex ING (i.e. Intact).

[8] In May 2009 the Fitts separated. Gordon left the matrimonial home with the family pickup truck, which was also registered to Deanna. He left the Charger behind. In July he asked Deanna for the use of the Charger one weekend. She refused.

[9] In July 2009 Gordon began to play hardball. He stopped paying the mortgage on the matrimonial home in the hope that the credit union would foreclose. Deanna would be out and he could redeem the mortgage. This worked; at least, Deanna had to move out on September 19, 2009.

[10] Gordon also stopped paying for the Charger with the same motivation. He thought that Daimler Chrysler would repossess it and he could redeem it. In early August 2009 Deanna made a payment on the Charger herself and insured it with State Farm. She called Intact’s agent from the State Farm office to ask Intact to take the Charger off the Intact policy. Intact refused. So State Farm and Intact knew about each other.

[11] Deanna stored the Charger at her uncle’s residence. Gordon still had one of the two car keys and Deanna did not want him to take the car. On September 18, 2009, the eve of her move, she moved the car to the garage of the matrimonial home. She was going to use it the next day to move property. Also on September 18 Gordon came over and made a scene. After he left Deanna noticed that the Charger was missing from the garage. She called the police. They were not willing to do anything but find out whether Gordon had the car. He did. Deanna asked for it back and Gordon refused. Deanna told her divorce lawyer. Deanna’s and Gordon’s lawyers wrote letters back and forth to address the Charger and the other property issues between the parties.

[12] Gordon missed a payment on his insurance. Intact’s agent wrote to him to advise him that unless he made the payment, the insurance would be cancelled as of October 29, 2009, which turned out to be eight days after the accident.

[13] On September 30, 2009 the licence plate sticker expired. Gordon renewed it.

[14] On October 16, 2009 Deanna’s lawyer found out that Dodie Barker had been seen driving the Charger. The lawyer wrote to Gordon’s lawyer, “There is no consent to the vehicle being driven.”

[15] By the eve of the accident, Gordon and Deanna had both asked Intact to delete the Charger from Intact’s policy. Intact refused to take the Charger off the Intact policy before the overdue premium was paid. Apparently, it preferred to keep the Charger on the policy until October 29, 2009 when the policy would be cancelled.

[16] The accident took place on October 21, 2009. After the accident State Farm paid Deanna for the loss of the Charger. She gave half of the proceeds to Gordon.

Ownership of the Charger

[17] The Highway Traffic Act provides:

192. (1) The driver of a motor vehicle or street car is liable for loss or damage sustained by any person by reason of negligence in the operation of the motor vehicle or street car on a highway.

(2) The owner of a motor vehicle or street car is liable for loss or damage sustained by any person by reason of negligence in the operation of the motor vehicle or street car on a highway, unless the motor vehicle or street car was without the owner’s consent in the possession of some person other than the owner or the owner’s chauffeur.

[18] The registered owner is the owner of the vehicle for the purposes of this section, unless the contrary is proven. No one has tried to prove that Deanna Stafford was not the owner.

[19] In addition, another person could be an owner of the vehicle if indicia of ownership so prove: Hayduk v. Pidoborozny, 1972 136 (SCC), [1972] SCR 879; Honan v. Doman Estate, 1974 26 (SCC), [1975] 2 S.C.R. 866.

[20] The indicia of Gordon Fitt’s ownership are many.

a. Before separation he participated in negotiating the purchase of the vehicle;
b. he co-signed the agreement of purchase and sale;
c. he co-signed the conditional sales agreement;
d. he paid most of the monthly instalments;
e. he insured the car; and
f. he used the car regularly.
g. After separation he withheld payment on the conditional sales agreement in order to regain possession of he car;
h. took the car;
i. he drove it;
j. he renewed the licence plate sticker; and
k. he received half the insurance proceeds for its loss.

[21] The indicia of ownership are ample to prove that Gordon was an owner of the vehicle for the purposes of s.192 of the Highway Traffic Act, whether I look at the period before separation, the period after separation or both periods together.

[22] I recognize that the Ontario legislation does not define owner as broadly as the Alberta legislation in question in Hayduk. Nevertheless, application of the principles enunciated in that case and in the Ontario case law leads inevitably to the conclusion that Gordon Fitt was an owner of the Dodge Charger within the meaning of s.192 of the Highway Traffic Act.

Deanna’s lack of consent to Gordon’s possession

[23] It is arguable that Deanna did not consent to Gordon’s possession of the vehicle. On the evidence of her lawyer’s letter it is also arguable that Deanna eventually consented to Gordon having possession of the vehicle, as long as it was not driven. That would be enough for liability to attach to her: Finlayson v. GMAC Leaseco Ltd., 2007 ONCA 557; Fernandes v. Araujo, 2015 ONCA 571.

[24] It is not necessary to decide. Her consent is irrelevant in the circumstances.

[25] I do not need to undertake a detailed analysis of the case law. In Mazur v. Elias, 2005 11390 (ON CA), [2005] O.J. No. 1407, paragraph 12, the Court of Appeal said, “It is unnecessary for the purpose of the section for one owner to have the consent of the other owner before liability will attach to both.” That decision is binding on me.

[26] I do not accept the contention of counsel for State Farm that Mazur is contradicted by the same court’s decision in Barham v. Marsden, [1960] O.J. No. 60, which is also binding authority. In Barham, the Court said that when a vehicle has two owners, and the vehicle causes damage while being driven by a person other than the owners, liability attaches to the owner who consented to the possession by the other person but not to the owner who did not consent.

[27] The Charger was not operated by someone other than an owner. Both owners are liable.

The available insurance proceeds

[28] Assuming that Intact and State Farm both insured liability for damage done in the operation of the Charger, and each policy had a $1,000,000 limit, are they liable to contribute $1,000,000 each to the plaintiffs’ loss?

[29] Section 277 of the Insurance Act provides:

277. (1) Subject to section 255 [nuclear hazards], insurance under a contract evidenced by a valid owner’s policy of the kind mentioned in the definition of “owner’s policy” in section 1 is, in respect of liability arising from or occurring in connection with the ownership, or directly or indirectly with the use or operation of an automobile owned by the insured named in the contract and within the description or definition thereof in the policy, a first loss insurance, and insurance attaching under any other valid motor vehicle liability policy is excess insurance only.

(2) Subject to sections 255 [nuclear hazards] and 268 [accident benefits] and to subsection (1) of this section, if the insured named in a contract has or places any other valid insurance, whether against liability for the ownership, use or operation of or against loss of or damage to an automobile or otherwise, of the insured’s interest in the subject-matter of the contract or any part thereof, the insurer is liable only for its rateable proportion of any liability, expense, loss or damage.

(3) “Rateable proportion” as used in subsections (1.2) and (2) means,

(a) if there are two insurers liable and each has the same policy limits, each of the insurers shall share equally in any liability, expense, loss or damage;

(b) if there are two insurers liable with different policy limits, the insurers shall share equally up to the limit of the smaller policy limit;

(c) if there are more than two insurers liable, clauses (a) and (b) apply with necessary modifications.

[30] The State Farm and Intact policies are both “owner policies” within the meaning of s.1 of the Act, so according to s.277(1) they are both primary or first loss policies. That is, they both promise to cover liability without another insurance policy having been exhausted. They are not excess policies. They do not promise to cover only liabilities in excess of another insurer’s policy limits.

[31] When more than one policy covers the same risk, the court must examine the policies to see whether each insurer has sought to limit its liability: Family Insurance Corp. v. Lombard Canada Ltd., 2002 SCC 48.

[32] In the case at bar, both policies have identical wording because the terms are mandated by regulation. Each one provides:

3.3 You or other insured persons may be legally responsible for the bodily injury to, or death or others, or for damage to the property of others as a result of owning, leasing or operating the automobile or renting or leasing another 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.

[33] This is a very straightforward promise. On its terms, the only limit on the insurer’s liability is the policy limit. I cannot find any other provision in the policy that limits this liability when other insurance exists, except in certain circumstances different from those in the case at bar.

[34] Counsel for Intact referred me to condition 2.3.2. In the text of the condition and the accompanying example, it provides that “if you have an accident while driving an automobile you don’t own,” and two policies cover the loss, the limits of the policy are added together and each insurer’s liability is the fraction of the total policy limits that its policy limits represent. The maximum payout will be no more than the amount of the higher policy limit. This condition does not apply to the case at bar because no insured was driving a vehicle that he did not own.

[35] Neither does condition 3.3.4 apply. Condition 3.3.4 provides that when two insured sue each other for the same accident in which one was the driver and the other a passenger, the insurer will treat the policy as two separate policies, but the total paid to both parties will not exceed the single policy limit.

[36] By way of contrast, condition 3.3.5 deals with the case in which overlapping insurance results from several persons insuring the same accident when a person rents a car. It provides that the renter’s insurance responds first, the driver’s insurance responds next and the owner’s insurance responds last. When one coverage is “used up” the next coverage takes over.

[37] Condition 3.3.5 does not apply to the case at bar any more than conditions 2.3.2 or 3.3.4, but I can say that the policies do not show an intention to provide in all circumstances that when a risk is insured to the same limit by two insurers, the liability of the insurers is limited to half the policy limit each. Specifically, no such intention is evidenced with respect to the circumstances before me in which a husband and wife both insure the same car in separate policies. The policies do not specifically mention such a case.

[38] S.277(2) of the Insurance Act, like Family Insurance, provides that in the circumstances, Intact and State Farm are only liable for their respective rateable proportion of the liability. According to s. 277(3)(a), “rateable proportion” means that each of the insurers shall share equally in “any liability, expense, loss or damage.” Obviously, if the total loss does not exceed $1,000,000, it must be shared equally by both insurers. Any other result would not be equitable. But the only limits I can see on the insurers’ respective liabilities are the policy limits and the amount of the loss. On the words of the section and the words of the policies, nothing compels me to hold that whatever the loss, the insurers are both entitled to accept the premiums for a $1,000,000 risk and then pay out for a $500,000 risk.

[39] I do not accept the submission that the case law suggests otherwise.

[40] In Family Insurance the loss was $500,000. One policy insured for $1,000,000 and the other insured for $5,000,000. Each policy provided that if other coverage existed, that other coverage would be considered primary coverage and its own coverage would be excess coverage only. The “other insurance” clauses in each policy were held to be irreconcilable and therefore void. This avoided the absurdity that if insurance is available elsewhere it is available nowhere. How then was the liability to be shared? The Supreme Court rejected the Minnesota approach, which calls for the court to decide which insurer is closer to the risk. The court instead held that the insurers must each contribute pro rata. In the absence of an intention to limit liability when other insurance exists or when the limitations cannot be reconciled, equitable contribution demands that the insurers share the burden equally. Since the risk is greater when the amount is lower, equitable division requires that when two insurers have different policy limits they share equally the liability up to the lower limit; beyond that the insurer with the higher limit meets the claim.

[41] Bastarache J. did not say in so many words what must happen when two policies have the same limit and the loss exceeds one limit or the total of the two. But he concluded his decision by quoting Lord Mansfield, who said in Godin v. London Assurance Co. (1758), 97 E.R. 419, “As between them [the insurer and insured], and upon the foot of commutative justice merely, there is no colour why the insurers should not pay the insured the whole: for they have received a premium for the whole risque.”

[42] Furthermore, the Supreme Court approved the approach taken by the British Columbia Court of Appeal in McGeough v. Stay’N Save Motor Inns Inc. (1994), 1994 3263 (BC CA), 116 DLR (4th) 137, a case in which two insurers had different policy limits and the loss had not yet been quantified. Legg J.A., writing for the court, described equitable contribution thus:

I conclude that Prudential and Laurentian should each contribute equal amounts until the applicable limits of each policy have been reached or none of the loss remains, whichever comes first.

[43] Finally, in Musca v. Wawanesa Mutual Insurance Co., 2004 ABQB 253, the defendant bought a new insurance policy and cancelled the existing policy effective the next day. The defendant was involved in a motor vehicle accident the very afternoon on which both policies were in effect. Both policies had the same limit. It was anticipated that the loss would exceed the limit of either policy. Langston J. held that the effect of subsections 650(2) and (3) of the Insurance Act, RSA 2000, C. I-3, which are identical to their Ontario counterparts, was to codify well recognized legal principles. He said:

They do not preclude the existence of two valid policies nor do they limit recovery to only one policy. ... While an insured is not entitled to be doubly indemnified for a loss, there is no suggestion that the applicant seeks such recourse. Damages in this case may well exceed $1,000,000. Neither insurer runs a risk greater than its limits nor is it facing the risk of either separately or jointly indemnifying the Applicant for a sum greater than his loss. The Applicant is entitled to rely on coverage from each insurer in the amount of $1,000,000 to a maximum of $2,000,000 with each insurer sharing equally in any liability, expense, loss or damage.

[44] I agree with Langston J. There is no intention in evidence in the policies to limit the insurer’s risk to half the policy limit when another valid policy exists. Nor is there anything in s.277 of the Insurance Act that would require the insurers to be given this windfall. The case law suggests that if the loss requires it, both insurers must assume the risk that they agreed to take on. Accordingly $2,000,000 is available to satisfy the loss.

[45] The plaintiffs’ motion for partial summary judgment is granted on all three questions put to me. Deanna Stafford’s motion is dismissed.

[46] The parties may make brief written submissions to costs, the plaintiffs and their insurers within 7 days of release of this endorsement, and the defendants and their insurers within 7 days thereafter. There will be no reply.

[47] Mr Patton asked for his costs thrown away as a result of the adjournment of the part of the motion that dealt with the retroactive cancellation of the Intact policy. Since he had to be here anyway, the amount would be minimal and I decline to make the order requested.

J.A. Ramsay J.

Date: 2015-11-02