Court File and Parties

COURT FILE NO.: C-226-16 DATE: 2020-03-10 ONTARIO SUPERIOR COURT OF JUSTICE

BETWEEN:

ALBAIR WILLIAM FALTAS, MAY MAHFOUZ HANA FALTAS and ROYAL ARTS PHARMACEUTICAL INC. Plaintiffs – and – MARK MACEROLLO and HC MATCON INC. Respondents

Counsel: Nolan Downer, Counsel for Moving Parties/Defendants Diana Edmonds, Counsel for Responding Parties/Plaintiffs

HEARD: February 11, 2020

The Honourable Mr. Justice D.J. Gordon

REASONS FOR DECISION

[1] In their motion, first returnable October 10, 2019, the defendants seek summary judgment, dismissing the claims of Albair William Faltas and Royal Arts Pharmaceutical Inc. only. The relief sought is opposed.

Factual Background

[2] As hereafter discussed, there appears to be an evidentiary dispute with respect to some matters. For the purposes of this motion, the following facts are not in dispute:

1. On July 28, 2014, Mr. Faltas was driving his Lincoln vehicle in a southerly direction on Homer Watson Boulevard, in the City of Kitchener.
2. Homer Watson Boulevard is a four lane street.
3. The Lincoln vehicle stopped in the outside lane (the reason is in dispute).
4. Mr. Faltas called his spouse, May Faltas to bring gas. Ms. Faltas, and their son, Davoud Faltas, arrived shortly thereafter. She parked her Nissan vehicle in front of the Lincoln. Gas was put into the Lincoln tank.
5. Mr. Faltas activated the four way emergency flashers and turned the ignition off.
6. Mr. Faltas called for roadside assistance/tow truck.
7. Mr. Faltas and Davoud sat in the Lincoln. Ms. Faltas remained in her vehicle.
8. The Lincoln was rear-ended by a truck, operated by Mark Macerollo and owned by HC Matcon Inc., the defendants. The collision caused significant damage to the Lincoln, pushing it into and also damaging the Nissan.
9. Mr. Faltas had signed an OPCF 28A Excluded Driver endorsement, dated January 8, 2013 or 2014, effective February 26, 2014. It remained in effect on the day of the collision.

The Claims

[3] Both Mr. Faltas and Ms. Faltas allege they were injured in the collision and seek compensation under various headings for same.

[4] Royal Arts Pharmaceutical Inc. also claims general and, in the alternative, special damages for the loss of the value of services of Mr. Faltas and Ms. Faltas to the corporation on the basis of “action per quod servitium amisit”.

[5] The company owned and operated Belmont Pharmacy. Mr. Faltas is a pharmacist and Ms. Faltas is a pharmacy assistant. Both are said to be officers, directors and shareholders of the company. It is alleged they were employees of the company. Their income was received from the company as shareholders, presumably dividends, and as employees, namely salaries. While they were injured and unable to work, it is said the company was required to hire replacement employees.

Litigation History

[6] The statement of claim was issued on March 2, 2016, seeking compensation as set out above.

[7] The statement of defence is dated April 15, 2016. It was subsequently amended, leave being granted by order on February 6, 2019, to plead that Mr. Faltas is statute-barred from bringing the action as he was an excluded driver pursuant to the Insurance Act, R.S.O. 1990, c. I.8 and the Compulsory Automobile Insurance Act, R.S.O. 1990, c. C.25.

[8] Examinations for discovery took place on June 16, 2017. The trial record was served and filed, and a pre-trial conference was scheduled for September 10, 2019. On September 5, 2019, a consent order was granted to vacate the pre-trial conference and striking the action from the trial list so that a summary judgment or Rule 21 motion could be heard.

[9] This summary judgment motion was then served.

Issues

[10] Two issues require determination:

(i) Is Mr. Faltas precluded from bringing an action pursuant to section 267.6(1) of the Insurance Act and sections 1(3) and 2(1) of the Compulsory Automobile Insurance Act? (ii) Is Royal Arts Pharmaceutical Inc.’s “per quod” claim tenable at law?

Summary Judgment

[11] The consent order granted on September 5, 2019 made reference to either a summary judgment motion, under Rule 20 or a Rule 21 motion, to determine an issue before trial. The defendants elected to proceed with a motion for summary judgment.

[12] In this Rule 20 motion, the onus is on the moving party/defendants to establish, on a balance of probabilities, that there is no genuine issue requiring a trial with respect to the plaintiffs’ claims.

[13] On such a motion, the court is entitled to assume that the parties have presented all of the relevant evidence and that there will be no further evidence required to determine the issues. Each party must put its best foot forward and lead trump or risk losing.

[14] The court must first determine if there is a genuine issue requiring a trial based on the evidence presented without using the fact-finding powers under Rule 20.04(2.1) of the Rules of Civil Procedure. Under that provision, the motion judge may weigh the evidence, evaluate credibility of a deponent and draw any reasonable inference from the evidence unless it is in the interests of justice for such powers to be exercised only at trial. See: Hryniak v. Mauldin, 2014 SCC 7.

[15] There will be no genuine issue requiring a trial if the summary judgment process provides the motion judge the evidence required to fairly and justly adjudicate the dispute and is a timely, affordable and proportionate procedure.

[16] If the moving party/defendant has discharged its evidentiary burden of proving there is no genuine issue requiring a trial, the burden shifts to the responding party/plaintiff to prove their claims have a real chance of success; that is, there is a genuine issue requiring a trial.

[17] In this case, the defendants’ summary judgment motion pertains only to the claims of Mr. Faltas and the corporate plaintiff. Regardless of the determination herein, the claims of Ms. Faltas will proceed.

The Evidence in General

[18] Affidavit evidence was presented for both the moving and responding parties. Gregory Carr, a lawyer at Giffens, counsel for the defendants, is the deponent on an affidavit, sworn October 4, 2019. Albair Faltas and May Faltas, two of the plaintiffs, are deponents on affidavits, both sworn December 19, 2019.

[19] I have concerns with lawyers providing affidavit evidence, particularly with respect to claims for substantial relief. While most of the facts pertaining to the collision, and the status of Mr. Faltas as an excluded driver, are not contentious, Mr. Carr’s purported evidence regarding events at the scene are understated in part, incorrect on others. Further, he attempts to offer conclusions regarding the status of the claims of Mr. Faltas and opinions as to the claim of the plaintiff corporation. These matters are inappropriate argument disguised as evidence. Such, in my view, are improper on a summary judgment motion.

Issue #1 – Claims of Mr. Faltas

(a) Legislation

[20] Section 267.6(1), Insurance Act, R.S.O. 1990, c. I.8, as amended provides:

No action by uninsured owner or lessee

267.6(1) Despite any other Act, a person is not entitled in an action in Ontario to recover any loss or damage from bodily injury or death arising directly or indirectly from the use or operation of an automobile if, at the time of the incident, the person was contravening subsection 2 (1) of the Compulsory Automobile Insurance Act in respect of that automobile.

[21] Sections 1(3) and 2(1), Compulsory Automobile Insurance Act, R.S.O. 1990, c. C.25, as amended, provides:

Exception re: excluded driver

1(3) Even if a motor vehicle is insured under a contract of automobile insurance, it shall be deemed to be an uninsured motor vehicle for the purposes of this Act while it is being operated by an excluded driver as defined in the Insurance Act with respect to that contract unless the excluded driver is a named insured under another contract of automobile insurance.

Compulsory Automobile Insurance

2(1) Subject to the regulations, no owner or lessee of a motor vehicle shall,

(a) operate the motor vehicle; or (b) cause or permit the motor vehicle to be operated,

on a highway unless the motor vehicle is insured under a contract of automobile insurance.

(b) The Evidence

[22] There is no dispute, a motor vehicle collision occurred on a highway on July 28, 2014, and, on that date, Mr. Faltas was an excluded driver with respect to the insurance policy pertaining to his vehicle.

[23] There is a dispute regarding the state of the Lincoln.

[24] In his affidavit, at para. 2, Mr. Carr asserts Mr. Faltas “… had stopped his vehicle on the travelled portion of the roadway after running out of gas”. The source of this information is not disclosed. This statement is inconsistent with the evidence given by Mr. Faltas on his examination for discovery. Yet in the factum for the moving parties, counsel, at para. 22, says the vehicle “broke down”, without further particulars being provided.

[25] Mr. Faltas, in para. 3 of his affidavit, says “Without warning the engine of the Lincoln stopped functioning”. At para. 6, he added “After my son, Davoud and I put gas in the Lincoln it still did not work so we called for road-side assistance … I expected that the Lincoln would have to be towed to a mechanic to be repaired”. And at para. 9, Mr. Faltas stated “I was not operating the Lincoln at the time it was rear-ended by the defendant”.

[26] This evidentiary dispute is of significant concern. The ultimate issue herein turns on the language in the legislation, namely “operate”, as applied to the facts. Mr. Carr, obviously, will not be a witness at trial and it is unknown as to whether the defendants are relying on other evidence. As stated earlier, the court is entitled to assume the parties have presented all of the relevant evidence. Hence, I must conclude the moving party has no evidence to contradict that of Mr. Faltas, namely that the Lincoln vehicle had stopped functioning prior to the collision.

(c) Analysis

[27] Mr. Faltas was an excluded driver. By virtue of the legislation, the vehicle is deemed uninsured if it was being operated. If such is the case, Mr. Faltas would not be entitled to recover damages for his injuries. See Trudeau v. Cavanagh, 2017 ONSC 4314, at para. 26.

[28] In Trudeau, the plaintiff was driving the vehicle at the time of the collision. There was no dispute, the vehicle was being operated. In the above referenced decision, Kurke J. granted leave to the defendant to amend the statement of defence to add as grounds that the plaintiff was an excluded driver under the policy of insurance on his vehicle, rendering the vehicle uninsured and barring recovery by the plaintiff by virtue of section 267.6(1) of the Insurance Act and sections 1(3) and 2(1) of the Compulsory Automobile Insurance Act. Subsequently, Del Frate J. granted summary judgment dismissing the plaintiff’s action. See: Trudeau v. Cavanagh, 2019 ONSC 2485.

[29] The facts in the case at bar are different, requiring a more detailed review of the legislation.

[30] Section 267.6(1) of the Insurance Act uses the phrase “use or operation”. Section 2(1) of the Compulsory Automobile Insurance Act only refers to “operate”. Neither term is defined in these statutes.

[31] Of some interest, impaired driving in section 253 of the Criminal Code of Canada, prior to the 2018 amendment, made reference to “… operates or has the care or control of a motor vehicle”. “Operate was defined in section 214 as “… in respect of a motor vehicle to drive the vehicle”. “Care or control” was not defined but the phrase has been addressed in a number of decisions.

[32] In R. v. Ford, [1982] 1 S.C.R. 231 (S.C.C.), intention to drive was said to not be an essential element of the offence. Care or control may be exercised without such an intent where the accused performs some act involving the use of the vehicle whereby the vehicle may unintentionally be set in motion creating the danger this section is designed to prevent.

[33] In R. v. Decker (2002), 2002 NFCA 9, 162 C.C.C. (3d) 503 (Nfld. C.A.), leave to appeal refused, [2004] 4 S.C.R. (S.C.C.), the court indicated the mere fact the individual is a custodian of a vehicle does not alone constitute care or control. There must be a risk of danger the vehicle might be put in motion or of other danger.

[34] The 2018 amendment, in section 320.14 only made reference to “operates” but, in section 320.11 defined such as being “… to drive it or to have control of it”.

[35] Here, Mr. Faltas had driven the vehicle prior but was not driving it at the time of the collision. Further, the vehicle was not functioning and, hence, it could be concluded it could not be unintentionally put in motion by Mr. Faltas.

[36] The terms “use” and “operation”, in the legislation, are not synonymous. The words denote different things. Use is a broader term. Repairing a vehicle, for example, might constitute “use” but not “operation”. See: Reliance Petroleum Ltd. v. Stevenson, [1956] S.C.R. 936 (S.C.C.), and Pilliteri v. Priore, [1997] O.J. No. 1079 (Ont. S.C.J.).

[37] Counsel referred to several prior decisions to assist in addressing “operation”. They did not identify any from the Court of Appeal and I assume there are none.

[38] In Ringer v. Cooper, [1995] O.J. No. 4886 (Ont. Sm. Cl. Ct.), the plaintiff’s uninsured vehicle was towed to a store parking lot as it was inoperable. The plaintiff was in the store with a prospective purchaser arranging for inspection and repair of the vehicle. The vehicle was struck by the defendant’s vehicle. Deputy Judge State concluded the vehicle was not operational when towed to the parking lot and that the act of towing did not constitute operation of a vehicle. The defendant’s motion to strike on the grounds the claim did not disclose of action and that the action was specifically barred by statute, the same or predecessor sections as here, was dismissed.

[39] In Nuffield v. Bordieri, [1999] O.J. No. 3958 (Ont. S.C.J.), the plaintiff’s uninsured vehicle was parked in the driveway of her residence. The defendant lost control of his vehicle, causing it to cross a neighbour’s lawn and crashing into the plaintiff’s vehicle. She sued to recover damages for the loss of the vehicle. In an oral decision, Himel J. determined “use” in the Insurance Act and “operate” in the Compulsory Automobile Insurance Act have a separate meaning. Further, the vehicle was not on a highway and, hence, the statutory bar did not apply. The vehicle being parked for some time on private property did not constitute operation of that vehicle.

[40] Ringer and Nuffield are “parking” cases and, as such, are not particularly helpful, save as to the discussion on “operation”.

[41] There are two other decisions that closer resemble the facts in this case, but the results differ.

[42] In Faria v. Ferreira (1995), 22 O.R. (3d) 737 (Ont. Gen. Div. – Div. Ct.), White J. heard an appeal from a judgment granted in favour of the plaintiff in Small Claims Court. The plaintiff parked his vehicle on the street while it was insured. Subsequently, the vehicle became uninsured. Two months later, the defendant’s vehicle collided with the plaintiff’s vehicle. White J., in an oral decision, concluded the vehicle was required to be insured as the prior act of parking and leaving it on the street constituted operation of a vehicle in the context of the Compulsory Automobile Insurance Act. In result, he granted the appeal and the judgment was set aside.

[43] In Williams v. Di-Carlo, [2006] O.J. No. 1415 (Ont. S.C.J. – Div. Ct.), the panel heard an appeal from the decision of Paisley J. dismissing the defendant’s motion for summary judgment. The plaintiff was driving his uninsured vehicle when it broke down. He got out of the vehicle to call for assistance and was standing at the curb of the street. The vehicle was struck by the defendant’s vehicle, propelling it into the plaintiff. The plaintiff sued for damages with respect to personal injuries sustained in the collision. On behalf of the panel, Gravely J. dismissed the appeal, concluding there was a triable issue. He made reference to the vehicle being inoperable, saying a trial judge might infer it was likely the plaintiff’s vehicle would be towed. Gravely J. also made reference to the “paucity of reported court decisions” and, as well, the “ambiguity in the law” and indicated “the case should not be decided without a full canvassing of the facts and the law at trial”.

[44] The situation today is no different than in 2006. No other decisions were referred to by counsel.

[45] The moving parties rely on Faria while the responding parties argue Williams is more appropriate.

[46] Common sense would suggest that if a vehicle engine cannot function, the vehicle is disabled and thus not capable of being operated. Further, given the reference to “at the time of the incident” in section 267.6(1) of the Insurance Act, in my view, the relevant point in time is when the collision occurred. Hence, I would conclude the plaintiffs’ vehicle was not being operated by Mr. Faltas.

[47] At the very least, there are conflicting decisions at the same level. The issue needs to be addressed by the Court of Appeal. In result, I conclude this is a triable issue and the defendants’ motion for summary judgment is dismissed in this regard.

Issue #2 – Claims of the Corporate Plaintiff

[48] In his affidavit, Mr. Carr refers to Royal Arts Pharmaceutical Inc. as a “shell company, owned by Mr. and Ms. Faltas through which the family pharmacy was run. Again, he does not identify the source of his information. It appears this was an active company, owning Belmont Pharmacy. According to Mr. Faltas, the company received revenue from the business operation and, likewise, paid its expenses. Further, he says the net value of the company exceeded its liabilities. The financial statements for the company, attached to the affidavit of Mr. Faltas, confirm his evidence. Mr. Carr’s reference to a shell company is misleading, if not incorrect.

[49] Mr. Faltas and Ms. Faltas received employment and other forms of income from Royal Arts. It is alleged, in the statement of claim, the company was required to hire others to replace them in the pharmacy while being unable to work due to injuries sustained in the collision. Their affidavits confirm the allegation.

[50] Mr. Carr further says, in paras. 16 and 17 of his affidavit:

16. As such. I verily believe that the Corporation effectively serves as a shell corporation through which Mr. Faltas and his wife drew an income, and the per quod claim is simply a back door means for Mr. Faltas to advance a loss of income claim even though his claim is statute barred due to his excluded driver status.
17. Moreover, I verily believe that per quod claims constitute an antiquated common law doctrine that no longer constitutes a valid cause of action.

[51] This is not evidence but, rather, opinion and improper. The only evidence presented by the moving parties is that the only source of income for Mr. and Ms. Faltas was from the pharmacy. That is not in dispute.

[52] Contrary to Mr. Carr’s assertion, per quod claims still constitute a valid cause of action. In R. v. Buchinsky, [1983] 1 S.C.R. 481 (S.C.C.), a decision relied on by the moving parties, Ritchie J., at para. 8 addressed the nature of the claim as follows:

8. The action per quod is born of the relationship of master and servant and though of very early origin, in my opinion still persists in the common law provinces of Canada in one form or another. The action recognizes the right in the master to recover damages as against a wrongdoer who has injured his servant and thus deprived the master of his services. The measure of damages in such cases is the cost necessarily incurred by the master in respect of the loss of any services of his servant and includes the cost of medical and hospital expenses incurred on the servant’s behalf as a result of such injury so suffered by him As will hereafter appear, the master’s right of action in such a case is dependant on the servant in turn having a valid cause of action against the wrongdoer.

[53] The moving parties also rely on D’Amato v. Badger, [1996] 2 S.C.R. 1071 (S.C.C.) and Brophy v. Turnbore, [2000] O.J. No. 3020 (Ont. S.C.J.). In my view, neither decision assists in the present case.

[54] In D’Amato, it is noted that per quod claims were prohibited by statute in British Columbia. The trial judge awarded the plaintiff corporation damages, in part for economic loss. That award was overturned on appeal and, on further appeal, dismissed on the basis of proximity and foreseeability. To be clear, that was not a per quod case.

[55] Brophy involved a claim, in part, by the co-owner of the business for the cost of additional staff and loss of future profit. While difficult to follow the analysis, it is clear the business did not hire a replacement employee, the business ceased operations for reasons that are not clear and there was no evidence of any actual loss to that co-owner.

[56] The responding parties rely on Fulcher v. Conklin, 2014 ONCA 710. The individual plaintiff suffered a serious spinal injury in a motor vehicle collision. He was also a shareholder and employee of the corporate plaintiff. Both sued. The trial judge awarded damages to the individual plaintiff for past and future loss of income and to the corporate plaintiff, on its per quod claim, for replacement services. The Court of Appeal upheld the decision.

[57] Thus, it is clear the remedy for per quod damages remains available. Here, the situation appears to be similar to Fulcher. Mr. Faltas and Ms. Faltas were shareholders and employees of Royal Arts. They say the company hired replacement employees when they became unable to work due to injuries sustained in the motor vehicle collision.

[58] I am satisfied there is an evidentiary basis to present the claim. It is for the trial judge to determine the merits.

[59] In result, this component of the defendants’ motion is also dismissed.

Summary

[60] For these reasons, the defendants’ motion for summary judgment is dismissed. There are genuine issues requiring a trial.

[61] This is not a case to consider use of the enhanced powers under Rule 20.04 of the Rules of Civil Procedure. The claims of Ms. Faltas are not addressed in this motion or decision. In my view, the circumstances herein necessitate a trial in the usual fashion.

[62] Following submissions on the substantive issues, I engaged counsel in a discussion to ascertain if the issue of costs could be resolved. Counsel reported an agreement. In result, costs are awarded to the plaintiffs, fixed in the amount of $13,899.28, inclusive of HST and disbursements.

D.J. Gordon J. Released: March 10, 2020