Court File and Parties

COURT FILE NO.: CV-19-69987

DATE: 2022/08/29

ONTARIO

SUPERIOR COURT OF JUSTICE

B E T W E E N:

JOSHUA BURNHAM

B. Cook, on behalf of the Plaintiff

• and -

CO-OPERATORS GENERAL INSURANCE COMPANY,

-and-

The Minister of Government and Consumer Services

M. Dhanani, for the Co-operators, Defendant

T. Wasserman, pursuant to section 8 of the Motor Vehicle Accident Claims Act R.S.O. 1990 c. M.41

HEARD: August 10, 2022

ENDORSEMENT

A.J. GOODMAN J.:

[1] The Defendant, Co-operators General Insurance Company (“Co-operators”), bring this motion pursuant to Rule 21.01 of the Rules of Civil Procedure for an order dismissing the action against it, with costs.

[2] The plaintiff did not participate in this motion. The parties to this motion are the defendant, and the Minister of Government and Consumer Services (the “Minister”) pursuant to s. 8 of the Motor Vehicle Claims Act, R.S.O. 1990, c. M.41, in the name and on behalf of Dana Piilo, Administrator for the Estate of John Franklin Hill.

[3] The grounds for the motion are that the plaintiff has no cause of action against Co-operators as his claim for uninsured motorist coverage are precluded under Section 1.8.2 of the standard Ontario Automobile Policy.

[4] For the following reasons, Co-operators has met its onus under rule 21.01, for an order dismissing all claims as against it.

Background:

[5] The allegations in the Amended Statement of Claim include that as result of the collision, the plaintiff is a person legally entitled to recover damages for bodily injuries from the driver of the uninsured automobile. The plaintiff seeks from the Co-operators recovery for any damages occasioned by the negligent operation of them or a motor vehicle, pursuant to the uninsured provisions of the policy.

[6] In the Statement of Defence, Co-operators pleads that the plaintiff knew or ought to have known that the deceased was operating the vehicle without permission or consent of the owner. The plaintiff was involved in a joint venture with the deceased in the theft of the vehicle and knew or ought to have known that the deceased Peter Bomberry did not have consent to possess or operate the subject vehicle.

[7] On August 25, 2014, the plaintiff was a passenger in the back seat of the Chevy automobile involved in the accident who sustained serious injuries. At the time of the accident, the plaintiff was asleep in the back seat. He has no recollection of the accident. He had no reason to believe that it was stolen and only found out when he woke up days after the accident.

[8] The pickup truck was owned by Lorne Morais. Mr. Morais reported the theft on August 22, 2014, three days before the accident. The truck was insured with the Co-operators.

[9] Josh sued John Hill’s estate, Ted Rowe, ECL Carriers GP Inc and Lorne Morais in the within action. The action was dismissed against Lorne Morais, and was subsequently dismissed against Ted Rowe and ECL Carriers GP Inc.

[10] Co-operators has denied that the plaintiff is entitled to any recovery for damages arising from the August 25, 2014 motor vehicle accident by virtue of the operation of Section 1.8.2. of the Ontario Automobile Policy, “Excluded Drivers and Driving Without Permission”.

[11] Section 8 of the Motor Vehicle Accident Claims Act R.S.O. 1990, c. M. 41 (the “MVAC ACT”) requires a plaintiff who expects to make a claim to the Motor vehicle Accident Claims Fund (the “Fund”) (pursuant to section 7 of the MVAC Act) to provide notice to the Minister if certain conditions are met. Once the Minister is given Notice of one of the conditions, such as a failure to serve a statement of defence, the Minister is permitted discretion to exercise certain rights within the litigation.

[12] In this case, Mr. Hill’s estate failed to defend the action, and the plaintiff notified the Minister who defended the action in the name and on behalf of the estate.

Issue:

[13] Does s. 1.8.2 of the Standard Ontario Insurance Policy exclude uninsured coverage for a passenger in a stolen vehicle, who at the time they became a passenger they did not know (ought reasonably to have known) that the vehicle was stolen?

Positions of the Parties:

[14] Co-operators submits that based on the clear and unambiguous language of the Insurance Act and the OAP 1, the uninsured automobile coverage provisions are not intended to apply to the vehicle that is insured under the automobile policy in question, even when that vehicle is operated without consent or stolen. It is further submitted that there would be no coverage, even when that vehicle is operated without consent or stolen, as is apparent upon review of the relevant exclusion clause in the OAP 1.

[15] The Minister responds that the Co-operators’ interpretation of the first clause in s. 1.8.2, is contradictory to its drafting and to the legislative intention of the 2005 and 2010 amendments. It is well established that the first clause refers to “the automobile” where the second paragraph refers to “an automobile”. To accept the Co-operators’ interpretation of the first paragraph would render the amendment meaningless since it would negate the knowledge component of the exclusion for anyone who is an occupant of “’the automobile”. The Fund’s interpretation is in line with the Ontario insurance scheme and its emphasis on consumer protection. It is also in line with the general principle that provisions designed for the protection of the Fund should be given full consideration and effect to ensure that the Fund is the payor of last resort. Further, the Co-operators acknowledges that its interpretation renders the second paragraph redundant and therefore contrary to the principles of statutory interpretation.

[16] The Minister submits that the Co-operators’ reliance on s. 1.8.2 overlooks the knowledge component of the section and their assertions are premised on outdated interpretations of the section. Section 1.8.2 has been addressed by the courts on multiple occasions and has undergone multiple amendments as a result. The version of s. 1.8.2 which was in effect at the time of this accident, has not yet been addressed by the courts. The motion ought to be dismissed.

Analysis:

[17] Rule 21.01(1) of the Rules of Civil Procedure provides that a party may move for the determination, before trial, of a question of law raised by a pleading, where such determination may dispose of all or part of the action or that a party may move to strike out a pleading on the ground that it discloses no reasonable cause of action.

[18] Section 265(1) of the Insurance Act R.S.O. 1990, c.I.8, states as follows:

Uninsured automobile coverage:

265(1) Every Contract evidenced by a motor vehicle liability policy shall provide for payment of all sums that,

(a) a person insured under the contract is legally entitled to recover from the owner or driver of an uninsured automobile or unidentified automobile as damages for bodily injuries resulting from an accident involving an automobile;

(b) any person is legally entitled to recover from the owner or driver of an uninsured automobile or unidentified automobile as damages for bodily injury to or the death of a person insured under the contract resulting from an accident involving an automobile.

[19] The section provides coverage for damages where there is liability on the part of an owner and/or driver of an “uninsured automobile”.

[20] Section 265(2) of the Insurance Act defines an “uninsured automobile” as follows: “uninsured automobile” means an automobile with respect to which neither the owner nor the driver thereof has applicable and collectible bodily injury liability and property damage liability insurance for its ownership, use or operation, but does not include an automobile owned by or registered in the name of the insured or his or her spouse [emphasis added]

[21] The version of s. 1.8.2 which was in effect at the time of the accident states:

Ontario Automobile Policy (OAP 1) Owners policy for use on or after June 1, 2013 Excluded Drivers and Driving Without Permission:

Except for certain Accident Benefits coverage, there is no coverage (including coverage for occupants) under this policy if the automobile is used or operated by a person in possession of the automobile without the owner’s consent or is driven by a person named as an excluded driver of an automobile policy or a person who, at the time he or she willingly becomes an occupant of an automobile, knows or ought reasonably to know that the automobile is being used or operated by a person in possession of the automobile without the owner’s consent.

Except for certain Accident Benefits coverage, there is no coverage under this policy for a person who, at the time he or she willingly becomes an occupant of an automobile, knows or ought reasonably to know that the automobile is being used or operated by a person in possession of the automobile without the owner’s consent.

[22] Both the Insurance Act and the OAP 1 exclude automobiles owned by or registered in the name of the insured person or his/her spouse from the definition of “uninsured automobile”. In other words, a policyholder may not claim uninsured motorist coverage for injuries arising out of the ownership, use or operation of his or her own automobile since such an automobile, by definition, is not considered to be uninsured.

[23] Section 1.8.2 of the OAP 1 as of September 1, 2010 expanded coverage under the occupant’s own policy or a third party policy, but not under the policy of the vehicle which was operated without consent.

[24] Much of the argument in this case centered around the policy (OAP-1) that appears to distinguish between “a described automobile” and “the automobile”.

[25] The Court of Appeal addressed the distinction between “the automobile” and “an automobile” for the purpose of differentiating the two paragraphs contained in s. 1.8.2: “an automobile” means “any automobile in which the plaintiff was an occupant that was being operated without the owner’s consent”, where “the automobile” conforms to the definition as described under the policy: Simison v. Catlyn, 2004 CanLII 22313 (ONCA) at para 17.

[26] In this policy, “an automobile” is described as any automobile specifically shown on the Certificate of Automobile Insurance. When referring to “the automobile”, it means: “a described automobile, a newly required automobile, a temporary substitute automobile, other automobiles driven by you or your spouse who lives with you, or trailers, in certain circumstances.”

[27] In Fosker v. Thorpe, 2004 CanLII 33358 (ONSC) Quinn J. considered a case in which the plaintiff was struck and injured by her own automobile, which was being operated by an uninsured driver who had stolen the vehicle. The plaintiff brought an action against her own insurer, Liberty Mutual Group, for uninsured and underinsured coverage. The insurer brought a motion to dismiss under Rule 21.01.

[28] In Fosker, the parties agreed that, given the virtually identical definitions in the Insurance Act and the OAP 1 (as well as the OPCF 44R), if the plaintiff’s vehicle was found to be uninsured under one, it would be uninsured under the others. Quinn J. stated as follows:

The wording of s. 265(2) of the Insurance Act, whether taken alone or in the “entire context” of that statute, is clear and unambiguous, as is O.A.P. No. 1, s. 5.1.2 and the OPCF 44R – Family Protection Endorsement, s.1.11. As a result, I find that, because the [vehicle] is owned by the plaintiff and she is the insured under the Policy, it is not an “uninsured automobile” as defined in the Policy or the legislation. The [vehicle] is specifically excluded from the definition.

[29] Quinn J. held that in the absence of ambiguity in the legislation, he had no discretion to extend coverage, even in the face of a harsh or absurd result.

[30] The importance of the consistency of the definition of “uninsured automobile” in the Insurance Act and the OAP 1 (as well as the OPCF 44R), was considered by the Court of Appeal in Skunk v. Ketash, 2018 ONCA 450. In Skunk, the plaintiff claimed damages for the injuries allegedly sustained while a passenger in a vehicle owned by his spouse. It was conceded that the defendant driver (a friend of the Plaintiff’s spouse) did not have the consent of the plaintiff or his spouse to drive the vehicle at the time of the accident. Therefore, Jevco, which insured the vehicle, denied coverage to the defendant driver. The question considered by the Court of Appeal was whether the plaintiff could claim uninsured and underinsured motorist coverage from Jevco, there being no third-party liability insurance available to him.

[31] At first instance, Fitzpatrick J. (following the reasoning in Fosker) rejected the plaintiff’s assertion that the definition of an “uninsured automobile” is ambiguous. To the contrary, he held that there is no ambiguity in the language of the Insurance Act or the OAP 1 (or the OPCF 44R). The “clear and concise” language of the provisions set out above means that “if a person is injured by an uninsured driver driving a car they own, or a car belonging to their spouse, they do not get the benefit of the uninsured automobile provisions”: 2017 ONSC 4457, at para. 21. Notably, Fitzpatrick J. understood that his finding may result in an unfair or absurd result in some cases; however, he held that because “the language is not ambiguous”, the various provisions do not allow for any other interpretation.

[32] The Court of Appeal agreed with Fitzpatrick J.’s interpretation, stating that the principles of statutory interpretation require that the Court first look to the plain meaning of the statute. If the words have a plain meaning and give rise to no ambiguity, then the Court should give effect to those words: (C.A.) at para. 8.

[33] The Court of Appeal concluded that “the meaning of the definition of ‘uninsured automobile’ is clear and unambiguous: ‘uninsured automobile means… but, does not include an automobile owned by or registered in the name of the insured or his or her spouse” [emphasis in original’]. In the words of the Court of Appeal, the definition of an uninsured automobile is “clear on its face”.

[34] Section 265 of the Insurance Act is expressly subject to the terms, conditions, provisions, exclusions and limits as prescribed by the regulations. Regulation 676 governs the scope of uninsured automobile coverage. It sets out the terms, conditions, provisions, exclusions and limits to payments under section 265(1) of the Insurance Act, which are to be attached to or included in every motor vehicle liability policy.

[35] Section 10 of Regulation 676 contains the following provision: In so far as applicable, the general provisions, definitions, exclusions and statutory conditions as contained in a motor vehicle liability policy also apply to payments under the contract under subsection 265(1) of the Act.

[36] Section 1.8.2 Excluded Drivers and Driving Without Permission Ontario Automobile Policy (“OAP 1”), effective September 1, 2010, (“the Exclusion”) states as follows:

Except for Certain Accident Benefits coverage, there is no coverage (including coverage for occupants) under this policy if the automobile is used or operated by a person in possession of the automobile without the owner’s consent or is driven by a person named as an excluded driver of the automobile policy or a person who, at the time he or she willingly becomes an occupant of an automobile, knows or ought reasonably to know that the automobile is being used or operated by a person in possession of the automobile without the owners’ consent.

Except for certain Accident Benefits coverage, there is no coverage under this policy for a person who, at the time he or she willingly becomes an occupant of an automobile, knows or ought reasonably to know that the automobile is being used or operated by a person in possession of the automobile without the owner’s consent.

[37] I am persuaded by the Co-operators position that the use of the word “or” between the clauses of the first paragraph of the Exclusion indicates that it is to be read disjunctively such that each cluse is an independent exclusion, as follows:

Except for certain Accident Benefits coverage, there is no coverage (including coverage for occupants) under this policy:

if the automobile is used or operated by a person in possession of the automobile without the owner’s consent; OR

is driven by a person named as an excluded driver of the automobile policy; OR

a person who, at the time he or she willingly becomes an occupant of an automobile, knows or ought reasonably to know that the automobile is being used or operated by a person in possession of the automobile without the owner’s consent.

[38] The meaning of the first clause of the first paragraph of the Exclusion was also considered in Shipman v. Dominion, 2003 CarswellOnt 5483, at para. 9, where the plaintiff was struck by a vehicle operated without the owners’ consent and sought uninsured motorist coverage under the owner’s policy with the insurer.

[39] The insurer in Shipman argued that the claim should be brought against the Motor Vehicle Accident Claims Fund (“the Fund”). The Court of Appeal held that the motion judge erred in finding that s. 265 of the Insurance Act provided a complete code for uninsured automobile coverage and that neither Regulation 676 nor section 1.8.2 of the OAP 1 had any impact on the issue. Rather, s. 265 of the Insurance Act, Regulation 676 and s. 1.8.2 of the OAP 1 must all be considered and applied. Section 1.8.2 of the OAP 1, which was in force at the time (the equivalent to the first clause of the first paragraph of the Exclusion), was interpreted to exclude coverage if the automobile was used or operated by someone without the owner’s consent. The insurer was not required to extend coverage to the plaintiff, and she was required to resort to the Fund.

[40] In Simison, the Court of Appeal considered the purpose of the second paragraph of section 1.8.2 of the OAP 1, which was in force at the time (the equivalent of the second paragraph of the Exclusion).

[41] In Simison, the plaintiff was a passenger in a stolen vehicle that collided with another vehicle. He sought uninsured coverage under his mother’s policy of insurance with Western, rather than the policy of the owner of the stolen vehicle. The plaintiff argued that the second paragraph of the exclusion applied only to the vehicle insured by the policy or was at least ambiguous and that the same words must be given the same meaning throughout the document. Western argued that the claim was excluded under the second paragraph of s. 1.8.2 of the OAP 1 which referred to “an automobile” rather than “the automobile”. The Court of Appeal agreed with Western and concluded that, pursuant to the second paragraph of s. 1.8.2 of the OAP 1, there is no coverage under a policy of automobile insurance for the occupant of any motor vehicle that is used or operated by a person in possession of the motor vehicle without the owner’s consent.

[42] A similar analysis can be found in two unreported decisions on two separate summary judgment motions in the same case. The plaintiff was a passenger in a stolen vehicle which was involved in a single-vehicle collision after a police chase. The plaintiff claimed against Cumis, the insurer of the stolen vehicle (“the Cumis Motion”), and against State Farm, the insurer of a vehicle owned by the plaintiff’s stepfather (“the State Farm Motion”).

[43] Summary judgment motions were brought by both insurers. Section 1.8.2. of the OAP 1, which was in effect at that time, had been amended to include “knew or ought to have known” language in the second paragraph of the exclusion (but not to the first paragraph), and stated as follows:

Except for certain Accident Benefits coverage, there is no coverage (including coverage for occupants) under this policy if the automobile is used or operated by a person in possession of the automobile without the owner’s consent or is driven by a person named as an excluded driver of the automobile.

Except for certain Accident Benefits coverage, there is no coverage under this policy for a person who, at the time he or she willingly becomes an occupant of an automobile, knows or ought reasonably to know that the automobile is being used or operated by a person in possession of the automobile without the owner’s consent: Shipman et al. v. Shipman et al. [Court file no. CV-08-695, November 17, 2016], Endorsement – Cumis Motion for Summary Judgement (“Shipman Cumis Motion”), Shipman et al. v. Shipman et al. [Court file no. CV-08-695, November 17, 2016], Endorsement – State Farm Motion for Summary Judgement (“Shipman State Farm Motion”).

[44] It bears repeating that with respect to the Cumis Motion, Nightingale J. was dealing with a summary judgment motion. In any event, there were certain facts presented and accepted by the learned judge in the course of that hearing. He stated that in his view, “the automobile” referred to in the first paragraph of s. 1.8.2 of the OAP 1 refers to the automobile insured by the policy and operated to exclude coverage for the plaintiff as an occupant under the Cumis policy if the insured automobile was used or operated by a person in possession of the automobile without the owner’s consent.

[45] Nightingale J. also explained that the second paragraph of s.1.8.2 of the OAP 1 was amended in 2005 to narrow the scope of the exclusion from coverage for occupants of a token vehicle when the claim for coverage was being made against the insurer of another automobile under whose policy the occupant qualified as an insured. The purpose of the amendment was to expand the scope of coverage for occupants who were entitled to this coverage under another automobile policy, but only if they did not know or ought not to have known that the vehicle in which they were occupants was stolen. Nightingale J. cited the Simison and Shipman decisions as being supportive of his interpretation of the exclusion.

[46] Nightingale J. concluded that, as the vehicle insured by the policy was being operated without the owner’s consent to possession, the first paragraph of the exclusion applied to exclude coverage under the Cumis policy.

[47] Based on the above-noted reasoning in Shipman et al. v. Shipman et al., if the amendment to the second paragraph of s. 1.8.2 of the OAP 1 expanded coverage for occupants seeking coverage under the policy of a third party where they did not know or ought not to have known the vehicle was stolen, then the addition of the third clause to the first paragraph of the Exclusion should be interpreted as expanding coverage for the insured person under their own policy if they are the occupant of another vehicle which they did not know or ought not to have known was stolen.

[48] In Joseph v. Coxall-Mejia, 2021 ONSC 2508, the court dealt with the wording of section 1.8.2 of the OAP 1, which is applicable to the present case. The plaintiff was injured while a passenger in a vehicle operated by the son of the owner of the vehicle. The plaintiff claimed against the driver, the owner and Certas, with whom the mother had insured the vehicle.

[49] On a motion for summary judgment, the court reviewed the facts of the case and determined that the son had taken the vehicle without his mother’s consent. The court held that, accordingly, there was no coverage for the plaintiff as a passenger under the owner’s policy as s. 1.8.2 of the OAP 1 states that there is no liability for loss or damage nor insurance coverage where the vehicle is being used or operated without the owner’s consent.

[50] The court in Joseph did not give any consideration as to whether the plaintiff knew or ought reasonably to have known that the vehicle was being used or operated without the consent of the owner. The decision is consistent with the interpretation of the first clause of the first paragraph of the Exclusion as operating independently to exclude coverage under the vehicle’s policy where it is driven without the owner’s consent. The Joseph decision is also consistent with the interpretation that the third clause of the first paragraph of the Exclusion applies to potential coverage under the occupant’s own policy or a third party policy, but not under the policy of the vehicle which was operated without consent.

[51] I can distinguish the summary judgment case of Egerton v. Wood, 2011 ONSC 1711, as presented by the Minister for this motion.

[52] In Egerton, the plaintiff was a passenger involved in a single motor vehicle collision in an automobile driven by the defendant Wood and owned by the defendant. TD insured the automobile and denied a defence and indemnification to the driver on the basis that Wood was operating and/or in possession of the vehicle without the owner’s consent. TD argued that the plaintiff was excluded from seeking uninsured motorist coverage under its policy based on an interpretation of s. 1.8.2.

[53] The motions judge disagreed with TD’s position that the issue of consent versus no consent was irrelevant. As this was a summary judgment motion, the judge held that findings of fact regarding consent, including the question of what Egerton knew or ought reasonably to have known at the time he willingly became an occupant of the motor vehicle were material facts in dispute and such facts could only be determined at trial. In any event, the motions judge did not refer to the Shipman or Simison line of cases.

[54] Further, with respect, I do not accept the Minister’s argument that the decisions of Fosker and Skunk are distinguishable on their facts; in that the automobiles that were being operated without consent were either owned by the insured or the spouse of the insured, which under the definition of the “uninsured automobile” meant that neither of the plaintiffs were entitled to make a claim pursuant to the uninsured motorist provisions of the policies in question.

[55] I am persuaded that if the first clause of the first paragraph of the Exclusion is read as an independent exclusion, then there is no coverage for “the automobile” insured by the policy, if the vehicle is being used or operated without the owner’s consent. It follows that there would be no uninsured automobile coverage for the occupant of “the automobile” under the policy which was operated without consent.

[56] Cooperators expanded the clauses in s. 1.8.2 for ease of reference in their submissions. The so-called “third clause” of the first paragraph of the Exclusion would then apply to exclude coverage under the policy where the insured person under the policy is an occupant of “an automobile”, which is not the one insured by the policy, and knows or ought reasonably to have known that the automobile was being used or operated by a person in possession of the vehicle without the owner’s consent.

[57] The wording of the third clause of the first paragraph appears to be the same as the wording of the second paragraph, arguably rendering the second paragraph of the Exclusion redundant. However, in applying a grammatical and harmonious context, I accept that there is caselaw interpreting the second paragraph of the Exclusion to apply where there is a claim for coverage for “the automobile” under a policy issued to a third party, rather than the policy of the owner of the automobile in which the claimant was an occupant. In this case, no exception to coverage arises.

[58] I find that the Exclusion must be read together with s. 265 of the Insurance Act.

[59] In the present case, there is no dispute that the vehicle in which the plaintiff was an occupant was stolen and/or operated without consent on the date of loss. Coverage would be excluded pursuant to the first clause of the first paragraph of the Exclusion as the vehicle was driven without the owner’s consent. The Exclusion clearly states that it excludes coverage for all occupants of the vehicle too, including the plaintiff.

[60] This interpretation is consistent with the clear and unambiguous language of the Insurance Act and the OAP 1 which states that the uninsured automobile coverage provisions are not intended to apply to the vehicle that is insured under the automobile policy in question, even when that vehicle is operated without consent or stolen.

[61] As a practical matter, in addressing the legal question before me, if an innocent pedestrian could not claim benefits under the policy of insurance as in the case of Shipman v. Dominion of Canada General Insurance Company, 2004 CanLII 33350 (ON CA), 73 O.R. (3d) 144, [2004] O.J. No. 4160, (C.A.), I cannot see how “the automobile” could be extended to the case at bar, even with the 2010 amendments to version of s. 1.8.2.

[62] Based on the prevailing jurisprudence, I accept the Co-operators’ submissions that there is no need for me to consider whether or not the plaintiff knew or ought reasonably to have known that the vehicle was being used or operated without the consent of the owner. This is not a claim for uninsured coverage by the plaintiff against another automobile policy.

[63] I find that the plaintiff has no recourse for recovery of damages as against the Co-operators, being the insurer of the stolen vehicle. It may be that the plaintiff is not ultimately prejudiced, as he has access to a claim against the Motor Vehicle Accident Claims Fund.

Conclusion:

[64] The Co-operators rule 21.01 motion is granted.

Costs:

[65] If the parties cannot agree on the issue of costs, I will consider brief written submissions. As the successful party, the Co-operators is presumptively entitled to costs. The cost materials shall not exceed three pages in length, (not including any Bill of Costs or Offers to Settle). The Co-operators shall file its costs submissions within 15 days of today’s date. The plaintiff shall file his costs submissions within 15 days of the receipt of the plaintiff’s materials. The Co-operators may file a brief reply within five days thereafter. If submissions are not received by September 30, 2022, the file will be closed and the issue of costs considered settled.

A.J. Goodman J.

Released: August 29, 2022