COURT FILE NO.: 51645/09 A1 (St. Catharines) DATE: 20180726

ONTARIO

SUPERIOR COURT OF JUSTICE

BETWEEN:

Dianne Harte Plaintiff

• and -

Ruslan Lavrov, Dmytro Lavrov and the Guarantee Company of North America Defendants

• and -

Manitoba Public Insurance Third Party

COUNSEL:

Kasia Kosacka, for the Plaintiff and for the Defendant the Guarantee Company of North America Bronwyn M. Martin, for the Third Party

HEARD: April 3, 2018 and by written submission dated May 7, 2018

BEFORE: R. A. Lococo, J.

REASONS FOR DECISION

I. Introduction

[1] In an action for damages arising from a motor vehicle accident, the court has been asked to determine certain questions of law by way of a special case pursuant to r. 22 of the Rules of Civil Procedure, R.R.O. 1990, Reg. 194. The main issue to be determined is whether the vehicle owned by one of the defendants was covered by a valid insurance policy at the time of the accident. For the reasons that follow, I have concluded that a valid insurance policy was in effect at the time of the accident.

[2] The dispute between the parties arose from a motor vehicle accident that occurred in St. Catharines on October 17, 2008. The plaintiff’s vehicle was rear-ended by a vehicle that was operated by the defendant Ruslan Lavrov and was owned by his brother, the defendant Dmytro Lavrov.

[3] By Statement of Claim issued October 6, 2009, the plaintiff commenced an action against the Lavrovs for damages arising from the accident. Ruslan Lavrov defended the action, and was subsequently examined for discovery. Dmytro Lavrov did not defend the action, and was noted in default.

[4] In August 2010, the plaintiff amended her claim to include the Guarantee Company of North America as a third defendant. The Guarantee Company was the plaintiff’s insurer for uninsured and underinsured coverage. The amended claim alleged that the Lavrovs were uninsured or underinsured at the time of the accident. In response to the amended claim, the Guarantee Company pleaded that the Lavrovs were insured by a valid insurance policy at all relevant times.

[5] In May 2013, the Guarantee Company commenced a third party claim seeking contribution and indemnity from Manitoba Public Insurance (MPI). In the third party claim, the Guarantee Company pleaded that Dmytro Lavrov had a valid insurance policy with MPI at the time of the accident.

[6] In response to the third party claim, MPI pleaded that Dmytro Lavrov’s insurance policy was suspended at the time of the accident due to Dmytro Lavrov’s non-payment of the premium and his breach of the policy’s Manitoba residency requirement. MPI also alleged that the third party claim was statute barred, since it was brought more than two years after service of the plaintiff’s claim on the Guarantee Company.

[7] In October 2015, the Guarantee Company settled the action with the plaintiff. As part of the settlement, the plaintiff assigned her claim arising from the accident to the Guarantee Company. The Guarantee Company seeks contribution and indemnity from MPI for the settlement amount paid to the plaintiff.

[8] As set out in the special case, the participating parties (being the plaintiff, the Guarantee Company, Ruslan Lavrov and MPI) seek the determination of the following questions of law:

1. Coverage – Was Dmytro Lavrov’s vehicle insured under a valid automobile insurance policy with MPI at the time of the accident?
2. Duty to defend/indemnify – If so, is MPI required to defend and indemnify either or both of the Lavrovs for damages for which they are found liable as a result of the accident?
3. Limitation – Is the third party claim statute barred pursuant to the Limitations Act, 2002, S.O. 2002, c. 24, Sch. B?

[9] Counsel for MPI and counsel for the Guarantee Company (who also represents the plaintiff) filed motion material and made submissions at the motion hearing. Ruslan Lavrov (who is self-represented) did not participate in the hearing, other than by signing the special case.

[10] During oral submissions, counsel indicated that there is no dispute that if there was a valid automobile policy with MPI at the time of the accident, then MPI would be required to defend and indemnify in accordance with the terms of the policy. I agree with that conclusion. As a result, if the answer to the first question in the special case is yes, then the answer to the second question would also be yes.

[11] Two issues remain to be addressed: the coverage issue and the limitation issue. As indicated further below, a decision of the Ontario Court of Appeal released after the motion was heard has resolved the dispute between the parties relating to the limitation issue. I will briefly address that issue first.

III. Limitation

[12] Is the third party claim statute barred pursuant to the Limitations Act, 2002?

[13] The Guarantee Company commenced its third party claim for contribution and indemnity against MPI in May 2013, more the two years after the plaintiff brought her claim against the Guarantee Company in August 2010. MPI argued that the third party claim was statute barred by s. 18(1) of the Limitations Act, 2002. The Guarantee Company took a contrary view.

[14] In order to support their positions, the parties relied on conflicting decisions of this court as to the correct interpretation of s. 18(1). That conflict has now been resolved by the Ontario Court of Appeal in Mega International Commercial Bank (Canada) v. Yung, 2018 ONCA 429, a decision released after the hearing of this motion. Counsel who appeared on the motion jointly brought that decision to my attention subsequent to the motion hearing.

[15] By way of background, the basic limitation period for Ontario actions is provided for in ss. 4 and 5 of the Limitations Act, 2002. Under s. 4, a proceeding in respect of a claim shall not be commenced more than two years after the claim was discovered. Under s. 5(1), a claim is discovered on the earlier of (a) the day on which the person making the claim first knew of a potential claim for a loss arising from the act or omission of the person against whom the claim is made, and (b) the day a reasonable person ought to have known of the matters giving rise to the claim. Under s. 5(2), a person with a claim shall be presumed to have known of the matters referred to in s. 5(1)(a) on the day that the act or omission on which the claim is based took place unless the contrary is proved.

[16] The limitation period for a claim for contribution and indemnity is addressed in s. 18(1) of the Limitations Act, 2002, which provides as follows:

18(1) For the purposes of subsection 5(2) and section 15, in the case of a claim by one alleged wrongdoer against another for contribution and indemnity, the day on which the first alleged wrongdoer was served with the claim in respect of which contribution and indemnity is sought shall be deemed to be the day the act or omission on which that alleged wrongdoer’s claim is based took place.

[17] MPI argued that the correct interpretation of s. 18(1) was that the two year limitation period for the third party claim by the Guarantee Company (“the first alleged wrongdoer”) against MPI (“another” alleged wrongdoer) started to run in August 2010 on the day that the Guaranty Company was served with the plaintiff’s claim (“the claim in respect of which contribution and indemnity is sought”). According to the Guarantee Company, that day was conclusively “deemed to be the day” on which the third party claim was discovered for the purpose of ss. 4 and 5. On that basis, the limitation period would have expired before the Guarantee Company brought the third party claim against MPI in May 2013. In support of that position, MPI relied on previous decisions of this court, including Miaskowski (Litigation guardian of) v. Persaud, 2015 ONSC 1654, rev’d in part, 2015 ONCA 758.

[18] The Guarantee Company took a contrary position, arguing in effect that s. 18 should be interpreted as identifying the presumptive commencement date for the limitation period for contribution and indemnity claims, subject to discoverability principles as set out in s. 5. In support of that position, the Guarantee Company relied on the reasoning of Leach J. in Demide v. Canada (Attorney General), 2015 ONSC 3000, 47 C.L.R (4th) 126. In that decision, Leach J. concluded (at para. 85) that s. 18 “merely creates a truly rebuttable presumption, (and not a conclusive one) … that the basic limitation period will expire two years from that date, unless it is proven that such matters were not discovered or capable of discovery through the exercise of due diligence until some later date.”

[19] As previously noted, after the hearing for this motion, the conflicting decisions relating to s. 18 were resolved by the Court of Appeal in Mega International Commercial Bank (Canada) v. Yung. As a result of that decision, it is now clear that it would not be correct for me to conclude on a definitive basis that the Guarantee Company’s third party claim for contribution and indemnity against MPI is statute barred, as argued by MPI.

[20] That being said, during oral submissions, counsel for both parties agreed that I am not in a position on this motion to make the contrary finding on a definitive basis, that is, a finding that the Guarantee Company’s third party claim against MPI is not statute barred. On the interpretation of s. 18 adopted by the Court of Appeal in Mega International, the two year limitation period for the Guarantee Company’s claim for contribution and indemnity against MPI presumptively commenced in August 2010. The issue that remains to be determined is whether discoverability principles provide the basis for determining that the limitation period commenced at a later time within two years prior to the bringing of the third party claim. That determination would include consideration of whether the Guarantee Company acted with reasonable due diligence in determining whether it had a claim against MPI.

[21] If necessary, the discoverability determination will be made at a later time on an appropriate evidentiary record. The motion record filed on behalf of MPI as moving party includes the agreed facts as stated in the special case as well as the pleadings for this action. The Guarantee Company responded with a motion record that includes an affidavit of a lawyer from the law firm representing the Guarantee Company, with various documents attached, including extracts from examinations for discovery and correspondence between counsel. However, as indicated during oral submissions, the parties are agreed that the additional material in the Responding Motion Record was intended only to provide background information relating to the facts as stated in the special case. The record as a whole does not provide the basis for determining on a definitive basis whether or not the third party claim is statute barred, applying discoverability principles.

[22] Accordingly, the answer to the third question is that the Guarantee Company’s third party claim is not deemed conclusively to be statute barred by s. 18 of the Limitations Act, 2002. However, it is not appropriate to determine on the record before me whether MPI has a limitation defence to the third party claim. Therefore, as agreed by the parties, the question of whether the third party claim is statute barred otherwise remains outstanding.

IV. Coverage

A. Introduction

[23] Was Dmytro Lavrov’s vehicle insured under a valid automobile insurance policy with MPI at the time of the accident?

[24] If the answer to this question is yes, MPI would be liable for the plaintiff’s damages arising from the accident. If the answer is no, the Guarantee Company would be liable as the plaintiff’s insurer to cover the plaintiff’s damages arising from the actions of the driver of the uninsured Lavrov vehicle.

[25] Consistent with counsel’s submissions at the motion hearing, the answer to this question involves legal considerations arising from the reciprocal scheme for the enforcement of automobile insurance policies that is in effect in Canadian provinces and territories. That scheme is described in some detail in Potts v. Gluckstein (1992), 8 O.R. (3d) 556 (C.A.), leave to appeal to S.C.C. refused (1992), 62 O.A.C. 320 n, a decision included in the Guarantee Company’s casebook for this motion. In Potts (at para. 3), the court described this reciprocal scheme in the following terms:

The reciprocal scheme provides a uniform basis for the enforcement of motor vehicle insurance claims in Canada. This ensures that a person who has entered into a motor vehicle insurance contract in one province is recognized as insured in other provinces. In the event of an accident, the insurer agrees to be bound by the law of the province or territory where the action is brought and not the province where the policy is issued. The insurer also accepts liability to the limits prescribed in its policy or, at least, to the minimum limits established in the province or territory where the action is brought …. The benefits of the scheme are obvious in Canada because of the heavy volume of interprovincial motor vehicle traffic.

[26] As described in Potts (at para. 2), the reciprocal scheme is based upon a power of attorney and an undertaking that the participating insurer is required to provide to provincial insurance regulators. During the course of these Reasons, I will be making further reference to the reciprocal scheme (including the required undertaking) and to the Potts decision.

[27] As a preliminary matter, the Potts decision raises a question of terminology that I thought was worth mentioning at this point. In Potts at para. 10, the court indicates that when considering coverage issues under Ontario insurance policies, caution should be exercised when considering prior court decisions that deal with insurance coverage under “public automobile schemes established in Manitoba and British Columbia where the terms of insurance coverage are set out in legislation, evidenced by certificates of insurance and not separate insurance policies issued to insureds” (emphasis added). The court also noted that “terms of statutory coverage were not the same in all respects as insurance policies issued by private insurers in other provinces”.

[28] In the motion before me, the first question set out in the special case relates to whether Dmytro Lavrov was insured under a “valid automobile insurance policy” with MPI. The parties did not raise any issue relating to use of the word “policy” with respect to the coverage issue in this case. However, as noted in Potts, it is useful to keep in mind the context in which the coverage issue arises, given that the insurer is MPI, the public automobile insurer in Manitoba. As explained further below, it also assists in relation to the use of terms such as “owner’s certificate”, which may not otherwise be familiar in the Ontario context.

[29] By way of background, MPI was incorporated under the Manitoba Public Insurance Corporation Act, C.C.S.M. c. P215 (the “MPICA”). As provided in that Act, MPI provides basic automobile insurance coverage in Manitoba on a compulsory basis. Insurance coverage is evidenced by a “certificate”, which is defined in s. 1(1) as a certificate of insurance issued under the MPICA. An “owner’s certificate” (as defined in s. 1(1)) is issued to the owner of a vehicle and evidences the owner’s insurance coverage relating to that vehicle. Under s. 48(1), a person applying to the Registrar of Motor Vehicles to register a vehicle in Manitoba must also apply for an owner’s certificate for that vehicle and make arrangements to pay the required premium. Similarly, a “driver’s certificate” is issued to a person who is eligible to hold a Manitoba driver’s licence. Under s. 48(2), a person applying for a Manitoba driver’s licence must also apply for a driver’s certificate and make arrangements to pay the required premium. Under ss. 58(1) and (2), the suspension or cancellation of a vehicle’s registration or a driver’s licence automatically suspends or cancels the owner's certificate or the driver’s certificate (as the case may be).

[30] I thought it would be useful to refer to that terminology at this point, since the status of the “owner’s certificate” for the Lavrov vehicle in particular is a key consideration with respect to the legal issues that arise on this motion.

B. Relevant background facts

[31] As set out in the special case and the supplementary documents, the undisputed facts relating to the coverage issue may be summarized as follows:

1. Dmytro Lavrov’s vehicle was insured under a valid automobile insurance policy with MPI commencing in May 2008. The policy was renewed for a one year period in June 2008.
2. Dmytro Lavrov moved to Ontario as of September 1, 2008. Dmytro Lavrov did not defend the action, and therefore has not provided any evidence as to his residence or the location of his vehicle at any material time. However, during oral submissions, counsel agreed that there was no dispute about Dmytro Lavrov’s move to Ontario as of that date.
3. MPI suspended Dmytro Lavrov’s insurance policy on October 4, 2008 due to his non-payment of the required premium. MPI sent written notice entitled “Notice of Upcoming Suspension – Midnight October 4, 2008” by certified mail addressed to Dmytro Lavrov at a Winnipeg address, which was the civic address that MPI had for Dmytro Lavrov. The notice letter was on MPI letterhead and was over the signature of the Manitoba Registrar of Motor Vehicles. The notice letter indicated (among other things) that (i) the installment due on September 20, 2008 had been dishonoured, (ii) the amount owing was $168.78, and (iii) payment of that amount by September 29, 2008 was required in order to “ensure that your registration and/or insurance coverage continues uninterrupted”. That notice was the only letter that MPI issued. MPI did not take any other steps to suspend, cancel or flag the vehicle attached to Dmytro Lavrov’s policy.
4. The accident in St. Catharines occurred on October 17, 2008. MPI was advised by telephone of the accident the same day. MPI’s “customer comments” for that date indicate that that caller advised that (i) he was in an accident in Ontario after his insurance was suspended, (ii) he was in the process of moving to Ontario, (iii) his friends had just sent him the letter advising of the suspension, and (iv) he will make payment ASAP.
5. On October 18, 2008 (the day following the accident), the policy was reactivated as a “short term policy” when one or both of the Lavrovs contacted the insurance broker to request reactivation and made a $313.00 payment to bring the account up to date. The payment consisted of (i) $164.78 for arrears for the period September 9 to October 8, 2008, and (ii) $148.00 for the premium on the policy reinstated on October 18, 2008.
6. On or about October 24, 2008, MPI cancelled the policy at the request of the Lavrovs. MPI retained the $164.78 arrears payment and returned the $148.00 premium payment.
7. Since Dmytro Lavrov did not defend the plaintiff’s action, he has not provided any evidence with respect to his knowledge (or lack of knowledge) of the policy suspension prior to the accident.
8. During Ruslan Lavrov’s examination for discovery, he testified that (i) he was not aware of any correspondence from MPI relating to the policy suspension before the accident, and (ii) he became aware of the policy suspension the day following the accident when he called MPI to advise them of the accident. During his discovery, Ruslan Lavrov was also asked if his brother received anything from MPI relating to the policy suspension before the accident. Ruslan Lavrov’s response was: “I don’t know. He said that he didn’t - - that’s the problem.”
9. Dmytro Lavrov did not register his vehicle in Ontario prior to the accident.

C. Positions of the parties

[32] Based on the foregoing facts, MPI’s position is that Dmytro Lavrov’s vehicle was not insured under a valid automobile insurance policy with MPI at the time of the accident on October 17, 2008. MPI justified that position on two bases.

1. First, the policy was suspended on October 4, 2008 for non-payment of the premium in accordance with Manitoba law. As set out in s. 3.1(1))(b)(i) of the Automobile Insurance Coverage Regulation, Man. Reg. 290/88, MPI may suspend or cancel a person’s driver’s certificate, owner’s certificate or other certificate for failure to pay any money payable to MPI. Without a valid owner’s certificate, the owner or the driver (with the owner’s consent) of the vehicle is no longer an “insured” (as defined in s. 77 of that Regulation) who is entitled to insurance coverage from MPI.
2. Second, Dmytro Lavrov failed to register his vehicle in Ontario within 30 days of moving to Ontario, as required by ss. 7 and 15(2) of the Highway Traffic Act, R.S.O. 1990, c. H.8. As a result, Dmytro Lavrov’s owner’s certificate in Manitoba was deemed to be revoked under s. 58 of the MPICA. Section 58 provides that were a motor vehicle designated in an owner’s certificate is operated in a jurisdiction outside Manitoba when the law of that other jurisdiction requires that motor vehicle to be registered or licensed in that jurisdiction, the owner’s certificate is deemed to be revoked. Without a valid owner’s certificate, there is no insurance coverage for the vehicle, since the owner or driver of the vehicle is no longer an “insured” who is entitled to insurance coverage from MPI.

[33] The Guarantee Company’s position is that Dmytro Lavrov’s vehicle was insured under a valid automobile insurance policy with MPI at the time of the accident. That being said, except as outlined below, the Guarantee Company did not take issue with the basic legal analysis underlying MPI’s position. What the Guarantee Company disputed was MPI’s entitlement to rely on either Dmytro Lavrov’s failure to register his vehicle in Ontario or his non-payment of the insurance premium as grounds for denying coverage under Dmytro Lavrov’s policy in this case. The bases for that position are summarized below.

1. As an “out-of-province” insurer, MPI was required to provide an undertaking to insurance regulators that applies when motor vehicles that MPI insures are operated in Ontario and other participating jurisdictions outside Manitoba. According to the Guarantee Company, MPI cannot deny coverage under Dmytro Lavrov’s policy because of that undertaking. Pursuant to s. 226.1 of the Insurance Act, R.S.O. 1990, c. I.8, MPI was required to undertake that its motor vehicle liability policies will provide at least the coverage described in sections 251 (relating to policy limits), 265 (uninsured automobile coverage) and 268 (statutory accident benefits) when the insured automobiles are operated in Ontario. MPI was also required to undertake that in an action in Ontario or other participating jurisdictions arising from a motor accident that occurred in that jurisdiction, MPI shall not set up a defence to an insurance claim that could not be set up if the insurance policy were issued in that jurisdiction (see s. 252(1)(b) of the Insurance Act (Ontario) and s. 36(4) of the MPICA). The Guarantee Company says that as a result of that undertaking, MPI was not entitled to deny insurance coverage based on the deemed revocation of the owner’s certificate under s. 58 of the MPICA, since there is no Ontario provision that corresponds to s. 58.
2. The Guarantee Company also says that MPI was not entitled to deny insurance coverage based on Dmytro Lavrov’s non-payment of the required premium, since MPI failed to comply with the notice requirements for suspension of the owner’s certificate for the vehicle that are required by Manitoba law. According to the Guarantee Company, in the absence of evidence that Dmytro Lavrov received actual notice prior to the accident that the owner’s certificate for his vehicle was no longer valid, his coverage under the policy remained in place at the time of the accident.
3. As well, the Guarantee Company says MPI did not comply with the notice requirements relating to the suspension of Dmytro Lavrov’s owner’s certificate that would apply in equivalent circumstances in Ontario. Therefore, even if MPI had provided notice of suspension in accordance with Manitoba law for non-payment of the required premium, MPI’s inter-jurisdictional undertaking precluded MPI from relying on compliance with Manitoba notice requirements to deny insurance coverage for the Lavrov vehicle on that basis.

[34] Based on the foregoing, the outstanding issues relating to coverage are as follows:

1. Failure to register vehicle in Ontario – Does MPI’s inter-jurisdictional undertaking preclude MPI from relying on s. 58 of the MPICA to deny insurance coverage for the Lavrov vehicle based on the failure to register the vehicle in Ontario?
2. Failure to pay premium – Did MPI fail to properly notify Dmytro Lavrov of the suspension of his owner’s certificate for non-payment of the required payment, thereby precluding MPI from denying insurance coverage on that basis? (a) Compliance with Manitoba notice requirements to terminate coverage – Did MPI provide Dmytro Lavrov with the notice required by Manitoba law to suspend the insurance coverage for the Lavrov vehicle for non-payment of the required premium? (b) Compliance with Ontario notice requirements to terminate coverage – Did MPI provide Dmytro Lavrov with the notice that would be required by Ontario law to terminate the insurance coverage for the Lavrov vehicle? If not, would MPI’s inter-jurisdictional undertaking preclude MPI from relying on compliance with Manitoba notice requirements to deny insurance coverage for the Lavrov vehicle based on non-payment of the required premium?

[35] I address each of these issues in turn below.

D. Failure to register vehicle in Ontario

[36] Does MPI’s inter-jurisdictional undertaking preclude MPI for relying on s. 58 of the MPICA to deny insurance coverage for the Lavrov vehicle based on the failure to register the vehicle in Ontario?

[37] To recap, it is an agreed fact that prior to the accident, Dmytro Lavrov did not register his vehicle in Ontario after moving to that province, as he was required to do under Ontario law. Therefore, his “owner’s certificate” evidencing his insurance coverage with MPI was automatically revoked pursuant to s. 58 of the MPICA. The Guarantee Company says that MPI’s inter-jurisdictional undertaking bars MPI from relying on s. 58 to deny insurance coverage for the Lavrov vehicle. MPI takes the opposite position.

[38] In order to support their positions, the Guarantee Company and MPI both relied on British Columbia decisions relating to the application of s. 58 of the MPICA. In each case, the decision involved a motor vehicle accident in British Columbia where a Manitoba owner’s certificate had previously been issued for the vehicle that the defendant driver operated. The ultimate issue in each case was which one of the public automobile insurers for Manitoba (MPI) or British Columbia (the Insurance Company of British Columbia, referred to as “ICBC”) was or could have been liable for amounts owing as a result of the accident.

[39] The Guarantee Company relied on the decision of the British Columbia Supreme Court in Dodd v. McFadden (1981), 128 D.L.R. (3d) 338 (B.C.S.C.). In that case, the defendant McFadden moved from Manitoba to British Columbia several months before the accident, and had previously been issued an owner’s certificate in Manitoba with respect to his vehicle. He did not register his vehicle in British Columbia prior to the accident as required by British Columbia law, which provided a 30 day grace period for registration after becoming a resident. The plaintiff settled her claim against McFadden and brought an action in British Columbia against MPI for payment of the amount due under the judgment. Relying on the predecessor to s. 58 of the MPICA, MPI argued that there was no insurance coverage because the owner’s certificate for the vehicle was deemed to be revoked when McFadden operated his vehicle in British Columbia without registration in that province as required by local law. The court held that MPI was not entitled to rely on the predecessor to s. 58 to avoid liability, given its undertaking not to set up any defence to a claim that may not be set up if the insurance policy had been entered into in British Columbia. In that regard, the court noted (at paras. 10 and 15) that at the time of the accident, there was no equivalent to s. 58 of the MPICA in British Columbia, although such a provision was subsequently adopted.

[40] Although not referred to by the parties, I note that in Insurance Corp. of British Columbia v. Koop (1985), 20 C.C.L.I. 127 (B.C. Co. Ct.), the motion judge considered the Dodd decision in connection with a special case to determine the insurance coverage issue on facts similar to those in Dodd. In Koop, the court held that (i) the defendant driver’s insurance coverage with MPI was deemed to have been revoked by the predecessor to s. 58 of the MPICA, and (ii) MPI’s inter-jurisdictional undertaking did not preclude it from relying on s. 58 in British Columbia to deny coverage. While noting that the opposite conclusion was reached in Dodd, the court in Koop (at paras. 12-14) indicated that Dodd was decided before the implementation of s. 32(1) of the Insurance (Motor Vehicle) Act, R.S.B.C. 1979, c. 204, which in effect provided for automatic cancellation of the ownership certificate for a vehicle operated outside British Columbia without registration in a jurisdiction where registration was required. The court held (at para. 17) that s. 38(2) of the Insurance (Motor Vehicle) Act was similar in wording and effect to the predecessor to s. 58 of the MPICA. Therefore, the undertaking did not preclude MPI from denying liability based on the deemed revocation of insurance coverage under the MPICA as a result of the defendant driver’s failure to register the vehicle.

[41] The Guarantee Company argues that parallel to the situation in Dodd, there is no Ontario legislation equivalent to s. 58 of the MPICA that provides for the automatic revocation of an “owner’s certificate” or its equivalent in Ontario if an Ontario driver operates a motor vehicle in another jurisdiction when registration of the vehicle is required in that jurisdiction. Therefore, relying on s. 58 to avoid liability would not be consistent with MPI’s undertaking not to set up a defence that it could not set up if the policy had been issued in Ontario. Accordingly, the undertaking precludes MPI from denying coverage under the policy, according to the Guarantee Company.

[42] In response to the Guarantee Company’s position, MPI relied on the British Columbia Court of Appeal decision in Steyns v Manitoba Public Insurance Corp. (1995), 7 B.C.L.R. (3d) 106, 126 D.L.R. (4th) 394 (C.A.). According to MPI, Steyns at least implicitly called into question the court’s reasoning in Dodd. Consistent with the decision in Koop, the Court of Appeal held that MPI was entitled to rely on s. 58 of the MPICA to deny coverage based on the deemed revocation of the owner’s certificate for failure to register the vehicle in British Columbia. In doing so, the court did not refer to Dodd or Koop, nor did it consider the issue of whether MPI’s inter-jurisdictional undertaking precluded it from relying on s. 58. It was not necessary for the court in Steyns to do so, since the parties and the court were in agreement that Manitoba law applied (see para. 15). The main issue to be determined was whether another provision of the MPICA barred MPI from relying on s. 58 to deny coverage. The court held that it did not. Accordingly, while the result in Steyns is consistent with the result that MPI is seeking (that is, denying coverage to the Lavrovs based on s. 58 of the MPICA), the reasoning in Steyns did not address the effect or scope of the undertaking, a key issue in the motion before me.

[43] In addition to relying on Steyns, MPI also says that in order to determine whether MPI’s inter-jurisdictional undertaking prevented it from relying on s. 58 of the MPICA to deny coverage, it is necessary to look at the wider scheme of insurance regulation in Ontario, rather than focusing on the whether there was a specific Ontario counterpart to s. 58. For example, under s. 4(2) of the Statutory Conditions – Automobile Insurance, O. Reg. 777/93, the insured under an automobile insurance policy in Ontario is prohibited from operating (or permitting any other person to operate) an insured automobile unless the insured (or other person) is authorized by law to do so. A driver is also prohibited by ss. 7 and 8 of the Highway Traffic Act from driving in Ontario without obtaining a valid vehicle permit and paying the prescribed fee. Under s. 15(2), the owner of a vehicle who becomes an Ontario resident has 30 days to comply with those requirements. MPI says that for the purpose of determining the scope of the restriction with respect to raising a defence available in Manitoba, the regulatory scheme in Ontario should be considered to be equivalent in substance to that in Manitoba. According to MPI, it is not appropriate to focus whether there is an exact Ontario counterpart to s. 58 of the MPICA.

[44] I initially found that argument to be persuasive. As noted in Potts, the “owner’s certificate” issued with respect to a vehicle under Manitoba’s public automobile insurance system constitutes evidence of insurance coverage relating to that vehicle. If the owner’s certificate is suspended or cancelled, there is no coverage. By way of contrast, in a system as in Ontario based on private insurance coverage in which there is no statutory equivalent of an “ownership certificate”, there would be no expectation that there would be an Ontario counterpart to s. 58 of the MPICA, the effect of which would be to automatically suspend insurance coverage upon non-payment of premiums. The closest legislative parallel in Ontario may be the authority for an Ontario insurer to terminate an automobile insurance policy for non-payment of premiums (see s. 12 of the Compulsory Automobile Insurance Act, R.S.O. 1990, c. C.25), upon appropriate notice (see s. 11(1) of the Statutory Conditions – Automobile Insurance). The termination of coverage in these circumstances is not automatic. A positive act of the insurer is required in order to terminate coverage.

[45] Taking a more expansive interpretive approach, however, the statutory regimes in both jurisdictions have broadly equivalent mandatory requirements for the registration of vehicles and for the licensing of drivers, while accommodating “guest” vehicles and drivers from other jurisdictions. Both regimes also include transitional provisions that apply when owners and drivers move with their vehicles from one jurisdiction to another on a more permanent basis. Those considerations provide some support for the position that MPI should not be precluded by its inter-jurisdictional undertaking from relying on s. 58 of the MPICA to deny insurance coverage to the Lavrovs.

[46] As further support for that position, MPI’s counsel also relied on certain passages in Potts (at paras. 11-12), in which the Ontario Court of Appeal quoted from the reasons of Zuber J.A. in the court’s previous decision in MacDonald v. Proctor (1977), 12 O.R. (2d) 745 (C.A.). MacDonald involved a collision in Ontario in which the plaintiff’s vehicle was insured by MPI and the defendant was insured under an Ontario insurance policy. MPI paid no-fault benefits to the plaintiff, as provided for in MPI’s insurance coverage. In the plaintiff’s Ontario action for damages, the defendant admitted liability. In assessing damages payable by the defendant’s insurer, the trial judge deducted the amount of the no-fault benefits from MPI, as would have been the case if they had been paid by an Ontario insurer. In doing so, the trial judge accepted the defendant’s position that as a result of MPI’s inter-jurisdictional undertaking, MPI was in the same position as an Ontario insurer, as if the policy had been made in Ontario. The Court of Appeal reversed that decision, holding that the no-fault benefits were not deductible. As stated in Potts (at para. 12), the Court of Appeal in MacDonald described the effect of the undertaking in the following terms:

[T]he effect of the undertaking given by MPIC was to commit it to observe Ontario rules to a “certain extent”, where its insured is involved in Ontario proceedings, but the undertaking did not convert the Manitoba policy into one that is “made in Ontario.” Zuber J.A. stated … :

…the undertaking filed simply precludes an insurer from setting up defences which cannot be set up by an Ontario insurer by virtue of the Ontario Insurance Act. I am unable to read the undertaking as an agreement to incorporate into extraprovincial policies all those items that the Ontario Insurance Act obliges an Ontario policy to include. [Emphasis added. Case citation omitted.]

[47] MPI says the reasoning in MacDonald as to the limited effect of the inter-jurisdictional undertaking supports their position that the undertaking should not be interpreted as precluding MPI’s reliance on s. 58 of the MPICA to deny coverage to the Lavrovs. For the reasons below, I disagree.

[48] In order to put into context the Court of Appeal’s comments in Potts relating to the MacDonald decision, it is useful to review the facts in Potts. Potts involved a collision in Ontario between a vehicle driven by an uninsured Ontario driver and a British Columbia vehicle insured by ICBC. Under Ontario law, uninsured automobile coverage is part of every motor vehicle liability policy issued in Ontario (see s. 265(1) of the Insurance Act). Under British Columbia law, ICBC was required to provide uninsured automobile coverage, but unlike Ontario, not with respect to accidents that occurred outside of Ontario (see Potts, at para. 4). ICBC relied on the latter provision to deny coverage, arguing that the plaintiff’s claim should be satisfied by the Ontario Motor Vehicle Accident Claims Fund rather than ICBC. The Court of Appeal disagree, finding that the absence of coverage under British Columbia law constituted a defence that was not available if the policy had been issued in Ontario. ICBC was therefore precluded by its inter-jurisdictional undertaking from relying on that defence, and was held liable for the plaintiff’s damages. In reaching that conclusion, the court considered whether the reference to “defence” in the undertaking included denial of coverage with respect to an uninsured automobile. The Court of Appeal (at para. 9) adopted the following interpretation of “defence” from Schrader v. United States Fidelity & Guarantee Co. (1987), 59 O.R. (2d) 178 (Div. Ct.), at p. 182: “It will be seen that the section clearly dealt with any defence. This would include any defence that the policy did not include coverages or limits mandated by the Ontario Act” (emphasis added).

[49] In reaching its decision in Potts, the Court of Appeal considered its previous decision in MacDonald, but distinguished (at para. 13), on the following basis:

Counsel for the appellant based his argument on the declaration in MacDonald v. Proctor that the filing of the power of attorney and undertaking in Ontario "did not render the Manitoba policy one that is “made in Ontario". From this, it was argued that Ontario could not dictate terms, such as uninsured motorist coverage, to be added on to ICBC's policy as if it were a "made in Ontario" policy. This conclusion does not follow, because MacDonald v. Proctor is entirely different from and not relevant to the present case. It dealt only with the deductibility of benefits paid to a plaintiff by a Manitoba insurer from damages awarded in Ontario. It did not deal with the present case, as it would have done if the plaintiff had been forced to sue MPIC in Ontario for no-fault benefits. Then the issue would have been, as it is in this case, whether MPIC was precluded from setting up a defence in the Ontario action which was not available to an Ontario insurer. This is unquestionably what Zuber J.A. had in mind when he recognized that MPIC was required to observe Ontario rules "to a certain extent". The decision in MacDonald v. Proctor did not deal with defences and it therefore provides no support for the argument of the appellant. [Emphasis added.]

[50] As set out above, the Court of Appeal in Potts essentially distinguished MacDonald on its facts without calling to question the court’s reasoning. Nevertheless, I do not agree with MPI that MacDonald should be relied on to support the limited interpretation of the inter-provincial undertaking that MPI proposed.

[51] In Potts, the court gave a broad interpretation the term “defence” as used in the inter-jurisdictional undertaking, finding that it included denial of uninsured coverage that is required by Ontario law for Ontario automobile insurance policies. That conclusion was consistent with the intended scope of the reciprocal scheme for the enforcement of automobile insurance policies as described in Potts (at paras. 2-3). As previously noted, under that scheme, the out-of-province insurer provides an undertaking under which “the insurer agrees to be bound by the law of the province or territory where the action is brought and not the province where the policy is issued” relating to policy limits, uninsured coverage and statutory accident benefits. The insurer also agrees not to set up a defence to an insurance claim that could not be set up if the insurance policy were issued in that jurisdiction.

[52] On the motion before me, MPI seeks to rely on s. 58 of the MPICA, which would permit MPI to deny insurance coverage by automatically revoking the owner’s certificate associated with the Lavrov vehicle based on Dmytro Lavrov’s failure to register his vehicle in Ontario within the required time. There is no equivalent Ontario provision that automatically denies insurance coverage with respect to an Ontario vehicle being operated in a jurisdiction outside Ontario if the vehicle is not properly registered in that jurisdiction. The fact that Ontario (unlike Manitoba) does not have a system of public automobile insurance provides an explanation for the absence of an Ontario equivalent to s. 58 of the MPICA. However, in my view, that explanation does not provide a convincing basis for concluding that the undertaking does not apply in these circumstances. I agree with MPI that consideration of the wider scheme of insurance regulation in Ontario provides a useful context for determination of the scope of the undertaking. However, if MPI is permitted to deny coverage on the basis that the undertaking does not apply in this case, the result would be that MPI would have the benefit of a “defence” not available under Ontario law if the policy were issued in Ontario. I consider that conclusion to be consistent with the interpretation of the scope of the inter-jurisdictional undertaking in previous case law, including Potts and Schrader.

[53] Accordingly, I have concluded that MPI is not entitled to deny coverage under the insurance policy on Dmytro Lavrov’s vehicle based on his failure to register his vehicle in Ontario prior to the accident, as required by Ontario law. By doing so, MPI would be raising a defence that could not be set up if the insurance policy were issued in Ontario, which is precluded by MPI’s inter-jurisdictional undertaking.

E. Failure to pay premium

[54] Did MPI fail to properly notify Dmytro Lavrov of the suspension of his owner’s certificate for missing a premium payment, thereby precluding MPI from denying insurance coverage on that basis?

[55] To recap, it is an agreed fact that MPI suspended Dmytro Lavrov’s insurance policy prior to the accident for failure to pay the required premium, as MPI was entitled to do under Manitoba law. The Guarantee Company says that MPI cannot deny coverage under the policy since prior to the accident, MPI did not provide notice to Dmytro Lavrov of that suspension in accordance with Manitoba law. The Guarantee Company also says that even if MPI provided notice that complied with Manitoba law, MPI’s inter-jurisdictional undertaking precluded MPI from relying on that compliance to deny insurance coverage for the Lavrov vehicle, given MPI’s non-compliance with notice requirements that apply to Ontario insurers. In both cases, MPI takes the opposite view.

[56] In order assist in determining which position is correct, it is useful to consider the constituent elements of the Guarantee Company’s position in greater detail, as indicated further below.

(a) Compliance with Manitoba notice requirements to terminate coverage

[57] Did MPI provide Dmytro Lavrov with the notice required by Manitoba law to terminate the insurance coverage for the Lavrov vehicle for non-payment of the required premium?

[58] As previously noted, s. 3.1(1)(b)(i) of the Automobile Insurance Coverage Regulation provides MPI with the authority to suspend or cancel a person’s owner’s certificate for failure to pay the required premium, thereby terminating the owner’s insurance coverage. When it does so, MPI is required by s. 3.1(2) to give written notice to the insured “without delay after the suspension or cancellation”. The required notice must be given by mailing it or delivering it to the insured’s last known address using a mail or delivery service that provides MPI with an acknowledgement of receipt (s. 3.1(3)). Evidence that such notice was provided and that MPI received an acknowledgement of its receipt is proof, in the absence of evidence to the contrary, that the insured received the notice (s. 3.1(4)).

[59] As well, under s. 92 of the Drivers and Vehicles Act, C.C.S.M. c. D104, and s. 269(2) of the Highway Traffic Act, C.C.S.M. c. H60, the Registrar of Motor Vehicles may suspend a person’s vehicle registration for failure to pay an insurance premium due to MPI. If the Registrar does so, the owner’s certificate for that vehicle would be automatically suspended by s. 59(1) of the MPICA, thereby suspending the owner’s insurance coverage. Under s. 93(1) of the Drivers and Vehicles Act, the Registrar must give a notice of suspension in writing “without delay after imposing the suspension”. The requirements for providing notice are equivalent to those applicable under s. 3.1 of the Automobile Insurance Coverage Regulation (see ss. 93(2), 90(30) and 90(4) of the Drivers and Vehicles Act).

[60] In addition to the requirement to provide notice “without delay after the suspension” of an owner’s certificate for failure to pay the required insurance premium, the Guarantee Company also argued that the statutory scheme in Manitoba required that the insured must be given notice prior to the effective date of the suspension, as outlined further below.

1. Counsel brought to my attention s. 273(2) of the Highway Traffic Act (Manitoba), which requires the Registrar of Motor Vehicles to provide prior notice of the Registrar’s intention to cancel or suspend a person’s licence or permit. That requirement applies where the Registrar is exercising his or her authority under s. 273(1) “for contravention of the provisions of this Act or the regulations or for any reasonable cause that the registrar considers sufficient”. Subsection 273(3) provides that such prior notice must be given by either personal service or by registered or certified mail, and that providing notice in that fashion creates a rebuttable presumption that the notice was received. However, by its terms, that provision applies where the Registrar is exercising his or her authority under s. 273(1) of that Act. By its terms, the requirement for prior notice does not apply to a suspension under s. 269 of that Act for failure to pay an insurance premium due to MPI.

2. Counsel also brought to my attention a passage from the MPI website under “Frequently Asked Questions” (at www.mpi.mb.ca/en/Reg-and-Ins/Insurance/Pages/i_faq.aspx), which indicated that missing a required payment may lead to a person’s registration and insurance being suspended. With respect to prior notice, the MPI website indicates as follows:

   We’ll send you a notice warning you that we’ll suspend your insurance coverage and/or you driver’s licence if we don’t receive your payment by a specific day. Even if you haven’t received a notice from us, Section 92 of The Drivers and Vehicle Act give us the right to suspend your insurance and/or your driver’s licence when you haven’t paid on time.”

   I do not agree, however, that in the absence of a mandatory requirement for prior notice, a statement on the MPI website creates a legal obligation to provide prior notice of the MPI’s intention to suspend a person’s insurance for non-payment of the required premium. In fact, the very next sentence on the website in effect cautions the reader to expect suspension in the event of non-payment, even if a prior warning is not received.

[61] In support of the Guarantee Company’s position that MPI failed to provide Dmytro Lavrov with the notice required by Manitoba law to suspend his owner’s certificate for non-payment of the required premium, counsel for the Guarantee Company also cited case law to establish that termination of insurance coverage was not valid where there is no actual service of the notice of termination on the insured. In Relke v. Waldner (1993), 90 Man. R. (2d) 155 (Q.B.), MPI denied insurance coverage for a motor vehicle accident on the basis that the driver did not have a valid driver’s licence at the time of the accident. Prior to the accident, the Registrar of Motor Vehicles cancelled Mr. Relke’s driver’s licence under s. 273(1) of the Highway Traffic Act (Manitoba) for failure to complete a requirement that the Registrar had previously imposed that Mr. Relke complete a driver improvement course by a specified date. The Registrar sent notice of cancellation by registered mail as required by s. 273(2), but the notice was returned with the notation that it was “unclaimed”. Mr. Relke did not learn of the licence cancellation until after the accident. In these circumstances, the court held (at paras. 9 and 15) that the presumption of service in s. 273(3) had been rebutted, and that the cancellation was not effective at the time of the accident. In doing so, the court noted (at para. 13) the “importance of the requirement for actual service of the notice of cancellation in strict compliance with the law”. The court also quoted with approval a previous case, which indicated that “to allow the cancelation of a person’s driving privilege without giving him or her actual notice is contrary to all principles of natural justice and is not justified by bureaucratic expediency, logistical problems or a saving of expenses.”

[62] Having considered counsel’s submissions, based on the undisputed facts as set out in the special case and the supplementary documents, I have concluded that MPI did not provide Dmytro Lavrov with the notice required by Manitoba law to suspend the owner’s certificate for his vehicle for failure to pay the applicable premium. The basis for that conclusion is set out below.

1. In order to suspend Dmytro Lavrov’s owner’s certificate for failure to pay the required premium, MPI was required by s. 3.1(2) of the Automobile Insurance Coverage Regulation to give him written notice of his suspension “without delay after the suspension”. The evidence is clear that once the suspension was effective on October 4, 2008, MPI did not provide him with written notice of the suspension prior to the date of the accident (October 17, 2008).
2. The evidence is also clear that by sending the “Notice of Upcoming Suspension” dated September 20, 2008 to Dmytro Lavrov’s Winnipeg address prior to the effective date of the suspension, MPI took steps to notify Dmytro Lavrov of its intention to suspend his insurance coverage effective October 4, 2008 if he did not pay the required premium. Even though that notice was sent prior to the intended effective date of the suspension, had the evidence established that MPI otherwise complied with the notice requirements in s. 3.1 of the Automobile Insurance Coverage Regulation, I would have considered that notice to be sufficient to satisfy the requirement to provide the insured with written notice of the suspension. However, the difficulty I have is that there was no evidence that delivery of the notice dated September 20, 2008 by “certified mail” met the requirement in s. 3.1(3) to use “a mail or delivery service that provides [MPI] with an acknowledgement of receipt.” As well, there is no evidence that MPI “received an acknowledgement of its receipt”, which under s. 3.1(4) would have constituted “proof, in the absence of evidence to the contrary, that the notice was received by the insured.” In fact, to the extent there is any evidence relating to Dmytro Lavrov’s receipt of notice (albeit indirectly from Ruslan Lavrov), it indicated that notice of suspension of the owner’s certificate did not come to the attention of the insured until after the accident. In these circumstances, consistent with the result in Relke, I have concluded that MPI is not entitled to rely on the suspension of Dmytro Lavrov’s owner’s certificate to deny insurance coverage for the accident.

[63] In reaching that conclusion, I also took into account case law that MPI relied on to support the position that it was not necessary to provide notice to the insured to terminate an insurance policy for failure to pay a premium. In particular, MPI relied on the following passage from Patterson v. Gallant, [1994] 3 S.C.R. 1080, as quoted in a decision of this court in Pomarico v. Petrovic (2006), 36 C.C.L.I (4th) 279 (Ont. S.C.), at para. 25:

As the Supreme Court observed in Patterson, it is not necessary for an insurer to terminate or cancel the alleged insurance in accordance with the Insurance Act where the policy expires because of the non-payment of the renewal premium. A lapsed policy does not need to be formally terminated.

[64] Upon review of the Patterson and Pomarico decisions in their entirety, however, I did not find them of assistance in deciding this case. In each of those decisions, the insured was involved in a motor vehicle accident that occurred after the expiry date of the insured’s automobile policy. Prior to the policy’s expiry, the insurer provided a renewal notice (including a “pink card” required to evidence insurance coverage) to the insured, offering to renew the policy upon payment of the required premium. The insured did not renew the policy or pay the required premium prior to the policy’s expiry. No issue was raised in either case as to the adequacy of the prior notice that the insurer provided. In those circumstances, the insurer denied coverage for the subsequent accident, and the court held that the insurer was justified in doing so. In each case, the court held, among other things, that the renewal notice and “pink card” did not give rise to a binding insurance obligation. In Pomarico, the court also held that a further reminder notice from the insurer and subsequent acceptance of payment from the insured did not bind the insurer retroactively.

[65] In Patterson, the court also considered whether the insurer was bound by Statutory Condition 8(1) under the Insurance Act, R.S.P.E.I. 1988, c. 1-F, which required the insurer to provide prior written notice of termination of an automobile insurance policy. At para. 35, the court held that Statutory Condition 8(1) did not apply, in the following terms (which included language that was not included in Pomarico when it cited the Patterson decision):

It is unnecessary for the appellant to terminate or cancel the alleged insurance in accordance with Statutory Condition 8(1). This is only necessary where there is a binding insurance policy. Where the policy simply expires because of the non-payment of the renewal premium, no formal termination procedure need be followed by the appellant.... In the absence of legislation to the contrary, which does not exist in this case, a lapsed policy does not need to be formally terminated. [Emphasis added.]

[66] As previously indicated, I did not find the Patterson and Pomarico decisions to be of assistance in deciding this case. In both cases, the insured was provided with prior notice of the impending expiry of the insurance policy and no issue was raised as to the adequacy of that notice. As well, unlike in Patterson, s. 3.1 of the Automobile Insurance Coverage Regulation imposed a positive obligation on MPI to provide written notice of suspension of the owner’s insurance coverage. On the evidence, I have concluded that MPI did not provide Dmytro Lavrov with notice that complied with that positive obligation, thereby precluding MPI from relying on the suspension of Dmytro Lavrov’s owner’s certificate to deny insurance coverage for the accident.

(b) Compliance with Ontario notice requirements to terminate coverage

[67] Did MPI provide Dmytro Lavrov with the notice that would be required by Ontario law to terminate the insurance coverage for the Lavrov vehicle? If not, would MPI’s inter-jurisdictional undertaking preclude MPI from relying on compliance with Manitoba notice requirements to deny insurance coverage for the Lavrov vehicle based on non-payment of the required premium?

[68] Since I have reached the conclusion that the MPI was precluded from denying insurance coverage on the Lavrov vehicle for non-payment of the required premium because of MPI’s failure provide the required notice of suspension in accordance with Manitoba law, it may be considered unnecessary to consider whether the notice provided would have been sufficient under Ontario law. However, had I reached the conclusion that the notice was sufficient under Manitoba law, the issue of compliance with Ontario notice requirement would have been relevant because of MPI’s inter-jurisdictional undertaking, as indicated previously. Since counsel addressed these issues during their submissions on this motion, I am prepared to provide my conclusions, to the extent they may be of assistance.

[69] As noted previously, under s. 12 of the Compulsory Automobile Insurance Act, an Ontario insurer is entitled to terminate an automobile insurance contract for non-payment of premiums. Subsection 11(1) of the Statutory Conditions – Automobile Insurance provides that the insurer may give the insured notice of termination by registered mail or personal delivery. That notice is required to contain certain specific information (s. 11(3)), and is also required to specify a day for termination that is no earlier than (i) the 30th day after giving notice (if by registered mail), or (ii) the 10th day after giving notice (if by personal delivery).

[70] As set out in the special case and the supplementary material, the only step that MPI took to provide notice to Dmytro Lavrov of the suspension of his insurance coverage was to send the document dated September 20, 2008 entitled “Notice of Upcoming Suspension – Midnight October 4, 2008” by certified mail addressed to Dmytro Lavrov at a Winnipeg address that was the civic address that MPI had for him. That notice indicated that the termination would be effective 14 days later on October 4, 2008. MPI confirmed that it did not take any other steps to notify Dmytro Lavrov. Therefore, even if the “Notice of Upcoming Suspension” had been sufficient notice under Manitoba law, it would not have complied with the notice requirement that would apply in Ontario. In particular, the notice that MPI sent to Dmytro Lavrov by “certified mail” would not have been sufficient to comply the requirements of s. 11(3) of the Statutory Conditions – Automobile Insurance, since the effective date of the suspension was less than 30 days from the date of the notice.

[71] Since the notice would not have complied with Ontario requirements, would MPI’s inter-jurisdictional undertaking preclude MPI from relying on compliance with Manitoba notice requirements to deny insurance coverage for the Lavrov vehicle based on non-payment of the required premium?

[72] To recap, pursuant to MPI’s inter-jurisdictional undertaking, MPI has agreed that in an Ontario action arising from a motor vehicle accident, MPI would not to set up a defence to a claim under one of its policies that could not be set up if the policy were issued in Ontario. As discussed above under “Failure to register vehicle in Ontario”, previous case law has taken a broad approach to the interpretation of a “defence” in this context. Applying the approach taken in those cases, the effect of MPI’s inter-jurisdictional undertaking would be to preclude MPI from relying on compliance with Manitoba notice requirements to deny coverage under the policy in this case.

[73] Accordingly, I have concluded that MPI is not entitled to rely on compliance with the Manitoba notice requirements for suspension of Dmytro Lavrov’s ownership certificate for non-payment of the required premium as the basis for denying coverage under the insurance policy on the Lavrov vehicle. The notice of suspension that MPI provided would not have complied with the notice requirements had the policy been issued in Ontario. Therefore, by relying on compliance with Manitoba notice requirements, MPI would be raising a defence that could not be set up if the insurance policy were issued in Ontario, which is precluded by MPI’s inter-jurisdiction undertaking.

V. Conclusion

[74] Accordingly, an order will issue providing the following answers to the questions in the special case:

1. Was Dmytro Lavrov’s vehicle insured under a valid automobile insurance policy with MPI at the time of the accident? Answer: Yes.
2. If so, is MPI required to defend and indemnify either or both of the Lavrovs for damages for which they are found liable as a result of the accident? Answer: Yes.
3. Is the third party claim statute barred pursuant to the Limitations Act, 2002, S.O. 2002, c. 24, Sch. B? Answer: The third party claim is not deemed conclusively to be statute barred by s. 18 of the Limitations Act, 2002. As agreed by the parties, the question of whether the third party claim is statute barred otherwise remains outstanding.

[75] If the parties cannot agree on costs, each party may serve and file brief written submissions (not to exceed three pages) together with a costs outline within 21 days. Each party may reply by brief written submissions within seven days. All such submissions are to be forwarded to the Trial Coordinator and to me at 59 Church Street, 4th Floor, St. Catharines ON L2R 7N8. If no submissions are received within the specified timeframe, the parties will be deemed to have settled costs.

The Honourable Mr. Justice R.A. Lococo

Released: July 26, 2018

COURT FILE NO.: 51645/09 A1 (St. Catharines) DATE: 20180726 SUPERIOR COURT OF JUSTICE - ONTARIO BETWEEN: Dianne Harte Plaintiff - and - Ruslan Lavrov, Dmytro Lavrov and the Guarantee Company of North America Defendants - and - Manitoba Public Insurance Third Party REASONS FOR DECISION R. A. Lococo J. Released: July 26, 2018

[1] The paragraph references for Potts that are quoted in these Reasons are taken from the electronic version of the decision reported at , [1992] O.J. No. 1173. The paragraphs in the version in the Ontario Reports are not numbered.

[2] This passage is part of the response to the following question: “What happens if I am late or miss a payment?” The path to that passage from the home page of the MPI website is by way of drop-down menu, as follows: (i) Registration & Insurance, (ii) Insurance, (iii) Insurance-FAQs, (iv) Payments.