CITATION: Herman v. Intact, 2017 ONSC 4945 COURT FILE NO.: CV-10-4760-A2 DATE: 2017-08-18

ONTARIO SUPERIOR COURT OF JUSTICE

B E T W E E N:

LATOYA ANTONETTE ELSIE HERMAN Did not appear Plaintiff

• and -

INTACT INSURANCE COMPANY and NOVEX INSURANCE COMPANY Douglas A. Wallace, for the Defendants Defendants

• and -

AVIVA CANADA INC. Donna A. Polgar, for the Third Party

HEARD: July 24, 2017, at Brampton, Ontario

Price J.

Reasons For Order

OVERVIEW

[1] Letoya Herman (“Ms. Herman”) was injured in a motor vehicle collision on April 27, 2006. She sued her auto insurers, Intact Insurance Company (“Intact”) and Novex Insurance Company (“Novex”), under a clause insuring her for personal injuries caused by an uninsured vehicle. When Intact and Novex received Ms. Herman’s Claim, they issued a Third Party Claim against Aviva Canada Inc. (“Aviva”), claiming that the at-fault vehicle was not uninsured but, rather, was insured by Aviva, who should be responsible for the damages.

[2] Aviva denies liability on the ground that the at-fault vehicle was added to its policy after the collision took place, and in furtherance of a conspiracy between its named insured, who caused the vehicle to be added, and the driver of the vehicle, who owned the vehicle before the collision. Aviva alleges that the driver still owned the car at the time of the collision. Aviva moves for summary judgment dismissing the Third Party Claim against it on the ground that there is no genuine issue for trial.

BACKGROUND FACTS

[3] On November 23, 2005, Skeeta Dawkins applied for auto insurance through a broker, the CG & B Group Inc. (the “Broker”) to insure a 2003 Mercedes automobile. Traders General Insurance Company, an Aviva subsidiary, approved the application and issued a Certificate of Automobile Insurance to Ms. Dawkins.

[4] On December 15, 2005, Ms. Dawkins caused her common-law spouse, Mervin Levy, to be added to the Aviva Policy as a named insured. Mr. Levy was the registered owner of a 2006 Honda Civic, which was added as an insured vehicle to the policy. Aviva issued a policy change notice and a new Certificate of Automobile Insurance to Ms. Dawkins and Mr. Levy.

[5] Ms. Herman was injured on April 27, 2006, when the vehicle she was driving was struck from behind by a 1999 Toyota Corolla automobile (“the Toyota”) driven by Mr. Osei-Afriyie. She says that Mr. Osei-Afriyie’s Toyota pushed her car into the car ahead of hers, which, in turn, struck a fourth car.

[6] On May 4, 2006, a week after Ms. Herman’s collision, Mr. Levy called the Broker to report a claim, and to request that the Toyota, which he said he had bought three days before the collision, on April 24, 2006, be added to the policy. He told the Broker that he had paid for the Toyota, but that the vendor, Mr. Osei-Afriyie, had remained in possession of it, as the terms of sale required him to have one of the headlights repaired. While Mr. Osei-Afriyie was on his way to the garage to obtain the repair, he rear-ended Ms. Herman’s vehicle.

[7] On May 18, 2006, the Broker sent Aviva a Policy Change Notice requesting that the Toyota be added to the Aviva Policy. He noted that the 2004 Mercedes, owned by Ms. Dawkins, had been returned to the dealer and would be removed from the policy once written confirmation was received. The Broker sent a letter to Ms. Dawkins and Mr. Levy the same date, May 18, 2006, confirming coverage for the Toyota, and Aviva issued a Policy Change Notice and a Certificate of Insurance to them, with the Toyota as a listed vehicle, effective April 24, 2006.

[8] On July 9, 2006, Aviva cancelled Ms. Dawkins’ policy for non-payment of premiums. On July 21, 2006, it sent Ms. Dawkins and Mr. Levy a letter acknowledging that a loss had been claimed under the policy, and requested an interview. Ms. Dawkins and Mr. Levy failed to attend the interview, and on August 14, 2006, Aviva notified them that it was denying the property damage claim by reason of their non-cooperation in the investigation.

[9] On April 28, 2008, Ms. Herman issued a Statement of Claim against Mr. Osei-Afriyie (the “Original Action”). Mr. Osei-Afriyie served and filed a Statement of Defence, admitting ownership of the Toyota, but denying liability for the damages claimed.

[10] On December 22, 2010, Ms. Herman issued a Statement of Claim against Intact and Novex Insurance Company, alleging that she had sustained injuries to her neck and back which affected her day-to-day life and impeded her career as a nurse (“Ms. Herman’s Insurance Action”).

[11] On February 22, 2012, the Original Action was dismissed for delay pursuant to Rule 48.14. Ms. Herman’s Insurance Action against Intact and Novex continued. On August 12, 2012, Intact issued a Third Party Claim against Aviva in the Insurance Action, claiming that Aviva insured the Toyota at the time of the collision and should therefore indemnify Mr. Osei-Afriyie for Ms. Herman’s damages.

[12] On February 26, 2013, Aviva brought a Fourth Party Claim against Mr. Osei-Afriyie. On March 5, 2014, Mr. Osei-Afriyie was noted in default, having failed to respond.

ISSUE

[13] The court must determine whether there is a genuine issue for trial as to whether Aviva issued a valid auto insurance policy that provided coverage of the Toyota at the time of the collision, and is therefore required to respond to Ms. Herman’s claim for damages.

PARTIES’ POSITIONS

Intact’s and Novex’s Position

[14] Intact and Novex argue that Aviva insured the Toyota and back-dated its policy. They say that Aviva issued a Policy Change Notice and a Certificate of Automobile Insurance which added the Toyota as an insured automobile, effective three days before the collision. It did so, they say, with full knowledge that the collision had already occurred. The result, they argue, is that its policy was valid and enforceable from that date until the policy was cancelled on July 9, 2006, due to Ms. Dawkins’ and Mr. Levy’s lack of cooperation.

[15] Intact and Novex claim that Mr. Levy, who was a named insured, was the actual owner of the Toyota at the time of the collision, even though he was not yet the registered owner. They rely on the facts in support of their position.

1. Mr. Osei-Afriyie and Mr. Levy signed a Proof of Purchase & Confirmation of Sale dated April 24, 2006.

2. Mr. Osei-Afriyie and Mr. Levy signed an Application for Transfer of ownership form dated April 25, 2006.

3. Mr. Levy insured the Toyota under his existing policy with Aviva. He told the Broker that he had bought the Toyota but not yet filed the transfer of ownership with the Ministry.

4. Mr. Levy submitted a Notice of Loss for property damage in his capacity as owner of the Toyota.

Aviva’s Position

[16] Aviva acknowledges that it added the Toyota to its policy several weeks after the collision, but argues that it was induced to do so by a fraudulent scheme involving two Aviva-insured persons, who conspired to retroactively insure the Toyota.

[17] Aviva says that because the Toyota was fraudulently added to the Aviva policy after the collision, the policy was not valid vis-à-vis the Toyota on the date of the collision, and that Aviva is not required to respond to claims arising from its use or operation.

[18] Aviva additionally argues that the requirement for coverage as set out in s. 239 of the Insurance Act, R.S.O. 1990, c. I-8, are not met in this case. It says that coverage under an auto insurance policy is only available to a driver who is not named in the policy if:

1. The named insured owns the vehicle being driven; and

2. The named insured gave his or her consent to the driver.

[19] Aviva says that Mr. Levy, the named insured under its policy, did not own the Toyota on the date of the collision, and so was unable to provide the required consent to the driver.

[20] Aviva argues that it is contrary to public policy to extend coverage to an accident that occurred before the insurance policy was issued. They say that the Aviva policy, vis-à-vis the Toyota, did not exist on the date of the collision, but only began to exist on May 18, 2006.

[21] Aviva submits that imposing an obligation on it to respond to the claim arising from a collision caused by Mr. Osei-Afriyie, a person with whom it had no relationship, who was driving a vehicle it did not insure, and for which it never collected premium payments, would be unjust and contrary to public policy.

ANALYSIS AND EVIDENCE

a) General principles applying to motions for summary judgment

[22] Rule 20.04 provides that where there is no genuine issue for trial with respect to a claim or defence, the court shall grant summary judgment accordingly. Rule 20.04(2) states:

(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.

[23] Accordingly, the court may grant summary judgment:

1. Where the parties agree;

2. Where the claim is without merit;

3. Where the motions judge is able to dispose of the matter and where the trial process is not required in the “interest of justice.”[^1]

[24] The Supreme Court of Canada, in Hryniak v. Mauldin,[^2] (2014) and Bruno Appliances and Furniture Inc. v. Hryniak,[^3] (2014) reinterpreted Rule 20 of the Rules of Civil Procedure, taking into account the need for the court to preserve the public’s access to justice. The Court held that summary judgment rules must be interpreted broadly, favouring proportionality and fair access to the affordable, timely, and just adjudication of claims. It held that a trial is not required if the court hearing a summary judgment motion can make a fair and just adjudication, by making the necessary findings of fact, and applying the law to those facts, and if the process is a more proportionate and expeditious, and less expensive, means of achieving a just result than a trial.

[25] The Supreme Court held that a summary judgment motion judge must assess the interests of justice that would be served by summary judgment, by considering the relative efficiencies that would be served by that process, and those that would be served by a trial, including the cost and speed of each procedure, the evidence that is available on the motion versus the evidence that would be available at trial, and the opportunity to evaluate such evidence fairly. The Court stated there will be no genuine issue requiring a trial if the summary judgment process gives the motion judge the evidence required to fairly and justly adjudicate the dispute on its merits, and is a proportionate, more expeditious, and less expensive means to achieve a just result.

[26] In Sweda Farms v. Egg Farmers of Ontario, in 2014, Corbett J. described the current approach to summary judgment motions following the Supreme Court’s decision in Hryniak v. Mauldin, as follows:

Summary judgment motions come in all shapes and sizes, and this is recognized in the Supreme Court of Canada’s emphasis on “proportionality” as a controlling principle for summary judgment motions. This principle does not mean that large, complicated cases must go to trial, while small, single-issue cases should not. Nor does it mean that the “best foot forward” principle has been displaced; quite the reverse. If anything, this principle is even more important after Hryniak, because on an unsuccessful motion for summary judgment, the court will now rely on the record before it to decide what further steps will be necessary to bring the matter to a conclusion. To do this properly, the court will need to have the parties’ cases before it.[^4] [Emphasis added]

[27] The Supreme Court in Hryniak v. Mauldin gave guidance as to how Rule 20 should be applied to promote timely and affordable access to the civil justice system. Justice Karakatsanis, on behalf of the court, noted that such motions are an opportunity to simplify pre-trial procedures and move the emphasis away from the conventional trial, in favour of proportional procedures tailored to the needs of the particular case. She stated:

There will be no genuine issue requiring a trial when the judge is able to reach a fair and just determination on the merits on a motion for summary judgment. This will be the case when the process (1) allows the judge to make the necessary findings of fact, (2) allows the judge to apply the law to the facts, and (3) is a proportionate, more expeditious and less expensive means to achieve a just result.[^5] [Emphasis added]

[28] Justice Karakatsanis held that the judge hearing a motion for summary judgment must compare the procedures available in such a motion, supplemented, if necessary, by the fact-finding tools provided by Rules 20.04(2.1) and (2.2), with those available at trial, to determine whether the court can make the necessary findings of fact and apply the principles of law to those facts in a proportionate, most expeditious, and least costly manner, to achieve a just result:

This inquiry into the interest of justice is, by its nature, comparative. Proportionality is assessed in relation to the full trial. It may require the motion judge to assess the relative efficiencies of proceeding by way of summary judgment, as opposed to trial. This would involve a comparison of, among other things, the cost and speed of both procedures. (Although summary judgment may be expensive and time consuming, as in this case, a trial may be even more expensive and slower.) It may also involve a comparison of the evidence that will be available at trial and on the motion as well as the opportunity to fairly evaluate it. (Even if the evidence available on the motion is limited, there may be no reason to think better evidence would be available at trial.)[^6] [Emphasis added]

[29] Based on the guidelines set out in Hryniak v. Mauldin, I must first determine, based on the evidence before me, and without using the fact-finding powers under Rule 20.04, whether there is a genuine issue requiring trial, whether I can fairly and justly adjudicate the dispute, and whether the motion is a timely, affordable, and proportionate procedure for achieving a just result under Rule 20.04(2)(a). If there is no genuine issue requiring a trial, I must grant summary judgment.[^7]

[30] If there is a genuine issue requiring a trial, I must exercise my discretion to determine whether the need for a trial can be avoided by using the expanded powers under Rules 20.04(2.1) and (2.2), provided their use will not be contrary to the interests of justice and will lead to a fair and just result, and serve the goals of timeliness, affordability, and proportionality in light of the litigation as a whole.[^8]

[31] The party moving for summary judgment has the onus of establishing that there is no genuine issue of material fact requiring a trial. Once that onus is met, the burden shifts to the responding party, opposing summary judgment, to demonstrate that the claim has a “real chance of success”.[^9] A self-serving affidavit is not sufficient to create a triable issue in the absence of detailed facts and supporting evidence.

b) Is there a genuine issue for trial as to whether Aviva issued a valid auto insurance policy that provided coverage of the Toyota vehicle at the time of the accident?

(i) Aviva’s allegation of fraud

[32] Aviva alleges that Mr. Levy lied to the Broker on May 4, 2006, when he said that he had purchased the Toyota ten days earlier, on April 24, 2006, three days before the collision on April 27, 2006. It submits that the court should find, based on the evidence of fraud, that Mr. Levy was not the owner of the Toyota at the time of the collision.

[33] For the reasons that follows, I find that the evidence on the issue of fraud is inconclusive and capable of different interpretations. It cannot reasonably be argued that the issue does not raise a genuine issue for trial.

[34] In support of its position that the alleged sale of the Toyota was an attempt to defraud it of payment for damage to the Toyota, Aviva relies on the following facts:

1. The sale price of the Toyota was allegedly more than its market value.

2. The Toyota was not registered in Mr. Levy’s name.

3. The police report appears to have been altered.

4. The police report identified The Personal as the insurer of the Toyota.

5. The property damage claim was not pursued.

[35] I will address each of those facts below.

Sale Price of the Toyota

[36] Mr. Levy told the Broker that he paid $9,500 for the Toyota. The appraisal that Aviva later obtained valued it at $4,500, based on an estimated value of $6,625 for a “typical” vehicle of that make and model.

[37] The appraiser deducted the following amounts from the “typical” value:

(a) $550 was deducted based on the fact that this Toyota had a mileage of 189,000 kms, which was higher than the “typical” mileage (152,460 kms.).

(b) $40 was deducted for an “Equipment/Package Adjustment” based on crediting amounts for equipment, such as a rear spoiler, that this Toyota had, and the “typical vehicle” does not, and other equipment, such as an AM/FM Stereo Tape, that the typical vehicle has, and this Toyota did not.

(c) Aviva’s counsel, when reviewing the photos of the damaged Toyota taken on June 29, 2006, approximately two months after the collision when the vehicle was apparently in an open field, acknowledged, upon observing that the entertainment system had apparently been removed at some point, that she did not know whether it was missing at the time of the collision or was removed after it was towed.

(d) $1,350 was deducted owing to damage that was observed on the Toyota at the field that, in the appraiser’s opinion, was unlikely to have been caused by the collision. For example, there were defects in the driver and passenger side door handles, and damage to the passenger side rear quarter-panel, and a disconnected rear bumper, which were deemed inconsistent with a collision in which the Toyota struck the vehicle ahead but was not struck from behind.

(e) Ms. Heald, a senior front line manager with Aviva, admitted on cross-examination that she had “no idea” whether Mr. Levy or Mr. Osei-Afriyie had any concept of the value of the Toyota.

(f) Aviva’s counsel, when asked whether there was any evidence as to when or under what circumstances the damage occurred that was the basis for the appraiser’s deductions, and whether it could have been done during the tow or at the Toyota’s eventual resting place, replied that she was confident that if damage had occurred after the collision, the towing company would have reported it to the insurance company. I regard this as speculation, as there are no photographs of the Toyota before, or immediately after, the collision, no evidence of the continuity of the Toyota from the time of the collision to the time when it was inspected two months later, or as to the circumstances of security and storage in the interval. The appraisal report does not contain information as to the circumstances in which the inspection was conducted, or even where the Toyota was located at that time. From the photographs taken on June 29, 2015, it appears that the vehicle was in a field, and there is no evidence of a fenced compound or other security at the location.

The Toyota was not registered in Mr. Levy’s name

[38] Ms. Heald admitted that, given that Mr. Levy produced an application to register the ownership of the Toyota, it could be inferred that he had an intention to do so, but that after the Toyota was “totaled”, it simply was not done. She further admitted that there would be no reason to change the plate registration after the Toyota was damaged beyond repair.

[39] Aviva’s counsel argued at the hearing that Mr. Levy was under a statutory obligation, under the Highway Traffic Act, R.S.O. 1990, c. H.8. to transfer the ownership of the Toyota into his name even if the car was damaged beyond repair, but acknowledged that there is no evidence that the Broker, or anyone else, advised Mr. Levy of that requirement or instructed him to register the transfer, notwithstanding that there was no purpose that would reasonably have occurred to him for doing so.

[40] The Highway Traffic Act provides, in this regard:

11 (1) Upon the holder of a permit ceasing to be the owner or lessee of the motor vehicle or trailer referred to in the permit, he, she or it shall,

(a) remove his, her or its number plates from the vehicle;

(b) retain the plate portion of the permit; and

(c) on delivery of the vehicle,

(i) to the new owner, complete and sign the transfer application of the vehicle portion of the permit including the date of the delivery and give that portion of the permit to the new owner, or

(ii) to a lessor, give the vehicle portion of the permit to the lessor. R.S.O. 1990, c. H.8, s. 11 (1).

Re-issue of permit

(2) Every person shall, within six days after becoming the owner of a motor vehicle or trailer for which a permit has been issued, apply to the Ministry, on the form provided therefor, for a new permit for the vehicle. R.S.O. 1990, c. H.8, s. 11 (2). [Emphasis added]

[41] Section 11(1) imposed an obligation on Mr. Osei-Afriyie, on delivery of the vehicle to Mr. Levy, to give the vehicle portion of the permit to him. Mr. Levy was obliged, within six days after becoming the owner, to apply to the Ministry for a new permit for the vehicle. As there is no evidence that Mr. Osei-Afriyie ever delivered the vehicle to Mr. Levy, or gave him the vehicle portion of the permit, or that the Toyota, being no longer operable, required a new permit, or that, if an obligation arose in these circumstances for Mr. Levy to apply for a new permit, that obligation was ever communicated to him, I am not prepared to find, in the circumstances, that his failure to register the transfer is evidence of fraud, or of the fact that he never became the owner of the Toyota.

Alteration of the Police Report

[42] Ms. Heald admitted that occasionally, police officers will prepare initial reports, and then subsequent reports, and that there are sometimes differences in those reports. Aviva’s counsel noted that there were multiple copies of the report in this case, described by Ms. Heald as “a copy of a portion of a police report” generated following the collision.

[43] Although P.C. Bryant gave evidence as to the manner in which she prepared the complete Accident Report, there is no evidence, in her affidavit or elsewhere in the material before me of how the “copies of portions of the police report”, of which Aviva’s counsel noted there were several, are generated, or by whom, or whether they are forms given to motorists for them to use to record what they believe to be the information they will later require, for one reason or another.

[44] The Highway Traffic Act provides, in this regard:

Duties of Registrar

205 (1) The Registrar shall,

supply of accident report forms

(a) prepare and supply to police officers and other persons and organizations blank forms approved by the Minister for accident and other reports which shall call for the particulars concerning accidents, the person involved and the extent of the personal injuries and property damage, if any, resulting therefrom, and the other information that may be required by the regulations;

investigation of accidents

(b) make the investigation of, and call for the written reports concerning, motor vehicle accidents, traffic conditions and other matters that he or she may consider necessary and proper and for that purpose may require the assistance of any police officer; [Emphasis added]

[45] There is no legislative regulation of the distribution of accident forms, or of their completion, copying, or dissemination. The Registrar may provide the blank forms to persons other than police officers, and there appears to be no restriction on their use, by members of the public, to record whatever information they may believe they need. In the absence of evidence as to who recorded the information on these partial forms, or for what purpose, and how they came to be faxed to Aviva, I am not prepared to find, based on the discrepancies from one to another of them, that they are evidence of fraud, or of the fact that Mr. Levy never owned the Toyota.

The Police Report identified Personal Insurance as the insurer of the Toyota

[46] Ms. Heald admitted that she had not spoken with Mr. Osei-Afriyie, and could not say whether he honestly believed that he had a policy with Personal Insurance, or simply made a mistake in identifying that insurer in the report.

The property damage claim was not pursued

[47] There are reasons, apart from fraud, why a legitimate property damage claim is not pursued. Among them is cost. Mr. Levy, after receiving the appraiser’s estimate of the value of the Toyota, may have concluded that the claim was not worth pursuing. There is no basis for concluding, based on the mere fact that neither Mr. Osei-Afriyie nor Mr. Levy pursued the claim, that one of them was not the owner.

[48] The onus is on Aviva to prove fraud. The evidence it relies on in support of its allegation is largely speculative. The fact that Mr. Levy disclosed the fact of the collision when he made the call requesting coverage is a fact that tends to the opposite conclusion. Aviva, while relying on the Broker’s records as business records, admissible for the truth of the events they describe, argues that what Mr. Levy told the Broker is inadmissible hearsay that the court should not rely on in determining whether Mr. Levy owned the Toyota at the time of the collision. I disagree.

[49] The court must determine whether the Broker’s evidence concerning the report that Mr. Levy made is reliable and trustworthy in all the circumstances. I regard Mr. Levy’s statements as statements against interest, insofar as his report of the collision exposed him to certain liability for higher premiums, which the Broker explained to him at the time. It is also likely that his statements could have exposed him to civil liability for any damages for injuries Ms. Herman might have suffered in the collision. Whether his statements would have been admissible for that purpose or not, it is likely that a person in Mr. Levy’s position would reasonably suppose that such statements could be used for that purpose.

[50] Additionally, Mr. Levy would reasonably have supposed that his disclosure of the fact that the Toyota had been involved in a collision after he became the owner could cause Aviva to deny him coverage. The insured in Ashton v. Tu, (1998),[^10] apparently for this reason, failed to disclose the fact that the vehicle she asked her insurer to cover under her policy had been in a collision. I find that Mr. Levy’s disclosure of the collision gives added reliability to the information he gave the Broker regarding his ownership of the Toyota. I reject Aviva’s submission that the only reasonable explanation for Mr. Levy’s report was that he was attempting to defraud his insurer. That is one of a possible motive, but not one that the court can safely accept based on the evidence before it.

a) Are the requirements of s. 239 satisfied?

[51] I am unable to give effect to Aviva’s argument that there was no coverage based on the requirements of s. 239 of the Insurance Act.

[52] The Insurance Act provides:

239. (1) Subject to section 240, every contract evidenced by an owner’s policy insures the person named therein, and every other person who with the named person’s consent drives, or is an occupant of, an automobile owned by the insured named in the contract and within the description or definition thereof in the contract, against liability imposed by law upon the insured named in the contract or that other person for loss or damage,

(a) arising from the ownership or directly or indirectly from the use or operation of any such automobile; and

(b) resulting from bodily injury to or the death of any person and damage to property. R.S.O. 1990, c. I.8, s. 239 (1). [Emphasis added]

Evidence of Mr. Levy’s ownership of the Toyota

[53] In Smith v. Mikel, (2003), Rady J., after reviewing the jurisprudence regarding indicia of ownership, concluded:

It has been held that someone is not an owner in the following circumstances:

• An individual (“A”) agrees to sell the vehicle to another (“B”)

• B acknowledges ownership

• B is responsible for insuring the vehicle

• A does not have an insurable interest in the vehicle

• A did all that was necessary to arrange for the transfer of registered ownership to B

• A exercises no possession or control over the vehicle

• A has not inspected the vehicle or had it certified

• A does not pay for repairs to the vehicle[^11]

[54] In the present case, Mr. Osei-Afriyie had agreed to sell the Toyota to Mr. Levy, Mr. Levy acknowledged ownership, and took the necessary steps to insure the vehicle. Both Mr. Osei-Afriyie and Mr. Levy took the steps necessary to arrange for the transfer of the registered ownership to Mr. Levy up until the time of the collision, when further steps would have appeared to serve no purpose. While Mr. Levy was not paying for repairs to the vehicle, Mr. Osei-Afriyie’s obligation to do so was, according to Mr. Levy, a term of their agreement of purchase and sale. In these circumstances, Mr. Osei-Afriyie’s driving the Toyota to the garage cannot be said to be an exercise of his own possession or control over it.

[55] Aviva issued an insurance policy for the Toyota on the basis that Mr. Levy was the actual owner, knowing that he had not yet registered the transfer of ownership with the Ministry. Ownership must be determined on the facts of each case. Aviva acknowledges that there can be more than one owner of an automobile, and that there can be a registered owner and a different actual owner at common law.[^12]

[56] On May 18, 2006, the Broker sent Aviva a Policy Change Notice requesting that the Toyota be added to the Aviva Policy. The Broker sent a letter the same date, that is, May 18, 2006, confirming coverage for the Toyota, and Aviva issued a Policy Change Notice and a Certificate of Insurance, with the Toyota as a listed vehicle and an effective date of April 24, 2006.

[57] Aviva does not dispute that it issued a Policy Change Notice and Certificate of Automobile Insurance that added the Toyota as an insured automobile, effective three days before the collision, with the result that its policy was valid and enforceable from that date until the policy was cancelled on July 9, 2006.

[58] Aviva did not allege misrepresentation or fraud as against Mr. Levy, or attempt to treat the policy as void. The Insurance Act provides, in part:

233. (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. R.S.O. 1990, c. I.8, s. 233 (1).[^13] [Emphasis added]

[59] Upon discovery of a material misrepresentation or fraud, an insurer has three options:

1. It may treat the policy as void ab initio and refund the premiums. If it chooses this position, the insurance company must declare it.

2. It may retain the premium and treat the contract as valid and subsisting.

3. It may treat the policy as valid but cancel unilaterally in accordance with the statutory conditions for unilateral termination.[^14] [Emphasis added]

[60] Aviva elected to treat the policy as valid, but to cancel it unilaterally based on non-cooperation, in accordance with the statutory conditions for unilateral termination. In such circumstances, the Insurance Act, in s. 258, imposes absolute liability on the insurer. The Act provides, in this regard:

258(1) Any person who has a claim against an insured for which indemnity is provided by a contract evidenced by a motor vehicle liability policy, even if such person is not a party to the contract, may, upon recovering a judgment therefor in any province or territory of Canada against the insured, have the insurance money payable under the contract applied in or towards satisfaction of the person’s judgment and of any other judgments or claims against the insured covered by the contract and may, on the person’s own behalf and on behalf of all persons having such judgments or claims, maintain an action against the insurer to have the insurance money so applied.

Insurer absolutely liable

[61] The right of a person who is entitled under subs. (1) to have insurance money applied upon the person’s judgment or claim is not prejudiced by:

(a) an assignment, waiver, surrender, cancellation or discharge of the contract, or of any interest therein or of the proceeds thereof, made by the insured after the happening of the event giving rise to a claim under the contract;

(b) any act or default of the insured before or after that event in contravention of this Part or of the terms of the contract; or

(c) any contravention of the Criminal Code (Canada) or a statute of any province or territory of Canada or of any state of the District of Columbia of the United States of America by the owner or driver of the automobile, and nothing mentioned in clause (a), (b) or (c) is available to the insurer as a defence in an action brought under subs. (1).

[62] The above sections prevent an insurer from defending a claim made by an innocent, injured, third party on the basis of a misrepresentation by the insured. The Court of Appeal for Ontario, in Ashton v. Tu, (1998), applied the predecessor of s. 258 in holding that the insurance policy, which the insurer State Farm had issued to its insured, back-dated to before the collision, was valid and enforceable, notwithstanding any misrepresentations by the insured. The Court stated:

…In back-dating the coverage period, Mrs. Luk acted contrary to State Farm company policy, but within her extensible authority. She deliberately accepted the request to back-date the policy. In acting as she did, she bound State Farm to the risk, which in my view commenced on February 26, 1988. When she issued a binder and a liability insurance slip, Ms. Luk, in my view, provided State Farm’s “Insured” with instruments issued as, and evidencing a motor vehicle liability policy.

To approach this matter as State Farm submits should be done, on the basis that there was no contract in the first place, would dramatically undercut the protection given to an innocent third party, such as Ashton, by s. 226(5).[^15] [Emphasis added]

Evidence of Mr. Levy’s ownership of the Toyota

[63] There is evidence that Mr. Levy became the actual owner of the Toyota on April 24, 2006, even though the transfer of ownership had not been registered when the collision occurred. If Mr. Levy did, in fact, buy the Toyota from Mr. Osei-Afriyie on April 24, 2006, then he was the named insured. If he gave Mr. Osei-Afriyie permission to drive the Toyota to the garage on April 27, 2006, then the requirements for coverage as set out in s. 239 of the Insurance Act are satisfied.

[64] 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. 2005, c. 31, Sched. 10, s. 2.

(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. 2005, c. 31, Sched. 10, s. 2.[^16] [Emphasis added]

[65] I infer from the fact that Mr. Osei-Afriyie was driving the Toyota after Mr. Levy bought it that he was driving the vehicle with Mr. Levy’s consent. I do not find that the evidence rebuts the presumption that Mr. Osei-Afriyie was driving the Toyota with Mr. Levy’s consent. Mr. Levy’s information to the Broker was that Mr. Osei-Afriyie was driving the Toyota to a garage to have its headlight repaired pursuant to a term of Mr. Levy’s agreement to purchase the vehicle, which required Mr. Osei-Afriyie to do so. This evidence supports an inference that Mr. Levy was exercising his control as owner of the vehicle to cause Mr. Osei-Afriyie to drive it and that Mr. Osei-Afriyie was driving it with his consent and for his benefit.

[66] To succeed in rebutting the presumption that Mr. Osei-Afriyie was driving the Toyota with the owner’s consent, Aviva must establish that Mr. Levy was not, in fact, the owner. In order to conclude that he was not the owner, the court would have to accept Aviva’s interpretation of Mr. Levy’s report to the Broker as part of a conspiracy between Mr. Levy and Mr. Osei-Afrieyie to defraud Aviva. There is no evidence that Mr. Levy and Mr. Osei-Afrieyie knew each other outside of their purchase and sale of the Toyota and I am not prepared to accept Aviva’s interpretation on the basis of the evidence it tendered.

b) Was the collision a risk that had already materialized?

[67] Aviva argues that it is contrary to public policy to extend coverage under an insurance policy to an accident that occurred before the policy was issued. They say that the Aviva’s coverage of the Toyota existed on the date of the accident because the Broker issued a Certificate three days later.

[68] In Bode, administrator appointed by the Law Society of Upper Canada v. Chubb Insurance Co. of Canada (Gen. Div.), (1991), a lawyer and sole practitioner took out an insurance policy against dishonest acts, knowing that he had already defrauded clients of $128,000. The type of policy was intended to protect innocent lawyers against liability for the dishonest acts of their partners. Rejecting the argument that the policy could legitimately cover a loss that had already occurred, Lane J. stated:

The result contended for is contrary to the fundamental insurance principle that insurers insure risk, not certainty. Losses that are known to the insured to have already occurred are not risks and there is nothing contrary to principle in construing the policy to exclude such losses or in holding it void for non-disclosure of them. There would be no coverage for Newport's defalcations prior to inception even if the policy was not otherwise void.[^17] [Emphasis added]

[69] In Alie v. Bertrand & Frere Construction Co., (2002),[^18] the Court of Appeal for Ontario held that it is the wording of an insurance policy that must guide the court in determining which what “triggers” the coverage in the policy. In arriving at this conclusion, the court approved the analysis of the Saskatchewan Court of Appeal in University of Saskatchewan v. Firemans' Fund Insurance Co. of Canada, (1997)[^19], rejecting the argument that a policy covered any damage that became “manifest” during the policy period. The Ontario Court, referring to the Saskatchewan decision, stated:

The court rejected the manifestation theory on the basis that it conflicts with two fundamental insurance concepts, risk and indemnity. If the damage has already occurred before the commencement of the policy, then there is no longer risk as the damage is a certainty.

We agree with the conclusion of the trial judge that in this case the manifestation theory, making only the insurer on cover at the date of manifestation responsible for the entire loss, is not consistent with the policy language…. A recognition and examination of this difference of view and approach is essential to the analysis of the proper trigger.[^20]

[70] The issue of whether the parties intended the policy to cover a risk that materialized on April 27, 2006, must be determined based on the wording of the policy. Aviva back-dated the policy to April 24, 2006, at which point the risk had not yet materialized. This court has held that effect must be given to the back-dating of an insurance policy. In McClelland & Stewart Ltd. v. Mutual Life Assurance Co. of Canada, (1977), Labrosse J., as he then was, held that the date to which the policy was back-dated was the effective date for purposes of determining whether the insured’s suicide occurred within two years from the date of the policy. Justice Labrosse stated:

In my view, once the policy was issued or the risk was accepted, if the defendant agreed to change the date from February 27, 1968, to January 23, 1968, for the purposes of determining the term of the policy (20 years from January 23, 1968), the premium payable, the policy years and the conversion privilege clause, then the defendant accepted the earlier date as the effective date for the purpose of calculating the two years after which the policy becomes incontestable. It would be difficult to understand that the premium would have been paid and accepted from January 23, 1968, and the policy would only have been effective from February 27, 1968, if not later.[^21] [Emphasis added]

[71] In Ashton v. Tu, (1998), the Ontario Court of Appeal found that the insurer’s agent, who back-dated the policy, intended to apply coverage retroactively, and held that the insurer was liable, under the policy, for an accident that had occurred before the application was made. In that case, the court held that the insured’s failure to inform the agent of the accident did not eliminate liability coverage for the plaintiff.[^22]

[72] Aviva seeks to distinguish Ashton v. Tu on the ground that in Ashton, the broker back-dated the application whereas, in the present case, he did not. Additionally, the insurer in Ashton v. Tu received payment for the policy premium on the date the application was made, and the coverage was intended to apply to the owner of the insured vehicle, who gave his consent to the driver. None of these facts were dispositive of the decision in Ashton. It is the date of the policy, not the date of the Application that determines the effective date of coverage, as Labrosse J. held in McClelland & Stewart Ltd., above. In the present case, Intact and Novex assert that Mr. Levy was the actual owner and gave his permission to Mr. Osei-Afriyie to drive, and there is evidence supporting those claims. Premiums were payable from the effective date of the policy, even if Ms. Dawkins failed to pay them.

c) Is it contrary to public policy to require Aviva to respond?

[73] Aviva argues that imposing on it the obligation to respond to a claim arising from an accident caused by a person with whom it had no relationship, who was driving a vehicle it did not insure, and for which it never collected premium payments, would be unjust and contrary to public policy. I disagree. Aviva insured Mr. Levy who, arguably, was the owner of the Toyota on the date of the collision. If he consented to Mr. Osei-Afriyie driving the vehicle to the garage to have the headlight repaired, the fact that Aviva had no relationship with Mr. Osei-Afriyie is immaterial.

[74] Aviva entered into a contract, which it back-dated to April 24, 2006, by which it insured the Toyota effective that date. Ms. Dawkins was legally obliged to pay the premiums from that date. The fact that she never, in fact, paid the premiums is immaterial. As of the effective date of the policy, the collision had not yet occurred. When it occurred three days later, it was an insured risk.

CONCLUSION AND ORDER

[75] Given the potential complexity of the issues of fact to be determined in relation of Aviva’s allegations of fraud, a trial is the most efficient and proportionate manner of securing a determination of them. None of the parties sought leave to examine Ms. Dawkins, Mr. Osei-Afriyie, or Mr. Levy as non-parties on the motion. Additionally, there was no cross-examination of the appraiser, or of the tow-truck driver, which might have shed more light on Aviva’s theory that a fraud was perpetrated. It is difficult to know, in the absence of affidavits from those witnesses, what their viva voce evidence would add to the evidentiary record.

[76] It would not be an efficient use of judicial or courtroom resources for the court to seek to use its powers under Rules 20.04(2.1) and (2.2) in an effort to fill in the gaps in the evidentiary record in order to make a final determination as to coverage under Aviva’s policy in isolation. The evidence of the witnesses referred to above, for example, regarding the condition of the Toyota immediately following the collision would be relevant to other issues, such as the quantum of the claim.

[77] The need for a trial cannot be avoided by using the expanded powers of the motion judge in a motion for summary judgment. Their use in the particular circumstances of this case would be contrary to the interests of justice and would not lead to a fair or just result, or serve the goals of timeliness, affordability, and proportionality in light of the litigation as a whole.

[78] For these reasons, it is ordered that:

1. Aviva’s motion for summary judgment is dismissed.

2. Aviva shall pay the defendants’ costs of the motion, fixed at the agreed upon amount of $15,000, within 60 days.

Price J.

Released: August 18, 2017

CITATION: Herman v. Intact, 2017 ONSC 4945 COURT FILE NO.: CV-10-4760-A2 DATE: 2017-08-18

ONTARIO SUPERIOR COURT OF JUSTICE

B E T W E E N:

LATOYA ANTONETTE ELSIE HERMAN Plaintiff

• and -

INTACT INSURANCE COMPANY and NOVEX INSURANCE COMPANY Defendants

• and -

AVIVA CANADA INC. Third Party

REASONS FOR ORDER

Price J.

Released: August 18, 2017

[^1]: Combined Air Mechanical Services Inc. v. Flesch, [2011] 108 O.R. (3d) 1, 2011 ONCA 764, at paras. 41-44 [^2]: Hryniak v. Mauldin, 2014 SCC 7, [2014] 1 S.C.R. 87. [Hyrniak] [^3]: Bruno Appliances and Furniture Inc. v. Hryniak, 2014 SCC 8, [2014] 1 S.C.R. 126. [^4]: Sweda Farms v. Egg Farmers of Ontario, 2014 ONSC 1200, [2014] O.J. No. 851, at para. 32 [^5]: Hryniak, at para. 49 [^6]: Hryniak, at para. 58 [^7]: Hryniak, at para. 66 [^8]: Hryniak, at para. 66 [^9]: Hamilton Kilty Hockey Club Inc. v. Ontario (Attorney General), 2003 24429 (ON CA), 64 O.R. (3d) 328, [2003] O.J. No. 1163, at para. 20. [^10]: Ashton v Tu, 1998 1766 (ON CA), [1998] 40 O.R. (3d) 690, O.J. No. 2239. [^11]: Smith v. Mikel, [2003] O.J. No. 4898, para. 38 [^12]: Hayduk v. Pidoborozny 1972 136 (SCC), [1972] S.C.R. 879. [^13]: Insurance Act, RSO 1990, c I.8 [^14]: Hansra v. York Fire & Casualty Insurance Co, 1982 2005 (ON SC), [1982] O.J. No. 3415 (Co. Ct.), at para. 13; Ellis v. London-Canada Insurance Co, 1952 ONSC 128, at para. 46, reversed on other grounds 1953 ONCA 14, aff’d 1954 5 (SCC), [1954] S.C.R. 28. [^15]: Ashton, above, at para. 50, 57 [^16]: Highway Traffic Act, RSO 1990, c H.8 [^17]: Bode, administrator appointed by the Law Society of Upper Canada v. Chubb Insurance Co. of Canada, [1991] O.R. (3d) 752, O.J. No. 1063 (Gen. Div.). [^18]: Alie v. Bertand & Frere Construction Co., 2002 31835 (ON CA), [2002] 62 O.R. (3d) 345, O.J. No. 4697. [^19]: University of Saskatchewan v Firemans’ Fund Insurance Co., [1997] S.J. No. 642, 1997 9789 (SKCA). [^20]: Alie v. Bertrand & Frere Construction Co., at paras. 121 and 137 [^21]: McClelland & Stewart Ltd. v. Mutual Life Assurance Co. of Canada, 1977 1824 (ON SC), [1977] O.J. No 1733, 17 O.R. (2d) 661, at para. 23. [^22]: Ashton v. Tu.