COURT FILE NO.: CV-19-79655
DATE: 20210527
ONTARIO
SUPERIOR COURT OF JUSTICE
BETWEEN:
BRADLEY GAGNON
Plaintiff
– and –
THARMATNAM SIVASAMBOO, L’UNIQUE GENERAL INSURANCE INC., and CO-OPERATORS GENERAL INSURANCE COMPANY
Defendants
Thomas Connolly, for the Plaintiff
Debbie Orth, for the Defendant, L’Unique General Insurance Inc.
Samantha Iturregui, for the Defendant, Co-Operators General Insurance Company
HEARD: May 11, 2021
REASONS FOR DECISION
MCNAMARA j.
Introduction
[1] These two matters were argued before me in motions court on May 11, 2021.
[2] On the first motion, the defendant, L’Unique General Insurance, seeks an order to be added as a Statutory Third Party under s. 258 (14) of the Insurance Act, R.S.O. 1990, c. I. 8.
[3] On the second motion, they seek to strike certain paragraphs of the plaintiff’s Amended Statement of Claim where the plaintiff seeks declaratory relief.
Background Facts
[4] This litigation arises out of a motor vehicle accident that took place on March 21, 2017 in Cornwall, Ontario. The plaintiff alleges he was injured when the motor vehicle of the defendant, Sivasamboo, ran a red light and crashed into his vehicle. The Statement of Claim was issued on March 19, 2019. There were great difficulties locating the defendant for service, and finally on February 7, 2020 an order for substitutional service on the applicant insurer was granted and service was affected.
[5] On August 11, 2020 an Amended Statement of Claim was served by plaintiff’s counsel.
[6] The applicant insurer denied coverage to its insured, Mr. Sivasamboo, based on a material misrepresentation which they allege made their policy void ab initio.
[7] The defendant, Co-Operators, is the insurer of the plaintiff and that policy may provide for payment of certain sums should it be determined that the defendant’s vehicle was uninsured or inadequately insured at the time of the accident.
[8] It is against that backdrop they seek the relief set out in the two motions.
First Motion
[9] As earlier indicated, on this motion the applicant insurer seeks to be added as a Statutory Third Party pursuant to s. 258 (14) of the Insurance Act. The defendant, Co-Operators, and the plaintiff take no position with the relief sought on this motion. That is understandable in view of the wording of the section, which in part, provides that, where an insurer denies liability under a motor vehicle policy, “it shall, upon application to the court, be made a third party in any action to which the insured is a party”. In those circumstances, there will be an order adding the applicant insurer as Third Party under the Act.
Second Motion
[10] The majority of time on this hearing dealt with the second motion.
[11] On August 11, 2020, the plaintiff served an Amended Statement of Claim. In it, the plaintiff removed paragraph 2(a) and replaced it with the following:
(aa). A declaration that L’Unique General Insurance Inc. policy 15495784 was a valid and enforceable automobile policy of insurance on March 21, 2017.
[12] The applicant insurer seeks to strike that paragraph as well as paragraphs 6, 15,and 15a , which allege that the applicant, L’ Unique, was the insurer of the defendant, Sivasamboo, pursuant to a policy of automobile insurance and that the defendant’s insurer has failed to properly respond to this claim and defend it on behalf of that defendant.
[13] The thrust of the applicant’s position is that claims for declaratory relief have two prerequisite conditions. First, there must be a real issue between the parties, and such right must be, or is threatened to be, infringed by the defendant’s acts or omissions. Second, the plaintiff must have standing, that is, the plaintiff must have a judicially recognized right. They submit that at this stage, there is no real issue between the plaintiff and the applicant insurer. They also submit the plaintiff does not have standing in this matter. They argue there is no privity of contract between the plaintiff and the applicant insurer, and as such, the plaintiff has no right, at this time, to raise an issue as relates to the enforceability of the defendant’s contract of insurance.
[14] They further argue that the insurer is required by s. 258 (15) to defend their insured in this litigation and to provide, if necessary, payment up to the statutory limits of $200,000. They concede that if the plaintiff recovers a judgment for more than the statutory limits, then the plaintiff, at that time, can maintain an action against the insurer pursuant to s. 258 (1) of the Act, and if it be determined there is coverage to have insurance proceeds applied towards those damages to the extent of the policy limits.
[15] The plaintiff argues first that it is erroneous to suggest there has been no judgment. The defendant, Sivasamboo, has not personally defended this action and has been noted in default. In consequence, they argue there is judgment for liability in favour of the plaintiff, leaving only damages to be determined. They further argue that Declaratory Relief can be granted by courts on a discretionary basis. Relief of this nature is appropriate where “ [a] the court has jurisdiction to hear the issue, [b] the dispute is real and not theoretical, [c] the party raising the issue has a genuine interest in its resolution, and [d] the responding party has an interest in opposing the declaration being sought”. (see S.A. v Metro Vancouver Housing Corp., 2019 SCC 4, [2019] 1 S.C.R. 99 at para. 60.)
[16] They submit that all parties to this action fall well within the test set out above. Furthermore, they argue that, as much as possible, multiplicity of legal proceedings should be avoided and all parties to this action have an interest in the relief claimed. In consequence, they submit the plaintiff should be allowed to seek declaratory relief set forth in the Amended Statement of Claim.
Analysis
[17] In the decision of this Court in William v. Pintar, 2014 ONSC 1606, 119 O.R. (3d) 447, Master Roger, as he then was, now Justice Roger of this Court, was dealing with many of the same issues as arise in this case. In William, the plaintiff moved to be granted leave to amend her statement of claim to add Jevco Insurance as a defendant in the main action, seeking declaratory relief related to coverage. Jevco had denied coverage to the defendant Pintar. That party had not defended the action and was noted in default. As here, Jevco had themselves added as a Statutory Third Party. They argued on the motion to add them as a defendant that there was no relationship, contractual or otherwise, with the plaintiff and therefore no cause of action existed against them. They argued it would be illogical to permit the amendment as it would allow the plaintiff to advance a claim against a party to an action that was not tenable in law. They argued that s. 258 (1) requires that there be a judgment against the defendant before the plaintiff has a potential cause of action against the insurer for reimbursement over the statutory minimum limits.
[18] In essence, the plaintiff argued that to add Jevco in order to claim declaratory relief, a cause of action is not required as long as the person seeking the declaration and the person opposing it have a true interest.
[19] Justice Roger found that the absence of a direct cause of action was not dispositive of the motion. As he stated in part at paragraph 21 of his decision:
21 …Even without a cause of action, the draft amended statement of claim discloses a tenable claim in the form of declaratory relief between interested persons sufficient for such amendments to be allowed applying the above tests.
[20] He agreed with the proposition that judges have broad jurisdiction to make declaratory orders particularly where, as here, a substantial question exists namely whether the defendant driver had a valid and enforceable policy of insurance so that should the judgment for damages exceed the statutory minimum limits, there may be funds available to satisfy those damages. He pointed out that, as here, the plaintiff was not seeking payment of damages at this stage. Rather, he seeks declaratory relief as to the validity and enforceability of the policy. If successful, payment will still have to be sought.
[21] I agree entirely with Justice Roger’s analysis and conclusions on this issue. As he put it, “Section 258(1) is not exclusive. It provides how a plaintiff may, upon recovering a judgment, proceed against the insurer of the defendant for payment of available insurance money. It does not provide that a Plaintiff may only proceed as provided therein and does not prevent a plaintiff from seeking declaratory relief.”.
[22] Section 138 of the Courts of Justice Act, R.S.O. 1990, c. C.43 provides “as far as possible, multiplicity of legal proceedings shall be avoided”. Rule 1.04 of the Rules of Civil Procedure, R.R.O. 1990, Reg. 194 is to the same effect.
[23] The issue of coverage can be determined by the trial judge as part of the trial as a whole, by way of a preliminary motion, or as the court may otherwise direct, all within the context of the litigation as a whole. All four litigants in this case have a real interest in having this coverage issue determined. It certainly would significantly shorten any enforcement proceedings or might well lead to settlement.
[24] In the often cited case of Hryniak v Mauldin, 2014 SCC 7, [2014] 1 S.C.R. 87, the Supreme Court of Canada was very clear that, in civil cases, the courts and parties have an affirmative obligation to find ways to provide affordable, effective, and accessible means of interpreting and enforcing the rights of parties to a particular piece of litigation. That is going to be even more important in the upcoming months and perhaps years that it will take the courts to deal with the massive backlog of civil cases awaiting adjudication or other resolution in our post-pandemic world.
[25] The motion to strike the paragraphs of the Amended Statement of Claim set forth in the notice of motion is dismissed
[26] If the parties are unable to agree on costs, I will entertain brief written submissions (three pages maximum).
Mr. Justice James McNamara
Released: May 27, 2021
COURT FILE NO.: CV-19-79655
DATE: 20210527
ONTARIO
SUPERIOR COURT OF JUSTICE
BETWEEN:
BRADLEY GAGNON
Plaintiff
– and –
THARMATNAM SIVASAMBOO, L’UNIQUE GENERAL INSURANCE INC., and CO-OPERATORS GENERAL INSURANCE COMPANY
Defendants
REASONS FOR decision
McNamara J.
Released: May 27, 2021