Horsefield v. Economical Mutual Insurance Company, 2017 ONSC 4868

CITATION: Horsefield v. Economical Mutual Insurance Company, 2017 ONSC 4868

COURT FILE NO.: CV-14-498099

DATE: 20170814

ONTARIO

SUPERIOR COURT OF JUSTICE

BETWEEN:

EDWARD HORSEFIELD, and EDWARD HORSEFIELD, ESTATE TRUSTEE OF THE ESTATE OF THE LATE CYNTHIA HORSEFIELD, DECEASED

Plaintiffs

– and –

ECONOMICAL MUTUAL INSURANCE COMPANY

Defendant

COUNSEL:

John L. Davis and Andrew Ottaway, for the Plaintiffs

Pat C. Peloso and Tessa Warmelink, for the Defendant

HEARD: July 19, 2017

M. D. FAIETA, J.

REASONS FOR DECISION

INTRODUCTION

[1] The plaintiffs bring this motion for summary judgment in respect of an action that it has commenced, pursuant to subsection 132(1) of the Insurance Act, R.S.O. 1990, chap. I.8, as amended (the “Act”) against the defendant, Economical Mutual Insurance Company (“Economical”).

[2] For the reasons given below, I dismiss this action.

BACKGROUND

[3] The plaintiffs, Edward Horsefield and the late Cynthia Horsefield, rented their house to their adult son, Ian Horsefield (the “Tenant”), effective June 1, 2017. On June 10, 2007, the Tenant was repairing the brake line on his automobile stored in the attached garage, when the gas tank under the automobile fell to the floor spilling gasoline which quickly led to a fire that destroyed the house.

[4] On June 14,2007 the Tenant was interviewed by Economical. He explained that his automobile, a 1994 Mazda, was his “everyday car”. The Tenant parked the automobile in the garage after its brakes “went”. He explained that he had replaced a leaking gas tank on his automobile, without incident, one week prior to the fire. On the date of loss, he placed his automobile on a ramp in the garage for the purpose of repairing a crack in the brake line. To make this repair, the Tenant moved the gas tank. The tank fell on to the garage’s concrete floor and cracked while he was on his back under the automobile. In a matter of seconds there was gas “everywhere” and a fire ensued. He speculates that the tank may have sparked when it fell onto the concrete floor or that he may have “freaked” while lying under the car and pushed the gas tank away from him leading the tank to spark on the floor. Once the Tenant doused the flames that had engulfed him, he tried unsuccessfully to put out the fire in the garage.

[5] The plaintiffs’ property insurer, North Waterloo Mutual Farmers Insurance Company (“North Waterloo”), paid for the cost of repairing the damage caused by the fire.

[6] On June 25, 2007, North Waterloo’s insurance adjuster advised the Tenant that they would be seeking to recover their costs from him and asked him to notify his insurer.

[7] The Tenant was insured by the defendant Economical pursuant to a “Personal Insurance Policy”, “Tenants Bronze Package Form” (hereafter “Tenant’s Policy”). By letter dated July 23, 2007, Economical advised the Tenant that:

Under the Liability coverage of your policy (section II), it is stated that:

You are insured for claims made against you arising from:

1. Personal Liability – legal liability arising out of your personal actions anywhere in the world.

You are not insured for claims made against you arising from:

(a) The ownership, use or operation of any motorized vehicle, trailer or watercraft, except those for which coverage is shown in this form; …

Since the fire started while you were working on your personal vehicle in the garage (the gas tank), this policy would not respond to the claims made against you. [Emphasis in original]

[8] Economical confirmed its denial of this claim by letter dated August 15, 2007 sent directly to North Waterloo’s insurance adjuster:

We have now completed our investigation in the above noted loss, and must inform you that we will not be in a position to honour your request for reimbursement.

Mr. Horsefield, at the time of the fire, was working on his own vehicle, which started the fire, confirmed by the Ontario Provincial Police, Constable Onstein, as well as the Fire Chief for Prescott, Bill Lawrence.

As you know, this is an exclusion on the tenant policy, and therefore this Policy will not respond to this claim.

[9] Economical sent a further letter dated August 20, 2007 directly to North Waterloo’s insurance adjuster:

… I am only prepared to disclose that the within claim was rejected on the basis of an exclusion related to loss or damage arising out of “ownership, use or operation” of an automobile.

[10] On June 4, 2009, North Waterloo commenced a subrogated action (Court File No. CV-09-380382) against the Tenant to recover its costs of repairing the house in the amount of $167,293.67 plus interest and costs.

[11] On March 2, 2012, an Amended Statement of Claim was filed. Amongst other things, it deleted the allegations that “[t]he defendant was using his welding torch when the fire began” and added the allegation that the defendant was “performing maintenance and mechanical work on his automobile, including the brake lines …” prior to the fire.

[12] North Waterloo and the Tenant entered Minutes of Settlement whereby they agreed, amongst other things, that:

(1) The Tenant would: (a) admit all of the allegations in the Amended Statement of Claim; (b) consent to Judgment in the amount of $167,293.67 plus pre-judgment interest of $11,738.05, costs of $59,239.52 and post-judgment interest; and (c) assign his rights against Economical to North Waterloo;

(2) North Waterloo would not take any further steps to execute the Judgment against the Tenant personally provided that the Tenant had truthfully represented that he is without the financial means to satisfy the Judgment.

[13] On February 8, 2013, with the consent of the parties, the following Judgment was granted by Master Dash:

THIS MOTION, made by the Plaintiffs, on consent of the Defendant for property damages, rental income loss, prejudgment and postjudgment interest, and the costs of the Action and such other relief this Honourable Court deems just, was heard this day at Toronto.

ON READING the pleadings, the Consent of the Plaintiffs and Defendant, filed, and the Affidavit of Andrew Ottaway, filed:

THIS COURT ORDERS AND ADJUDGES that the Defendant pay to the Plaintiffs their damages in this Action in the total amount of $167,293.67;

THIS COURT ORDERS AND ADJUDGES that the Defendant pay pre-judgment interest at the rate of 1.3% from the date of loss to October 31, 2012, being the amount of $11,738.05;

THIS COURT ORDERS AND ADJUDGES that the Defendant pay costs in the amount of $50,000.00 plus disbursements in the sum of $2,577.05, and HST in the sum of $6,662.47, being the total amount of $59,239.52.

[14] This action was commenced on February 7, 2014. The Statement of Claim, alleges that as a result of the fire the plaintiffs sustained damages of $165,293.67 (for the building) and $2,000 (for loss of rental income) as a result of the fire.

[15] The plaintiffs allege that this claim against the Tenant is covered by the Tenant’s Policy and bring this motion for summary judgment.

The Tenant’s Policy

[16] The Tenant’s Policy consists of two sections. Section I – Property Coverages and Section II - Liability Coverage.

[17] Section II – Liability Coverage provides the following parts:

• Coverage E – Legal Liability

• Coverage F – Voluntary Medical Payments

• Coverage G – Voluntary Payment for Damage to Property

• Special Limitations

• Loss or Damage Not Insured

• Definitions

• Conditions

[18] The terms of SECTION II- LIABILITY COVERAGE are as follows:

COVERAGE E – Legal Liability

We will pay all sums which you become legally liable to pay as compensatory damages because of bodily injury or property damage. …

You are insured for claims made against you arising from:

1. Personal Liability – legal liability arising out of your personal actions anywhere in the world.

You are not insured for claims made against you arising from:

(a) The ownership, use or operation of any motorized vehicle, trailer or watercraft, except those for which coverage is shown in this form;

(b) Damage to property you own, use, occupy or lease;

(c) Damage to property in your care, custody or control; … [Emphasis added]

2. Premises Liability

Legal liability arising out of your ownership, use or occupancy of the premises defined in Section II. This insurance also applies if you assume, by a written contract, the legal liability of other persons in relation to your premises.

You are not insured for claims made against you arising from:

(a) Damage to property you own, use, occupy or lease;

(b) Damage to property in your care, custody or control; …

3. Tenants Legal Liability

Legal liability for property damage to premises, or their contents, which you are using, renting or have in your custody or control caused by fire, explosion, smoke or water escape, rupture, freezing, as provided in Section I.

You are not insured for liability you have assumed by contract unless your legal liability would have applied been if no contract had been in force. … [Emphasis added]

4. Employer’s Liability

Legal liability for bodily injury to residence employees arising out of and in the course of their employment by you. …

5. Defense, Settlement, Supplementary Payments

Under Coverage E, we will defend any suit against you alleging bodily injury or property damages and seeking compensatory damages, even if it is groundless, false or fraudulent. …

COVERAGE F – Voluntary Medical Payments

We will pay reasonable medical expenses, incurred within one year of the date of the accident, if you unintentionally injure another person or if they are injured on your premises. This coverage is available even though you are not legally liable. …

You are not insured for claims arising out of the ownership, use or operation of any motorized vehicle, trailer or watercraft, except those for which coverage is shown in this policy. … [Emphasis added]

COVERAGE G – Voluntary Payment for Damage to Property

We will pay for unintentional direct damage you cause to property even though you are not legally liable. You may also use this coverage to reimburse others for direct property damage caused intentionally by anyone included in the definition of “you” or “your” in Section II of this form, 12 years of age or under. You are not insured for claims:

1. Resulting from the ownership, use or operation of any motorized vehicle, trailer or watercraft, except those for which coverage is provided by this form;

2. For property you or your tenants own or rent;

3. Which are insured under Section I;

4. Caused by the loss of use, disappearance or theft of property. [Emphasis added]

SPECIAL LIMITATIONS

1. Watercraft – Watercraft You Own

You are insured against claims arising out of your ownership, use or operation of watercraft equipped with an outboard motor …

2. Watercraft You Do Not Own

You are insured against claims arising out of your use operation of watercraft which you do not own, provided …

3. Vehicles You Own

You are insured against claims arising out of your ownership, use or operation of the following including their trailers or attachments:

(a) Self-propelled lawn mowers, snow blowers, garden type tractors …;

(b) Motorized golf carts while in use on a golf course;

(c) Motorized wheelchairs …

(d) Electric powered vehicles as defined in Section I including bicycles, children’s toys, personal transporters and scooters;

4. Vehicles You Do Not Own

You are insured against claims arising out of your use or operation of any self-propelled land vehicle, amphibious vehicle or air cushion vehicle …

5. Trailers

You are insured against claims arising out of your ownership, use or operation of any trailer or its equipment used for private pleasure purposes …

6. Business and Business Property

You are insured against claims arising out of:

(a) Your work for someone else as sales representative …

(b) Your work as a teacher …

(c) The occasional rental of your residence to others …

LOSS OR DAMAGE NOT INSURED

You are not insured for claims arising from:

1. War, invasion, act of foreign enemy …

2. (a) loss or damage caused directly or indirectly by any nuclear incident …

(b) Loss or damage caused directly or indirectly by contamination by radioactive material

3. Your business or any business use of your premises except as specified in this policy

4. The rendering or failure to render any professional service

5. Bodily injury or property damage caued by any intentional or criminal act …

6. The ownership, use or operation of any aircraft …

7. The ownership, use or operation of any motorized vehicle, trailer or watercraft except those for which coverage is provided in this form. [Emphasis added]

8. The transmission of communicable disease …

9. (a) Sexual, physical, psychological or emotional abuse …

(b) Failure of any person insured by this policy to take steps to prevent sexual …abuse …

10. Punitive or exemplary damages …

DEFINITIONS (Applicable to Section II)

1. “BODILY INJURY” means …

2. “PREMISES” means all premises where the person(s) named as Insured on the Coverage Summary page, or their spouse, maintains a residence, … provided such premises are specifically described on the Coverage Summary page. It also includes:

(a) Premises where you are residing temporarily … as long as you are not … the lessee or tenant of the premises which is longer than 90 consecutive days …;

(b) Premises in Canada to be occupied by you as your principal residence from the date you acquire ownership or take possession but not beyond the earliest of: (i) 30 consecutive days; (ii) the date the policy expires or is terminated; (iii) the date upon which specific liability insurance is arranged for such premises; …

[19] Economical does not dispute that the plaintiffs’ claim is covered under the “Tenants Legal Liability” provisions of the Tenants’ Policy. However, Economical denies coverage for this claim on the basis of the exclusion found in paragraph 7 above (“motorized vehicle exclusion”) which states:

You are not insured for claims arising from …

The ownership, use or operation of any motorized vehicle, trailer or watercraft except those for which coverage is provided in this form.

[20] In response, the plaintiffs submit that: (1) the motorized vehicle exclusion does not apply to the Tenants Legal Liability coverage; (2) in alternative, if the motorized vehicle exclusion does apply, then exception in that exclusion applies;; (3) in the further alternative, Economical waived its right to rely on the motorized vehicle exclusion; (4) in the further alternative, the motorized vehicle exclusion does not apply on the facts of this case.

ANALYSIS

[21] As a preliminary matter, I note that Economical does not dispute that this motion is an appropriate use of Rule 20 of the Rules of Civil Procedure.

Direct Right of Action

[22] The plaintiffs bring this action pursuant to subsection 132(1) of the Act provides a judgment creditor with a direct right of action against a judgment debtor’s insurer for the recovery of a judgment debt. It states:

Where a person incurs a liability for injury or damage to the person or property of another, and is insured against such liability, and fails to satisfy a judgment awarding damages against the person in respect of the person's liability, and an execution against the person in respect thereof is returned unsatisfied, the person entitled to the damages may recover by action against the insurer the amount of the judgment up to the face value of the policy, but subject to the same equities as the insurer would have if the judgment had been satisfied. [Emphasis added]

[23] A judgment creditor asserting a claim under s. 132(1) of the Act stands in no better position than the judgment debtor insured. Therefore, if the insurer has a defence against its insured, that defence would apply to the judgment creditor seeking recovery. The “equities” that may be raised by an insurer include the defence that the coverage is excluded under the terms of the policy.

Principles of Insurance Policy Interpretation

[24] In Ledcor Construction Ltd. v. Northbridge Indemnity Insurance Co. 2016 SCC 37, the Supreme Court of Canada stated, at paras. 49-52:

The primary interpretive principle is that where the language of the insurance policy is unambiguous, effect should be given to that clear language, reading the contract as a whole: …

Where, however, the policy's language is ambiguous, general rules of contract construction must be employed to resolve that ambiguity. These rules include that the interpretation should be consistent with the reasonable expectations of the parties, as long as that interpretation is supported by the language of the policy; it should not give rise to results that are unrealistic or that the parties would have contemplated in the commercial atmosphere in which the insurance policy was contracted, and it should be consistent with the interpretations of similar insurance policies. …

Only if ambiguity still remains after the above principles are applied can the contra proferentem rule be employed to construe the policy against the insurer: … [A]…. corollary of this rule is that coverage provisions in insurance policies are interpreted broadly, and exclusion clauses narrowly.

It is also important to bear in mind this Court's guidance … on the "generally advisable" order in which to interpret insurance policies… . [The] … policies share a similar alternating structure: they set out the type of coverage followed by specific exclusions, with some exclusions containing exceptions. As such, the insured has the onus of first establishing that the damage or loss claimed falls within the initial grant of coverage. The parties in these appeals have conceded that this particular onus has been met: … . The onus then shifts to the insurer to establish that one of the exclusions to coverage applies. If the insurer is successful at this stage, the onus then shifts back to the insured to prove that an exception to the exclusion applies: … . Contrary to the Court of Appeal's statement at para. 26 of its reasons that the exclusion and exception in this case must be interpreted "symbiotically", I see no reason to depart from the generally accepted order of interpretation in analyzing the Policy and the Exclusion Clause.

ISSUE #1: DOES THE MOTORIZED VEHICLE EXCLUSION APPLY TO THE TENANTS LEGAL LIABILITY COVERAGE UNDER THE TENANTS POLICY?

[25] The onus rests with Economical to establish that the motorized vehicle exclusion applies to the plaintiffs’ claim.

[26] Economical submits that all of the exclusions found under the heading “LOSS OR DAMAGE NOT INSURED” (the “Omnibus Exclusions”) apply to all of the coverages provided by the Tenant’s Policy. The plaintiffs submit that the Omnibus Exclusions only apply to “Coverage G – Voluntary Payment for Damage to Property”.

[27] The Tenant’s Policy has two sections. “Section I – Property Coverages” provides coverage to the insured against direct loss or damage caused by certain perils (Coverage C) as well as additional living expenses (Coverage D) caused by certain insured perils. It contains a heading “Loss or Damage Not Insured” with numerous exclusions. “Section II – Liability Coverage” provides coverage for Legal Liability (Coverage E), Voluntary Medical Payments (Coverage F) and Voluntary Payment for Damages to Property (Coverage G). Once again, it contains a hearing “Loss or Damage Not Insured”.

[28] In my view, it is clear from the structure of the policy that the Omnibus Exclusions apply to all of the coverages provided under Section II – Liability Coverage and not just Coverage G. Further, the opening words of the Omnibus Exclusions states “[y]ou are not insured for claims arising from …”. There is nothing in the opening words or elsewhere in the Omnibus Exclusions which states or suggests that the Omnibus Exclusions only apply to Coverage G.

[29] To limit the application of the Omnibus Exclusions to Coverage G – Voluntary Payment for Damage to Property would render the provisions of the Omnibus Exclusions related to bodily injury (see paragraphs 5, 9 and 12) meaningless.

[30] To interpret this policy in the manner that the plaintiffs have suggested would mean that all exclusions found in the Omnibus Exclusions such as: 1) war, invasion, act of foreign enemy; 2) nuclear incident; 3) contamination by radioactive material; 4) business use of premises; 5) intentional or criminal act; 6) terrorism, would not apply to Tenants Legal Liability under Coverage E- Legal Liability (with limits of $ 1,000,000.00) but rather only apply to Coverage G – Voluntary Payment for Damage to Property (with limits of $1,000.00). The approach suggested by the plaintiffs makes makes no commercial sense.

[31] The plaintiffs submit that the heading “Loss or Damage Not Insured”, unlike the “Definitions” section does not expressly state that it is “Applicable to Section II” and therefore the Omnibus Exclusions under the heading “Loss or Damage Not Insure” does not apply to all the coverages provided under Section II – Liability Coverage but just to Coverage G – Voluntary Payment for Damage. In my view, the phrase “Applicable to Section II” were redundant in reference to the Definitions section and does not create any uncertainty regarding whether the Omnibus Exclusions applies to all the coverages under Section II- Liability Coverages.

[32] The plaintiffs also submit that the motorized vehicle exclusion is found with certain of the coverages (“Personal Liability” found in Coverage E- Legal Liability, Coverage F – Voluntary Medical Payments and Coverage G – Voluntary Payment for Damage to Property) and thus had Economical intended that the motorized vehicle exclusion apply to the “Tenants Legal Liability” under Coverage E – Legal Liability, then it would have inserted that exclusion directly into that particular coverage.

[33] Even though there is some apparent redundancy in the presence of the motorized vehicle exclusion found in some parts of Coverage E, Coverage F and Coverage, G, I find that to interpret the policy in the manner suggested by the plaintiff would require that the Omnibus Exclusions to be ignored. It would defeat the insurer’s clear intent to apply the motorized vehicle exclusion to all coverages under Section II of the Tenant’s Policy. I agree with the views expressed by Justice Drost in Yip v. Davies, 1999 CanLII 2959 (BC SC), [1999] B.C.J. No. 1836, at paras. 25 and 27-30, which dealt with very similar circumstances:

… The wording of the omnibus exclusion clause is unambiguous; it is its relationship with the rest of the insurance contract which is problematic. …

As the sections are intended to be read together, it might be assumed that the omission from the tenants' legal liability coverage provision of a clause specifically excluding claims arising from the use or operation of any motorized vehicle is deliberate and, read alone, the tenants' legal liability coverage would appear to include claims arising from the use or operation of a motorized vehicle. However, to adopt that interpretation would, in my opinion, require one to ignore completely the omnibus exclusion clause upon which the Insurer relies.

As noted above, it must be assumed that each word contained in the Policy is intended to serve a purpose and every term will be given effect if that can be done by reasonable construction without doing violence to the right of either party: Couch on Insurance at para. 22.43.

In my view, the fact that "specific" exclusions are found within certain of the Policy's coverage provisions cannot mean that the general or omnibus exclusion clause, which applies to all aspects of the Policy, is of no force or effect. To reach such a conclusion would defeat the Insurer's clear and unambiguous intention to exclude any and all liability claims arising out of the "use or operation of any motorized vehicle" and would, in my view, do more violence to the Policy than a finding that it is inoperative.

I find that the omnibus exclusion clause can co-exist with the other specific exclusion clauses without negating the purposes of the Policy. While some of the wording may be redundant, the clauses are not "so totally repugnant that they cannot stand together".

[34] I find that the Omnibus Exclusions apply to the Tenants Legal Liability coverage under Coverage E – Legal Liability.

ISSUE #2: DOES THE EXCEPTION FOUND IN THE MOTORIZED VEHICLE EXCLUSION RENDER THE EXCLUSION INAPPLICABLE?

[35] The plaintiffs submit that the exception found in the motorized vehicle exclusion applies in that the motorized vehicle exclusion states that:

You are not insured for claims arising from:

The ownership, use or operation of any motorized vehicle, trailer or watercraft except those for which coverage is provided in this form

[36] The plaintiffs submit that coverage for the claim is provided under the Tenants Legal Liability provisions of the Coverage E – Legal Liability. However, this invites an interpretation of the motorized vehicle exclusion that renders that exclusion meaningless and fails to read the the Tenant’s Policy as a whole. I find that this exception is clearly referable to the coverages for motorized vehicle, trailer or watercraft found the Tenant’s Policy under the heading “SPECIAL LIMITATIONS” shown above. In particular, see paragraphs 3 and 4 which provide coverage for claims arising from the ownership, use or operation of certain motorized vehicles such as motorized golf carts. None of the coverages expressly provided for a “motorized vehicle, trailer or watercraft” under the SPECIAL LIMITATIONS part of Section II – LIABILITY COVERAGE has any application and therefore I find that the exception in the motorized vehicle exclusion found in the omnibus exclusion is inapplicable.

ISSUE #3: DID ECONOMICAL WAIVE ITS RIGHT TO RELY ON THE MOTOR VEHICLE EXCLUSION FOUND IN THE OMNIBUS EXCLUSION?

[37] The plaintiffs submit that Economical is waived its right to rely on any exclusions in the Tenant’s Policy other than the exclusions found in Coverage E – Personal Liability. In particular, the plaintiffs rely on Economical’s letter to the Tenant, dated July 23, 2017, described above, which referenced the Personal Liability coverage under the Coverage E- Legal Liability and stated that the policy would not respond because the fire started while he was working on his personal vehicle in the garage.

[38] There is no basis for the plaintiffs’ assertion that Economical’s correspondence amounted to a waiver of its right to rely on the motor vehicle exclusion found in the Omnibus Exclusions.

[39] In Saskatchewan River Bungalows Ltd. v. Maritime Life Assurance Co. 1994 CanLII 100 (SCC), [1994] 2 S.C.R. 490, at para.20, Justice Major stated:

Waiver will be found only where the evidence demonstrates that the party waiving had (1) a full knowledge of rights; and (2) an unequivocal and conscious intention to abandon them. The creation of such a stringent test is justified since no consideration moves from the party in whose favour a waiver operates. An overly broad interpretation of waiver would undermine the requirement of contractual consideration.

[40] While there little doubt that Economical had knowledge of its defences under the Omnibus Exclusions, I find that Economical did not demonstrate an “unequivocal and conscious intention” to waive its right to rely on the motorized vehicle exclusion found in the Omnibus Exclusions. The letter relied upon by the plaintiffs does not state that Economical would not be relying on any other defences other than those described in the letter. In fact, Economical continues to rely on the motorized vehicle exclusion referenced in its letter albeit that this provision now relied upon is found in the Omnibus Exclusions since the plaintiffs do not advance their claimed under the Personal Liability coverage under Coverage E – Legal Liability.

ISSUE #4: DOES THE MOTORIZED VEHICLE EXCLUSION APPLY ON THE FACTS OF THIS CASE?

[41] The plaintiffs submit that their claim did not arise from the “ownership, use or operation” of the Tenant’s automobile. They rely on the materials before the court that granted the consent Judgment, namely, the pleadings, the consent and the affidavit of Andrew Ottaway.

[42] The Amended Statement of Claim which includes the following pleadings:

5. On or about June 10, 2007, the Defendant was performing maintenance and mechanical work on his automobile, including the brake lines, in the Premises’ attached garage.

6. In order to access the areas of the automobile which the Defendant intended to repair, he removed the automobile’s gas tank from its normal position. The gas tank fell or was dropped, and gasoline was spilled.

7. The gasoline or the fumes from the gasoline were ignited and resulted in a fire which destroyed the Premises.

8. The Plaintiffs plead that the fire and damages aforesaid were occasioned, caused or contributed to as a result of the negligence of the Defendant, the particulars of which negligence are as follows:

(a) he was working, maintaining, and repairing his vehicle and its brake lines and gas tank in an unsafe, unreasonable, careless and hazardous manner, without due care, attention, and concern for the safety of the Premises; …

9. Further, and in the alternative, by virtue of the acts and omissions aforesaid the Defendant caused an unreasonable interference with the Plaintiffs’ use and enjoyment of the Premises thereby committing a nuisance in law.

10. Further, and in the alternative, the Plaintiffs plead and rely upon the doctrine in Rylands v. Fletcher.

11. As a result of the Defendant’s negligence, nuisance and contravention of the doctrine in Rylands v. Fletcher, the Plaintiffs sustained damages to their house, contents and Premises, and sustained a rental income loss … [Emphasis added.]

[43] The affidavit of Andrew Ottaway, counsel for the plaintiffs, referenced in the Judgment, states:

The Defendant, Ian Horsefield, rented the subject premises, the property municipally known as 448 Duke Street, Prescott, Ontario (the “Premises”) from the Plaintiffs, his parents. On June 10, 2007, the Defendant was performing maintenance and mechanical work on his automobile in the Premises’ attached garage. While working, the Defendant removed the automobile’s gas tank from its normal position. The gas tank fell or was dropped, and gasoline spilled. The gasoline or the fumes from the gasoline were ignited and resulted in a fire which destroyed the Premises. The Plaintiffs claimed damages of $175,000 for property damage, $5,000 in lost income, pre-judgment interest and post-judgment interest, and costs. A true copy of the Amended Statement of Claim is attached hereto as Exhibit “A”. [Emphasis added.]

[44] A two-part test must be satisfied in order for the motorized vehicle exclusion to apply.

[45] First, it must be established that the claim resulted from “the ordinary and well-known activities to which automobiles are put”: Reliance Petroleum Ltd. v. Stevenson 1956 CanLII 27 (SCC), [1956] S.C.R. 936, para. 11. The “use” of a motor vehicle includes activities related to its maintenance and repair: Shelton v. Insurance Corp. of British Columbia [1993] B.C.J. No. 1169 (B.C.C.A.), para. 18; Pilliteri v. Piore, 1997 CanLII 12135 (ON SC), [1997] O.J. No. 1079, paras. 20 and 27; Gramak Ltd. v. State Farm Mutual Automobile Insurance Co. (1976), 1976 CanLII 747 (ON SC), 12 O.R. (2d) 553n (C.A.), affirming (1975), 1975 CanLII 427 (ON SC), 10 O.R. (2d) 518 (H.C.J.), I find that the Tenant’s maintenance and repair of his motor vehicle constituted the “use” of a motorized vehicle within the meaning of the motorized vehicle exclusion.

[46] Second, there must be an unbroken chain of causation between the “ownership, use or operation” of the motor vehicle and the injury. In Law, Union & Rock Insurance Co. v. Moore's Taxi Ltd., 1959 CanLII 81 (SCC), [1960] S.C.R. 80, at para. 11, Justice Ritchie stated this exclusion applies when: “… it is possible to trace a continuous chain of causation unbroken by the interposition of a new act of negligence and stretching between the negligent use and operation of a motor vehicle on the one hand and the injuries sustained by the claimant on the other.”

[47] The plaintiffs submit that the source of the ignition of the gasoline or gasoline fumes which escaped in the course of the work performed by the Tenant on his motor vehicle is unknown and that the source of the ignition constitutes an additional cause of the fire. The fire ensued quickly after the gas tank fell. There is no allegation that the ignition was somehow an independent, negligent cause of the fire. The plaintiffs also allege that there were additional and concurrent causes such as the Tenant’s failure to have a fire extinguisher available. These allegations do not constitute intervening acts of negligence that severed the chain of causation. In my view, the loss claimed by the plaintiffs can be traced directly back to the negligent maintenance performed by the Tenant and such loss would not have occurred but for the maintenance performed.

CONCLUSIONS

[48] The plaintiffs’ claim is dismissed.

[49] The parties are encouraged to resolve the issue of costs failing which Economical may deliver its costs submissions within two weeks of today and the plaintiffs may deliver their costs submissions within four weeks of today. Submissions shall be a maximum four pages exclusive of the costs outline.

Mr. Justice M. D. Faieta

Released: August 14, 2017

CITATION: Horsefield v. Economical Mutual Insurance Company, 2017 ONSC 4868

COURT FILE NO.: CV-14-498099

DATE: 20170814

ONTARIO

SUPERIOR COURT OF JUSTICE

BETWEEN:

EDWARD HORSEFIELD, and EDWARD HORSEFIELD, ESTATE TRUSTEE OF THE ESTATE OF THE LATE CYNTHIA HORSEFIELD, DECEASED

Plaintiffs

– and –

ECONOMICAL MUTUAL INSURANCE COMPANY

Defendant

REASONS FOR DECISION

Mr. Justice M. D. Faieta

Released: August 14, 2017