Court File and Parties

COURT FILE NO.: CV-13-477406 DATE: 20190501 ONTARIO SUPERIOR COURT OF JUSTICE

BETWEEN:

JOROGA REAL ESTATE LTD. Plaintiff – and – STATE FARM FIRE AND CASUALTY COMPANY and THE CITY OF TORONTO Defendants

Counsel: Michael A. Katzman, for the Plaintiff Nadine Nasr, for the Defendant State Farm Fire and Casualty Company Mark Siboni, for the City of Toronto

HEARD: April 24, 2019

Endorsement

SANFILIPPO J.

Overview

[1] The Plaintiff, Joroga Real Estate Ltd., brought this action for damages said to have been sustained after a water main rupture rendered office space it leased to tenants inaccessible for several weeks, resulting in lost rental income and other expenses. The Plaintiff seeks recovery of these damages from two parties in two markedly different ways: from the City of Toronto, on the allegation that the City was negligent in its operation, maintenance and management of its underground water system, and from its insurer, State Farm Fire and Casualty Company, because State Farm declined insurance coverage for this loss.

[2] State Farm brought this motion for summary judgment seeking an Order dismissing this action as against it or, alternatively, limiting State Farm’s insurance coverage obligations to four weeks of lost income. In essence, State Farm seeks validation of its insurance coverage position.

[3] State Farm’s motion addressed only part of the issues raised by this action. Should State Farm succeed in the principal relief that it seeks, this action must still continue to trial as between the Plaintiff and the City. Should State Farm succeed only in the alternative relief that it seeks, State Farm would remain in this action to quantify the income loss that it would owe to the Plaintiff and to pursue recovery of these damages in its crossclaim against the City.

[4] After hearing submissions, I dismissed this summary judgment motion on the basis that it is inconsistent with the principles pertaining to partial summary judgment. I determined that granting this partial summary judgment motion would give rise to duplicative proceedings, a risk of inconsistent findings in the elements that will proceed to trial, would not advance the litigation as a whole and would not provide for a more expeditious and less expensive means by which to achieve a just result.

[5] In endorsing the dismissal of this motion, I stated that I would provide reasons to more fully explain the basis for my determinations. These are those reasons.

I. BACKGROUND

[6] On January 30, 2013, a water main ruptured near the intersection of Yonge Street and Davenport Avenue in Toronto. Water entered a high-rise condominium building known municipally as 920 Yonge Street (the “Building”). On January 30, 2013, the City issued an Order to Remedy an Unsafe Building restricting access to the Building, pursuant to section 15.9(4) of the Building Code Act, 1992, S.O. 1992, c. 23.

[7] The City issued its Order after it determined that, as a direct result of water infiltrating the electrical room on the lower level (P3) of the Building, the life safety systems, electrical power and building services were no longer functional, thereby not allowing for the normal use of the Building.

[8] At that time, the Plaintiff was the owner of the commercial condominium units that comprised floors six and eight of the Building (the “Joroga Property”). Joroga Ltd. had leased these commercial office units to tenants.

[9] State Farm Fire and Casualty Company insured the Plaintiff under a CNP-4103 Businessowners’ Coverage Form bearing policy number 90GU37496 (the “State Farm Policy”) for risks to property at the time of the water main rupture, subject to policy limits, exclusions, provisions and conditions. The Plaintiff submitted a claim to State Farm for the income loss that it claimed to have sustained by reason of being restricted from accessing the Building and, within it, the Joroga Property.

[10] On March 8, 2013, State Farm denied coverage for the claim on the basis that the State Farm Policy excluded coverage for water damage: “water damage is not a covered cause of loss and as a result, the policy is unable to cover damages for your loss of income.”

[11] On April 2, 2013, Joroga Ltd. initiated this action against State Farm and the City, seeking from them, jointly, damages that the Plaintiff alleges to have sustained.

[12] Joroga Ltd. pleaded that the City was negligent in its operation, maintenance, administration and management of its underground water system, and seeks damages for loss of rental income during the time that the Building was inaccessible and other expenses attendant thereto. Joroga Ltd. pleaded that State Farm was liable for the same damages by reason of having improperly denied policy coverage. In paragraphs 2(c), 2(d), 2(e), 19 and 27 of its Statement of Claim, Joroga Ltd. pleaded that the damages of $300,000 that it seeks against State Farm are “payable on a joint and several basis with the co-defendant City”.

[13] In its Statement of Defence and Crossclaim, State Farm admitted that a water main rupture occurred on January 30, 2013 but denied the relief sought. In paragraph 23 of its Crossclaim, State Farm pleaded that the City is liable to State Farm for “contribution and indemnity with respect to any judgment or cost or any contribution to a settlement recovered by the plaintiff against [State Farm]”. State Farm pleaded in paragraph 25 of its Crossclaim that if this Court determines that the damages sustained by Joroga Ltd. are covered, in whole or in part, under the State Farm Policy, and if these damages resulted from negligence or breach of contract of the City, then it is subrogated to the rights of the Plaintiff as against the City to the extent of any payments made by State Farm under its policy of insurance.

[14] In its Statement of Defence, the City admitted that the water main rupture occurred on January 30, 2013. The City admitted that the Building’s life safety systems, electrical power and building services were damaged and no longer functional, resulting in the City issuing an Order to Remedy an Unsafe Building, which prohibited anyone from occupying the Building until the electrical power and safety systems were restored. The City denied any liability to the Plaintiff.

[15] State Farm brought this motion for summary judgment.

II. THE SUMMARY JUDGMENT MOTION

A. The Relief Sought

[16] In this summary judgment motion, brought in accordance with Rule 20.01(3) of the Rules of Civil Procedure, R.R.O. 1990, Reg. 194, State Farm seeks the following:

(a) An Order dismissing this action against State Farm; (b) In the alternative, an Order that the maximum payable by State Farm to the Plaintiff is for the “Loss of Income” for the consecutive four week period between January 30, 2013 and February 27, 2013.

[17] The Plaintiff seeks the dismissal of State Farm’s summary judgment motion, with costs. Additionally, the Plaintiff seeks the following relief:

(a) An Order declaring that the loss is covered by the State Farm Policy; (b) An Order that the issue of damages be referred to trial; (c) An Order that the issue of liability for bad faith and punitive damages against State Farm be referred to trial.

[18] The City took no position on the relief sought by State Farm on the issue of coverage, and participated in the summary judgment motion for the purpose of submitting that no findings of fact ought to be made that could prejudice the City’s ability to defend the Plaintiff’s claims as against it. The City’s position recognized that the Plaintiff’s claims against the City will require a trial for determination regardless of the outcome of the summary judgment motion.

B. The Basis for State Farm’s Motion

[19] State Farm submits that the Plaintiff’s claim is not covered under the State Farm Policy on two grounds:

(a) There was no direct physical loss to the Joroga Property as is required, according to State Farm, to activate policy coverage; (b) The Plaintiff’s loss of income derives from water damage, which State Farm says activates a policy exclusion and therefore takes this loss outside of policy coverage.

[20] In the alternative, if there is coverage for Joroga Ltd.’s claim, State Farm submits that the policy limits the amount payable to the loss of rental income and extra expenses incurred by the Plaintiff in the four consecutive weeks from the date the City prohibited access to the Building: January 30, 2013 to February 27, 2013. State Farm did not produce any evidence on this motion of the value of this loss, meaning that the quantification of damages would require a trial for determination. Further, if State Farm is required to pay the Plaintiff for this four week income loss, it intends to pursue recovery of these amounts from the City in its crossclaim further to its right of subrogation.

III. APPLICABLE PRINCIPLES

A. Summary Judgment

[21] State Farm’s motion for summary judgment is based on Rule 20.01(3) of the Rules of Civil Procedure, R.R.O. 1990, Reg. 194, which provides as follows:

A defendant may, after the delivering a statement of defence, move with supporting affidavit material or other evidence for summary judgment dismissing all or part of the claim in the statement of claim.

[22] Rule 20.04(2) describes when a court can grant summary judgment. It directs as follows:

20.04(2) The court shall grant summary judgment if, (a) the court is satisfied that there is no genuine issue requiring a trial with respect to a claim or defence;

20.04(2.1) In determining under clause (2)(a) whether there is a genuine issue requiring a trial, the court shall consider the evidence submitted by the parties and, if the determination is being made by a judge, the judge may exercise any of the following powers for the purpose, unless it is in the interest of justice for such powers to be exercised only at a trial;

1. Weighing the evidence.
2. Evaluating the credibility of a deponent.
3. Drawing any reasonable inference from the evidence.

20.04(2.2) A judge may, for the purposes of exercising any of the powers set out in subrule (2.1), order that oral evidence be presented by one or more parties, with or without time limits on its presentation.

[23] In Hryniak v. Mauldin, 2014 SCC 7, [2014] 1 S.C.R. 87, the Supreme Court emphasized that the important objective of ensuring access to justice requires an effective and accessible process for the enforcement of rights. The procedural tool refined in Hryniak, the summary judgment motion, was emphasized as a means to achieve timely and efficient adjudication in certain, but not all, cases. In Hryniak, the Supreme Court provided the template by which Rule 20 is to be applied.

[24] In Hryniak, at para. 66, the court sets out a two-part test for considering summary judgment under Rule 20.04(2)(a), termed the “Roadmap”. The first step is that the motion judge must determine whether there is a genuine issue requiring trial based only on the evidence contained in the motion record, specifically without using any of the powers set out in Rule 20.04(2.1). There will be no genuine issue requiring trial where the evidentiary record on the motion provides the judge with the evidence necessary to reach a fair and just determination in a process that is timely, proportionate and affordable, as is stated in Hryniak at paras. 4, 28, 66 and specifically at 49. Paragraph 49 states:

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

[25] The second step in the “Roadmap” is activated when a judge finds that there is a genuine issue requiring a trial. The court should then determine whether the issue can be decided using the powers set out in Rules 20.04(2.1) and (2.2). These powers are to be employed where they will lead to a fair and just result but not where they do not serve the goals of affordability and proportionality, as stated in Hryniak at para. 66:

She may, at her discretion, use those powers, provided that their use is not against the interest of justice. Their use will not be against the interest of justice if they will lead to a fair and just result and will serve the goals of timeliness, affordability and proportionality in light of the litigation as a whole.

[26] The foundational themes in Hryniak focus on the goals of proportionate, cost-effective and timely adjudication on an evidentiary record and in a process that allows for a fair and just determination. The Supreme Court emphasized that when a judge can fairly and justly adjudicate a case using the new powers under Rules 20.04(2.1) and (2.2), it will be in the interest of justice to do so. The decision to use these powers is within the discretion of the judge: Hryniak at para. 68.

[27] The Supreme Court emphasized in Hryniak, at paragraph 60, that the motion judge must consider “the consequences of the summary judgment motion in the context of the litigation as a whole”, cautioning that the motion judge must guard against granting partial summary judgment that “runs the risk of duplicative proceedings or inconsistent findings of fact”.

B. Partial Summary Judgment

[28] The summary judgment sought by State Farm would, regardless of the outcome, result in this action continuing against the City. Indeed, if only the alternative relief is granted to the moving party State Farm, it would remain in this action for purpose of quantification of damages and pursuit of its crossclaim against the City.

[29] I must therefore be satisfied that this summary judgment process is fair and just in the context of the litigation as a whole. Since Hryniak, several decisions by the Ontario Court of Appeal have provided guidance on the motion judge’s assessment of the advisability of summary judgment in the context of the litigation as a whole.

[30] In Baywood Homes Partnership v. Haditaghi, 2014 ONCA 450, 120 O.R. (3d) 438, the motion judge held that he could determine the validity of a release by summary judgment, but a trial was required to determine the validity of two promissory notes that were part of the same transaction. The Court of Appeal reversed, finding that the partial summary judgment risked inconsistent findings, and thereby substantive injustice, to the parties in relation to the surviving issues. The Court of Appeal applied the principle set out in Hryniak that the motion judge is required to “assess the advisability of the summary judgment process in the context of the litigation as a whole”: Baywood at para. 33.

[31] An identical finding was made in Hamilton (City) v. Thier + Curran Architects Inc., 2015 ONCA 64, 45 C.L.R. (4th) 1 where, relying on Baywood, the court stated, at para. 22, that “a summary judgment motion judge commits an error in principle when he or she fails to assess the advisability of the summary judgment process in the context of the litigation as a whole.” In that case, a motion judge’s dismissal of third party actions was overturned on the basis that it created a risk of inconsistent findings of fact by and between the parties and was thereby not a proportionate means to achieve a just result.

[32] In Canadian Imperial Bank of Commerce v. Deloitte & Touche, 2016 ONCA 922, 133 O.R. (3d) 561, the Court of Appeal held that the motion judge erred in granting partial summary judgment dismissing the lender’s claim in negligence against the defendants in circumstances in which the lender’s surviving claim for misrepresentation would proceed to trial. The motion judge ordered the partial summary judgment on a finding that there was no risk of duplicative proceedings or inconsistent findings in dismissing part of the lender’s claim. The Court of Appeal ordered that the negligence claim proceed to trial, finding that the factual determinations made by the motion judge in dismissing this negligence claim would likely be at issue again in the trial of the claim for misrepresentation, such that there was a real risk of duplicative or inconsistent findings at trial. The Court of Appeal cautioned, at para. 4, against granting partial summary judgment except where there is “no risk of duplicative or inconsistent findings at trial and [where] granting summary judgment [is] advisable in the context of the litigation as a whole”.

[33] In Butera v. Chown, Cairns LLP, 2017 ONCA 783, 137 O.R. (3d) 561, the motion judge granted summary judgment in regard to one cause of action between the parties without final determination against any party. In reversing, the Court of Appeal stated that, in addition to the danger of inconsistent findings considered in Baywood and CIBC, partial summary judgment raises a series of further problems that are contrary to the principles of efficiency and proportionality raised in Hryniak, namely: summary judgment motions cause the progression of the action to be delayed; a motion for summary judgment can be very expensive; significant court resources are required to address an increase in the volume of summary judgment motions; and the record available on a summary judgment motion will likely not be as expansive as a record at trial, giving rise to the potential for inconsistent findings: paras. 30-33. The Court of Appeal cautioned, at para. 34, that parties should consider these factors when assessing the advisability of a summary judgment motion:

When bringing a motion for partial summary judgment, the moving party should consider these factors in assessing whether the motion is advisable in the context of the litigation as a whole. 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.

[34] The cases where partial summary judgments have been upheld have all shared certain common elements. First, the partial summary judgment resolved a discrete, standalone issue that could be severed from the other claims or parties in the surviving case. Second, the motion was capable of being adjudicated on factual findings that did not intersect or overlap with the factual findings required to determine the issues left for trial, on an evidentiary record that reflected the evidence expected at trial, such that there was no risk of duplication or inconsistent findings. Third, the summary motion could be dealt with expeditiously and in a cost effective manner and, fourth, the motion served the overarching objective of advancing the litigation as a whole.

[35] For example, in Sirois v. Weston, 2017 ONCA 1002, the court upheld a motion judge’s decision to dismiss a claim due to the expiry of a limitation period on the finding that the limitation period was a distinct issue that could be severed from the surviving issues in the case and determined on the facts contained in the motion record. In Kueber v. Royal Victoria Regional Health Centre, 2018 ONCA 125, a motion judge’s order granting summary dismissal of several, but not all, claims against doctors and ambulance attendants was upheld even though further claims against a hospital were left to be determined at trial. The Court of Appeal stated, at para. 3, that “this is precisely the type of case that summary judgment is designed to address”, because it achieved the objectives of proportionate, cost-effective and timely dispute resolution without impacting the remaining elements to be adjudicated. Similarly, in Larizza v. Royal Bank, 2018 ONCA 632 at paras. 40-42, the Court of Appeal upheld partial summary judgment against certain but not all defendants where the claims were “standalone and limited in nature” and because there was “no real concern about duplicative or inconsistent findings arising with respect to the claims asserted against the remaining defendants.”

[36] In contrast, in Mason v. Mongenais, 2018 ONCA 978, the Court of Appeal set aside a partial summary judgment dismissing a professional negligence action against a tax law specialist where the action would nonetheless continue against the general law practitioner who had retained the specialist to assist the lawyers’ common client. The Court of Appeal held at para. 37 that there was a tripartite arrangement involving the two lawyer defendants and the plaintiff client, and that removal of one of the lawyer defendants conflicted with the “interest of justice” element set out in Hryniak at para. 60. The partial summary judgment was not sustained because it did not achieve any advancement of the litigation as a whole, it gave rise to risk of inconsistent findings and did not provide for a “more expeditious and less expensive means to achieve a just result”, applying Hryniak at para. 49: Mason at para. 42.

[37] Most recently in Vandenberg v. Wilken, 2019 ONCA 262, the Court of Appeal set aside a partial summary judgment declaring an agreement of purchase and sale valid while denying the remedy of specific performance and ordering a trial regarding damages, even though a counterclaim and third party action remained outstanding. The Court held that there was a risk of duplicative proceedings or inconsistent findings in the adjudication of the elements that would proceed to trial, such that the summary determination did not result in the issues being dealt with in an expeditious and cost effective manner.

[38] This case law highlights that a motion judge hearing a partial summary judgment motion must balance the competing objectives set out in Hryniak: namely, the court must weigh the efficiencies achieved by some summary resolution of a severable, standalone claim against the risk of duplicative proceedings or inconsistent findings in the surviving elements of the case. The motion judge must be certain that the net result of the partial summary judgment process will advance of the litigation as a whole and will increase overall efficiency in adjudicating the case.

IV. ANALYSIS

A. Is Partial Summary Judgment Appropriate in this Case?

[39] To determine whether partial summary judgment is appropriate in this case, meaning it is consistent with the principles set out by the Supreme Court in Hryniak, particularly at paras. 49 and 60, and emphasized by the Court of Appeal in Butera, particularly at para. 34 and Mason, particularly at para. 22, I will consider the following:

(a) Is the Plaintiff’s claim against State Farm severable from the remainder of the action? (b) Is there a risk of duplicative proceedings or inconsistent findings? (c) Can the issues raised by State Farm’s motion be adjudicated summarily in an expeditious and cost-effective manner? (d) Does this partial summary judgment motion achieve an advancement of the litigation as a whole?

[40] An analysis of these issues will determine whether this summary judgment motion provides for a more expeditious and less expensive means to achieve a just result.

(a) Is the Plaintiff’s Claim against State Farm Severable?

[41] The Plaintiff’s claim against State Farm is analytically severable from the remainder of the issues in this case. It is a standalone action. Indeed, it is, in substance, a declaratory relief action seeking validation of an insurance coverage position, welded by a shared factual matrix to a negligence action against the City.

(b) Is There a Risk of Duplicative Proceedings or Inconsistent Findings?

[42] To assess whether the determination of State Farm’s motion raises a risk of duplicative proceedings or inconsistent findings at trial, I will identify the factual findings that I would be required to make to decide this summary judgment motion.

[43] The coverage relied upon by the Plaintiff in seeking reimbursement for income loss from State Farm is found in Clause 1 of the Loss of Income and Extra Expense Endorsement contained in the State Farm Policy, which states as follows:

COVERAGES

1. Loss of Income a. We will pay for the actual “Loss of Income” you sustain due to the necessary “suspension” of your “operations” during the “period of restoration”. The “suspension” must be caused by accidental direct physical loss to the property at the described premises. The loss must be caused by a Covered Cause of Loss.

With respect to the requirements set forth in the preceding paragraph, if you occupy only part of the site at which the described premises are located, then the described premises means:

(1) The portion of the building which you rent, lease or occupy, and; (2) Any area within the building or on the site at which the described premises are located if that area is the only such area that: (a) Services, or (b) Is used to gain access to the described premises.

[44] In order then to activate coverage under the Loss of Income Coverage, the Plaintiff must establish:

(a) accidental direct physical loss to the property at the described premises; and (b) the loss must be caused by a Covered Cause of Loss.

[45] A “Covered Cause of Loss” is limited by the exclusions contained in the State Farm Policy. The exclusion relied on by State Farm is Exclusion (h)(4), “Water”, which states as follows:

SECTION I – EXCLUSIONS

1. We do not insure under any coverage for any loss which would not have occurred in the absence of one or more of the following excluded events. We do not insure for such loss regardless of: (a) the cause of the excluded event; or (b) other causes of the loss; or (c) whether other causes acted concurrently or in sequence with the excluded event to produce the loss; or (d) whether the event occurs suddenly or gradually, involves isolated or widespread damage, arises from natural or external forces, or occurs as a result of any combination of these:

h. Water (4) Water or sewage under the ground surface pressing on, or flowing or seeping through: (a) Foundations, walls, floors or paved surfaces; (b) Basements, whether paved or not; or (c) Doors, windows or other openings; or (5) Material carried or otherwise moved by any of the Water, as described in Paragraphs (1) through (4), above.

But if Water, as described in Paragraphs (1) through (5), results in accidental physical loss by fire, explosion or sprinkler leakage, we will pay for the loss caused by that fire, explosion or sprinkler leakage.

[46] The parties agree that the factual findings necessary to determine the first threshold coverage issue – whether there was direct physical loss to the Joroga Property – will not raise a risk of inconsistent or duplicative findings at trial. These include:

(a) Did the electrical service room in the Building P3 level provide service to the Joroga Property on the 6th and 8th floors sufficient to constitute this electrical service room as part of the Joroga Property? (b) Was the electrical service room damaged by the water infiltration from the water main rupture? (c) Was the damage to the electrical service room sufficient to render the Joroga Property unusable and incapable of being occupied for the period from January 30, 2013 to May 30, 2013?

[47] However, the Plaintiff and the City submitted that the factual findings necessary to determine the second threshold coverage issue – whether the Plaintiff’s loss of income claim derives from an excluded water loss – involve issues that are material to the continuing case by the Plaintiff against the City. They submit further that there is a risk of inconsistent or duplicative findings if these issues are determined on the current paper record on motion as opposed to a complete record at trial. These issues include:

(a) In what manner did the water enter the Building? Did the water rise to the surface level and then enter the Building through parking garage ramps and basement windows, or did the water “flow or seep” underground through foundations, openings, joints or joists? (b) The assessment of how the water entered the Building builds on determination of the mechanism by which the water escaped, when and for what duration, and the resultant volume of water. (c) What was the sequence of events that led to the water entering the Building? Did the water saturate the ground and rise to surface level first and then enter the Building, or did the water enter the Building through subsurface infiltration?

[48] State Farm concedes that factual findings about how the water entered into the Building are material to a determination of its coverage position, and therefore its summary judgment motion, but argued that these factual findings will not be material to the Plaintiff’s negligence claim against the City. I disagree. The trial judge’s determination of the City’s conduct in containing the water main rupture will involve the very factual issues that are material to State Farm’s summary judgment motion. The Plaintiff contends that the City’s response was too slow and too ineffective, rendering material the issues identified pertaining to the mechanism and nature of the water escape.

[49] I conclude that a determination of this summary judgment motion involves making factual findings that are also material to the issues that will continue to trial in this action between the Plaintiff and the City. This gives rise to a risk of inconsistent or duplicative findings.

(c) Can the issues raised by State Farm’s motion be adjudicated summarily in an expeditious and cost-effective manner?

[50] State Farm submitted that the facts material its summary judgment motion could be determined “without prejudice” to the trial judge’s assessment of the same factual issues at trial. I do not accept this submission. Even if adjudication twice, once on a paper record and once at trial, of discrete factual issues were capable of being done in a manner that does not give rise to the risk of inconsistent or duplicative findings, it is not cost-effective or a proper use of judicial resources.

[51] This summary judgment motion involves a coverage dispute. Where the language of an insurance policy is unambiguous, the Court should give effect to the clear language, reading the insurance contract as a whole: Non-Marine Underwriters, Lloyd’s of London v. Scalera, 2000 SCC 24, [2000] 1 S.C.R. 551 at para. 71. However, where the wording of the insurance contract is ambiguous, as the Plaintiff here contends, Courts must prefer an interpretation drawn from the whole of the contract and any material surrounding circumstances that gives effect to the reasonable expectations of the parties at the time of contracting, provided that any such interpretation is supported by the language of the policy: Progressive Homes Ltd. v. Lombard General Insurance Company of Canada, 2010 SCC 33, [2010] 2 S.C.R. 245, at para. 23; Consolidated-Bathurst Export Ltd. c. Mutual Boiler & Machinery Insurance Co., [1980] 1 S.C.R. 888 at p. 901; MacDonald v. Chicago Title Insurance Company of Canada, 2015 ONCA 842, 127 O.R. (3d) 663 at para. 66.

[52] The interpretative process should avoid an interpretation that will result in a windfall to the insured of unexpected coverage or a windfall to the insurer of less expansive coverage than the premium contemplated: MacDonald, at para. 66. As Estey J. stated in Consolidated-Bathurst, at pp. 901-902: “…the courts should be loath to support a construction which would either enable the insurer to pocket the premium without risk or the insured to achieve a recovery which could neither be sensibly sought nor anticipated at the time of the contract.”

[53] In order to apply these interpretative principles to the State Farm Policy, I must make findings concerning the nature of the loss that gave rise to the Plaintiff’s claim for policy coverage. This task cannot be completed on the five facts that the City helpfully distilled as being common in the parties’ evidence, but rather would require assessing the five affidavits of conflicting evidence from four witnesses and the three cross-examination transcripts filed on this summary motion. The issues raised by this evidentiary record, and their resulting determination, cannot be readily deconstructed from the remainder of the issues that will in any event proceed to trial and cannot be adjudicated summarily in a cost-effective manner.

(d) Does this partial summary judgment motion achieve an advancement of the litigation as a whole?

[54] The central issue in this action is to determine responsibility for the damages said to have been sustained by the Plaintiff. The City denies any liability. The Plaintiff and State Farm are united in stating that the City is responsible. The Plaintiff is the party of interest in this position should the State Farm Policy not cover this loss. State Farm is the party of subrogated interest in this position if the State Farm Policy is responsive. In the event that the State Farm Policy provides coverage limited to four weeks of income loss (State Farm’s alternative position in this motion), then both the Plaintiff and State Farm will remain parties of interest in the shared objective of imposing liability on the City at trial: the Plaintiff to the extent of any provable uninsured loss and State Farm to the extent of its subrogated claim.

[55] While determination of this summary judgment motion would provide clarity to the responsibilities as between insurer and insured, both commercial parties, this partial summary judgment motion does not achieve any advancement of the central issue in this action, or of the litigation as a whole.

Conclusion – Partial Summary Judgment is Not Appropriate in this Case

[56] I conclude that this partial summary judgment gives rise to duplicative proceedings and a risk of inconsistent findings in the elements that will proceed to trial, does not advance the litigation as a whole and does not provide for a “more expeditious and less expensive means to achieve a just result”, as required by Hryniak. On these findings, this summary judgment motion is dismissed.

B. Terms for the Efficient Progression of this Action to Trial

[57] Rule 20.05(1) provides that where a motion for summary judgment is refused, the Court may make an Order that the action proceed to trial expeditiously and, pursuant to Rule 20.05(2), may give such directions or impose such terms as are just.

[58] Complementing the authority provided under Rules 20.05(1) and 20.05(2), Rule 50.13(1) provides authority for a judge to conduct a case conference, at any time. Rule 50.13(5) authorizes a judge to identify the issues in the action and establish a timetable for the proceeding.

[59] This action is six years old. It was administratively dismissed for delay on April 25, 2018, and restored by Order of Master Muir on June 19, 2018 (the “June 2018 Order”). This Order set out a timetable for the development of this action including a strict deadline for the action to be set down for trial, but the parties could not adhere to those timelines as the first step, the determination of this summary judgment motion, was held down from its original return date through no fault of the parties.

[60] After affording the parties an opportunity to confer, collaborate and take instructions on the remaining procedural steps required to set this action down for trial, and after then hearing submissions from them, I order that the following timetable be implemented, in variation of the June 2018 Order:

(a) The examination for discovery of the Plaintiff shall be completed on either May 23, 2019 or June 14, 2019; (b) Any motion arising from the Plaintiff’s examination for discovery shall be scheduled within thirty days of the completion of this examination; (c) Any re-examination to answer questions properly arising from undertakings shall be completed within fifteen days after a decision on any such motion is rendered; (d) The parties shall agree to a mediator by May 15, 2019 and shall engage in mediation by no later than September 30, 2019; (e) This action shall be set down for trial by October 31, 2019, failing which the Registrar shall dismiss this action for delay pursuant to Rule 48.14. I reinstitute this dismissal term from the June 2018 Order; (f) The dates set out in this timetable may be varied by written consent of all parties to dates reasonably proximate to those fixed, but the deadline for setting down the action for trial may be varied only by Court Order.

[61] I further order, in accordance with Rule 20.05(2)(f), that the affidavits or other evidence filed on this motion and any cross-examination on them may be used at trial in the same manner as an examination for discovery, subject to any Order by the trial judge.

V. COSTS

[62] The Plaintiff sought costs payable by State Farm on a partial indemnity basis at $27,855 for fees, $3,087.75 in disbursements and taxes of $3,987.85 for a total of $34,930.60, all inclusive. The Plaintiff submitted that it was successful in defending the State Farm motion, and is thereby presumptively entitled to costs.

[63] The City did not seek costs, and submitted that it ought not to be subject to any cost award by reason of the limited position that it took on the motion. I agree.

[64] State Farm submitted that there should be no award of costs as the substantive issues raised by the motion were not determined. In terms of amount of quantification of costs, State Farm contended that the costs sought by the Plaintiff were excessive, both in terms of number of hours and hourly rate, particularly as State Farm’s cost outline showed that State Farm would have sought a lower amount, $23,657.68 all inclusive, had it prevailed on this motion.

[65] State Farm submitted, as well, that as the evidence on the motion may be used at trial as examination evidence, that the costs of this motion are not wasted or limited in purpose to the motion alone but are applicable to the trial and should thereby be reduced. I accept this submission.

[66] Having regard to the principles set out in Rule 57, noting that the evidence gathered on this motion is preserved for use at trial, and taking into consideration that the quantification of costs is not just a mechanical exercise involving arithmetic computation of hours and hourly rates but rather an assessment of what is fair and reasonable (Boucher v. Public Accountants Council for the Province of Ontario (2004), 71 O.R. (3d) 291 (C.A.); Zesta Engineering Ltd. v. Cloutier (2002), 21 C.C.E.L. (3d) 161 (Ont. C.A.) at para. 4), I quantify and thereby fix the costs of this motion at the amount of $15,000, all inclusive of fees, disbursements and applicable taxes.

[67] In regard to entitlement to costs, I have concluded that costs should be payable in the cause as between the Plaintiff and State Farm. I have reached this conclusion because the result today did not determine the coverage issue between State Farm and the Plaintiff, and I find that it is fair and just that the costs of this motion should follow that determination. I adopt the approach by Perell J. in Drywall Acoustic Lathing and Insulation Local 675 Pension Fund (Trustees of) v. SNC-Lavalin Group Inc., 2017 ONSC 3369 at para. 10, where he ordered costs of the motion in the cause because “it would be unfair and unjust that the party that won the battle but lost the war should receive costs from the ultimate victor of the case.” Similar determinations were made in Quizno’s Canada Restaurant Corp. v. 1450987 Ontario Corp.; Smith (Estate) v. National Money Mart Co. (2008), 92 O.R. (3d) 224 (S.C.J.); and Kelly v. Ontario (Minister of Energy), 2014 ONSC 6413.

VI. DISPOSITION

[68] This summary judgment motion is dismissed.

[69] I order, in accordance with Rule 20.05(2)(f), that the affidavits or other evidence filed on this motion and any cross-examination on them may be used at trial in the same manner as an examination for discovery, subject to any Order by the trial judge.

[70] The parties shall advance this action in accordance with the timetable set out in paragraph 60 of this Endorsement.

[71] The costs of this motion are fixed in the amount of $15,000, payable in the cause as between the Plaintiff and State Farm.

Sanfilippo J. Released: May 1, 2019