DATE: 2018/11/30
ONTARIO SUPERIOR COURT OF JUSTICE
B E T W E E N:
GORE MUTUAL INSURANCE COMPANY Plaintiff – and – SOVEREIGN GENERAL INSURANCE COMPANY Defendant
Counsel: Debbie Orth, for Plaintiff/Responding Party Kayla Kwinter, for the Defendant/Moving Party
HEARD: April 12, 2018
DECISION ON MOTION FOR SUMMARY JUDGMENT
Corthorn J.
Introduction
[1] In the spring of 2015, a pick-up truck was stolen from the lot of Orr Motors. The dispute between the parties is as to which of them is required to provide coverage for the theft of the truck. The dispute arose because of (a) the circumstances surrounding the lease of the vehicle by Orr Motors to its principal, Fred Orr, and (b) the delay encountered by Mr. Orr in having the vehicle plated.
[2] As of the spring of 2015, the plaintiff (“Gore”) was the motor vehicle insurer for Mr. Orr. The defendant (“Sovereign”) was the insurer for Orr Motors at that time. Gore paid the loss ($48,300) by way of a cheque payable to “Orr Motors and Fred Orr”. The vehicle was ultimately recovered and sold by Gore to Orr Motors for $17,400.
[3] In this action, Gore seeks a declaration that Sovereign:
a) Is the insurer required to respond to the vehicle loss from theft, based on the terms of the garage policy issued by Sovereign to Orr Motors (the “Garage Policy”); and
b) Must indemnify Gore for the loss from the theft claim made by Mr. Orr pursuant to his personal policy of motor vehicle insurance (the “Gore Policy”).
[4] Sovereign relies on an exclusion in the Garage Policy concerning leased vehicles, and denies that the claim falls within the scope of coverage available pursuant to the Garage Policy. Sovereign brings this motion for summary judgment and requests that the action against it be dismissed.
Background
[5] As of the spring of 2015, Orr Motors was the registered owner of the 2014 GMC Sierra pick-up truck which is the subject of this action. On March 25, 2015, Fred Orr executed a document titled “Lease Agreement” (“the Agreement”). Mr. Orr executed the Agreement in his capacity as President of Orr Motors. The dealership is described as the “Lessor”. Mr. Orr also executed the document in his personal capacity; he is described in the Agreement as the “Lessee”.
[6] The terms of the Agreement are, in their entirety, as follows (the use of all upper case letters is as per the original document):
LEASE AGREEMENT
BETWEEN
ORR MOTORS 6230 HAZELDEAN ROAD STITTSVILLE, ONTARIO LESSOR
AND
FRED ORR, LESSEE
DATED, MARCH 25, 2015
ORR MOTORS HEREBY AGREE TO LEASE THE FOLLOWING VEHICLE TO FRED ORR FOR $100.00 PER MONTH FOR A PERIOD OF 90 DAYS. THE LESSOR AND LESSEE HAVE THE RIGHT TO TERMINATE THE LEASE WITH 30 DAYS NOTICE. THE LESSEE IS RESPONSBILE TO PROVIDE, FULL COVERAGE, INSURANCE ON THE VEHICLE.
2014 GMC SIERRA VIN: 3GTU2WEC8EG505207
DATED AT OTTAWA THIS 25 TH DAY OF MARCH 2015
ORR MOTORS FRED ORR
FRED ORR, PRESIDENT
[7] The parties agree that the truck was on the Orr Motors lot between March 28 and April 1, 2015. They also agree that the theft of the truck, from the lot, occurred during that period.
[8] On April 1, 2015, an insurance broker with Palladium Insurance Group sent a Notice of Loss to Gore, notifying the latter of the theft of the truck. The Notice of Loss identifies Mr. Orr as the insured and refers to the policy number for the Gore Policy. The “Remarks” section of the Notice of Loss includes the following: “Vehicle leased Mar. 25/15, stolen from dealer lot. Dealer did not realize vehicle was missing, date of occurrence sometime between Mar. 28 and Apr. 1”. The Notice of Loss indicates that the broker was contacted by Fred Orr by telephone at 12:00 p.m. on April 1, 2015.
[9] There is no evidence from Mr. Orr in response to the motion for summary judgment. The responding motion record includes an affidavit from Thomas Jewett, an employee of Gore (“the Jewett Affidavit”). In his affidavit, Mr. Jewett identifies that he resides in Cambridge, Ontario. Mr. Jewett did not personally handle the theft claim, nor did he have any dealings directly with Mr. Orr.
[10] In his affidavit, Mr. Jewett describes steps taken by Gore employees with respect to the Gore Policy and in response to the Notice of Loss. There is no evidence that he spoke with any one of the employees upon whose conduct he relies for the substantive evidence. A number of the paragraphs in the affidavit begin with, “I am informed by a review of the file that …” Nowhere in the affidavit does Mr. Jewett state that he believes the information he derived from his review of the file to be true. In that regard, the contents of the affidavit fall short of the requirements with respect to evidence based on “information and belief” found in r. 39.01(4) of the Rules of Civil Procedure, R.R.O. 1990, Reg. 194.
[11] In his affidavit, Mr. Jewett describes the following steps as having been taken by other Gore employees:
- On April 1, 2015 (following receipt of the Notice of Loss), Gore added the truck as a vehicle insured under the Gore Policy;
- On April 2, 2015, Gore employee Leanne Blackmore had a telephone conversation with Mr. Orr, which she recorded with Mr. Orr’s consent; and
- On April 29, 2015, Gore employee Derek De Reiter had a telephone conversation with Mr. Orr, the substance of which the former summarized in a typed memo to the file.
[12] Mr. Jewett attaches as exhibits to his affidavit both a copy of the recording of the first, and a copy of Mr. De Reiter’s typed notes summarizing the second, telephone conversation with Mr. Orr. Gore requests that the Court rely on those exhibits as evidence with respect to (a) why the truck was on the Orr Motors lot at the time of the theft, and (b) whether the truck was leased by Orr Motors to Mr. Orr at the time of the theft.
[13] In response to Gore’s claim, Sovereign (a) acknowledges that the theft of the truck falls within the initial grant of coverage pursuant to the Garage Policy, and (b) relies on an exclusion to deny that it is required to indemnify Gore for the loss. Sovereign and Gore agree that the exclusion clause relevant to the determination of Gore’s claim is s. 7.14 from the wording of the Standard Garage Policy.
[14] I refer to the wording of the Standard Garage Policy because the complete wording of the Sovereign Policy is not in the record. The evidence on behalf of Sovereign in support of the motion for summary judgment is limited to an affidavit from Cody Dolgay, a lawyer with the office of Sovereign’s counsel (“the Dolgay Affidavit”).
[15] At para. 2 of the Dolgay Affidavit, reference is made to the Sovereign Policy. It is described as “Ontario Automobile Policy (O.A.P. 4)”. A copy of the Sovereign Policy is said to be attached as an exhibit to the Dolgay Affidavit, as Exhibit “A”. Yet the documents attached as Exhibit “A” are restricted to the following:
a) A Certificate of Insurance for the period January 31, 2015 to January 31, 2016 for “O.A.P. No. 4 Ontario Garage Automobile Policy” (two pages);
b) Two Multiple Alteration Endorsements (each one page in length); and
c) A series of additional endorsements specifically for Ontario Garage Automobile Policy No. 4 including O.E.F. Nos. 74, 76, 77, 79, and 81 (each of these documents is either one or two pages in length).
[16] Exhibit “A” to the Dolgay Affidavit does not include a copy of the wording of O.A.P. 4. Ironically, a copy of that wording is found in Exhibit “A” to the affidavit of Cheryl Letourneau, a lawyer with the office of Gore’s counsel (“the Letourneau Affidavit”). The Letourneau Affidavit is included in the responding motion record.
[17] Without the inclusion of a copy of the wording in the O.A.P. 4 as an exhibit to the Letourneau affidavit, there would have been no evidence before the Court of the exclusion upon which Sovereign relies in support of its motion for summary judgment.
[18] The exclusion upon which Sovereign relies in the O.A.P. 4 is:
7.14 THE INSURER SHALL NOT BE LIABLE while,
(a) the automobile is rented or leased by the insured to another, provided that the following shall not be deemed to be renting or leasing to another,
(i) the use by an employee of the employee’s automobile on the business of the employer and for which the employee is being paid;
(ii) the use of an owned automobile by a customer pending return of the customer’s automobile which has been left with the Insured for repairs or servicing; and
(iii) the use of an owned automobile by a customer for a period not exceeding 30 days, a purchase order or lease agreement has been placed with the Insured by the customer;
but this exclusion shall not apply while an owned automobile, rented or leased to another, is in the care, custody or control of the Insured for the purpose of maintenance or repair, and in this case this Policy shall be first loss of insurance.
[19] Sovereign relies on the Agreement as evidence that the truck was “leased by the insured to another” within the meaning of s. 7.14(a) of the Garage Policy. Sovereign acknowledges that if the truck was leased to Mr. Orr and Gore establishes that the truck was “in the care, custody or control of [Orr Motors] for the purpose of maintenance or repair”, then the exclusion does not apply and Sovereign must indemnify Gore for the loss.
The Issues
[20] The issues to be determined on this motion are:
- Is this an appropriate case for determination by way of summary judgment?
- If so, is Sovereign entitled to rely on s. 7.14 of the Garage Policy to deny coverage for the loss?
Issue No. 1 – Is this an appropriate case for determination by way of summary judgment?
[21] Sovereign and Gore agree that this matter is appropriate for determination by summary judgment. The parties agree that it would be more expeditious and cost-effective for this action to be resolved by way of summary judgment than by trial.
[22] As I have already noted, there are deficiencies in the evidence filed on behalf of Sovereign—specifically, it did not file a complete copy (or any copy at all) of the policy wording upon which it relies. Despite that deficiency, Gore did not take any issue with the Court relying on the combination of Exhibit “A” to the Dolgay Affidavit and Exhibit “A” to the Letourneau Affidavit as evidence of the complete policy wording.
[23] Sovereign submits that the evidentiary record allows the Court to fully appreciate the case. For the following reasons, I disagree.
[24] A full appreciation of the case—whether the Court is considering Sovereign’s position or Gore’s position—is not possible because of the deficiencies in the record with respect to the extent to which the Agreement was carried out as of the date of the theft of the truck.
[25] I turn first to Gore’s position. It requests that the Court find that the truck was on the Orr Motor Lot at the date of the theft “for the purpose of maintenance and repair” (taking the truck out of the scope of the s. 7.14 exclusion). In support of that request, Gore relies on evidence that is not admissible on the motion for summary judgment. That evidence is found in the recording and notes of two conversations with Mr. Orr subsequent to the date of the theft.
[26] Neither the recording nor the notes meet the requirements of the principled exception to the rule against hearsay statements.
[27] First, for the recording and notes to even be considered hearsay, the individuals who had the telephone conversations with Mr. Orr would have to give evidence as to the conversations. They have not done so. Second, the necessity of admitting the recording and notes as exceptions to the rule against hearsay statements would have to be addressed. That has not been done. There is no evidence to support a finding that Mr. Orr is incapable of providing direct evidence. Even if Gore were able to address the first and second issues, it would still have to address the reliability of the recording and of the notes.
[28] In summary, there is no evidence as to why the truck was on the Orr Motor lot on the date of the theft.
[29] There is, however, admissible and uncontradicted evidence with respect to ownership of the truck. Included as an exhibit to the Jewett Affidavit is a copy of the VIN History. That document is dated April 29, 2015. It shows that as of March 18, 2015, Orr Motors was the registered owner of the truck.
[30] Also included as an exhibit to the Jewett Affidavit is a copy of a Plate/VIN by date with address for a license plate registered to Fred Orr. That document is dated August 19, 2015. It indicates that plate no. BSXF292 was unattached as of that date. There is no evidence as to whether that license plate could be attached to a passenger vehicle only or it could alternatively be attached to a truck.
[31] The lack of any other evidence as to the status of the truck as of the date of the theft is not only a problem for Gore, it is a problem for Sovereign. This is so, despite Sovereign relying exclusively on a policy interpretation argument. The problem for Sovereign arises in the second step of the three-step policy interpretation process.
[32] The first step in the policy interpretation process requires Gore to establish that the loss falls within the initial grant of coverage under the Garage Policy; Sovereign acknowledges that it does.
[33] The second step in interpreting the policy is to determine whether the exclusion, upon which Sovereign relies, applies. For Sovereign to succeed in that regard, it must demonstrate that the truck was rented or leased to another. Sovereign relies exclusively on a copy of the Agreement in support of its position on that point. Is that document alone sufficient to give the Court a full appreciation of the case to be determined? I find that it is not.
[34] The cases relied on by Gore highlight the importance of looking beyond the title of the document to other criteria or indicia, to determine whether a lease has been entered into: see Baird v. Abouibrahim, 2012 ONSC 859, 110 O.R. (3d) 600 and Coachman Insurance Co. v. Lombard General Insurance Co. of Canada, 2011 ONSC 1655, 105 O.R. (3d) 475.
[35] Consideration of the Agreement alone gives rise to uncertainty. For example, the document dated March 25, 2015, provides that Orr Motors “agrees to lease” the truck, refers to the monthly fee to be paid, and yet provides that the lease is for a period of 90 days. The Agreement does not say when that 90-day period was intended to begin. Was the lease intended to begin on March 25 or some later date, including a date subsequent to April 1 (and therefore subsequent to the period during which it was agreed that the truck was stolen)?
[36] As another example the Agreement provides that “monthly fees” are to be paid. Were they to be paid effective April 1, 2015 or on some other date? Did Orr Motors consider that the term of the lease began before the first month’s fees were paid?
[37] This is a fact-driven case. The evidentiary record falls short of providing the court with the evidence required to develop a full appreciation of the case and determine the matter on a summary judgment motion.
Disposition
[38] In light of the outcome under Issue No. 1, it is not necessary for the court to address Issue No. 2.
[39] I turn instead to the issue of costs of the motion. Had the responding motion record not included a copy of the wording of O.A.P. 4, there would have been no evidence before the Court of the exclusion clause upon which Sovereign relies in support of the motion for summary judgment. That is a significant deficiency in the moving party’s record.
[40] Gore chose not to rely on that deficiency and instead, placed the relevant policy wording before the Court. That said, the balance of the responding record includes a significant amount of evidence that is inadmissible. A good portion of oral argument on behalf of Gore (a) included reference to that evidence, and (b) submissions with respect to a position that is, by reason of evidentiary deficiencies, not supported.
[41] Summary judgment can be cost-effective and expeditious. It will only be so if the evidentiary record is sufficient to permit the court to develop a full appreciation of the case. I find that both parties failed to fully consider the evidence required in support of their respective positions. They are both responsible for the inability of the court to determine the matter on a summary judgment motion. As a result, there shall be no order as to costs.
[42] The motion for summary judgment is dismissed without costs.
Madam Justice Sylvia Corthorn