Court File and Parties

COURT FILE NO.: CV-20-576 (Chatham) DATE: 20230622 ONTARIO SUPERIOR COURT OF JUSTICE

BETWEEN:

Alison Dyck, Plaintiff – and – Kent & Essex Mutual Insurance Company, Gurdarshan Dhillon, Orchid Leasing Corporation and IWD Transport Inc., Defendants

Counsel: Heather Colman, Counsel for the Plaintiff Bruce Mitchell, Counsel for Kent & Essex Mutual Insurance Company Iain Peck, Counsel for Orchid Leasing Corporation T. Le, Counsel for IWD Transport Inc.

HEARD: November 28, 2022

Ruling on Motion

HEBNER J.

[1] This motion was brought by Orchid Leasing Corporation (Orchid) seeking summary judgment dismissing the plaintiff’s claim, and the Kent & Essex Mutual Insurance Company (Kent & Essex) cross claim, as against Orchid. This is my ruling on the motion.

Background Facts

[2] The action arises out of a June 12, 2018, motor vehicle accident that happened on Highway 401 near Chatham, Ontario. The plaintiff’s motor vehicle was rear ended by a transport truck driven by Gurdarshan Dhillon (Dhillon). Orchid was the registered owner of the tractor portion of the transport truck. IWD Transport Inc. (IWD), a freight company, was the registered owner of the trailer portion. At the time of the accident, Dhillon was hauling the trailer for IWD. Kent & Essex was the plaintiff’s automobile insurer.

[3] Dhillon leased the tractor from Orchid by way of a lease agreement dated April 22, 2015. The term of the lease agreement was 30 months. The first payment was for $5,989 and the remaining monthly payments were $1,186.59. The lease had a purchase option at the price of $1,186.59 due one month after the 30th lease payment. According to Article 5 in the lease agreement, Dhillon was required to keep the tractor in good working order and perform all required maintenance and repairs.

[4] Article 11 in the lease agreement required the lessee (Dhillon) to obtain insurance. If the lessee failed to provide proof of insurance, the lessor (Orchid) had the right, but not the obligation, to obtain the lessor’s own insurance at the lessee’s expense.

[5] Dhillon obtained the license plates for the tractor after receiving a letter from Orchid authorizing him to do so.

[6] Dhillon made every payment on the lease and the final payment to exercise the option to purchase on November 1, 2017.

[7] Dhillon did not attend at Orchid to pick up the bill of sale until March 19, 2018. On that date, he attended at Orchid and was given the following:

1. The bill of sale for the tractor signed by both Dhillon and Orchid;
2. A letter advising that Orchid does not have a security interest in the tractor;
3. A letter authorizing a transfer of ownership to Dhillon; and
4. The ownership with an authorized signature on the Application for Vehicle Transfer on the back.

[8] After the accident, Dhillon was charged and convicted of driving a motor vehicle without insurance. He was also charged with careless driving and operating a motor vehicle without a permit.

[9] Dhillon registered the change of ownership with the MTO, and obtained a permit, on July 4, 2018.

[10] Dhillon made an assignment in bankruptcy in September of 2020. He listed the tractor as an asset in the bankrupt estate. Dhillon has not defended the plaintiff’s claim. No insurer has responded on Dhillon’s behalf. Given the bankruptcy, there is a stay of proceedings against him.

[11] During the term of the lease, Orchid contacted Dhillon’s insurance broker, National Truck League, for evidence of insurance. In June of 2017, National Truck League wrote to Orchid advising that it was no longer the broker for Dhillon and to contact him directly for current insurance information. There is no evidence that Orchid took any further steps to confirm that the tractor was insured.

[12] It appears as though Dhillon was uninsured at the time of the accident. Accordingly, the plaintiff sued her own insurer, Kent & Essex, pursuant to the family protection coverage and seeks uninsured motorist coverage for her damages from her own insurer.

[13] At some point in time before the accident, it appears as though Intact Insurance Company was Dhillon’s insurer. Orchid did not receive notice from Intact that Dhillon’s insurance had been cancelled. Intact has not been added as a party and has not responded to the claim on behalf of Dhillon, Orchid or IWD.

[14] Kent & Essex seeks damages from Orchid by way of a cross claim for what it alleges is a breach of a covenant by Orchid to insure Dhillon. Orchid has defended the cross claim.

The Issue

[15] Orchid seeks an order dismissing the plaintiff’s claim and the cross claim of Kent & Essex as against it. Both the plaintiff’s claim against Orchid and the cross claim of Kent & Essex against Orchid are premised on the contention that Orchid was the legal owner of the tractor at the time of the accident. Kent & Essex makes the additional allegation that Orchid covenanted with Dhillon to insure the tractor. Orchid asserts that on a plain reading of the documents, that simply is not the case. I agree.

[16] The plaintiff takes no position and simply wants the issue dealt with such that policy coverage is determined and the action can move forward.

[17] Kent and Essex would not provide its uninsured coverage in the event other insurance is available and asserts that there is other coverage available from Intact. Kent & Essex seeks an order dismissing the motion and a declaration that Orchid is vicariously liable for any negligence of Dhillon in the operation of the vehicle based on s. 192(2) of the Highway Traffic Act, RSO 1990 c. H-8.

[18] Kent & Essex seeks relief against Intact, namely that it had failed to deliver to Orchid the required notice of cancellation of its policy insuring Dhillon and Orchid such that the Intact policy remained in full force and effect as of the date of the accident. Kent & Essex also asserts that an Aviva policy issued to Orchid in respect of vehicles owned by Orchid provides coverage at the time of the accident and seeks a declaration in that respect. The Aviva policy provided insurance to Orchid for vehicles “owned by and licensed in the name of the insured (Orchid)”.

[19] Intact and Aviva have not been added as parties to this action and have not been served with notice of this motion. Accordingly, I decline to consider any relief involving these two insurance companies.

[20] The first question is whether this is an appropriate case for summary judgment. If it is, the issue before me is a focused one – was Orchid an owner of the tractor at the time of the accident. If it was not, then the action and cross claim against it must be dismissed.

Analysis

Summary Judgment

[21] The Rules of Civil Procedure, R.R.O. 1990, Reg. 194, and specifically rule 20.01(3) provides that “a defendant may, after delivering a statement of defence, move with supporting affidavit material or other evidence for summary judgment dismissing all or part of the claim in the statement of claim”. Rule 20.04(2)(a) provides that the court must grant summary judgment if it is satisfied that there is no genuine issue requiring a trial with respect to a claim or defence.

[22] The principles pertaining to summary judgment are well known since the seminal case of Hryniak v. Mauldin, 2014 CSC 7. At para. 49, the test is set out thusly:

There will be no genuine issue requiring a trial when the judge is able to reach a fair and just determination on the merits on a motion for summary judgment. This will be the case when the process (1) allows the judge to make the necessary findings of fact, (2) allows the judge to apply the law to the facts, and (3) is a proportionate, more expeditious and less expensive means to achieve a just result.

[23] Hryniak sets out a two-step approach that a judge must follow in determining whether a genuine issue requiring a trial exists. First, the judge must decide if there is a genuine issue requiring trial based only on the evidence before her, without using the enhanced fact-finding powers. If there appears to be a genuine issue requiring a trial, the judge should then determine if the need for a trial can be avoided by using the powers under rules 20.04(2.1) and (2.2) (see Moffitt v. TD Canada Trust, 2023 ONCA 349 para. 41).

[24] Rule 20 concerns itself with a simple question: does a specific action require a trial for its fair and just determination on the merits? (Moffitt at para. 42).

[25] When responding to a summary judgment motion, a party is required to “put its best foot forward”. A responding party is not entitled to rest on allegations in its pleadings. On a motion for summary judgment, the motions judge is entitled to assume that the record on the motion contains all of the evidence the parties would present at trial. (Sweda Farms v. Egg Farmers of Ontario, 2014 ONSC 1200 at para. 26-27).

[26] In my view, this is a proper case for summary judgment respecting the claims against Orchid. The question of whether Orchid was an owner of the tractor at the time of the accident is not a question that requires a trial. Moreover, if the motion is successful, then the claims against Orchid will have been disposed of in their entirety.

Ownership of the Tractor

[27] The Highway Traffic Act provides that the owner of a motor vehicle is liable for loss or damage sustained by reason of negligence in the operation of that vehicle. Orchid was registered with the Ontario Ministry of Transportation as the owner of the tractor at the time of the accident. That registration gives rise to a rebuttable presumption of ownership.

[28] In Hayduk v. Pidoborozny, [1972] SCR 879, the Supreme Court said that registration of ownership of a motor vehicle is to be treated as proof of ownership unless and until the contrary can be shown. In concurring reasons, Laskin J. said that the proper approach for the application of the vicarious liability provisions of a provincial Highway Traffic Act is set out in Haberl v. Richardson, [1951] OR 302 (CA).

[29] In Haberl, the defendant driver was 21 years of age at the time of the accident. The car was registered in the name of his father. The car was bought and paid for by the 21-year-old driver. It was never in the possession of the father, nor was it ever under the father's control. Henderson J.A., speaking for the court, said “the owner referred to in our statute is the real owner, the person having dominion over and control of the car”. In finding the 21-year-old driver to be the owner of the car Henderson J. referenced, with approval, the following passages from the Court of Appeal decision in Wynne v. Dalby (1913), 30 OLR 67:

The word 'owner' is an elastic form, and the meaning which must be given to it in a statutory enactment depends very much upon the object the enactment is designed to serve. (p. 72)

The purpose of sec. 19 was ... to render the person having dominion over the vehicle, and in that sense the owner of it, answerable ... and I do not think that it can have been intended to fix the very serious responsibility which the section imposes upon one who, ... at the time the accident happened, had neither the possession of nor the dominion over the vehicle, although he may have been technically the owner of it in the sense in which the owner of the legal estate in land is the owner of the land. (p. 74)

[30] In Dalton (Litigation Guardian of) v. Emerson Estate (1999), 103 OTC 53 (OnSC) Gillese J. said:

Where the registered owner does not retain indicia of title, has no control over the vehicle, and has done everything that could reasonably be expected to be done to transfer ownership, she will not be "an owner" of the vehicle within the meaning of the Highway Traffic Act. (para. 22)

[31] The issue was addressed by Rady J. in Smith v. Mikel, a case where the ownership of a snowmobile was raised. The registered owner at the time of the accident was B&K Tire and Battery. The driver was William Mikel. B&K had sold the vehicle to Jason Wolfe. B&K had given the necessary paperwork to Wolfe to complete the transfer of ownership, received the purchase price in full, did not have keys to the snowmobile, exercised no possession or control over the snowmobile, and was not in a position to consent or withhold consent to the operation of the snowmobile at the time of the accident. Rady J. found that B&K was not an owner of the snowmobile at the material time.

[32] After reviewing the Supreme Court’s decision in Hayduk, Rady J. set out the following indicia of ownership:

• An individual (“A”) agrees to sell the vehicle to another (“B”).
• B acknowledges ownership.
• B is responsible for insuring the vehicle.
• A does not have an insurable interest in the vehicle.
• A did all that was necessary to arrange for the transfer of registered ownership to B.
• A exercises no possession or control over the vehicle.
• A has not inspected the vehicle or had it certified.
• A does not pay for repairs to the vehicle.

[33] In Liu v. The Personal Insurance Company of Canada, 2017 ONSC 4232, Sutherland J. dealt with the question of ownership of a truck involved in a collision. The registered owner was a woman, Linda Sue Pearce. The driver of the truck was her son, Trevor James Middleton. Middleton lived with Pearce and her partner. Pearce gave Middleton a loan to purchase the truck. Pearce was the registered owner to secure her loan. The bill of sale was in Pearce’s name. If Middleton did not pay the loan, then Pearce could sell the truck. Pearce had her own vehicle and drove the truck only a few times. The insurance premiums were paid through Middleton’s account and Pearce deposited money into this account from time to time. At para. 23, Sutherland J. set out the following circumstances that indicate a change of ownership:

(a) Removal of the licence plates from the motor vehicle; (b) Transfer of ownership by agreeing to sell the motor vehicle either verbally or supported by a written bill of sale; (c) The signing of the registration of ownership of the motor vehicle; (d) No longer having an insurable interest in the motor vehicle; (e) Not being responsible for the certification or repairs of the motor vehicle; (f) No longer having possession of the motor vehicle; (g) Acknowledgment of ownership by the other person; and (h) The accepting of the proceeds of sale of the motor vehicle.

[34] Sutherland J. found that Pearce’s initial and continued registration of the truck in her name was deliberately done to maintain control of the truck and, as Middleton lived with her, possession of the truck. He found that Pearce had not rebutted the presumption of ownership.

[35] Turning to the facts of this case, I make the following findings of fact based on the evidence filed:

• Orchid agreed to sell the tractor to Dhillon and Dhillon paid the purchase price in full.
• Orchid gave the necessary paperwork to Dhillon to transfer the ownership, including the bill of sale.
• Orchid exercised no possession or control over the vehicle after March 19, 2018.
• There is no evidence that Orchid retained keys to the vehicle.
• Orchid was not in a position to consent or withhold consent to the operation of the vehicle after March 19, 2018.
• Orchid did not have an insurable interest in the vehicle at the time of the accident.

[36] By the time of the accident, aside from the MTO registration, there was no indicia of ownership of the truck by Orchid.

[37] The fact that Intact cancelled its insurance in September of 2016 with notice to Dhillon but not to Orchid is not relevant because at the time of the accident Orchid was not the owner of the tractor.

[38] Based on all of the evidence, I find that Orchid has successfully rebutted the presumption of ownership of the tractor.

Disposition

[39] For these reasons, summary judgment dismissing the plaintiff’s claim, and the cross claim of Kent & Essex, as against Orchid is granted.

[40] In the event the parties cannot agree on costs, they may make brief written submissions, including a costs outline and any relevant offers to settle, according to the following schedule:

1. Orchid within 20 days:
2. All other parties within 20 days thereafter;
3. Any reply from Orchid within 10 days thereafter.

Original Signed by “Justice P.L. Hebner” Pamela L. Hebner Justice

Released: June 22, 2023