COURT FILE NO.: 6495-12 DATE: 2016/10/17 ONTARIO SUPERIOR COURT OF JUSTICE

BETWEEN:

Mark Francis Mailloux, Fatima Mailloux, Janina Jeannette Mailloux, Kasin Nassem Mailloux and Ty Anna Jennelle Mailloux, by her litigation guardian, Fatima Mailloux, Plaintiffs – and – Deborah Mindorff, Defendant

COUNSEL: Vicky J. Edgar, for the Plaintiffs, Responding Parties W. Colin Osterberg, for the Defendant, Moving Party

HEARD: June 20, 2016

RADY J.

Introduction

[1] The defendant moves for summary judgment dismissing this personal injury claim arising from a March 3, 2011 accident. The case is scheduled for a three-week trial with a jury in November 2016.

Procedural History

[2] I questioned counsel about why the motion was scheduled at this stage in the proceedings and particularly so close to the trial date. I was advised that this motion was originally served on November 26, 2004. It was scheduled to be argued on March 11, 2015 at a special appointment. The motion was adjourned to June 2015 to permit cross-examinations.

[3] In the meantime, on May 25, 2015, the plaintiffs served a constitutional challenge. They asserted that one of the issues to be determined was whether the suspension of Mr. Mailloux’s licence was unconstitutional because of a division of powers argument, touching on the pertinent provincial legislation and the federal Bankruptcy and Insolvency Act. The motion for summary judgment was adjourned sine die pending the outcome of a case then pending before the Supreme Court of Canada. In the meantime, the Attorneys General of Ontario and Canada were served with notice as required. Ultimately, the challenge was not pursued and the Attorneys General did not appear on the return of this motion for argument.

The Issue

[4] In the circumstances of this case, are Mr. Mailloux and his derivative claimants entitled to bring this action? In particular, do s. 2(1) of the Compulsory Automobile Insurance Act (“CAIA”) and s. 267.6 of the Insurance Act bar this action? The defendant submits that Mr. Mailloux is disentitled. The plaintiffs submit that s. 2(1) of the CAIA does not apply to him or in the alternative, there is a genuine issue requiring a trial.

[5] It is helpful to reproduce those sections of the Acts here in order to provide context to what follows.

The Insurance Act

[6] The Act provides as follows:

No action by uninsured owner or lessee

267.6 (1) Despite any other Act, a person is not entitled in an action in Ontario to recover any loss or damage from bodily injury or death arising directly or indirectly from the use or operation of an automobile if, at the time of the incident, the person was contravening subsection 2 (1) of the Compulsory Automobile Insurance Act in respect of that automobile.

Prosecution not necessary

(2) Subsection (1) applies whether or not the person was prosecuted for or convicted of an offence under the Compulsory Automobile Insurance Act.

The Compulsory Automobile Insurance Act

[7] It provides:

Compulsory automobile insurance

2. (1) Subject to the regulations, no owner or lessee of a motor vehicle shall,

(a) operate the motor vehicle; or

(b) cause or permit the motor vehicle to be operated,

on a highway unless the motor vehicle is insured under a contract of automobile insurance.

The Evidence

[8] There is a large volume of material filed on the motion.

[9] Mr. and Mrs. Mailloux both swore affidavits dated March 3, 2015. Prior to that time, they were examined for discovery on January 22, 2013. Both were cross-examined on their affidavits on April 7, 2015. Transcripts of the discoveries and cross-examinations were filed on the motion. Also in the record are:

• Statements of Claim dated March 12, 2012 and Defence dated May 24, 2012;
• the Motor Vehicle Accident report dated March 3, 2011;
• London Police Service General Occurrence Report containing “Will Say Statements”;
• a copy of the investigating officer’s notes;
• an Extended Drivers’ Search from the Ministry of Transport;
• a Driver Record Profile; and
• correspondence from the Financial Services Commission of Ontario respecting a judgment against Mr. Mailloux by the Motor Vehicle Accident Claims Fund (“MVAC”);
• Mr. Mailloux’s income tax records from 2006 to 2011;
• various truck expense receipts; and
• NotePad Inquiry entries prepared by TD Insurance and a TD Automobile Insurance cancellation notice to Fatima Mailloux effective March 4, 2011.

The Facts

[10] The parties agree that the following four paragraphs accurately describe certain of the facts in this lawsuit.

[11] In the early 1970s, Mr. Mailloux caused an accident for which he was liable and uninsured. MVAC paid the injured person and obtained judgment against Mr. Mailloux. His licence was suspended over the years from time to time due to criminal convictions or a failure to comply with court orders to make payments on MVAC’s judgment or for the non-payment of other fines.

[12] Mr. Mailloux’s Extended Driver Record Search reveals that he was convicted of driving while disqualified seven times up to and including the March accident: for offences that occurred on March 25, 1974, March 26, 1974, September 1, 1974, January 19, 1977, August 3, 1979, June 27, 2002 and March 3, 2011 (the day of the accident). He was also convicted of dangerous driving on September 21, 1974; and impaired driving on January 5, 1988 and August 29, 2001. As noted, he was convicted of driving while suspended on September 26, 2011, an offence arising from the March 2011 accident and to which he pleaded guilty. On that date, a charge against Mrs. Mailloux for permitting an unlicensed driver to operate her motor vehicle was withdrawn (I surmise as a part of a plea agreement between the Crown and defence).

[13] On October 23, 2000, Mr. Mailloux’s driver’s licence, which had been reinstated in 1996, expired. It was not renewed until after the accident. Consequently, at the time of the accident, he was driving with a licence that had been expired for in excess of a decade.

[14] In March, 2012 (at about the time this claim was commenced), Mr. Mailloux’s application to repay the MVAC judgment was approved upon monthly payments of $200 beginning on March 30, 2012. His licence was reinstated as of that date.

[15] The plaintiffs, relying on the affidavit of Mr. Mailloux and the couple’s evidence on examination, suggest further relevant facts to be as follows:

• Mr. Mailloux was operating a 2004 Ford COE pickup truck bearing licence plate 4037ML. He did not own or lease it when the accident occurred;
• Mrs. Mailloux was the lessor of the truck that her husband was operating at the time;
• Mr. Mailloux used the truck primarily to travel to and from work. He was never the registered owner or lessor. Mr. Mailloux did not use the vehicle regularly;
• Mr. Mailloux’s licence was suspended due to an accident that occurred when he was 16 years old. His licence would be reinstated if he made payments on the outstanding judgment;
• when they married, Mrs. Mailloux assumed responsibility for the household finances and made payments on behalf of Mr. Mailloux toward the outstanding judgment. If the family was short of funds, “occasionally” payments would not be made;
• Mr. Mailloux was not aware that he did not have insurance coverage at the time of the accident or that when he was driving without a licence, he did not have insurance coverage;
• Mrs. Mailloux was “unsure” of the status of his licence at the time of the accident;
• Mrs. Mailloux was aware that for the ten years before the accident, her husband’s licence was suspended from time to time for falling behind on payments toward the judgment; and there were periods when his licence was reinstated;
• whether or not Mr. Mailloux had a licence was never consistent; and
• Mrs. Mailloux consented to her husband driving the pickup truck to and from work.

[16] The defendant disagrees with the contention that Mr. Mailloux was not an owner/lessee of the truck as the terms are properly understood. She also disagrees that he was not a regular driver. The defendant says that the evidence clearly demonstrates that Mr. Mailloux was a regular driver; he knew that he was unlicensed and uninsured at the time of the accident; and that the truck was taken in Mrs. Mailloux’s name because of it. She agrees that he was driving at the time of the accident with Mrs. Mailloux’s consent.

The Evidence

[17] At their examination for discovery, both Mr. and Mrs. Mailloux testified that they knew that he did not have a valid driver’s licence at the time of the accident. Mrs. Mailloux testified to the same thing on her cross-examination. At his, Mr. Mailloux was more equivocal, suggesting that he did not know but he also said cognitive issues have affected his memory.

[18] The following are excerpts from the transcripts on this issue:

Examination for Discovery – Mr. Mailloux

63. Q. Okay. And I understand you didn’t have a driver’s licence at the time of the accident? A. Right.

64. Q. What, what was the reason for that? A. I got in an accident when I was 16 and I lost my licence there from a dangerous driving incident.

65. Q. Yes? A. I had been drinking.

66. Q. Right? A. So I got sued from that.

67. Q. Right. So you mean from the time you were 16 you didn’t have a driver licence? A. No, I had a driver’s licence in between.

68. Q. Yes? A. But I had to pay for my licence, had to make payments…

69. Q. Yes? A. …on it like to receive my licence. MS. EDGAR: He was in a situation where there was a judgment against him… THE DEPONENT: Yes. MS. EDGAR: …that he couldn’t pay. THE DEPONENT: Right. MS. EDGAR: And so he made arrangements from time to time to make payments to, I guess it’s FISCO, I can’t remember what it is… THE DEPONENT: The Ministry of Transportation, yeah. MS. EDGAR: …the Ministry of Transportation. And while he was able to make the payments he would have a valid licence. THE DEPONENT: Yeah. MS. EDGAR: And when he wasn’t able to make the payments he wouldn’t have a valid licence.

70. MS. HANDLER: Okay. THE DEPONENT: They put me under suspension, right.

71. MS. HANDLER: Q. Okay. And so for how many years prior to the accident of March 3rd, 2011 were you unable to make the payments? A. I’m not a hundred percent. I have no idea.

72. Q. How long had you… A. My wife was making the payments for me and, you know, I just left it up to her to make them. I guess there was some time there we couldn’t afford it and the money went elsewhere.

73. Q. Okay. Do you know how long it had been that you had been unlicensed before the accident? A. No, I don’t know.

74. MS. HANDLER: Counsel, can we get the details from the MTO as to when the licence was suspended? MS. EDGAR: Well, it was suspended when he was… Oh, you mean the most recent suspension?

75. MS. HANDLER: Yes. MS. EDGAR: I’ll see if they have that information. THE DEPONENT: Prior… Yeah, I don’t know either.

76. MS. HANDLER: Q. And so you were, your wife leased a vehicle in her name? A. Yes.

77. Q. Was that because you weren’t able to lease one in your own name, not having a driver’s licence? A. Possibly. That’s probably what it was, yeah.

78. Q. And then you were driving then without a licence at the time of the accident, and you were aware of that, is that correct? A. I don’t remember what happened that day so…

79. Q. No, no, but you knew you didn’t have a driver’s licence? A. Yes, I know I, yeah, I knew it.

80. MS. HANDLER Q. You knew you weren’t supposed to drive? A. Yes, I knew I wasn’t supposed to drive.

Examination for Discovery – Mrs. Mailloux

22. Q. Okay. Now before the accident he didn’t have a driver’s licence? A. No.

23. Q. Okay. And that was because he had a judgment that he had to pay, and if he defaulted on his payments his licence was suspended? A. Correct.

24. Q. And so can you tell us when he fell behind in payments prior to the accident? A. From… Ten years.

25. Q. Ten years? A. Ten years.

26. Q. So for ten years he didn’t have a driver’s licence? A. On, it was on and off. It wasn’t consistent.

27. Q. Okay. Prior to 2010, before the… Sorry… A. 2011.

28. Q. …prior to March 3rd, 2011 for how long had he been without a driver’s licence? A. A couple of years.

29. Q. A couple of years? A. Mm-hmm.

30. Q. Okay. And you were both aware of this, obviously? A. Correct.

31. Q. And you leased a truck in your name? A. Correct.

32. Q. And you let him drive it? A. Correct.

Cross-examination of Mr. Mailloux

82. Q. All right, and I take it that you did not have a proper licence to drive at the time of that accident? A. I don’t even remember that if I had a licence or not because that’s quite a few years ago and the memory doesn’t actually put me there anymore.

83. Q. Specifically you asked her about that? A. Yes, I – yeah, I’m pretty sure that I did. I’m not 100 percent now because I’m thinking I did but I don’t know. Like, this accident really threw me back. Like, it just knocked my head so hard. Like, I just…

84. Q. That’s fair. A. …I’m not sure of anything.

85. Q. So you don’t really remember that… A. No.

86. Q. …but that’s what you assume you did? A. Yeah.

Cross-examination of Mrs. Mailloux

118. Q. And you knew on the date of the accident, you knew that Mr. Mailloux didn’t have a driver’s licence? A. Yeah, we had a large argument that morning because he was determined to take the truck out and go find work and I begged him not go, I begged him to stay home, I begged him not to go out, not to do anything. It’s because – he didn’t know why, but I knew why because I knew that he wasn’t driving with a valid licence at that time and I begged him and we argued and he left me at work to go try to find work to try to help pay the bills and then I find out at 11 o’clock that he was in an accident.

[19] At the time of the accident, the only driver’s licence in Mr. Mailloux’s possession had been issued in 1996 and had expired October 23, 2000. Copies of his licences were provided by plaintiffs’ counsel to the defence. One licence is noted as issued January 12, 1996 expiring October 23, 2000. Another was issued July 3, 1996 and also expired on October 23, 2000. The third was issued May 22, 2012 - after the date of the accident.

[20] After the expiry of the licence on October 23, 2000, Mr. Mailloux was convicted of impaired driving in 2001 and driving while disqualified in 2002.

[21] The pick-up truck was leased in 2007. At the time, Mrs. Mailloux told her husband that the truck lease would have to be taken in her name because Mr. Mailloux did not have a driver’s licence. As I understand it, the suspension that was in effect in 2007 was not lifted until 2012. Their evidence on the point is as follows:

Cross-examination of Mrs. Mailloux

66. Q. Okay. Okay, now I understand that when you were initially leasing the pick-up truck you and Mark went in together to lease the vehicle, is that right? A. He was at the dealership with me, yes.

67. Q. All right, and was it – it was at that time as I understand it that Mark found out that he didn’t have a license [sic]? A. He – yes, that was the time when he found out that his license was not active at that time.

68. Q. Right, and did he find that out because you initially tried to lease the vehicle in his name and was he then told he couldn’t lease it so therefore because he didn’t have a license and therefore we have to put it in your name? A. No, that was not the reason why. I discussed it with him because it was an expense that was going to need to be discussed if this was something that we could do but he needed to know at that time that for us to take this, I had to be honest with him and tell him that his license was not active at that time because when you sit down and fill out paperwork they want to see your license.

69. Q. Right, and he didn’t have a license at that point? A. No, at that time no, it was not active.

70. Q. Okay, and he did – his license was not active or not valid – is that another way you could say that? A. You could use that term, yes.

Cross-examination of Mr. Mailloux

61. Q. All right, now I want to refer you to – as I understand the arrangement and looking at the income tax returns and what the truck was used for and that sort of thing it’s my understanding that the truck was leased in your wife’s name because you didn’t have a license, right? And you weren’t able to lease a vehicle. A. That was – yes, yeah. MS. EDGAR: And to be fair you’ll learn that he only learned about that the day they bought the vehicle.

62. MS. OSTERBERG: Q. Okay, so when you – you mean back before the accident when the vehicle was leased? MS. EDGAR: Yes.

63. MR. OSTERBERG: Q. All right, so when the vehicle was leased you found out that you were not able to lease a vehicle? A. Yes, and there was arrangements to be made, you know like, to get my licence.

64. MR. OSTERBERG: Q. So when you were trying to purchase or lease this? A. Yes, exactly. Yeah, I think that’s how it went.

65. Q. …you found out that you didn’t have a license, right? A. Right.

66. Q. And you found out that you weren’t able to lease the vehicle because you didn’t have a license? A. Yes, exactly. Yeah, I think that’s how it went.

[22] Mr. Mailloux was self-employed in the construction business for more than 30 years prior to the accident. At the time of the accident and for many years prior, he operated an eavestrough and siding business called Mailloux Home Renovations (a successor to Affordable Home Renovations). The business involved visiting potential client worksites, quoting on jobs, the purchase and installation of materials, often using ladders and other equipment. See Mr. Mailloux’s Examination for Discovery, questions 37-49.

[23] Mrs. Mailloux worked full-time as a licensed securities broker at TD Ameritrade Bank. She had her own vehicle, which she drove regularly. See Mrs. Mailloux’s Examination for Discovery, questions 47, 54-58.

[24] In her statement to police taken by Officer Koekebakker on March 4, 2011, she is noted to have said:

She did advise that Mark is the only driver of the truck, that it is used daily for his personal and primarily work transportation, that she has her own vehicle that she drives regular and that she is the registered owner of the truck. Fatima also signed a medical release form for Mark’s Medical records. PC Koekebakker and I also attended the residence of the other involved party where he retrieved the keys to her car so that he could return and complete the balance of the exam, mainly electrical related.

[25] The financial records produced by the plaintiffs show that in the year it was purchased, the cost of the pickup truck, $23,068, was recorded against Mr. Mailloux’ business for income tax purposes. The income tax returns show that vehicle expenses associated with the truck were written off against his business income.

[26] In 2007, Mrs. Mailloux was advised that TD Insurance did not insure commercial vehicles but private passenger vehicles only. (See the NotePad Inquiry of January 15, 2007).

[27] On the day of the accident, Mr. Mailloux was driving the pickup from a worksite and pulling a trailer of tools, ladders and equipment. As already noted, Mrs. Mailloux is recorded as having told Officer Koekebakker that her husband was the only driver of the truck and that he used it for work. In response to this motion however, Mr. Mailloux deposes in his affidavit that he used the truck for work and emergencies and that he was not a regular driver of it.

[28] Mrs. Mailloux did not disclose to TD Insurance that Mr. Mailloux drove the vehicle even on occasion. Mrs. Mailloux admitted that she never advised TD that Mr. Mailloux would drive the vehicle. She was asked by TD who was in the household. She said the company never said Mr. Mailloux was not to drive the vehicle. Her evidence is as follows:

Cross-Examination - Mrs. Mailloux

107. Q. Okay, and did you tell your insurance company that – when you initially leased the vehicle did you tell the insurance company that Mr. Mailloux was going to be driving it? A. No, I did not. They did not ask.

108. Q. They didn’t ask who in the household would be driving the vehicle? A. No, they did not ask if he was driving the vehicle.

109. Q. Did they ask who in the household was driving the vehicle? A. They would say – it’s a long time ago. I remember saying me, I remember me but I don’t remember saying anybody else.

110. Q. All right, and did they ask who in the household – who else was in the household? A. They asked who else was in the household, yes.

111. Q. All right, and you gave them their names? A. Mm-hmm. I did, sorry.

112. Q. All right, and did you ever tell the insurance company that Mark’s license was suspended or had been suspended in the past? A. No, I did not.

113. Q. And did the insurance company ever find out that Mr. Mailloux’s license had been suspended in the past? A. From what I can recollect, no.

114. Q. Did the insurance company ever ask or tell you that Mr. Mailloux was not to drive the vehicle? A. No, the insurance company never said no.

115. Q. And did the insurance company ever ask you to sign a form listing Mr. Mailloux as an excluded driver in the insurance policy? A. They never did, no.

116. Q. Okay, and I’m submitting to you that you knew that if Mr. Mailloux was driving the vehicle with no license that he wouldn’t have any insurance, right? A. No, I didn’t – I didn’t think that. I’m sorry, rephrase the question again?

117. Q. Did you know that if Mr. Mailloux was driving the vehicle without a valid driver’s license that he wasn’t insured? A. Yes, I did know that.

[29] It is noteworthy that one of the TD NotePad Inquiries discloses that on March 16, 2010, Mrs. Mailloux contacted TD Insurance to have her son added to the insurance policy as a driver of the vehicle. I reproduce the text of the inquiry:

FATIMA CALLED TO QUOTE 3ND VEHICLE: SHE IS P/OP ON 2 VEHICLES BUT 3 LIC OPS LISTED ? SON/DAUGHTER SHOULD HAVE BEEN RATED AS PRINCIPLE

ALSO SPOUSE MARK NOT LISTED; WE SHOULD HAVE DR LIC# ON FILE TO SEE IF END28A? NOTEPAD INDICATES 2001 AF COLLISION WITH IMPAIRED CHARGE

NEW PREM WILL BE $2642, WITH SON KASIN AS PO…

FUP WITH CLT RE: CHANGE IN SON TO PO OF A VEHLE & RE MR. (MARK) STATUS FOR INSURANCE AS NOT LISTED HERE AS DRIVER.

NOTEPAD FROM 2001 INDICATES THAT ‘MARK’ DOES NOT LIVE IN HH.. SO WILL RECONFIRM SITUATION.

[30] Another NotePad Inquiry from March 7, 2011 contains this information:

*** DENIAL FOR PD CLAIM UNDER SECTION 7.2.2 ***

**** DRIVING WITH SUSPENSION ON LICENSE, UNLISTED DRIVER ***

AFTER REVIEWING FILE, MARK TH EHUSBAND HAS NEVER BEEN LISTED ON THE POLICY, HE WAS INVOLVED IN ANOTHER ACCIDENT IN JUNE 2011, ANOTHER DENIAL, IMPARIED DRIVING, NEVER ABEYANCED FROM CLAIMS. WE HAVE TRIED TO OBTAIN INFO ON HIM AND INSD NEVER PROVIDED.

REC: RECOMMEND WE CANCEL FOR NON DISCLOSURE, FOR ALL POLICIES.

[31] On examination for discovery and cross-examination, Mrs. Mailloux admitted that she knew that Mr. Mailloux would not be insured if he drive the truck without a driver’s licence and so did he:

Examination for Discovery - Mrs. Mailloux

39. Q. And you were aware that if he drove the truck without a driver’s licence he wouldn’t be insured. A. Correct.

40. Q. And he knew that too? A. Correct.

41. Q. And you told him that? A. Correct.

Cross-Examinations - Mrs. Mailloux

117. Q. Did you know that if Mr. Mailloux was driving the vehicle without a valid driver’s license he wasn’t insured? A. Yes, I did know that.

118. Q. And you knew on the date of the accident, you knew that Mr. Mailloux didn’t have a driver’s license? A. Yeah, we had a large argument that morning because he was determined to take the truck out and go find work and I begged him not to go out, not to do anything. It’s because - he didn’t know why, but I knew why because I knew that he wasn’t driving with a valid license at that time and I begged him and we argued and he left me at work to go try to find work to try to help pay the bills and then I find out at 11 o’clock that he was in an accident.

[32] Finally, the London Police Service General Occurrence Hardcopy includes Mr. Mailloux’s “Will Say” Statement recorded by Officer Hammond. In response to questions posed by the officer, he said:

Q. Do you know that you are a suspended driver? A. No.

Q. Do you have a driver’s licence? A. No. It’s expired.

Summary Judgment

[33] Rules 20.04(2)(2.1) and (2.2) provide as follows:

(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.

(2.1) In determining under clause (2)(a) whether there is a genuine issue requiring a trial, the court shall consider the evidence submitted by the parties and, if the determination is being made by a judge, the judge may exercise any of the following powers for the purpose, unless it is in the interest of justice for such powers to be exercised only at a trial:

1. Weighing the evidence.
2. Evaluating the credibility of a deponent.
3. Drawing any reasonable inference from the evidence.

(2.2) A judge may, for the purposes of exercising any of the powers set out in subrule (2.1), order that oral evidence be presented by one or more parties, with or without time limits on its presentation.

[34] The evidence to be used on the motion is governed by Rule 20.02:

(1) An affidavit for use on a motion for summary judgment may be made on information and belief as provided in subrule 39.01(4), but, on the hearing of the motion, the court may, if appropriate, draw an adverse inference from the failure of a party to provide the evidence of any person having personal knowledge of contested facts.

(2) In response to affidavit material or other evidence supporting a motion for summary judgment, a responding party may not rest solely on the allegations or denials in the party’s pleadings, but must set out, in affidavit material or other evidence, specific facts showing that there is a genuine issue requiring a trial.

[35] The Rule was amended in 2010 to expand a motions judge’s power to weigh the evidence, assess credibility and draw inferences of fact. Jurisprudence prior to that time reserved those powers to the trial judge. The amendment overrules Court of Appeal decisions that prevented judges from making evidentiary determinations. See, for example, Aguonie v. Galion Solid Waste Material Inc. (1998), 156 D.L.R. (4th) 222 (Ont. C.A.).

[36] The leading authority considering the amended Rule is Hryniak v. Mauldin, 2014 SCC 7.

[37] The court suggested at para. 66 the following process to guide the motion judge’s approach:

1. The judge should first determine if there is a genuine issue requiring trial based only on the evidence before her, without using the new fact-finding powers.
2. There will be no genuine issue requiring trial if the summary judgment process provides her with the evidence required to fairly and justly adjudicate the dispute and is a timely, affordable and proportionate procedure.
3. If there appears to be a genuine issue requiring a trial, the judge should then determine if the need for a trial can be avoided by using the new powers under Rules 20.04(2.1) and (2.2).
4. She may, at her discretion, use those powers unless it is against the interest of justice to do so. It will not be against the interest of justice if use of the powers will lead to a fair and just result and will serve the goals of timeliness, affordability and proportionality in light of the litigation as a whole.

[38] The full appreciation test requires a motion judge to determine whether the mechanics of a trial are necessary to enable her to properly adjudicate a case or whether summary judgment provides the means to a fair and just adjudication.

[39] However, the admonition remains that the responding party must “lead trump or risk losing”. In other words, it cannot rest on allegations but must set out the specific facts on which it relies to say that there is a genuine issue for trial, which is the thrust of Rule 20.02(2). It is entitled to rely on the moving parties’ evidence, however: Pereira v. Contardo (2014), 2014 ONSC 6894, 123 O.R. (3d) 271 (Div. Ct.).

[40] The parties cannot rely on the possibility that more favourable facts may develop at trial. The court is entitled to consider that the evidentiary record before it on the motion is what will be available at trial.

Guilty Pleas

[41] A plea of guilty is a formal admission in criminal proceedings. It has been said that formal admissions dispense with the need to prove a fact in issue and are binding on the party who makes them. See Watt’s Manual of Criminal Evidence, (Toronto: Carswell, 2013).

[42] The Supreme Court of Canada held in R. v. Wilson, [1983] 2 S.C.R. 594 c. p. 599 that collateral attacks are impermissible:

It has long been a fundamental rule that a court order, made by a court having jurisdiction to make it, stands and is binding and conclusive unless it is set aside on appeal or lawfully quashed. It is also well settled in the authorities that such an order may not be attacked collaterally – and a collateral attack may be described as an attack made in proceedings other than those whose specific object is the reversal, variation, or nullification of the order or judgment.

[43] The rule is a judicial creation (which must therefore yield to a contrary legislative enactment) based on general considerations related to the administration of justice, as explained in Garland v. Consumers’ Gas Co., 2004 SCC 25, [2004] 1 S.C.R. 629 at para. 72:

The fundamental policy behind the rule against collateral attack is to “maintain the rule of law and to preserve the repute of the administration of justice” (R. v. Litchfield, [1993] 4 S.C.R. 333, at p. 349). The idea is that if a party could avoid the consequences of an order issued against it by going to another forum, this would undermine the integrity of the justice system. Consequently, the doctrine is intended to prevent a party from circumventing the effect of a decision rendered against it.

The Law

[44] The term owner is not defined in the legislation. Notably, however, it is not defined as the registered owner. There are a number of authorities that stand for the proposition that the term includes the registered owner and the common law or actual owner. See, for example, Honan v. Doman Estate, [1975] 2 S.C.R. 866.

[45] In R. v. Zwicker, [1994] O.J. No. 197 (C.A.), the court was called upon to determine whether the word “owner” used in the CAIA applied only to the registered owner. The court held that the term could not be so limited. It reasoned that to conclude otherwise would confer on individuals all the rights of common law ownership but would permit them to avoid the accompanying responsibilities.

[46] Section 233 of the Insurance Act states:

(1) Where,

(a) an applicant for a contract,

(i) gives false particulars of the described automobile to be insured to the prejudice of the insurer, or

(ii) knowingly misrepresents or fails to disclose in the application any fact required to be stated therein;

(b) the insured contravenes a term of the contract or commits a fraud; or

(c) the insured wilfully makes a false statement in respect of a claim under the contract,

a claim by the insured is invalid and the right of the insured to recover indemnity is forfeited.

Statutory accident benefits protected

(2) Subsection (1) does not invalidate such statutory accident benefits as are set out in the Statutory Accident Benefits Schedule.

[47] Section 234(1) of the Act provides:

The conditions prescribed by the regulations made under paragraph 15.1 of subsection 121 (1) are statutory conditions and shall be deemed to be part of every contract to which they apply and shall be printed in English or French in every policy to which they apply with the heading “Statutory Conditions” or “Conditions légales”, as may be appropriate.

[48] The statutory conditions are found in Ontario Regulation 773/93 and includes:

4.(1) Authority to Drive – The insured shall not drive or operate or permit any other person to drive or operate the automobile unless the insured or other person is authorized by law to drive or operate it.

[49] The term authorized to drive requires a driver to have a valid driver’s licence – one that is not expired, suspended or cancelled: Kereluik v. Jevco Insurance Co., 2012 ONCA 338, [2012] O.J. No. 2226 (C.A.).

[50] It is axiomatic that a contract of insurance is uberrima fides. An insured is obliged to disclose all material facts so that the insurer can assess whether it is the risk it is prepared to undertake and at what cost. It has been said that “[t]his fundamental principle of insurance law has been applied by the courts for over 200 years” with reference to the classic Ivamy text, General Principles of Insurance Law (4th ed.) in the decision Ford v. Dominion of Canada General Insurance Co., [1989] M.J. No. 674 (C.A.).

[51] A helpful discussion of this obligation is found at paras. 51 and 52 of Sagl v. Chubb Insurance Company, 2009 ONCA 388. The court wrote:

[52] The starting point in the analysis of this ground of appeal attracts no debate. The relationship between an insurer and an insured is contractual in nature. But contracts of insurance are no ordinary contracts; special rules apply. Chief among these is the doctrine of uberrima fides that holds the parties to a standard of utmost good faith in their dealings with each other. It places a heavy burden on applicants for insurance coverage to provide full disclosure to the insurance company of all information relevant to the nature and extent of the risk that the insurer is being asked to assume: Coronation Insurance Co. v. Taku Air Transport Ltd., [1991] 3 S.C.R. 622, at p. 636. A fact is relevant or material if it would influence a prudent insurer in deciding whether to issue the policy or in determining the amount of the premium: Mutual Life Insurance Co. v. Ontario Metal Products Co. Ltd., [1925] 1 D.L.R. 583 (P.C.), at p. 588; Gauvremont v. Prudential Insurance Co. of America, [1941] S.C.R. 139, at p. 160; Fidelity & Casualty Co. of New York v. General Structures Inc., [1977] 2 S.C.R. 1098, at p. 1110. Whether a misrepresentation or non-disclosure is material is a matter of fact to be determined by the trier of fact: see s. 124(6) of the Insurance Act, and Mutual Life at p. 588. However, there is a subjective element to the test as well. The non-disclosure or misrepresentation must have induced the insurer to enter into the contract: see s. 124(4) of the Insurance Act; see also Taylor v. London Assurance Corp., [1935] S.C.R. 422, at p. 429.

[52] The duty to disclose all material facts applies even in the absence of questions from the insurer, although the absence of questions may be evidence that the insurer does not consider a fact to be material: Gregory v. Jolley (2001), 54 O.R. (3d) 481 (C.A.), at paras. 31-32 and 37, and W.H. Stuart Mutuals Ltd. v. London Guarantee Insurance Co. (2004), 16 C.C.L.I. (4th) 192 (Ont. C.A.), at para. 11, leave to appeal refused, [2005] 1 S.C.R. xvii. The consequence of non-disclosure or misrepresentation of a material fact by the insured is that the insurer is entitled to void the insurance contract ab initio: see Lloyd’s London, Non-Marine Underwriters v. National Armoured Ltd., (1996), 142 D.L.R. (4th) 506 (Ont. Gen. Div.), affirmed by [2000] I.L.R. I-3751 (Ont. C.A.).

[53] If an applicant gives false particulars of the described vehicle, fails to disclose material information, contravenes a term of the contract or commits a fraud, any claim under the policy for indemnity is forfeited. See s. 233 of the Insurance Act, reproduced above.

[54] Examples of material misrepresentation include the number of vehicles owned, the number of licensed drivers in a household and the number of drivers using a vehicle for which insurance is sought: Schoff v. Royal Insurance Co. of Canada, [2004] A.J. No. 592 (C.A.).

[55] In Comer v. Bussell, [1939] O.J. No. 355 (C.A.) the court noted:

11 It is not necessary, however, to go through the whole insurance contract to see that the basis of it was Seaman’s alleged ownership and control of the motor car, and the risks to which he was exposed as such owner. The learned trial Judge was of the opinion that there were no misrepresentations that were material, it surely is material to an insurer whether the person who desires to be insured against risks incurred in the use of the motor car is a person who has the control of it and the right to say when and how and by whom it will be used. It would seem to be further important whether the person insured had such proprietary interest in the motor car that he would be reasonably careful to protect it from accident by careless driving or otherwise. The agent through whom the policy was obtained says that if she had known that there was not a real transfer of ownership to Seaman, she would not have issued the policy. Without any evidence I think the Court would be warranted in assuming, as a matter of every day business, that no responsible insurer would issue a policy of this character to one whom he knew was in fact not the owner of the motor car, nor in any way in control of it (emphasis mine).

[56] And finally, to the extent that authority is required, as Murphy v. Welsh (1993), 106 D.L.R. (4th) 404 (S.C.C.) makes clear, derivative claims made pursuant to s. 61(1) of the Family Law Act cannot stand independently. They depend on the right to sue the person from whom they derive their claim. See also Wright v. Bradley Air Services Ltd. (2000), 47 O.R. (3d) 524 (S.C.J.).

Analysis

[57] I have concluded that there is no genuine issue requiring a trial in this case for the following reasons.

[58] The evidence on this motion establishes:

• Mr. and Mrs. Mailloux are husband and wife;
• Mr. and Mrs. Mailloux knew that Mr. Mailloux did not have a valid driver’s licence;
• Mr. Mailloux pleaded guilty to driving at the time of the accident, while suspended (establishing that fact beyond a reasonable doubt);
• Mr. Mailloux operated a home renovation business - a commercial enterprise - for which he required transportation;
• the truck lease could not be taken in Mr. Mailloux’s name because he had no licence. Therefore it was taken in Mrs. Mailloux’s name;
• the truck was used for commercial purposes and in reality was driven by Mr. Mailloux as his own;
• Mr. and Mrs. Mailloux knew that he could not obtain automobile insurance;
• Mrs. Mailloux knew TD did not insure commercial vehicles;
• Mrs. Mailloux knew she was obliged to disclose who in the household drove the vehicle;
• Mrs. Mailloux obtained insurance without disclosing to the insurer that Mr. Mailloux was a driver, that he was unlicensed or that the truck was used for commercial purposes.

Conclusions from the Facts as Established

[59] It cannot be seriously argued that Mr. Mailloux did not know that he did not have a licence. The overwhelming evidence is that both Mr. and Mrs. Maillloux knew this to be so. The only licences in Mr. Mailloux’s possession had been expired for more than a decade.

[60] It is plain and obvious and good common sense that without a driver’s licence, Mr. Mailloux was simply ineligible to be insured as a driver in Ontario. It is difficult to quarrel with the defendant’s assertion that this is not abstract legal or specialized knowledge.

[61] Given his long and unenviable history of licence suspensions, convictions, and dealings with the MVAC due to his lack of insurance in the past, Mr. Mailloux knew or at minimum should have known that he could not obtain insurance to drive without a valid driver’s licence. In fact, one of the TD NotePad Inquiries referenced above suggests to me that Mr. Mailloux was in fact an excluded driver in the past. Any suggestion that a person with Mr. Mailloux’s history did not know that he was uninsured is bluntly put, unworthy of belief. It falls far short of raising a genuine issue requiring a trial. In my view, no issue of credibility is involved that would even require the use of the expanded powers conferred by Rule 20.

[62] Furthermore, there can be no doubt that the real lessee of the vehicle was Mr. Mailloux. Title was only taken in Mrs. Mailloux’s name because the couple knew that Mr. Mailloux had no licence and no insurance. The only reasonable conclusion is that the lease arrangement was a sham designed to circumvent Mr. Mailloux’s ineligibility to be a lessee.

[63] Support for this conclusion is found in their own evidence and the fact that business expenses were claimed by Mr. Mailloux, including those related to the truck.

[64] It follows that Mr. Mailloux was in breach of the CAIA. He cannot recover damages by operation of s. 267.6 of the Highway Traffic Act. The derivative claims necessarily fail as a result.

[65] Moreover, Mrs. Mailloux also knew that TD Insurance did not insure commercial vehicles. She was given this information by TD in response to one of her inquiries. Nevertheless, the truck was clearly used for commercial purposes. This was a material misrepresentation or a failure to disclose, therefore rendering the contract of insurance void ab initio.

[66] Finally, Mrs. Mailloux knew she was obliged to disclose who was driving the vehicle in order to have appropriate coverage, as evidenced by her call to TD when her son began to drive to have him added to the policy as a driver. Mrs. Mailloux did not make the same disclosure in respect of her husband at any time. She knew that he would not qualify for insurance because he was not licensed. This too was a material non-disclosure rendering the policy void at the outset. There can be no doubt this information was material given that the insurer cancelled the policy the day after the accident. Indeed, on the authority of Comer, this is an assumption that is warranted even in the absence of direct evidence as a matter of sound business judgment.

[67] For all of these reasons, the motion for summary judgment is granted. If the parties cannot agree, I will receive brief submissions on costs, first from the defendants by October 31, 2016; and from the plaintiff by November 14, 2016.

“Justice H. A. Rady”

Justice H. A. Rady

Released: October 17, 2016