Elmi v. Choukair et al., 2020 ONSC 1181

COURT FILE NO.: 15-64080-A2 DATE: 2020/02/26 ONTARIO SUPERIOR COURT OF JUSTICE

B E T W E E N:

IDIL ELMI Plaintiff – and – MOHAMED CHOUKAIR, MOHAMAD GHANDOUR and AVISCAR INC. Defendants – and – LLOYD’S UNDERWRITERS (CANADA) Third Party

Counsel: Derek Nicholson, for the Plaintiff Brigette A. Morrison, for the Defendants Patricia B. Simpson, for the Third Party

HEARD: June 11, 2019

RULING ON MOTION FOR SUMMARY JUDGMENT

Corthorn J.

Background

[1] Idil Elmi was injured when, as a pedestrian, she was struck by a vehicle driven by Mohamed Choukair. The vehicle, a 2014 Jeep Cherokee (the “Vehicle”), was owned by rental car company, Aviscar Inc. (“Avis”). At the date of the accident, the Vehicle was leased by Avis to Mohamad Ghandour. He had rented the Vehicle for approximately four weeks for his and his wife’s personal use.

[2] At the time of the accident, Choukair was doing a favour for his friend, Ghandour. Choukair was driving the Vehicle from Ghandour’s place of work, Milano’s Pizza, to Ghandour’s home. Ghandour’s wife had asked Ghandour for the Vehicle for her personal use. She was to drive Choukair back to Ghandour’s place of work. Because of the accident, Choukair never delivered the Vehicle to Ghandour’s home.

[3] Ghandour’s work at Milano’s Pizza was not his sole source of income. He also ran a used car dealership through a Quebec numbered company whose business address is in Lacelle, Quebec. The business operated under the name of “VIP Vente d’Auto” (“the Dealership”).

[4] The Dealership was insured under a garage policy (“the Policy”) from Lloyd’s Underwriters (Canada) that was obtained through a Quebec-based insurance broker. To date, Lloyd’s maintains that there is no coverage available to the defendants under the Policy with respect to the accident.

[5] Pending the outcome of this motion, the Defendants are being defended in the action under an insurance policy issued to Avis by The Continental Casualty Company (“Continental”).

[6] The Defendants bring this motion for summary judgment. They request a declaration that, pursuant to s. 277(1.1) of the Insurance Act, R.S.O. 1990, c. I.8, Lloyd’s ranks first in priority and is required to provide the Defendants with a defence to this action. In response, Lloyd’s denies coverage and requests that the motion for summary judgment be determined in its favour. The Plaintiff was not represented on the return of the motion.

[7] If the court finds that Lloyd’s is required to provide the Defendants with a defence to this action, then Continental also requests that Lloyd’s be ordered to pay Continental the costs it has incurred to date for the defence of the action as well as its costs for this motion.

Preliminary Issue

[8] A preliminary issue arose with respect to the manner in which the Defendants rely on the transcript from the examination for discovery of Ghandour (“Ghandour Transcript”). The parties were given an opportunity to file written submissions addressing that issue.

a) The Ghandour Affidavit and Transcript

[9] The Defendants rely on an affidavit from Ghandour (“the Ghandour Affidavit”) that consists of three paragraphs. In the first paragraph, Ghandour refers to the Dealership, the Policy, his rental of the Vehicle, and the request made of Choukair to drive the Vehicle to Ghandour’s home. The third paragraph of the Ghandour Affidavit is a typical final paragraph found in affidavits; it includes no substantive evidence.

[10] The second paragraph reads as follows:

I provided evidence under oath with respect to the issues in these proceedings at an examination for discovery held on November 21, 2018 in Ottawa. Attached hereto and marked as Exhibit “A” are highlighted excerpts of my evidence from that examination. I have reviewed these excerpts and confirm that the evidence remains true and accurate to the best of my knowledge, information, or belief.

[11] Exhibit “A” consists of approximately 40 non-consecutive pages from the Ghandour Transcript. That examination was conducted in November 2018. The last page of the excerpts included at Exhibit “A” is numbered “76”. A complete copy of the transcript is included in Lloyd’s responding motion record; it numbers 77 pages in total.

b) Positions of the Parties

[12] In their supplementary materials, the Defendants make two arguments with respect to the reliance on excerpts from the Ghandour Transcript. First, they submit that the prohibition against a party relying, for the purpose of a motion, on their own discovery evidence is not absolute: see r. 39.04(2) of the Rules of Civil Procedure, R.R.O. 1990, Reg. 194.

[13] Second, they submit that, by attaching a copy of the Ghandour Transcript to the Ghandour Affidavit, they followed a method of presenting evidence recommended by the Ontario Court of Appeal in Lana International Ltd. v. Menasco Aerospace Ltd. (2000), 50 O.R. (3d) 97.

[14] In its supplementary materials, Lloyd’s does not dispute the Defendants’ entitlement to rely on the contents of the Ghandour Transcript. Lloyd’s agrees with the submissions made on behalf of the Defendants. In addition, Lloyd’s submits that, because it included the Ghandour Transcript in the responding motion record, the Defendants are entitled to rely on evidence from that transcript: see Perreira v. Contardo, 2014 ONSC 6894, 123 O.R. (3d) 271 (Div. Ct.), at para. 44.

c) Analysis

[15] In Lana, a defendant moving for summary judgment chose not to file his own affidavit in support of the motion. Instead, he filed and relied on the transcript from his examination for discovery. During oral argument, counsel for that defendant relied extensively on answers given by their client during the examination for discovery. The motion for summary judgment was granted.

[16] The Court of Appeal concluded that, despite recognizing the prohibition set out in r. 39.04(2), the motion judge relied on evidence from the defendant’s discovery transcript and made an error in doing so. The Court found the language of r. 39.04(2) to be “clear and unlimited”: para. 18. It held that r. 39.04(2) undoubtedly applies to motions for summary judgment, just as it does to other types of motions: see paras. 18, 26.

[17] The Court contemplated how to address cost-effectiveness and efficiency considerations in presenting evidence on a motion for summary judgment made after examinations for discovery have been conducted. O’Connor J.A. noted that a party who has undergone examination for discovery and who then files an affidavit in support of a motion for summary judgment may in fact end up being subject to two pre-trial examinations – the examination for discovery and cross-examination on an affidavit: see para. 39.

[18] At para. 39, O’Connor J.A. went on to say that “an interpretation of Rule 39.04(2) which precludes any use by parties of their own examinations for discovery on a motion need result in extra examinations, expense or delay.” He therefore offered three solutions to avoid repetitive examinations:

• The parties could agree to approach the examination for discovery as cross-examination on an affidavit attesting to the facts in their respective pleadings;
• A party could attach the transcript from their examination for discovery as an exhibit to their own affidavit, with cross-examination permitted but without repeating questions from the examination for discovery; and
• When the motion for summary judgment is brought before examinations for discovery, the parties could agree to treat the cross-examination of a party as all, or a portion of, the examination for discovery of that party.

[19] In their supplementary materials, the Defendants in the present matter submit that the second option identified by O’Connor J.A. in Lana is “precisely what was done” by them. I disagree. The options listed by O’Connor J.A. include appending “the discovery” to the party’s affidavit. Those options do not include appending extracts or limited numbers of pages from a discovery transcript.

[20] There is good reason to require that a party append the entire transcript from their examination for discovery; particularly where the party relies on a series of unconnected answers given during the examination. Without the benefit of the entire transcript, the court is unable to ascertain whether the party cherry-picked answers and/or omitted portions of the transcript that deal with the same subject matters as the extracts included.

[21] There can be circumstances in which only a very small segment of a party’s discovery transcript is relevant to the issues to be determined on the motion. In those circumstances, the parties could agree upon the inclusion in the record of that small segment only. By doing so, the parties would eliminate unnecessary copying expenses and avoid burdening the court with paper it does not require.

[22] If the parties are unable to agree on restricting the portions of a transcript to be filed, they could, in the alternative, agree that:

a) the party who seeks to rely on a portion of the transcript shall append the entire transcript to their affidavit; and b) both parties are entitled to rely on the transcript.

[23] Proceeding in that manner reduces to one the number of copies of the transcript included in the record.

[24] Despite the Defendants’ failure to include a complete copy of the Ghandour Transcript in the motion record, a complete copy of that transcript is before the court. It forms part of the Lloyd’s responding motion record. The court is therefore able to consider the evidence from Ghandour on his examination for discovery.

Substantive Issues

[25] The issues to be determined on this motion for summary judgment are:

1. Which of the two insurers, Continental or Lloyd’s, is required to respond to the claims made in this action and provide a defence to the three defendants?
2. If Lloyd’s is required to provide the defence, to what costs, if any, is Continental entitled with respect to (a) the action to date, and (b) the motion for summary judgment.

Issue No. 1 – Which of the two insurers, Continental or Lloyd’s, is required to respond to the claims made in this action and provide a defence to the three defendants?

a) Statutory Provisions

[26] In 2005, both the Insurance Act and the Highway Traffic Act, R.S.O. 1990, c. H.8 (“HTA”) were amended with respect to liability and insurance coverage for motor vehicle accidents involving rented vehicles. Pursuant to the amending statute, s. 191.9 was added to the HTA, s. 192 of the HTA was amended, and s. 277(1.1) was added to s. 277 of the Insurance Act: see S.O. 2005, c. 31, Schedules 10 and 12.

[27] The plaintiff relies on s. 192(4) of the HTA in support of her allegation that Ghandour’s consent to Choukair driving the Vehicle is deemed to be the consent of Avis. The plaintiff also relies on s. 192(6) of the HTA to establish the joint and several liability of each of Avis, Ghandour, and Choukair for the accident.

[28] Of greater significance on the motion for summary judgment are the priority rules set out in s. 277 of the Insurance Act. In s. 277(1.1), the priority in which the insurers of the driver, lessee, and owner of a leased vehicle are required to respond to a claim made as a result of an accident involving a rented vehicle are set out. In summary, and assuming that coverage is available to one or more of the lessee, lessor, and driver of a rented vehicle then the lessee’s policy is first in priority, the driver’s policy is second, and the lessor owner’s policy is third.

[29] The Defendants rely on s. 277(1.1) in support of the motion for summary judgment. They argue that the Policy is first in priority because, under it, coverage is available to Ghandour (and to Choukair, who was driving the Vehicle with Ghandour’s consent). Lloyd’s does not dispute the priorities established by that section of the Insurance Act. Rather, it relies on the terms of the Policy issued and submits that there is no coverage available to the Defendants under the Policy.

b) Positions of the Parties

[30] The Defendants submit that the recent amendments to both the HTA and the Insurance Act were intended to address the circumstances present in this case; namely, where the lessee of a vehicle consents to its use or operation by another. The Defendants’ position is that:

• “use or operation” of a vehicle includes temporarily lending it to another person;
• although the Vehicle was leased from Avis by the Dealership, coverage is available to Ghandour, as an unnamed insured, under the Policy; and
• in any event, the Defendants are entitled to a defence under the Policy.

[31] Lloyd’s responds by denying coverage to the Defendants for the following reasons:

• There is no coverage available to the Defendants unless the Vehicle falls within the coverage for non-owned vehicles. Lloyd’s submits that the Vehicle does not fall within that coverage;
• Ghandour personally, not the Dealership, was the lessee of the Vehicle. The rental of the Vehicle had nothing to do with the Dealership. The Vehicle was rented entirely for Ghandour’s personal use; and
• Even if it can be said that there is some connection between the Vehicle and the Dealership, it cannot be said that the Dealership, as the named insured, “furnished” the Vehicle to Ghandour within the meaning of the Policy.

c) The Evidence

[32] The Defendants served a request to admit. Based on that document and Lloyd’s response to it, the following facts are not in dispute:

• At the time of the accident, Choukair was driving the Vehicle;
• The Vehicle was owned by Avis. Ghandour rented it from Avis for the 30-day period from September 18 to October 18, 2014;
• Ghandour rented the Vehicle for personal use by himself and his wife;
• Ghandour was the “lessee” of the Vehicle within the meaning of s. 277(4) of the Insurance Act;
• The named insured on the Policy was 9269-8182 Quebec Inc. (c.o.b. as “VIP Vente d’Auto”);
• Ghandour was the president and sole administrator of the numbered company; and
• The Policy had been neither suspended nor terminated prior to the date of the accident.

[33] Although not addressed in the request to admit and response to it, there are a number of other undisputed facts. They include that the rental agreement between Avis and Ghandour is a single-page, computer-generated document. The only information provided by the lessee, Ghandour, is his name and Ontario Driver’s Licence number. There is no mention of the Dealership. The rental charge of $926.63 was paid by Ghandour using his personal American Express card.

[34] The Dealership’s application for the garage policy was made in two stages. The first part of the application was completed on a form bearing the logo for “ING Assurance”. The second part of the application was completed on a form bearing the broker’s logo. Further,

• in both documents the name of the applicant is the numbered company;
• on the first form, Ghandour is listed as an “Additional Insured”, while on the second form Ghandour’s name is listed under “Driver’s Information”;
• on the first form, Ghandour is identified as the sole owner and principal of the Dealership; and
• on the second form, the Dealership is identified as being owned by one person.

[35] On his examination for discovery, Ghandour testified that it was possible that he had, prior to the date of the accident, driven the Vehicle for the purpose of Dealership business. He did not, however, have any specific recollection of having done so.

[36] Lloyd’s issued to the Dealership a garage policy (QPF No. 4) to which is attached an exclusionary endorsement (QEF 4-70). The endorsement is titled “Excluding Owned Automobile Endorsement”.

[37] The Declaration Page for the Policy identifies the numbered company as the “Insured”. Ghandour’s name does not appear anywhere in the Declaration Page, the QPF 4, or the QEF 4-70.

d) Interpretation of the QPF 4 and QEF 4-70

[38] The garage policy upon which the defendants and Lloyd’s rely is evidence of a contract of insurance

• applied for and entered into between a numbered company incorporated and said to be located in Quebec; and
• the terms of which are set out in a “Quebec Automobile Insurance Policy” on forms approved under s. 422 of the Act respecting insurance, R.S.Q., Chapter A-32.

[39] The terms used in the QPF 4 include “Named Insured” and “Insured”. The QEF No. 4-70 refers to the “Named Insured”. The “Definitions” of words or phrases used in the QPF 4 are set out in section 3 of the “General Provisions, Definitions and Exclusions” section of that document. No definition is provided of either “Named Insured” or “Insured”.

[40] The Policy was issued to the numbered company, suggesting that it is the “Named Insured” within the meaning of the Policy. Does the inclusion of Ghandour’s name in one or both application forms mean that he is an “Insured” within the meaning of the Policy?

[41] On the return of the motion, the parties were invited to provide additional submissions addressing whether the application documents form part of the contract of insurance. In their additional materials, the Defendants rely on ss. 1 and 232(1) of the Insurance Act. They also rely on the decision of this court in Farmers’ Mutual Insurance Co. v. McAlister (2003), 65 O.R. (3d) 307, at paras. 30, 37, and 40.

[42] Lloyd’s relies on the same statutory and jurisprudential authorities. It also relies on the following paragraph, which appears immediately above the applicant’s signature on the second application form:

The signing of this application does not bind the Insured to purchase the Insurance, but is agreed that this application and any material submitted herewith are the representation of the proposed Insured and are material. It is further agreed that this application and any material submitted therewith shall be the basis of the contract should be a Policy be [sic] issued, and this application and any attachment thereto will be attached to and become a part of the Policy.

[43] It is difficult to see how the statutory and jurisprudential authorities provided to this Court could be of assistance in interpreting the Policy. The policy documents identify that they are in forms approved under s. 422 of Quebec’s Act respecting insurance. The Ontario Insurance Act is not relevant to the interpretation of the Policy. Farmers’ Mutual relates to an application for insurance made by an Ontario resident, in Ontario, for a policy of motor vehicle insurance governed by the Ontario Insurance Act. In the absence of evidence that this Ontario decision is in some way relevant to the interpretation of the Policy, it is not of assistance to this Court.

[44] I agree with the parties that, in this action, which concerns an accident involving a motor vehicle in Ontario, the law of Ontario applies to determine both liability for the accident and the priority of insurance. Determination of the latter issue, however, requires the determination of whether coverage is available to the defendants pursuant to a contract of insurance applied for and issued in Quebec pursuant to the laws of that province.

[45] In November 2019, subsequent to the date on which the present motion was heard, the Ontario Court of Appeal released its decision in Ontario Corporation Number 1009329 (Enterprise Rent-A-Car) v. Intact Insurance Company, 2019 ONCA 916, 96 C.C.L.I. (5th) 38. The Court held that priorities under the Insurance Act depend on the existence of coverage under a policy of insurance: see para. 8. Section 277(1.1) does not create insurance coverage where none is available: see para. 10. Indeed, “priorities of insurance coverage established in s. 277(1.1) do not come into play unless there is insurance coverage, and that is a matter that must be determined in accordance with the terms of the insurance contract”: ibid.

[46] From this recent decision of the Court of Appeal, it is clear that the first step in determining a priority dispute under s. 277(1.1) is to ascertain whether coverage is available from more than one insurer. Given the location of certain parties and contracts in the present case, it is worth considering that the Civil Code of Quebec, CQLR c. CCQ-1991 (“CCQ”) is the principal body of law governing legal relationships between persons within Quebec’s jurisdiction. I bring to the attention of the parties the following provisions of the CCQ.

[47] First, article 3150 CCQ provides that Quebec authorities have jurisdiction over disputes related to contracts of insurance where the contract is connected to Quebec. It provides that Quebec courts have jurisdiction to “hear an action based on a contract of insurance where the holder, the insured or the beneficiary of the contract is domiciled or resident in Québec, the contract covers an insurable interest situated in Québec or the loss took place in Québec” (emphasis added). Is the Dealership an insurable interest in Quebec?

[48] Turning more generally to the law of contract, article 3119 CCQ provides that:

Notwithstanding any agreement to the contrary, a contract of insurance covering property or an interest situated in Québec, or that is subscribed in Québec by a person resident in Québec, is governed by the law of Québec if the policyholder applies for the insurance in Québec or the insurer signs or delivers the policy in Québec. (Emphasis added.)

[49] There is no evidence before the court as to the law of Quebec, including with respect to whether the Quebec authorities have proper jurisdiction to address disputes of the kind between the Defendants and Lloyd’s presently before this Court. Even if this Court has jurisdiction to determine the dispute, evidence is required as to the law of Quebec so that this Court is in a position to apply the correct law.

[50] The parties have not made any submissions as to the jurisdiction of this Court to determine their dispute. Nor have they made submissions as to the law of Quebec to be applied, assuming this Court has jurisdiction.

[51] The parties will want to consider the most efficient, cost-effective course of action available to them. First, they must decide whether the Quebec authorities have proper jurisdiction over their dispute. If so, and the Quebec authorities determine that Lloyd’s is required to provide the Defendants with a defence, then the Defendants and Lloyd’s may be able to determine the priority issue without having to return to this court. If Quebec authorities determine that Lloyd’s is not required to provide the Defendants with a defence, then there is no priority issue to be determined.

[52] If the unsuccessful party or parties in the proceeding before Quebec authorities choose to appeal said decision, then the appeal route would also be in Quebec. Only if the final determination from a Quebec authority is that Lloyd’s is required to provide the Defendants with a defence does there exist a priority issue to be determined. Again, in this scenario, the Defendants and Lloyd’s might be able to resolve the priority issue without having to return to this court.

[53] If the Defendants and Lloyd’s take the position that this Court has the jurisdiction to interpret the QPF 4 and QEF 4-70 and decide the coverage issue, then it will be necessary for them to appear before me again to make submissions on that issue. The Defendants and Lloyd’s will, however, want to consider what type of evidence would need to be marshalled if the court were to conclude that it has jurisdiction to decide the coverage issue.

[54] Would the Defendants and Lloyd’s each be required to present evidence from individuals who have expertise in the field of insurance law in Quebec? Would affidavit evidence be sufficient? Will it be necessary to have the expert witnesses available to give viva voce evidence regardless of whether they are cross-examined on their respective affidavits? The court may have questions of such experts even if transcripts from cross-examinations are available. Will the parties require counsel familiar with Quebec law, and called to the Bar in Ontario, to be confident that they can properly represent their respective interests?

[55] What will happen if the coverage dispute is determined by this Court and the unsuccessful party appeals? Leaving aside whether it makes good sense for this Court to be determining a coverage dispute that might otherwise be determined by Quebec authorities, does it make sense for the Ontario Court of Appeal to hear an appeal involving the application of the Civil Code of Quebec to a policy of insurance issued in that province?

Summary

[56] For the reasons set out above, it is not possible to determine Issue No. 1 at this time. The motion is adjourned sine die to permit the parties to consider the issue of jurisdiction.

[57] If the Defendants and/or Lloyd’s take the position that this Court has jurisdiction to determine the coverage dispute, then they shall take the steps necessary to make submissions on that issue. They shall bring the motion back for argument on the issue of jurisdiction only. They shall obtain a date for the continuation of the motion and deliver the requisite materials in accordance with the Rules of Civil Procedure.

[58] If the Defendants and/or Lloyd’s wish, at a later date, to make submissions with respect to costs, the party or parties shall make arrangements for a telephone case conference. The purpose of the conference will be to address logistics for costs submissions, including whether they will be made in writing or orally.

[59] The coverage dispute shall not be determined by this Court unless and until (a) it has determined that it has jurisdiction to determine that dispute, and (b) the requisite evidence and written argument on the coverage dispute are delivered.

[60] The motion for summary judgment is otherwise adjourned sine die.

Madam Justice Sylvia Corthorn

Released: February 26, 2020