COURT FILE NO.: CV-19-168
DATE: 2021 06 22
SUPERIOR COURT OF JUSTICE – ONTARIO
RE: Phu Hoang Vu
Plaintiff
AND:
Lyons Auto Body Ltd., Jack Kiely Lyons aka John Lyons, Patrick Bailey and Aviva General Insurance Company
Defendants
BEFORE: Justice G.D. Lemon
COUNSEL: Daniel Zacks and Heather J. MacDougall, Counsel for the Plaintiff, Phue Hoang Vu
Daniel I. Reisler and Dennis Ong, Counsel for the defendant, Aviva General Insurance Company
Melvyn Solmon, Counsel for the defendant, Lyons Auto Body Ltd.
HEARD: May 28, 2021
ENDORSEMENT
The Issue
[1] Aviva moves for summary judgment to dismiss Mr. Vu’s claim against Aviva on the basis that the action “was brought outside the one year limitation period as set out in the Insurance Act and [Mr. Vu’s] policy of insurance.”
The Background
[2] Mr. Vu’s motor vehicle was involved in an accident on May 24, 2017. The details of that accident and the acts of the other defendants are not relevant to this motion. Lyons attended the motion but took no part in the submissions.
[3] There is no dispute that at the time of the accident, Mr. Vu was insured with Aviva by way of a standard Ontario automobile insurance policy and that Mr. Vu has had counsel to assist him since at least July 13, 2017.
[4] Mr. Vu issued his Statement of Claim on May 7, 2019. He says that the applicable limitation period is two years and that he issued his claim in time. Aviva says that the applicable limitation period is one year and that Mr. Vu’s claim is statute barred.
[5] All parties agree that pursuant to Hryniak v. Mauldin, 2014 SCC 7, [2014] 1 S.C.R. 87, the issue is one that is appropriate for a summary judgment motion and that I can resolve this on the paper record provided.
Authorities
[6] The parties agree on much of the applicable law. Pursuant to the Limitations Act, 2002, S.O. 2002, c. 24, Schedule B, the basic limitation period to commence a proceeding is two years from the day on which the claim was discovered. However, s. 19 of the Act incorporates other limitation periods set out in other acts. Essentially, that provision incorporates the limitations set out in s. 259.1 of the Insurance Act, R.S.O. 1990, c. I.8 and statutory condition 9(4) of the motor vehicle accident policy.
[7] Section 259.1 of the Insurance Act states that:
A proceeding against an insurer under a contract in respect of loss or damage to an automobile or its contents shall be commenced within one year after the happening of the loss or damage.
[8] Statutory condition 9(4) of the standard automobile insurance policy also has a one-year limitation period in respect of loss or damage to a motor vehicle. Statutory condition 9(4) states:
Every action or proceeding against the insurer under this contract in respect of loss or damage to the automobile or its contents shall be commenced within one year next after the happening of the loss and not afterwards…
Position of the Parties
[9] Aviva submits that Mr. Vu’s claim is an action against his insurer under his contract of insurance and is therefore governed by the one-year limitations set out above.
[10] Mr. Vu submits that his claim is not under the contract but arises out of Aviva’s breach of its duty of good faith. As this claim is independent of the policy, he has the standard two-year limitation in which to bring his action. To that end, he relies on Stegenga v. Economical Insurance Company, 2019 ONCA 615, 147 O.R. (3d) 65 and Dundas v. Zurich Canada, 2012 ONCA 181, 109 O.R. (3d) 521.
[11] Mr. Vu specifically disavows any claim for a breach of the contract. He agrees that such a claim would be statute-barred. Mr. Vu raises no issue with discoverability of his claim or any other issues that could extend a limitation period.
[12] In reply, Aviva denies that Stegenga or Dundas, properly understood, assists the plaintiff.
Analysis
[13] It is agreed that Mr. Vu’s pleading against Aviva is:
- The Plaintiff claims:
(a) the sum of TWO HUNDRED THOUSAND DOLLARS ($200,000.00);
(b) Aggravated and/or punitive damages in the amount of $75,000.00;
(c) A declaration that the Defendant, Aviva General Insurance Company, is
liable to pay and make good to the Plaintiffs the loss and damages
sustained in accordance with the provisions of Vu’s Policy bearing number
21862236;
(c.1) An order that that the Defendant, Aviva General Insurance Company, is liable to pay and make good to the Plaintiffs the loss and damages sustained from having breached its duties owed to Vu;
(d) prejudgment interest in accordance with section 128 of the Courts of Justice Act, R.S.O. 1990, c. C.43, as amended;
(e) postjudgment interest in accordance with section 129 of the Courts of
Justice Act, R.S.O. 1990, c. C.43, as amended;
(f) the costs of this proceeding, plus all applicable taxes; and
(g) such further and other Relief as to this Honourable Court may seem just.
C. The Insurer
After learning of the collision, Vu called his insurer, Aviva, on or about May 24, 2017 to notify it of the collision. He did not hear back from Aviva.
On or around June 7, 2017, Vu talked to Aviva and learned for the first time his Vehicle had been taken to Lyons Auto.
The Aviva representative explained they had viewed a signed Work Order authorizing Lyons Auto to commence repairs. Neither Vu nor [his son] signed a Work Order.
Aviva did not assist Vu, follow up with him or respond to his inquiries in a timely fashion. Aviva failed to properly process or in the alternative improperly denied Vu’s claim for insurance coverage for the Vehicle.
[14] In argument, Mr. Vu clarified that he was not seeking aggravated or punitive damages against Aviva. There is no suggestion that Aviva denied Mr. Vu’s claim; it is the handling of that claim that is in issue.
[15] This pleading appears to be quite deficient. Mr. Vu acknowledges that it is “sparsely pleaded” but asks that it be read generously as a bad faith claim. In this motion, Aviva does not seek any relief arising out of the state of Mr. Vu’s Statement of Claim. Mr. Vu says that he has made his “breach of duty claim explicit.” I am not so sure of that, but I agree with Mr. Vu that this motion is not about the merits of his claim; Aviva has only sought a ruling on which limitation period applies. The determination of whether this claim is properly pleaded, or whether Aviva acted in good faith, is for another day.
[16] Mr. Vu submits that he is not “tacking on” a bad faith claim to a contractual issue – he is only claiming for bad faith.
[17] While there is some dispute within the cases, counsel agree that there is no case directly on point to decide this issue. However, I take my guidance from Dundas. There, Strathy J. (as he then was) wrote:
[32] The appeal was argued primarily on the basis of the trial judge's interpretation of the statutory conditions. While I agree with the appellants that the trial judge's interpretation was incorrect, it is my view that the appeal should also be allowed because the claim in this action does not engage the statutory conditions at all. It is not a claim "under" the insurance contract. Rather, it is a claim for breach of the insurer's independent duty of good faith and fair dealing and is subject to the general six-year limitation period that applied at the time.
[49] . . . [I]t is my view that this is not an action to recover "a claim under [this] contract" within the meaning of statutory condition 6(2). Nor is it an action or proceeding "under this contract . . . in respect of the loss or damage to person or property" within condition 6(3). It is not a claim for indemnity under the contract at all.
[50] On the contrary, this action contains a claim for breach of the independent duty of the utmost good faith, which an insurer owes to its insured. In Whiten v. Pilot Insurance Co., Binnie J. described the duty as "independent of and in addition to the breach of contractual duty to pay the loss". Similarly, in Ferme Gérald Laplante & Fils Ltée. v. Grenville Patron Mutual Fire Insurance Co. (2002), Charron J.A. observed:
A breach of the duty to act fairly and in good faith gives rise to a separate cause of action that is distinct from the cause of action founded on the express terms of the policy and that is not restricted by the limits in the policy. Hence it may result in an award of consequential damages distinct from the proceeds payable under the policy.
[Citations omitted.]
[18] Following that reasoning, Mr. Vu’s claim is apparently separate and distinct from the claim under the insurance contract. As such, it falls outside the one-year limitation period relied on by Aviva.
[19] I acknowledge Aviva’s submission that Stegenga (decided after Dundas) can be read to the opposite effect. There, the issue was whether a bad faith claim fell outside the purview of the License Appeal Tribunal pursuant to s. 280 of the Insurance Act. Aviva acknowledges that Stenenga interprets a different section than what I have to deal with. To that extent, Dundas is more compelling to me.
[20] Aviva also raises arguments with respect to the legislative intent of s. 259.1. That legislation was passed in 2002. Dundas was decided by the Court of Appeal for Ontario in 2012. I am bound by that decision in this case.
[21] That said, and assessing only the pleadings, it is not clear to me that the plaintiff can succeed with his bad faith claim without it flowing from a breach of the insurance contract. I do not see much difference between “the loss and damages sustained in accordance with the provisions of Vu’s Policy” and the loss and damages sustained by Aviva “from having breached its duties owed to Vu.” However, on this pleading, I cannot agree with Aviva that the pleading is “an attempt to frame what is clearly a property damage claim into a bad faith cause of action.” That is not so clear to me.
[22] Examinations have not yet occurred, but they may flesh out Mr. Vu’s claim or add to Aviva’s arguments. On this record, I cannot find that summary judgment should follow at this stage of the litigation. Despite the positions of the parties, I can only grant summary judgment if I am satisfied that there is no genuine issue requiring a trial with respect to a claim or defence. The pleading is vague and there is insufficient evidence for me to weigh, to evaluate the credibility of a deponent or draw reasonable inferences with respect to the bad faith claim as required by Hryniak.
Result
[23] In the end result, Aviva’s motion is dismissed without prejudice to renewing the motion before or at trial on further evidence.
Costs
[24] If costs cannot be agreed upon, Mr. Vu may provide his costs submissions within the next fifteen (15) days. Aviva shall provide its response within fifteen (15) days thereafter. No reply submissions will be accepted unless I request them.
[25] Each submission shall be no more than three (3) pages (double-spaced, 12-point font, one-inch margins), not including any Bills of Costs or Offers to Settle. If I have not received any submissions within the time frame set out above, I will assume that the parties have resolved the issue and I make no order as to costs.
[26] Any costs submissions shall be forwarded to my office in Guelph by electronic transfer to GuelphOffice.SCJ@ontario.ca or by mail to Guelph Superior Courthouse, 74 Woolwich St., Guelph, N1H 3T9.
“Justice G.D. Lemon”
Justice G.D. Lemon
Date: June 22, 2021