Court File and Parties

COURT FILE NO.: CV-15-534618 DATE: 20181207 SUPERIOR COURT OF JUSTICE - ONTARIO

RE: Krista McKay, Wendy McKay and Jack McKay, Plaintiffs AND: Sarah Elizabeth Park, Defendant/Moving Party AND: TD Home and Auto Insurance Company and Giancarlo Hnatiuk, Defendants/Responding Parties

BEFORE: H. McArthur J.

COUNSEL: No one appearing for the Plaintiffs No one appearing for the Defendant/Responding Party, Giancarolo Hnatiuk S. Gilbert, appearing as counsel for the Defendant/Moving Party, Sarah Park R. Pano and I. Sfranciog, appearing as counsel for the Defendant/Responding Party, TD Home and Auto Insurance Company

HEARD: November 15, 2018

Endorsement

H. MCARTHUR J.:

Introduction

1This is a summary judgment motion that, in essence, involves two insurance companies fighting over who should compensate the plaintiff, Krista McKay, who suffered significant injuries in a car accident.

2The accident occurred on August 29, 2013. On that date, Sarah Park was driving her car on Highway 407. Her boyfriend, Giancarlo Hnatiuk, was seated in the passenger seat. They were arguing. Ms. Park said something that angered Mr. Hnatiuk. Suddenly, and without warning, Mr. Hnatiuk grabbed the steering wheel, causing the car to lose control and collide with the car in which Ms. McKay was a passenger.

3Mr. Hnatiuk fled the scene of the accident. Mr. Hnatiuk was ultimately arrested and pleaded guilty to dangerous driving causing bodily harm and failing to remain at the scene of the accident. Mr. Hnatiuk was served with the Statement of Claim in this matter. He failed to file a Statement of Defence and has been noted in default.

4Ms. Park had a standard automobile OAP1 policy provided to her by State Farm Mutual Automobile Insurance Company (State Farm). She was the sole listed driver, but her policy provided her with third-party liability coverage. TD Home and Auto Insurance Company (TD) insured Ms. McKay under a policy which provided for uninsured and underinsured motorist coverage (“UIM”). TD was also named as a defendant and filed a Statement of Defence and a Crossclaim against Ms. Park.

5On behalf of Ms. Park, State Farm now brings a motion for summary judgment, arguing that there is no genuine issue requiring a trial, as the evidence establishes that Ms. Park is not liable. In the event that State Farm prevails, it also seeks a determination pursuant to r. 21 of the Rules of Civil Procedure, R.R.O. 1990, Reg. 194, that Mr. Hnatiuk was not covered by Ms. Park’s insurance. If State Farm is successful on both motions, that would mean that Ms. McKay would be covered by TD’s UIM coverage.

6TD opposes both motions. It argues that I should not grant summary judgment as State Farm is acting in bad faith and contrary to Mr. Park’s best interests. TD also asserts that it is inappropriate to grant partial summary judgment. Further, TD argues that there are genuine issues requiring a trial. Finally, TD argues that it is premature to seek a determination with respect to whether or not Mr. Hnatiuk is covered by Ms. Park’s insurance.

7For the reasons set out below, I find that there are no genuine issues requiring a trial and that the action and crossclaim against Ms. Park should be dismissed. The findings of fact that lead to that conclusion also lead to the determination that Mr. Hnatiuk was not covered by Ms. Park’s insurance, as he did not have her consent to drive the car.

8I do not intend to outline the facts at the outset, and instead will refer to them as necessary in my analysis.

Analysis

1) Is this an appropriate case for summary judgment?

9TD argues that this is not an appropriate case for summary judgment for two reasons. First, TD alleges that in litigating this matter, State Farm is acting in bad faith and against Ms. Park’s best interests. Thus, TD asserts I should not entertain the motion for summary judgment. Second, TD argues that this is not one of those rare cases where partial summary judgment is warranted. I will address each submission in turn.

(i) The allegation of bad faith

10TD argues that Ms. Park will suffer negative collateral consequences if she is successful in this motion. TD notes that if I find that Ms. Park is not liable because Mr. Hnatiuk took the wheel without her consent, then this finding would inevitably lead to a determination pursuant to r. 21 that Mr. Hnatiuk was not covered by Ms. Park’s insurance at the time of the accident. If TD is thus obligated to provide insurance coverage to Ms. McKay pursuant to the UIM policy, then TD will bring a subrogated claim against Mr. Hnatiuk. This, TD argues, would negatively affect Ms. Park personally “because any joint monies or property owned with Giancarolo Hnatiuk are subject to enforcement of any judgments against him”. Thus, TD argues that I should decline to grant this summary judgment motion as it is not in Ms. Park’s financial interest for Mr. Hnatiuk to be found to be uninsured.

11I cannot accept this argument for three reasons. First, the position of TD is highly speculative. While I understand that Ms. Park and Mr. Hnatiuk have a child together, I have no evidence before me regarding their finances. There is no evidence that they have any “joint monies or property”. There is no evidence that they share a bank account, or a mortgage or a credit card. I have no evidence that they intermingle their funds in any way.

12Second, when pressed in oral argument, TD could not articulate why, if there is no genuine issue requiring a trial, it would not be to Ms. Park’s advantage to have that determination made now. As a matter of common sense, it seems better for Ms. Park to have such a finding at this stage. If not, then she will be forced to continue to trial, which will no doubt be stressful and time consuming. If the trier-of-fact reaches the conclusion that Ms. Park is not liable and that Mr. Hnatiuk was not covered by her insurance, then any risk flowing from a potential subrogated proceeding against Mr. Hnatiuk at that time would be the same as if I were to make those findings at this motion. It would just take longer to get to that point.

13Third, the issue to be determined by me on the summary judgment motion is whether there is a genuine issue requiring a trial. Rule 20.04(2)(a) of the Rules of Civil Procedure, provides that the court shall grant summary judgment if satisfied that there is no genuine issue requiring a trial. There is no discretion to decline to grant summary judgment if it is determined that there is no genuine issue requiring a trial.

(ii) The appropriateness of partial summary judgment

14If Ms. Park is successful in her summary judgment motion that would mean that TD will still remain as a defendant; the action would continue against TD. TD argues that it is inappropriate to grant partial summary judgment.

15In Butera v. Chown, Cairns LLP, 2017 ONCA 783, the court explained that caution must be used when considering whether to grant partial summary judgment. A court should consider whether (i) there is a risk of duplicative or inconsistent findings at trial and whether (ii) granting partial summary judgment is advisable in the context of the litigation as a whole. As the court noted at para. 34, “a motion for partial summary judgment should be considered to be a rare procedure that is reserved for an issue or issues that may be readily bifurcated from those in the main action and that may be dealt with expeditiously and in a cost effective manner.”

16As noted above, Mr. Hnatiuk has been noted in default. TD conceded in oral argument that if Ms. Park is granted summary judgment in her favour (which, as set out below, would lead to a determination that Mr. Hnatiuk was uninsured at the time of the accident) the only remaining issue will relate to damages. There will thus be no risk of inconsistent findings.

17In my view, when considering the litigation as a whole, this is one of those rare cases where, assuming that there is no genuine issue requiring a trial, partial summary judgment would be appropriate. Removing Ms. Park from the litigation would result in a more focused and efficient action, dealing with the issue of damages only. That would advance, not defeat, the important objectives of proportionality, efficiency and cost effectiveness.

18I turn now to an analysis of whether there is a genuine issue requiring a trial.

2) Is there a genuine issue requiring a trial?

19In Hryniak v. Mauldin, 2014 SCC 7, at para. 49, Karakatsanis J. explained that 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 court to make the necessary findings of fact, (2) allows the court to apply the law to the facts, and (3) is a proportionate, more expeditious and less expensive means to achieve a just result. There will be no genuine requirement for a trial if there is sufficient evidence to fairly and justly adjudicate the dispute and if summary judgment would be a timely, affordable and proportionate result.

20TD argues that there are two genuine issues requiring a trial. First, TD argues that a trial is required on the issue of whether Ms. Park was in possession and control of the car when the accident occurred, thus rendering her liable. Second, TD argues that there is a genuine issue requiring trial as to whether Ms. Park was contributorily negligent. I will consider each in turn.

i. Is there a genuine issue requiring a trial regarding whether Ms. Park was in possession of her car at the time of the accident and thus liable?

21TD argues that Ms. Park was in physical possession of her car at the time of the accident and is thus liable for the accident. In my view, however, the position of TD cannot be reconciled with Bélanger v. The Queen, [1970] S.C.R. 567, a case that is very similar to the present one. There, a police officer who had investigated Mr. Bélanger was driving him home. Mr. Bélanger grabbed the steering wheel, causing an accident. Ritchie J., writing for the majority of the court, said the following at p. 574:

The fact is that the police cruiser was driven from its own lane directly into the lane reserved for approaching traffic because the appellant had deliberately grabbed the steering wheel and taken control from the hands of the constable. Under these circumstances, with the greatest of respect for those who hold a different view, I am of the opinion that for the brief period during which the appellant had assumed control, he was solely responsible for the dangerous driving of the cruiser…

22Similarly, in the present case, the overwhelming evidence is that Mr. Hnatiuk grabbed the steering wheel suddenly, impulsively and without Ms. Park’s consent. In so doing, he took control of the car. The fact that Ms. Park owned the car, had been driving it immediately before Mr. Hnatiuk grabbed the wheel and had access to the brake and gas pedal, is of no moment. When Mr. Hnatiuk grabbed the wheel, he took control of the car without Ms. Park’s consent.

23TD, however, points to the civil judgment that flowed from the Bélanger case: Momney et al v. The Queen in the right of Ontario, [1972] 2 O.R. 165 (H.C.J.). TD argues that the civil decision supports the position that Ms. Park was in possession of her car at the time of the accident and is thus liable.

24I cannot agree. It is true that the judge in the civil matter commented that the officer “was in possession of the car” and that the “operation of the vehicle was being done by” the officer. But in focusing on those comments, TD ignores or glosses over the substance of the decision. The trial judge in the civil matter flowing from Bélanger found that the officer was not negligent or liable for the accident. Indeed, the judge found that Mr. Bélanger was solely liable for the accident. Contrary to the position of TD, in my view Momney does not support its position; instead, the decision supports State Farm’s position that Ms. Park is not liable, as she did not have control of the car when Mr. Hnatiuk grabbed the wheel without her consent.

25TD also relies on the case O’Sullivan v. Personal Insurance Co., [2009] O.J. No. 4273 (S.C.) in support of its position that Ms. Park was in possession of the car and is thus liable for the accident. A careful review of the decision, however, does not support TD’s position.

26In O’Sullivan, a son had been driving his father’s car, with his father’s permission. The passenger in the car grabbed the steering wheel, causing an accident in which the son was injured. The father’s insurance policy provided that there would be no coverage if the car was used without the owner’s consent. The defendant, Personal Insurance Company, argued that by grabbing the wheel, the passenger became the operator and possessor of the car. Since she did not have the owner father’s consent, the exclusion applied and the son thus had no insurance coverage.

27It was in this context that the judge noted that if the facts pleaded were accepted, it would be reasonable to conclude that both the son (the driver) and the passenger had control over the car at the same time. The judge noted that to say that the driver would not be covered by insurance in these circumstances was “perverse”. That said, the judge made it clear that that the passenger would not be covered by the insurance policy.

28In my view, O’Sullivan does not assist TD. Instead, as will be set out below, the case supports State Farm’s position with respect to the r. 21.01(a) request for a determination that Mr. Hnatiuk was not covered by Ms. Park’s insurance.

ii. Is there a genuine issue requiring a trial as to whether Ms. Park was contributorily negligent?

29TD argues that there is a genuine issue requiring trial as to whether Ms. Park was contributorily negligent. To succeed in an action for negligence, a plaintiff must prove the following four elements on a balance of probabilities: (1) that the defendant owed him or her a duty of care; (2) that the defendant’s behaviour breached the standard of care; (3) that the plaintiff suffered damage; and (4) that the damage was caused, in fact and in law, by the defendant’s breach: Mustapha v. Culligan of Canada Ltd., 2008 SCC 27, at para. 3. The basic test for determining causation is the “but for” test: Resurfice Corp. v. Hanke, 2007 SCC 7, at para. 21.

30As noted recently in Rankin (Rankin’s Garage & Sales) v. J.J., 2018 SCC 19, at para. 21, “reasonable foreseeability of harm and proximity operate as crucial limiting principles in the law of negligence”. This is because, as explained by Karakatsanis J. at para. 22, it “would simply not be just to impose liability in cases where there was no reason for defendants to have contemplated that their conduct could result in the harm complained of.”

31TD argues that it was reasonably foreseeable that three aspects of Ms. Park’s conduct could result in the harm suffered by Ms. McKay. First, she knew that Mr. Hnatiuk was capable of an impulsive and violent act, as only two months earlier he had kicked in her door, damaged her property and assaulted her. Thus, she should have prevented him from entering her car when he was angry.

32I cannot agree, however, that because Mr. Hnatiuk had acted in a violent manner towards Ms. Park two months earlier, that it was reasonably foreseeable that he would grab the wheel of the car causing it to swerve and collide with another car. He had never attempted to grab the steering wheel before. Moreover, while he had been violent to Ms. Park in the past, he had never taken violent action that put his or Ms. Park’s life at risk. But by grabbing the wheel, Mr. Hnatiuk put his own life in danger as well as Ms. Park’s and those of innocent motorists. There was nothing in his previous behaviour that would make it reasonably foreseeable that he would take such shocking action and thereby cause the harm that he did to Ms. McKay.

33Second, TD argues that it was reasonably foreseeable that the accident would occur because Ms. Park drove on the highway despite the fact that she was having an argument. The third point made by TD is related, in that it argues that the accident was reasonably foreseeable because Ms. Park failed to use her judgment and pull over until the argument was over. But for this conduct of Ms. Park, TD argues, the accident would not have occurred. I disagree.

34Up until the point that Mr. Hnatiuk suddenly and impulsively grabbed the wheel, there is no question that Ms. Park was driving in a safe manner. Given the safe manner of her driving, but for the unexpected action of Mr. Hnatiuk in grabbing the wheel, the accident would not have occurred.

35TD counters that while Ms. Park appeared to be driving safely, in light of the argument she was having it can be reasonably inferred that Ms. Park would have been distracted and not paying appropriate attention to her driving. In assessing this submission, I keep in mind that there is a distinction between a reasonable inference and mere speculation. As noted by Ducharme J. in R. v. Munoz, [2006] O.J. No 446 (S.C.), at para. 31, the “drawing of inferences is not a process of subjective imagination, but rather is one of rational explication. Supposition or conjecture is no substitute for evidence and cannot be relied upon as a basis for a reasonably drawn inference.”

36In the present case, there is a complete absence of evidence to support the inference that Ms. Park was not driving appropriately because she was distracted. Until Mr. Hnatiuk grabbed the wheel, Ms. Park had been driving in a normal manner with the flow of traffic. She was not exceeding the speed limit. She was not tailgating. She was not veering in her lane. There is simply no evidence to support the contention that she was not driving safely because of the argument. TD asks this court to substitute conjecture for evidence.

(iii) Conclusion on whether there is a genuine issue requiring a trial

37The record before me allows me to make the necessary findings of fact and apply the law to those facts. There is no genuine issue requiring a trial. When Mr. Hnatiuk suddenly grabbed the wheel, he did so without Ms. Park’s consent. Further, it was not reasonably foreseeable that Mr. Hnatiuk would grab the steering wheel and cause the damage that he did to Ms. McKay. Ms. Park is not liable. Summary judgment would be a proportionate, less expensive means to deal with this matter. Ms. Park is entitled to summary judgment in her favour dismissing the action against her. Further, she is entitled to summary judgment in her favour dismissing the crossclaim brought by TD.

38I turn now to the r. 21.01(a) motion.

3) Should there be a determination that Mr. Hnatiuk is not covered by Ms. Park’s insurance?

39Rule 21.01(a) provides that a party may move before a judge for a “determination, before trial, of a question of law raised by a pleading in an action where the determination of the question may dispose of all or part of the action, substantially shorten the trial or result in a substantial saving of costs. Pursuant to this rule, State Farm moves for a determination that Mr. Hnatiuk is not covered by Ms. Park’s insurance policy.

40TD advances two arguments in support of its position that I should dismiss the r. 21.01 motion. First, TD argues that the motion is premature. I disagree. On the summary judgment motion, I have concluded that the evidence on the motion allows me to find that Mr. Hnatiuk grabbed the steering wheel without Ms. Park’s consent. That finding leads to the inevitable conclusion that Mr. Hnatiuk would not be covered by Ms. Park’s insurance.

41Second, TD argues that the O’Sullivan case supports its position that Mr. Hnatiuk would arguably be covered by Ms. Park’s insurance. Again, I disagree. As noted above, in O’Sullivan, the court held that the defendant insurance company had no obligation to provide insurance coverage to the passenger who had grabbed the steering wheel without consent. Contrary to the submission of TD, O’Sullivan actually supports the position that Ms. Park’s insurance would not cover Mr. Hnatiuk.

42The motion pursuant to r. 21.01(a) is allowed. I have determined that Mr. Hnatiuk was not covered by Ms. Park’s insurance. The determination of this question will substantially shorten the trial or otherwise result in a substantial saving of costs.

Costs

43Pursuant to s. 131(1) of the Courts of Justice Act, R.S.O. 1990, c. C.43, the court has a broad discretion when determining the issue of costs. Rule 57.01(1) of the Rules of Civil Procedure sets out the factors to be considered by the court when determining the issue of costs.

44State Farm prevailed on behalf of Ms. Park in both the summary judgment motion and the motion pursuant to r. 21.01(a). State Farm is seeking costs in the amount of $85,765.97, inclusive of HST and disbursements. TD counters that the costs sought are inappropriate, as they relate to the entire action and not simply the motions before me. TD also argues that the hourly rate sought is excessive. TD thus argues that any costs awarded should be substantially less than that being sought by State Farm.

45Counsel for State Farm spent only about 15 hours on the file before TD filed its Statement of Defence and Crossclaim. After that point in time, TD was actively involved in this litigation. For example, counsel for TD fully participated in examinations for discovery. As Ms. McKay’s counsel, who was in court observing, advised me, they have been in a holding pattern waiting for TD and State Farm to settle the issues between them so this matter can move forward. I accept that TD should not be responsible for any costs before it became involved or costs unrelated to any issues involving TD. That said, it is clear that TD actively participated in much of this litigation. Given that, and the fact that the main disputes have been between TD and State Farm, it seems reasonable to consider the entire action in determining an appropriate costs award.

46In terms of the hourly rate, senior counsel on this matter for State Farm charged an actual hourly rate of $450. State Farm argues that it should be compensated for the actual hourly rate charged for two reasons. First, State Farm argues that the actual rate charged, is, in effect, a partial indemnity rate, as counsel would normally charge $600 an hour. Since State Farm retains counsel on many different briefs, counsel provides a volume discount. I note that if TD had prevailed on these motions, it would also be seeking their actual costs on the same basis. It seems that such volume discounts are not unusual. In my view, however, the fact that counsel agreed to a volume discount does not mean that I should consider the actual rate charged by counsel in this matter to be akin to a partial indemnity rate.

47State Farm also relies on r. 20.06 in arguing that costs should be awarded on a substantial indemnity basis. This rule provides that on a motion for summary judgment, the court may fix costs on a substantial indemnity basis if a party acted unreasonably by making or responding to the motion or if a party acted in bad faith for the purpose of delay.

48There is some conflict between this rule and the cost principles set out in cases such as Mars Canada Inc. v. Bemco Cash & Carry Inc., 2018 ONCA 239. There, at para. 43, the Court of Appeal explained that to warrant costs on a substantial indemnity basis against a party, their conduct must be reprehensible, scandalous, or outrageous: see also Davies v. Clarington (Municipality), 2009 ONCA 722, at para. 40.

49I agree with the comments of Schreck J., in Himidan v. 2546579 Ontario Inc., 2018 ONSC 6037, at para. 11, that while resort to r. 20.06 may not require a finding that a party acted in a "reprehensible manner", it does require some finding of improper conduct. As he noted, the heading in the Rules of Civil Procedure under which r. 20.06 is found is entitled "Costs sanctions for improper use of rule." I agree that this means that r. 20.06 should be employed only in "exceptional circumstances" where a party has behaved improperly: 1095909 Ontario Inc. v. Westmount-Keele Ltd., 2016 ONSC 3507, at para. 10. In the present case, while I have ruled against TD, I am unable to find any improper conduct on its parts that would warrant substantial indemnity costs.

50Determining an appropriate cost award is not a purely mathematical exercise. The overall objective of fixing costs is to fix an amount that is fair and reasonable for the unsuccessful party to pay in the particular circumstances, rather than an amount fixed by actual costs incurred by the successful litigant: Boucher v. Public Accountants Council for the Province of Ontario, [2004] O.J. No. 2634 (C.A.); and Davies v. Clarington (Municipality), 2009 ONCA 722, at para. 52. In determining the costs issue, I have considered the factors set out in r. 57. I have considered the complexity of this matter, as well as the principle of proportionality set out in r. 1.04(1.1). I keep in mind that the Court should seek to balance the indemnity principle with the fundamental objective of access to justice.

51With this in mind, I have determined that costs should be fixed against TD in the amount of $50,000, inclusive of HST and disbursements, payable within 60 days.